International Development Association

– in the House of Commons at 12:00 am on 6th March 1969.

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10.23 p.m.

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

I beg to move, That the International Development Association (Additional Payments) Order 1969, a draft of which was laid before this House on 21st January, be approved. The purpose of the Order is to enable Her Majesty's Government to make a payment to the International Development Association of the sterling equivalent of the sum of 51,840,000 dollars; in other words, a sum equal to the first instalment of the British share of the second replenishment of the I.D.A.

The view has often been expressed from all sides of the House that the International Development Association is one of the most valuable institutions in the whole area of development aid. As the House will be aware, it provides soft-term multilaterial aid to the poorest of the developing countries, the countries which are least able to afford the servicing of loans at conventional rates of interest. It is of great benefit to these countries in the sense that it combines interest-free terms, untied procurement, with very high standards of management and very high standards in the scrutiny of projects.

Last year, an agreement was reached to replenish the funds of I.D.A. at the level of 1,200 million dollars over a three-year period, which was a 60 per cent. increase over the level for the preceding three years. As the House will be aware, Her Majesty's Government worked very hard to secure that agreement and would have been prepared to go to a higher figure and pay the British contribution to that higher figure if agreement had been possible.

The agreement was ratified in this House in the summer, when the Overseas Aid Act, 1968, passed all its stages in both Houses. That Act authorised the payment of the sum of £64·8 million over the three-year period, that being the British contribution of the replenishment.

However, the replenishment cannot be effective until the agreement has been ratified by at least 12 countries, making a total contribution between them of 950 million dollars. The position to date is that 11 countries have ratified, with a total contribution between them of 472 million dollars. Seven other donor countries have not yet ratified. Those seven countries include the United States.

The U.S. position is vital in this, partly because the other six countries are waiting for the U.S. to ratify, and in two cases this has been made clear by spokesmen of their Governments. But it is particularly vital because the U.S. contribution is essential to reach the minimum figure of commitment of 950 million dollars.

The outgoing U.S. Congress had an I.D.A. Bill before it which received a certain amount of discussion before the American elections. But it was not passed before the elections took place, and the Bill is now beginning to be considered by the new U.S. Congress.

Meanwhile, it became clear by about October last that the resources of I.D.A. were becoming so low that it was not possible for it to enter into commitments for more than a very limited period ahead. In that situation, the President of the World Bank, Mr. McNamara invited contributing members to make advance pledges pending the operation of the agreement in full.

On 17th December last, I was able to tell the House in reply to a Question by my hon. Friend the Member for West Lothian (Mr. Dalyell) that Her Majesty's Government were prepared to make an interim contribution of £21·6 million, which is the sterling equivalent of the dollar figure in the Order—in other words, a pledge of our first instalment under the second replenishment—provided that the House was prepared to agree to it.

I should make it clear that this advance contribution will count as the first contribution that we are due to make when the full replenishment takes effect. I should also tell the House that a number of other countries have announced that they also are prepared to make interim contributions to I.D.A. in these circumstances. Pledges have been made by Canada, Germany, Sweden, Italy, Denmark, Finland, and Norway—with ourselves, a total of eight countries, with a total pledge of 230 million dollars, a sum which will allow I.D.A. to continue its lending programme.

This Order derives its authority from Section 1 of the Overseas Aid Act, 1968 At the time when that Act was before the House, it was assumed that subsections (1) to (4) of Section 1 would cover the second replenishment of I.D.A. without the necessity of coming back to the House. In fact, it has been necessary to lay an Order under subsections (5) to (7) of Section 1 because the full conditions of the second replenishment have not been fulfilled, for the reasons which I have given.

I think that I should say a word about the prospects, as I see them, for the full ratification taking place so that the second replenishment can go ahead as planned. As I indicated, the decision of the United States is crucial. My latest information is that the Banking and Currency Committee of the House of Representatives considered the I.D.A. Bill the day before yesterday. It took evidence from the Secretary of the Treasury, Mr. David Kennedy, and he indicated the strong support of the new American Administration for the ratification of I.D.A.

Following that session, the Banking and Currency Committee approved the I.D.A. Bill by a very large majority. It will be necessary for the Bill to be considered on the Floor of the House of Representatives and, by various procedures, in the Senate. I cannot anticipate what decision will eventually emerge or how long it will take for the matter to be dealt with. It is not for me, as a member of the British Government, to lecture the United States Congress; but it is reasonable to say that, because the attitude of the British Government and of the House is clearly in favour of a second replenishment, we certainly hope that the United States' ratification will take effect and will become an accomplished fact before very long.

Meanwhile, it is important that the operations of I.D.A. should be maintained. As I have explained, it has been necessary for a number of countries to pledge these interim sums so that the operations may continue without interruption. It is the view of Her Majesty's Government and of the other Governments that I have named that we can help in this way. I hope that the House will agree and will see fit to approve the Order.

10.32 p.m.

Photo of Bernard Braine Bernard Braine , Essex South East

I am sure that the House will be grateful to the Minister for explaining the Order in his usual clear and courteous way.

It will be recalled that there was general approval for the decision that the Government made last year to ratify the agreement—concluded I think in March, 1968—to replenish the funds of the International Development Association. Indeed, the Overseas Aid Bill, authorising a contribution of £64·8 million, which is no mean sum, in three equal instalments, was passed without a Division in both Houses.

It is generally agreed, I think, that this method of channelling aid to developing countries for carefully selected projects has much to recommend it. While I.D.A. finance is made available on soft terms, every application has to satisfy the strictest criteria. Before a project is approved, it is studied in relation to the whole economy of the recipient country. It must fulfil a priority need; it must be economically viable on its own account; the borrowing country must be prepared to put up a reasonable share in its own currency; and aid is not given to any country which defaults on its external debt or which nationalises foreign businesses without fair compensation. All that is very sensible. Moreover, a study of the list of projects already successfully undertaken by the Association shows the infinite value of this kind of development assistance.

But when we passed the Bill last summer it was still not certain what the future held for I.D.A. As the right hon. Gentleman has just reminded us, the original agreement to replenish the funds of the Association, to which we were party, could not become effective until at least 12 contributing member States, whose pledges aggregate not less than 950 million dollars out of a total contribution of 1,200 million dollars, made final ratification. That means that, without the American contribution, the agreement would be null and void.

By the time that our first contribution was due to be paid—namely, on 1st November of last year—the United States Congress had not passed the necessary legislation, and it still has not done so.

Am I right in concluding, therefore, that the money we are authorising tonight in this Order cannot be paid over, and that the agreement made in March last year cannot be implemented until the Americans stir themselves and pass their own ratifying legislation? If so, a serious situation arises. I am greatly encouraged by the news of what has happened in Washington in the last few days, but we are being asked to authorise a massive sum of money to be paid out to an international organisation, the future of which is uncertain. What happens if the United States Congress refuses to ratify the 1968 agreement?

So far the Americans have played a leading and responsible rôle in the task of helping the poorer nations to overcome poverty and to speed development. From Marshall Aid to the American pledge to provide 40 per cent. of the I.D.A. replenishment funds, their rôle has been both honourable and indispensable, and it would be tragic if they faltered now. Already the aid efforts of the Americans, the French and ourselves, to take the three major donors, have tended to level off at roughly the levels reached in the early 'sixties. If the richest people on earth were now to turn their backs on the most pressing problem of our time, it would be disastrous.

So far I have seen no indication that this matter was discussed with President Nixon during his recent visit to Europe. Of course it may have been. But while the pursuit of European unity and the strengthening of the Atlantic Alliance are matters of the highest importance, in the long run the enjoyment of affluence and security by the western world will depend on the extent to which we are ready to help overcome the poverty and allay the dissatisfaction of the rest of mankind. I ask the right hon. Gentleman therefore what will happen to the I.D.A. and its activities if the United States Congress does not ratify the agreement?

I now turn to a technical point. The contribution authorised in this Order is not one in effect made under the March agreement, although in essence we are making the same sum available under some of the same conditions. The agreement reached in March, 1968, was made after devaluation in November, 1967, and so presumably Her Majesty's Government committed themselves to a British contribution equivalent to 155·5 million dollars at their 1960 value, with their eyes fully open.

Let us look at the Explanatory Note to the Order. Why do the Government think it necessary to provide for the payment of any sum which may be required to maintain the foreign exchange value of their contribution "? If this means anything at all, it means that we are guaranteeing our contribution against the possible further devaluation of sterling. Is this not a very considerable confession of failure? Seeing that the agreement has not yet come into force, why is this necessary? How binding is this undertaking? I think that Parliament is entitled to an explanation

The third question that I wish to ask concerns the Government's view of the future of I.D.A., assuming that the present difficulties regarding replenishment are overcome. During our general debate on overseas aid on 7th May last year the right hon. Gentleman expressed himself in favour of shifting the emphasis away from bilateral aid towards multilateral aid, partly because multilateral agencies are better equipped to take a broader view both of the developing world's needs, and the means of meeting them, and partly because recipient countries prefer this kind of relationship. I do not think that anyone would quarrel very much with that.

Later, when we discussed the Overseas Aid Bill, the right hon. Gentleman said that he expected that the proportion of our official aid going to multilateral bodies would increase from 11 per cent. in 1967 to about 15 per cent. in 1968, the largest factor in the increase being the higher contribution that we were making to the I.D.A. In the event, that contribution was not made last year; we are authorising it now, and the shift that the right hon. Gentleman was talking about probably did not take place at all. Does the right hon. Gentleman still adhere to that view? Certainly multilateral agencies have an important rôle to play in bringing aid to the developing countries, but they are only one of the weapons in the armoury of our development effort.

I ask this question for two reasons. First, there appears to be a trend in the United States and France towards a reduction in the flow of official aid, offset perhaps by a desire to increase private investment. It is true that what matters to developing countries is the total inflow of financial resources, and clearly there must come a stage where their infrastructure has been developed with official aid to the point where what is then needed is an injection of the skills and experience that only private investment can bring.

If the reverse trend is practised here, with Britain continuing to put money into infrastructure development overseas whilst actively discouraging private investment, as I am afraid the Government have been doing, then in the long run the advantage to Britain of any expansion in the wealth of developing countries will be diminished in relation to that enjoyed by other aid donors. It is right for us—I have always tried to do it from this side of the House—to stress the need for the strong to help the weak. I yield to no one on that. But it is politic also to remember that we are spending here the taxpayers' money.

The second reason for asking the right hon. Gentleman whether he stands by what he said about increasing our contribution to multilateral agencies at the expense of bilateral aid arrangements is this. If Britain was in a strong enough position to increase the total aid she gives to developing countries, a shift of emphasis such as the right hon. Gentleman was suggesting might not matter. In fact, it might be a good thing, because as a trading country we have a direct interest in seeing that the total international volume of aid is increased. Indeed, experience has shown that we gain substantially from untied project aid financed by agencies such as the International Development Association. But we are not increasing our total aid in any significant sense. The right hon. Gentleman will know better than most that our——

Photo of Mr Sydney Irving Mr Sydney Irving , Dartford

Order. The hon. Gentleman is going rather wide of the Order. He is concerned with other than the additional contribution, which is the subject of the Order.

Photo of Bernard Braine Bernard Braine , Essex South East

You are very kind, Mr. Deputy Speaker, in allowing me to develop this argument which I hope to show very shortly has relevance to the Order.

The right hon. Gentleman will know that our aid performance expressed as a percentage of gross national product has been declining in recent years. We had some figures from the Parliamentary Secretary on 28th January which showed that our official and private aid expressed as a percentage of gross national product was lower in 1967 than in any year since 1961. I would guess that the comparable figure for 1968 was lower still. All this should be a matter of concern to the Government.

The White Paper on Public Expenditure suggests that our gross aid will rise a little from current levels, but so also will repayments on past loans, so that net aid, which is what counts when we are thinking in terms of the U.N.C.T.A.D. target, is not likely to rise at all. In short, I have the impression—and it is against this background that we must look at this Order—that the Government have no clear idea of what they are trying to do in the field of aid.

Here we are authorising a substantial subscription to the funds of an international organisation. At least that organisation publishes details of its activities. The benefits can be quantified. The book is there for all to read. But there is still a widespread ignorance of what is happening over the wider field of the British aid effort. The picture is diffuse. I think we provide aid to over 100 different countries, although 90 per cent. of what we provide is concentrated in about 30 countries. I wonder whether we are making the best use of our slender resources in this way. Has anyone got the answer?

Although the right hon. Gentleman's Ministry publishes a mass of statistics and the occasional White Paper, there is nothing to compare with the detailed discussion of conditions in those recipient countries which the United States Administration presents to Congress before the latter takes decisions on aid. The Americans work out, especially in the case of countries where they are the major donor, clear objectives for the kind of development that they are willing to support. They calculate how their aid will contribute to the general development programme and concentrate on particular sectors, agriculture, say, or communications, where there are major obstacles to economic growth, and then concentrate their aid on those sectors. Are we doing this? Certainly, there is a need for greater scrutiny by Parliament of our aid effort, and with greater scrutiny should come a clearer sense of purpose of what we are trying to achieve. This is why, in passing, I warmly welcome the proposal for a Select Committee on Aid and Development.

Judging from the record of the I.D.A., the money which we are authorising will be well spent. That leads me to my last question. Some of that money will be spent in countries where we are already providing bilateral aid, or where we and other national and international bodies are sharing in development programmes. What co-ordination of effort are we making on our part to ensure the maximum efficient use of resources? Can the Minister give some examples of how I.D.A.-financed projects dovetail into development financed by other British aid?

This is a highly technical subject, but I thought it right to ask a number of questions about the Order and, perhaps even more important, about the thinking behind the British aid effort of which this contribution is part. Subject to our receiving satisfactory answers, my hon. Friends and I will not wish to impede the passage of the Order: indeed, we shall give it our warm support.

10.47 p.m.

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

I should like to pay a tribute—I hope that he does not treat it with suspicion—to the hon. Member for Essex, South-East (Mr. Braine) for the sincerity with which he always speaks on this subject. It is rather nice to have a bilateral policy on a subject which is controversial outside the House. Certain of his questions needed to be asked, but in essence he was in broad agreement with the concepts and aims of I.D.A.

The Estimates Committee, on which the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) and I served, said that the aid of donor countries … is co-ordinated through I.D.A. rather than competitive and the recipient country has a much clearer idea of the budget within which it must make its development plan. This is why it is important tonight to get the I.D.A. replenishment Order fixed and give the American Government time to make up its mind. I hope that they do not take too long about it, because, although they may be talking about small sums relative to their national budget, these sums are critical for the underdeveloped countries.

I am sure that I carry the hon. Member for Essex, South-East with me when I make a comparison with the thousands of millions of pounds of which we spoke in the defence debate earlier this week and the tens of millions which are the subject of this debate tonight. The tens of millions under this Order will lead to greater security for the world than the thousands of millions we spoke of earlier in the week. This work is vital.

I find it a little paradoxical that not so long ago I was critical of Mr. McNamara's rôle in the United States because he was concerned with defence, but I am much happier about his present rôle. I like to think that his skills, judgment and ability can be used to far greater effect for the good of society the world over in his present rôle. Our passing of this Order, allowing for continuity, will, I hope, persuade the American Government that they ought to make the maximum use of their highly skilled, efficient ex-civil servant to perform a task for the world at large. I very much hope that the holding operation on which we are now engaged—for that is what it is—will tide over the period before the American Government see the light in the best sense of the word.

I have no doubt that my hon. Friend the Member for Portsmouth, West (Mr. Judd) will hope to catch your eye, Mr. Deputy Speaker, but I hope that he will not mind if I "pinch" one sentence from the letter which he wrote to The Times on Tuesday last and in which he spelled out what the I.D.A. is all about: It would damage the reputation of America both with her allies and with the countries of the developing world if the second replenishment were frustrated by her failure to ratify. That is the key to the situation.

I was delighted when the hon. Member for Essex, South-East, while questioning some of the long-term aims and posing some of the difficulties which might arise, gave a general blessing to the concept of an early replenishment. I end with another quotation from the 1967–68 Report of the Estimates Committee on Overseas Aid. I know that the hon. and gallant Member for Winchester will agree when I say that the Committee spent a great amount of time on this matter and was entirely satisfied to say, in paragraph 54: Your Committee are also convinced that the contribution made to I.D.A. is among the most effective forms of aid given by this country. Despite the present difficulties facing the replenishment of I.D.A. funds, indeed because of them, the British Government should take the initiative in seeking to ensure that the maximum use is made of I.D.A. To night, I have great pleasure in being present in the Chamber to see the Minister and the Opposition in agreement on the importance of this work, and I greatly hope that the Government's action, supported by the Opposition, will lead the Americans quickly to make up their mind in favour of replenishment.

10.54 p.m.

Photo of Rear-Admiral Morgan Morgan-Giles Rear-Admiral Morgan Morgan-Giles , Winchester

I, too, appreciate the opportunity to speak in this debate, when we are not indulging in the system of competitive insult across the Floor. I have two technical questions to put to the Minister and some more general comments to add. First, I have a question on Article 2. Why is the sum shown in United States dollars? I know that the accounts of the I.D.A. are kept in United States dollars, but the Article refers to weight and fineness in effect on 1st January 1960". That must be a known quantity. Is it not, therefore, possible for the Government to show in the Order the equivalent sum in sterling? We are being asked to pass more or less on the nod a large sum of money, by my reckoning £15 million or £20 million. It would be of assistance to the House and the public if the Minister could indicate, for the layman, the sum involved in £s.

Article 3 appears to be an open-ended commitment, without limit or need for further affirmative Order by the House. Perhaps the Minister could enlighten us whether this is so. Article 4 refers to redeeming non-interest bearing and non-negotiable notes. Could the Minister explain what it means? I am glad that tributes have been paid from both sides to the work of the I.D.A. and that the Government are contributing promptly to its funds.

I do not feel that it is for us in this country to prompt the United States on this. As was said recently when their representative was in the Gallery, it is for this nation to recognise what has been done for the world and for this country by the United States ever since the war.

Another hon. Member and I recently saw the Mangla Dam in the Indus Valley. It is the biggest earth-filled dam in the world, which will be of enormous benefit to agriculture and provide electric power and which will greatly assist towards the removal of potential causes of war between India and Pakistan. I am glad that British consultants played such a big part in this I.D.A. project. I hope that the money we are approving this evening, perhaps not with a label round its neck, will find its way into that sort of project, perhaps the one at Tarbela, some way up the Indus from the one we saw.

I think that what I have said shows that I am in favour of economic aid to underdeveloped countries whatever our differences here, because it is essential that we in this country should not become inward-looking. The aid we are discussing tonight is correlated to defence, which we discussed earlier in the week. I differ slightly from the hon. Member for Eccles (Mr. Carter-Jones). I cannot agree that there is a comparison between defence and economic aid here. I suggest that freedom from want and fear are the two things which must be achieved, particularly in Asia and that those two freedoms go together. This is one reason why my hon. Friends and I continually urge a military presence of sorts east of Suez.

10.59 p.m.

Photo of Mr Arthur Blenkinsop Mr Arthur Blenkinsop , South Shields

I join in welcoming the action of the Government in bringing this Order forward to ensure that this important work is carried on.

I wish to clear up some points. My right hon. Friend said that under this scheme the programme was untied. Is this true? Special provision was made to enable the American Government to ease their own trade balance position. This facility would be open to other countries if they desired and if circumstances warranted. The understanding, I gather, is that if the American Government ratify this proposal, as we all very much wish them to, the sums as they are released, at least initially in the first period, will be spent within the United States. In that sense, the procurement provision is tied to that extent. There will still be the balance of the United States' contribution which will be called upon later, which will, presumably, be open for wider procurement. It is important to put that point, because it seems to me that every effort has been made to try to meet any anxieties in the United States on this matter.

Those anxieties are in some respects understandable, because a great deal of the funds provided by the Americans has been used for purchases elsewhere than in the United States. We are in the fortunate position that the funds which we use are more than refunded, in the sense that more than the £ value comes back to us in purchases, whereas the United States have not been in quite that same happy position. Therefore, one understands some of the difficulties in the United States. We very much hope that there will not be any further delay in their ratification. I merely wished to have confirmation from my right hon. Friend the Minister that this special easement had been provided for.

11.2 p.m.

Photo of Mr John Tilney Mr John Tilney , Liverpool Wavertree

I intervene only briefly. My hon. Friend the Member for Essex, South-East (Mr. Braine) addressed some pertinent questions to the Minister. He also mentioned the importance of infrastructure. Quite often, we use that word not really knowing what it means or whether it refers to roads, power or great dams, such as the Mangla Dam, which I have seen.

One occasionally does not ask the right questions about whether the money is properly spent on those projects and whether, once a project is completed, there will be the right demand for power or whether the water that is impounded will be needed further downstream. One knows very well that in the case of the Volta Dam there is a surplus of power, as there will be, possibly, for generations. One has seen the great roads built by the French in Dahomey, a great infrastructure and important, but Dahomey still remains one of the poorest countries in Africa.

It is important that trade and light industry should follow the infrastructure. That is why the question put by my hon. Friend the Member for Essex, South-East about private enterprise following up on projects and infrastructure is so extremely important.

11.4 p.m.

Photo of Mr Frank Judd Mr Frank Judd , Portsmouth West

It is a pleasure to follow the hon. Member for Liverpool, Wavertree (Mr. Tilney), because we know of his long-standing and deep interest in these subjects.

We are discussing tonight an aspect of multilateral aid. It is always good to see the Government recommitting themselves, by a practical Order of the kind that is before us, to the priority which, they say, they are now giving to multilateral aid in the context of our overseas aid and development programme generally.

Two points should be made about the significance of a multilateral aid programme of this kind. First, it has distinct political advantages. We cannot escape the fact that bilateral aid programmes have connotations of neocolonialism which are not always acceptable to the receiving countries. Multilateral aid programmes of the sort being discussed tonight have the advantage of a certain degree of anonymity about the origin of the resources which are applied to them.

The second point, which, I feel, is even more important than the political aspect, is that consideration of efficiency and effectiveness in the field. One of the great potential advantages of multilateral aid is that it avoids unnecessary duplica-cation between competing bilateral programmes. It also assists the planning resources of individual developing countries. Frequently the limited resources for local economic management are put under considerable pressure by different programmes pressing in on the country, each with different terms of reference and each going to the heart of a specific economic development within that country, while perhaps paying lip service to the local ministry or department of planning, and introducing a fragmentation at a time when cohesion in economic development is essential.

The I.D.A. is one of the important arms of the World Bank. The World Bank has a reputation second to none in many ways in multi-lateral development projects, but there have been two reservations about its programmes and they stressed the need for the introduction of the programmes of I.D.A.

The first was that the World Bank's programme was limited in the sense that some of its success was due to the fact that it always invested in clearly identifiable projects and looked for a sound return on capital in clearly traditional concepts. The advantage of the I.D.A. was that it introduced, as a result of American initiative, assistance on more favourable terms.

I stress that this was a United States initiative., although in doing so I do not in any way wish to embarrass the U.S. in its present consideration of replenishment. I wish to pay tribute to those who started the I.D.A. and it is worth noting some of the arguments they used at that time. It was first proposed in a Resolution of the United States Senate or 23rd July, 1958, when Senator Monroney of Oklahoma clearly set out its purpose. The Resolution had as its purpose Providing a source of long-term loans available at a reasonable rate of interest and repayable in local currencies, or partly in local currencies, to supplement International Bank lending activities and thereby permit the prompt completion of worthwhile development projects which could not otherwise go forward. Later the Resolution was concerned with Insuring that funds for international economic development car. be made available by a process which would encourage multilateral contributions for this purpose. This showed great imagination on the part of the Americans in 1958.

This was followed a year later when President Eisenhower's Secretary to the Treasury, Mr. Anderson, made the proposition at a meeting in 1959 of the governors of the World Bank. It is interesting to note that at that meeting President Eisenhower himself delivered an address in which he referred to the importance of the I.D.A. He said: It is recognised, however, that there are many development projects which, though economically sound, cannot be financed by existing international institutions. To meet this situation, the United States Governor of the Bank has proposed the creation of an International Development Association as an affiliate of the Bank. In that message to the governors of the World Bank, the then President clearly identified himself with the need for the I.D.A. Now the I.D.A. has become the world's major source of soft-term multilateral aid.

Photo of Mr Sydney Irving Mr Sydney Irving , Dartford

Order. The hon. Member is going wide of the Order. We are not discussing the principle of I.D.A. but the contribution which is the subject of this Order.

Photo of Mr Frank Judd Mr Frank Judd , Portsmouth West

I thought that in taking this essential step this evening we have to consider the importance of the I.D.A. in relation to soft-term multilateral aid. Hon. Members have referred to the fact that we now see the future of I.D.A. in jeopardy because of doubts and hesitation in the United States about replenishment. We must recognise that the United States has had difficulties in terms of acute balance of payments crises, but, as was pointed out by my hon. Friend the Member for South Shields (Mr. Blenkinsop), we and the other members of I.D.A. have put forward proposals which would lighten the burden on the United States in this respect.

As we send from this House this evening our message to our colleagues in the United States asking them to speed as much as possible the commitment of the United States to replenishment, we could not do better than quote what Senator Monroney said in the debate which initiated the whole introduction and establishment of this important arm of multilateral aid. He said: Americans are becoming increasingly convinced that sponsoring military buildup in an effort to discourage external attack, provides a hollow shell of strength, unable to withstand the mounting pressures from within these nations. This pressure is being generated by what Adlai Stevenson called the revolution of rising expectations. Around the globe captive peoples are in revolt—in revolt against the captivity of poverty, of social immobility, of disease, of national inferiority. These demands for an equitable share of the world's goods, and recognition as a significant force in the world's culture, constitute the basic reality of our age—more basic and more pervading than atoms, or sputnics, or political alliances. This short and interesting debate has made clear that this House is united in urging our friends in the United States to give their support to replenishment of one of the greatest brain childs of the previous Republican Administration under President Eisenhower.

11.14 p.m.

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

I ask permission to speak again, first to welcome the speeches made from both sides of the House in this short debate. They have signified the general agreement in all parts of the House with the Order and approval of the philosophy of I.D.A.

One or two hon. Members have perhaps strayed a little wide of the Order and I shall resist the temptation to follow them along the paths they have trodden, except to say that the fact that hon. Members do so on these occasions indicates that we would welcome wider opportunities for discussion of some of these points. It also indicates that it is a good thing that we are to have a Select Committee on aid and development in which a number of these points can be examined in depth and detail with more time available to do so than is normally the case on the Floor of the House.

The hon. Member for Essex, South-East (Mr. Braine) said he assumed—I hope that I got it right—that the sums provided for in the Order could not be actually paid over to I.D.A. unless the United States ratified the agreement. That is not so. We are making a pledge here which can be taken up by I.D.A., a pledge which applies to the amount of money provided here. It similarly applies to the other seven countries which have entered into similar pledges. He asked what would happen if the United States Congress failed to ratify the agreement. I do not think that we shall need to face that possibility. The policy of supporting I.D.A. is the policy of the previous Administration, which signed the agreement last March, and of the new Administration, as evidenced by the statement made by the Secretary to the Treasury two days ago to the relevant Committee of the House of Representatives. I do not think we should expect that there will not be ratification, so it is a hypothetical question. If such a situation were to arise, clearly all the countries concerned would have to get together and consider what future arrangements might be made to replace I.D.A., but this is something which I do not think is likely. We can all assume that it is likely that there will be ratification by the United States and, indeed, by the other countries which have not yet ratified the agreement reached last March.

Photo of Bernard Braine Bernard Braine , Essex South East

Do I correctly understand that the Minister is saying that until such time as the agreement of March, 1968, is ratified by a sufficient number of States, which must include the United States, the contribution we are authorising tonight may be pledged but cannot be spent?

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

It could be spent. I.D.A. will have available now certain amounts of money in the fiscal year 1968–69 which for bank purposes ends in June. It is a different fiscal year from ours. My latest information is that I.D.A. will have available about 380 million dollars of old resources, including the bank transfer of 75 million dollars, 235 million dollars in advance contributions, which is part of what we are discussing this evening, and a 15 million dollars special contribution from Denmark. From these resources I.D.A. has recently made commitments totalling 200 million dollars, which includes credits to India for 125 million dollars, which will be of great importance to the Indian economy. It can proceed to use the other money within that total that I have mentioned.

The purpose of this operation and of similar arrangements in the other countries which have made similar decisions is to enable the I.D.A. to have a fund of resources to finance its operations while it is waiting for the agreement made last March to be implemented. The money can be used in the interim period.

The hon. Member for Essex, South-East and the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) asked about the paragraph that pledges the money in dollars and also about the provision for necessary adjustments if there is an alteration in value as between the £ and the dollar. This has no special significance. It is the standard text for the general agreement reached last March and for previous agreements—the first I.D.A. Agreement and the first replenishment as well—by which all the countries which pledged money pledged it in dollars and pledged to make up the dollar value of their contribution if that were necessary. It is in the same form for all the donor countries.

The hon. and gallant Gentleman is right in saying that the text of the Order would enable us to make the extra payment without coming back with a new order, if that became necessary, but I do not expect that this will be so. We have simply used the normal form of the agreement which has been used in the past by all the donor countries for the original contribution, the first replenishment and the second replenishment.

Photo of Rear-Admiral Morgan Morgan-Giles Rear-Admiral Morgan Morgan-Giles , Winchester

Would it become necessary if there were a change in the exchange rate?

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

Yes; it would become necessary if there were a change in the exchange rate. The same would apply to other donor countries as well.

The hon. Member for Essex, South-East raised the larger question about the trend to multilateral aid. He is right to say that I have said on more than one occasion that it is the Government's view that we should see a shifting emphasis year by year to a larger amount of our aid going through multilateral agencies. I have said that in the current year there would be an increase for various reasons, the main one being the higher level of I.D.A. replenishment. This will still apply, though perhaps not quite to the same extent.

We ask in the Order for the authority of the House to commit our first instalment of the second replenishment. This would have become due anyway last November if the whole matter had not been held up by the delays in ratification. We are asking for it a few months later, but still within the same British financial year, and also within the same Bank fiscal year.

Because of the delay in ratification, there might be some delay in the drawing down of the British contribution, and, when we work out the percentage for the current year, rather less might go on multilateral aid than I had thought, but I do not think that there will be a very big difference. Certainly, the trend is there. The trend to which I referred depended not only on the I.D.A. contribution but on the larger amount contributed to the United Nations development programme, and to other forms of multilateral aid.

The hon. Gentleman also talked about the need for more information about our aid programme generally. This was a bit wide of the Order, but I should like to say one thing about it. He is aware that I promised the House a White Paper which will reply to the points recently made by the Select Committee on Estimates. This will include references to information. I have been studying this question for some time with a view to trying to meet criticisms about information on these matters, although I would suggest to the hon. Gentleman that quite a lot of information is available. He and many other hon. Members show that they have quite a lot of information on this subject, which they can dig out from material provided by the Ministry of Overseas Development.

Photo of Mr Lewis Carter-Jones Mr Lewis Carter-Jones , Eccles

Could we have an assurance that the White Paper will appear before the Select Committee is established? It would be rather nice for the Estimates Committee to look at the White Paper before any other Select Committee is established.

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

I think that the White Paper will appear in about two weeks, which will almost certainly be before the Select Committee is established.

The hon. Gentleman also talked about co-ordination between the operations of I.D.A. and bilateral donors. This is provided for in a number of ways. For each of the two biggest recipients of I.D.A. credits in recent years—India and Pakistan—there is a consortium of aid donors chaired by the World Bank. This system allows for co-ordination between the I.D.A. credits available and the bilateral aid from all the main donors.

The arrangements for the other countries vary, but there are several different forms of consultative committees for particular countries or groups, very often chaired by the World Bank. It is part or our policy to see that there is coordination anywhere that we have a major programme. The arrangements vary from one recipient country to another, but this is very much one of our concerns in making certain that there is no overlapping of the effort.

The hon. and gallant Member for Winchester asked about paragraph 4 of the Order. The payment of our contribution to I.D.A. is in the form of notes which I.D.A. can encash. In other words, we redeem them as it needs to draw on our contribution. The paragraph makes it clear that this can be done, and provides for it in the necessary technical terms.

My hon. Friend the Member for South Shields (Mr. Blenkinsop) was right in saying that the system of credits under the I.D.A. is not 100 per cent untied. He referred to the special arrangements with the United States. But it is fair to say that this does not mean that the American contribution will be tied eventually to American procurements but that the drawing arrangements for the United States provide that, initially, its contribution is drawn down to the extent that there is American procurement and that the balance of the contribution can be deferred for up to three years. But, in the end, the contribution is drawn down irrespective of the procurements which the United States manages to obtain.

In relation to the interim arrangements provided for by this Order, and similar pledges made by the seven other donor countries, that consideration does not arise. We are assuming that the drawing down will be in proportion to the amounts of the various pledges, and none of the eight countries concerned has any special arrangements similar to those made for the United States.

Photo of Rear-Admiral Morgan Morgan-Giles Rear-Admiral Morgan Morgan-Giles , Winchester

While the right hon. Gentleman is on technicalities, could he answer the point about sterling equivalents so that the public may know approximately what sum is involved? It seems that about a dozen right hon. and hon. Members are tonight granting supply of about £100 million each of the taxpayers' money.

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

I thought that I had answered that point in reply to the hon. Member for Essex, South-East. The hon. and gallant Gentleman will see what I said in HANSARD. The amount of sterling equivalent is £21·6 million. That is the equivalent of the amount in dollars.

Photo of Rear-Admiral Morgan Morgan-Giles Rear-Admiral Morgan Morgan-Giles , Winchester

Could it be put in the form of a table?

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

I am not sure whether that is possible, but I will consider it.

I hope that I have given sufficient information now to the House and I welcome the support given to the Order by both sides. The Order provides for an important interim contribution to the funds of the I.D.A. so that it can continue the most important work that it is doing in the developing countries. If it were not able to carry on in this difficult interim period, many of the poorest developing countries would not be able to get the resources they need and which we and our opposite numbers in other countries wish to provide. It is in that spirit that I commend the Order.

Question put and agreed to.

Resolved, That the International Development Association (Additional Payments) Order 1969, a draft of which was laid before this House on 21st January, be approved.