Turks and Caicos Islands (Development)

Supplementary Estimates – in the House of Commons at 4:41 pm on 14 March 1983.

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[Relevant document: Foreign Affairs Committee Second Report, Turks and Caicos Islands: Airport Development on Providenciales, House of Cotntnons Paper 112, Session 1982–83.]

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury 5:04, 14 March 1983

I beg to move, That a further Supplementary sum not exceeding £1,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1983 for expenditure by the Foreign and Commonwealth Office (Overseas Development Administration) on the official United Kingdom aid programme including pensions and allowances in respect of overseas Service, assistance to certain refugee students, grants in aid, certain subscriptions to international organisations and certain payments under the Commonwealth Scholarship and Fellowship plan.

Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

Mr. Speaker has selected the amendment in the name of the hon. Member for Stroud (Sir A. Kershaw). I remind the House that the debate will end at 6.34 pm.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

I should make it clear to the House that this debate has arisen from the decision of the Liaison Committee in its report of last Thursday, in which it recommended that the debate should be limited to the question of airport development on Providenciales in the Turks and Caicos Islands.

With the permission of the House, I shall respond to the debate at its conclusion.

Photo of Mr Anthony Kershaw Mr Anthony Kershaw , Stroud 5:06, 14 March 1983

I beg to move, That Class II, Vote 10, be reduced by £500 in respect of Subhead C3(6) (Budgetary aid to Turks and Caicos). Other hon. Members have called attention to the significance of this debate and have expressed our general thanks to those responsible—the Government and the Committees of the House, in particular those of my right hon. Friends the Members for Taunton (Mr. du Cann) and for Worthing (Mr. Higgins).

To some extent the House is resuming its ancient right to scruntinise expenditure. However, perhaps it is apposite to remark that it has not been all that easy to find subjects to debate. Contrary to olden times, the House usually urges the Government to spend more, not less. However, there are two items before us that involve less expenditure. The hon. Member for Sheffield, Heeley (Mr. Hooley) and I decided to table an amendment and we consulted those who know about such things. We received conflicting advice about whether it would be suitable. However, we tabled it to identify precisely, and if necessary to vote about, this subject. I know that the debate is limited in time, but if it were to come to a Division—I do not say that it will—we would have to vote against the whole Estimate. In general, we do not want to do that and want only to call attention to this item.

I have one quibble with the procedure being followed today. The amendment seeks a token reduction of £500 in the spring Supplementary Estimate for overseas aid, merely because the total Supplementary Estimate sought by the Government is itself only a token amount of £1,000. This token amount disguises increases in individual provisions in the Vote of more that £149 million, most of which is to be paid for by transfers from the very large unallocated portion of the overseas aid Vote.

This way of presenting the Supplementary Estimates probably has considerable merit in the case of overseas aid, where detailed requirements for aid expenditure may not become clear until the financial year is well under way. But it has made our task more difficult in clearly identifying the reduction in the Estimates which we believe may be justified as a result of our inquiries. Our original wish was to put down an amendment which would seek to reduce subhead C3 of the vote by about £50,000, which would be close to the total sum sought for support for the budget of the Turks and Caicos Islands Government: this would have been preferable to the token sum that we are compelled to propose by the terms of the motion.

Therefore, I urge the Government to find some means in future of presenting their expenditure requirements in such a form as to allow Members and Committees, if they wish, to propose real reductions and not merely token reductions; otherwise we shall find our proceedings under the new system retaining some of the artificiality of the old Supply procedure, which contributed to the collapse of that procedure.

The hon. Member for Heeley, who presides over the Sub-Committee with such distinction, will be able to explain the matter to the House if he catches your eye, Mr. Deputy Speaker. He has the detail of the report much more at his command than has anyone else. However, I shall permit myself some general observations on the report.

It is known that the proposal to help the Turks and Caicos Islands involves the expenditure of about £5 million to put a holiday village into Providenciales, one of the islands in the group. The village is to be built by the Club Mediterranee.

The Turks and Caicos Islands, with a population of 7,500, have—or had—two basic industries. One is salt, which has been rather superseded by other methods, and the other is fish. For some time, it has been received wisdom in Government circles that it would be very easy to overfish the resources there. I know that some reports are rather more optimistic, but I do not think that the fishing industry there can be pursued too far with advantage. If that is so, the only other resource that the Turks and Caicos Islands have—they share it with many other places in that part of the world—is sun, sea and sand. Therefore, one's mind obviously turns to tourism.

Experience has shown that tourism must have certain characteristics before it is of real value to the place concerned. It must not place too great demands upon the infrastructure of the island or the locality. It must use, as far as is possible, local resources such as agriculture and food. It must not be too conspicuously different from local conditions and the level of life. When poor people see rich foreigners driving about in expensive cars, they do not relish what they see, and envy is aroused.

Tourism must not be too big for the area in which it is to be developed. It must not overwhelm the area in size or volume of activity. It must provide employment for local people; otherwise there is hardly any reason for it from their point of view. It must provide revenue for the Government 0f the country concerned. I am afraid that the scheme before the House failed on all those grounds.

I was rather appalled when I saw the Sub-Committee's report. It showed that the financial estimates had in some cases been hundreds of per cent. out. Only one estimate was near the original one. Some information had been withheld. Expert information had not been made available to those who had to take decisions.

In particular, the Club Mediterranee had undertaken by contract to be in operation by the end of 1982. So far, nothing whatever has been built and there is no sign of any activity. The new international airport is very nearly completed and the roads are there, but there is no sign of the Club Mediterranee. Therefore, the proposed development has been badly planned and badly executed, and the House ought to have its attention drawn to what is proposed.

Photo of Mr Frank Hooley Mr Frank Hooley , Sheffield, Heeley 5:14, 14 March 1983

I am much obliged to the hon. Member for Stroud, (Sir A. Kershaw) for the terms in which he has moved the amendment. I am glad that we have an opportunity, under the new procedure, to debate the issue, which is very important in general developmental terms, quite apart from the specific things that have gone wrong.

As the hon. Gentleman said, the Turks and Caicos Islands are a small group of islands in the Caribbean, with a population of about 7,500 people. They already enjoy the benefit of two international airports. In 1980, the Overseas Development Administration came to the astonishing conclusion that a third airport was necessary. It proposed to put it on the tiny island of Providenciales, which has fewer than 1,000 people living there, and on which at that time—the position is probably the same today—there was no unemployment; in fact, according to the evidence to the Select Committee, there was a labour shortage.

Why did the ODA come to the astonishing decision to attract a multinational company, Club Mediterranee, which said that it was ready to build a tourist centre—it called it a vacation village—that would house more tourists than the total adult population of the island on which it was to be built? What exactly was the origin of that peculiar decision? According to the evidence given to the Committee, it was in response to an approach by private developers resident on Providenciales and a request by the Turks and Caicos Islands Government. It was in response to an approach by private developers that the Club Mediterranee came to that little island in the West Indies. The House is entitled to know a little more about who those private developers were and what their motives were. At any rate, that was the reason why the representative of the Club Mediterranee went to Providenciales in June 1979 to survey the ground for its vacation village.

The club decided that it would build the vacation village on the following conditions: that an international airport be built from public funds; that an access road be built between the vacation village and the airport from public funds; that there be a supply of electricity and water for the village from public funds—although that was slightly modified later. The next requirement was that the club be granted exemption from all taxes on profits, gains or turnover, property tax, capital levies or other capital taxes for 20 years. That was an astonishing proposition, even though we know that tax-free regimes abound in the Caribbean area.

To be fair to the Turks and Caicos Government, who were partly involved in, but not solely responsible for, the negotiations, they pointed out to Club Mediterranee that the island already possessed two international airports. They suggested to the multinational company "Certainly, we would welcome your activities, but why not go where an airport already exists?" The club replied that it was not interested in that proposal, that the village must be built on Providenciales, that a third airport must be built, and that the club would not finance it. The club asked that it be financed out of public funds. I think that the club assumed at the time that the public funds might come from the European development fund, as a possible alternative to the British taxpayer financing it. The club had the option of going elsewhere; it refused it, and insisted upon going to that tiny island. It also insisted on an extraordinary expenditure of public funds to enable it to do so.

Photo of Mr Neil Marten Mr Neil Marten , Banbury

For the record, it should be said that it was an extension to an existing airfield.

Photo of Mr Frank Hooley Mr Frank Hooley , Sheffield, Heeley

The existing airport was a very tiny facility, which could take only light aircraft. The club wanted an airport of international calibre, capable of taking large jets, carrying 200 or perhaps 300 tourists at a time. It cannot be contended that such an airport already existed. This was a major operation, at a cost of about £5 million, from public money.

What is truly astonishing is not that the company made these demands—that is not surprising if it thought that it could get away with them—but that the Foreign and Commonwealth Office accepted them. The Foreign and Commonwealth Office undertook to build the airport and the access roads, to provide the water and electricity and to give the tax concessions that are built into the agreement that was eventually made, despite the fact that there was no proper tourist development policy for the islands, no proper development of alternatives such as fisheries, and no balanced development strategy for the islands. Yet the Foreign and Commonwealth Office was prepared to accept the proposition that £5 million of public money should be put into this tiny community for the benefit of a multinational company which wanted to develop tourism for its own benefit.

In some ways a more disagreeable aspect of the matter was the internal faultiness of the procedures in the Ministry itself. Figures produced by independent consultants who had gone out to Providenciales to study the position on the ground and had produced careful calculations of the recurrent and capital costs of the scheme were never presented either to the Minister when the decision came to be made or to the committee within the Overseas Development Administration.

I shall quote from the Select Committee report of July 1981, as the internal administration of the ODA is an important issue. It says: Not only was the decision by the ODA to reduce the consultants' estimates of social infrastructure by over two-thirds not mentioned in the Project Committee submission: it was not known to senior FCO/ODA officials responsible for the project. It was not even clear to the Senior Economic Adviser when he first appeared before the Sub-Committee to give evidence … It was only when the Sub-Committee asked for a detailed breakdown of the economic and financial analysis of the project that it became clear that the capital and recurrent costs which were actually used by ODA in the economic and financial appraisal were about one-third of the level of the consultants' estimates. In other words, someone within the ODA deliberately fiddled the figures to persuade the relevant committee and the Minister to embark on a project which could not give any real financial return. In case anyone says that I am exaggerating, I must say in all honesty that the right hon. Member for Banbury (Sir N. Marten), who was Minister at the time, formally apologised to the Select Committee for the fact that misleading figures had been given. It says something when a senior official at the Department appeared before the Select Committee and gave the wrong set of figures without even knowing at the time that they were the wrong set of figures.

The agreement was duly signed on 5 February 1980. The multinational company undertook that the vacation village should be operating not later than 31 December 1982. In fact, not a stone has been put on another stone, not a single sod has been turned—nothing whatever has been done by that multinational company to build the village to which it was by contract committed three years ago on 5 February 1980. By contrast, £5 million of British taxpayers' money has been committed to the airport and to other facilities. Thirteen million dollars worth of property speculation, arising from the existence of the airport, is now in progress on Providenciales. Wide open opportunities for a dangerous and profitable drug trade arise out of the existence of another international airport in those tiny islands. When the officials originally gave evidence to the Select Committee, they admitted the danger of the drug traffic but seemed to have discounted it in agreeing to this project.

In addition, revenue commitments on the aid programme arise from the project. The greatest irony of all is that the Government intended to bring private enterprise into this exercise, particularly so that the budgetary deficit of the Turks and Caicos Islands should be reduced. In fact, that deficit has increased.

In the short space of time that is available, I will not pursue the matter further except to ask the Minister some questions. Who is making the profits on this exercise? What steps are being taken by the Turks and Caicos Islands Government to tax those profits and to introduce some special windfall taxes on the property gains on the speculation that is taking place? Is there any evidence of corruption within the Turks and Caicos Islands Administration? Who made the original approaches? Who was in cahoots with the Club Mediterranee? Why has not the company raised a finger to meet its obligations under a formal legal agreement? What is happening about the control of drug trafficking, and how much will it cost the Turks and Caicos Islands Government to bring the problem, which the existence of the airport will aggravate, under control?

What reason have we now to trust Club Mediterranee to fulfil any engagement it may make to make good its breach of agreement? What steps is the Foreign and Commonwealth Office taking to ensure that, in any future agreement involving aid money, there will be a sufficiently powerful sanction against any breach of that agreement if it is made with a multinational company? What is being done to tighten up the internal administration of the ODA to ensure that when projects are approved not only is the Minister told what the Foreign and Commonwealth officials think the financial calculations are, but he is told in clear and unequivocal terms what any independent consultants have said about the nature and cost of such a project?

Photo of Mr Frank Hooley Mr Frank Hooley , Sheffield, Heeley

It is a short debate and I have virtually finished my speech.

This is not an academic exercise. We know that the airport is virtually complete and that it cannot be dissolved or wished away, but I must remind the House that, in another group of islands 8,000 miles away, there is talk of building other airports and of expending huge sums of ODA money on certain facilities for a population that is tinier even than that of the Turks and Caicos Islands. Before we embark on such projects in that part of the world, much less get involved further in the Turks and Caicos, we need some clear and firm assurances from the Minister that he has proper control of what is going on with the British aid programme.

Photo of Mr Bowen Wells Mr Bowen Wells , Hertford and Stevenage 5:28, 14 March 1983

If the position was as has been outlined by the hon. Member for Sheffield, Heeley (Mr. Hooley) and even by my hon. Friend the Member for Stroud (Sir A. Kershaw), I, too, would be highly critical of what has happened in the Turks and Caicos Islands, but the original report of the Select Committee is very misleading and its subsequent report, which I thought was the principal subject of our debate tonight, arises because of the failure of the Club Mediterranee to conclude and live up to the contract entered into between it and the Government. It is ironic that that second report should be the subject of criticism by the Select Committee because the issue was born of the Select Committee's great prejudice against tourist development as a means of developing overseas countries. It was and still is reluctant to support tourist development even in circumstances where islands such as the Turks and Caicos have only sun, sea and sand to offer as basic materials from which to produce development. It is ironic that the second report criticises the Government and the Club Mediterranee for not having produced the tourist development that it originally criticised.

It is regrettable that Club Mediterranee has not built the tourist village with 650 beds. That would have been the start of tourist development in the Turks and Caicos Islands. The islands have wished to start development for the past 25 years, but could not find a developer willing to undertake the project. When Club Mediterranee proposed the development on Providenciales, the Government of the islands and the ODA grabbed the opportunity. The project had much greater appeal than simply the start of a tourist industry. Club Mediterranee offered the islanders the ability to market the islands through its framework of tourist promotion. Therefore, the islands did not need their own expensive tourist development and advertising campaign. The hotel beds would have been filled by Club Mediterranee, and the Government of the islands would not have had to be involved.

It is a great problem to fill hotel beds in the initial years of a tourist development. It is a major problem obtaining adequate air services to service the development. The building of an international airport on Providenciales, capable of accepting charter flights direct from the sources of tourism, meant that Club Mediterranee could fill the hotel bedrooms immediately and have a profitable and viable proposition.

Club Mediterranee has developed similar projects in other places, notably in the Bahamas, which is close to the Turks and Caicos Islands, where it has two successful villages. One result of successful development is to attract other hotel developers and other tourism. There is evidence that that is already happening in the islands. The Minister told the Select Committee that a $13·5 million development was taking place on the islands because of the new international airport. There is much evidence to suggest that Club Mediterranee is a good pump primer for tourist development.

We would have been right to support the ODA in bringing about tourist development in the islands because it would provide the means by which the islands could at least pay for their current expenditure. They are dependent on the United Kingdom Treasury to make good any shortfall on their current expenditure. The Government are asking for an increase in that figure to offset the effect of not having Club Mediterranee attracting tourists and actively filling hotel beds on Providenciales.

The project is a vital development for the islands. The alternative of the fishing industry can be discounted because it has reached the end of its possible development. There would need to be a change to scale fishing, of which there is no experience in the islands and little prospect of finding an adequate market. The island used to depend on the salt industry, but that is now judged to be uneconomic. Agriculture is extremely difficult because the islands are short of water, and what they have is unpredictable. Agricultural production of a cash crop is difficult to promote.

The ODA has some experience of promoting projects on the islands—for example, on Elenthera in the early 1950s with the development of pineapple growing. Although it appeared to be viable on the surface, the ODA discounted the number of rocks in the land, on which pineapples cannot grow. The result was a disastrously unviable pineapple production.

I do not believe that there is an alternative to tourism for the islands. In addition, the social implications of the development of tourism by such a company as Club Mediterranee will be contained within the village, as will all the related activities. Therefore, there will be a limited impact on the community as a whole, which is a point in favour of a Club Mediterranee-type development.

The hon. Member for Heeley suggested that the ODA had changed the figures disastrously and misled the Minister. He did not take into account—nor did he tell the House—that the estimates were reduced because the nature of the project changed from the time of the consultants' report and the time when the project was put to the Minister. The proposal to build a secondary school on Providenciales was eleminated because all secondary education takes place on other islands, usually on Grand Turk. A viable secondary school population was not likely to develop in Providenciales. The necessity for police and customs stations were equally reduced in scope. That is the principal explanation for the reduction in estimates.

There are some internal procedures that the ODA agrees need tightening. If the House reads the original report it will be satisfied that the ODA has now done so. If we refuse to develop the potential of islands that are dependent on the United Kingdom, despite the heavy expenditure per head, we are not fulfilling our duty. The islands are the neighbours of the Bahamas, which has been successfully developed, mainly through tourism and other related activities.

If the islands are left undeveloped, like any vacuum they invite the intrusion of other powers. It will not have escaped the attention of the House that the islands are close to Cuba, which might wish to promote similar activity to that which occurred in the Falkland Islands between Argentina and ourselves. A large factor in that hostility was the fact that the Falkland Islands had not been developed. The attendant territories of the British Crown should be properly developed. They should have the opportunity of a viable economic existence.

What has been happening with tourism in the Caribbean? Barbados has a significant tourist industry, which accounts for more than 50 per cent. of its gross national income, yet the number of tourists arriving in Barbados has fallen. There were 370,000 in 1979, 369,000 in 1980 and 352,000 in 1981. The Bahamas is not so well blessed with agricultural potential as Barbados, and its tourist development has been much greater and of longer duration. Even so, its tourist figures are dropping—from 1,130,000 in 1979 to 1,020,000 in 1981.

The fall in tourist arrivals in the large and earlier developed areas in the Caribbean is, perhaps, the reason why Club Mediterranee did not proceed with the development on Providenciales. That is perfectly understandable. The Minister has given an undertaking that the Government will take action under clause 16 of the agreement to force Club Mediterranee to abide by the contract or to make compensation. It is not acceptable that Club Mediterranee has not renegotiated a definite undertaking to build the holiday village. It is right that that should be brought to the attention of the House. Similarly, it is right that the Minister's undertaking should be brought to its notice.

It is the problem of attracting enough tourists to the holiday village in Providenciales to make it viable that lies behind the non-performance of Club Mediterranee. However, it is a fine development. It is the only development on the island that is capable of sustaining income to the Treasury. There is much evidence that the development financed by the ODA will prime the pump, provide an income for the island and provide a valuable source of employment for the other islands in the Turks and Caicos group.

Several Hon. Members:


Photo of Mr Ernest Armstrong Mr Ernest Armstrong , North West Durham

I hope that it will help the House to know that the Front Bench spokesmen hope to catch my eye at 10 minutes past six.

Photo of Mr Christopher Brocklebank-Fowler Mr Christopher Brocklebank-Fowler , North West Norfolk 5:41, 14 March 1983

I am grateful for the opportunity to discuss this important matter. I speak as a member of the Select Committee on Overseas Development and the Sub-Committee of the Foreign Affairs Committee at the time of the first report in 1981. I have since left the Select Committee, but I have watched with great interest the work that has been done by the hon. Member for Sheffield, Heeley (Mr. Hooley) and his colleagues.

We should start by asking "What was the problem on the Turks and Caicos Islands that led the Government to contemplate such major public expenditure?" Having examined the issue and read the subsequent reports, it seems that there were two problems. It appears that the islands were in receipt of budgetary aid over a lengthy period. Secondly, there were high levels of unemployment in parts of the Turks and. Caicos group.

The Financial Secretary to the Treasury, in reply to a question that I put to him when the Select Committee was sitting on 13 January 1981, said: The level of budgetary aid, as opposed to capital or technical co-operation, has risen to an annual total of about £1 million a year in past years. In subsequent questioning by the hon. Member for Heeley, the Minister gave the figures for three representative years. He referred to £219,000 in 1970 and said that that aid, in the form of technical co-operation, was £29,000. Budgetary aid was £298,000. The figures were considerable over the 10 years between 1970 and 1980 and there were variations between the lowest figure of £298,000 and the peak of £1 million. It appears from the Select Committee's latest report that there was no budgetary aid in 1980–81 but there was £900,000 in 1981–82 and £1·2 million in 1982–83.

The Government were concerned about the consequent outflow of public funds to support a relatively small group of islands, important though they are to Britain. They wished, understandably, to help the islands become self-sufficient. They concluded, as early as 1971, that there was general agreement that tourism was the right way forward. The House can probably accept that much.

The hon. Member for Stroud (Sir A. Kershaw) worried me when he talked about sun, sea and sand. All of us who know about tourist development in many developing countries know and worry about the fourth "s"—sex—which has brought grave social problems to many developing countries which have gone in for mass package tourism.

Unemployment on Providenciales was only 3 per cent. It suffered from virtually no unemployment, whereas on other islands, such as Salt Cay and Middle Caicos, unemployment is as high as 81 per cent. It is 81 per cent. on Salt Cay and 68 per cent. on Middle Caicos. If the Government had concluded that tourism was the right way to help the island develop—part of the development was designed to reduce unemployment—why did they choose Providenciales for the development?

Are the Government correct in saying that the only form of tourism that can establish a base for the Turks and Caicos Islands economy is that of mass package tourism, which will require a brand new airport of the sort that the British taxpayer is now being asked to finance?

Those were the problems, and it seems that the Government have signally failed to arrive at the right solution over about 10 years. Having now committed themselves to the expenditure of a large sum of public money to develop an airport in the wrong place to resolve unemployment that does not exist on the island that they have chosen, I am concerned that, even if they are successful in concluding a contract with Club Med, they will distort the balance of the islands and create immense social problems.

I am concerned that the Government will not resolve unemployment on the islands without causing major immigration to Providenciales, which would undoubtedly upset the islanders. I share the concern of the hon. Member for Heeley at the lackadaisical manner in which the scheme has been brought forward. I share the concern of the House and that of the taxpayer that such a huge sum has been spent on so few with such little effect at this stage.

I hope that, as a result of the debate, the ODA and the Foreign Office will examine carefully any plans for expenditure of such a size before they enter into agreements in future. I hope that the ODA has learnt a lesson. I hope also that in future the sparse aid funds that the Government make available will be utilised with considerable attention to the quality of projects and devoted to sound development plans which will not cause problems in the recipient countries. In that form they can make a major contribution to improving the economies of developing countries.

Photo of Mr Robert Banks Mr Robert Banks , Harrogate 5:49, 14 March 1983

Like others in the House tonight, I welcome this debate. I think that it is a great strength of the work of the Select Committee that we have this opportunity to air the report—in fact, there are two reports. But many times reports are compiled—and a great deal of work goes into them—and they are not read by very many people. I believe that these debates will be noted by a greater number of people than would otherwise be the case.

There are two points that I specifically would like to refer to. In the first place, it is the actual way in which this project has been managed. At the outset the agreement was that the airport would be built and that at the same time Club Med would go ahead and develop its holiday village—one dependent on the other. Yet the airport has been built and yet not one single piece of work has been done towards the construction of the Club Med village. Therefore, one has to look at the way in which an agreement was drawn up whereby it was possible for the costly development of an airport to proceed step by step without recourse to any recrimination on the part of the Government towards Club Med for not going ahead with its part of the development. Nearly three years after the original agreement was signed, we are still waiting to see what the Club Mediterranee organisation will do. That teaches a lesson that I hope will be understood.

My second point deals with the legal agreement. These matters are often left to lawyers to deal with. When something goes wrong, one reaches for the legal agreement, reads it and tries to understand it. The chances are that it is not understood and another set of lawyers has to be employed to interpret what the agreement set out originally to do. This is such a case.

Appendix 1 deals with the first question relating to the rights of the Turks and Caicos Government under the agreement. The report considers that the legal position is complex. The legal complexity arose because the Government who drew up the agreement in conjunction with the Turks and Caicos Islands and Club Mediterranee reached a bad agreement. I believe that there is a lawyer sitting in an office somewhere who deserves the sack over this. He pitched us into this problem. The matter should be easily understood by consulting the document. It should not be necessary to go to counsel or other advisers to be told what the agreement enables the Government to do. We hope that Club Mediterranee will decide to go ahead with the agreement by 31 March, which is its deadline.

The airport exists and although there is no Club Mediterranee development as yet, as my hon. Friend the Member for Hertford and Stevenage (Mr. Wells) has pointed out, other developments have taken place. Developments worth $13 million are going ahead. Why is it that, when other people have the confidence to build hotels and do other things, Club Mediterranee has not gone ahead? That is the point that must be brought home. It should have been clear some little while ago that Club Mediterranee never intended to go ahead with the development. We shall know that soon enough.

I hope that the Committee's recommendations, which seek to ensure that Club Mediterranee does not benefit from selling the land for some other development if it decides not to go ahead with this project, will be accepted. It would be entirely wrong if the company benefited. We have been let down badly by the company. The construction of the airport has gone ahead and has produced some developments in the island. That may be the silver lining, because much of that development was not envisaged when the island originally negotiated for the airport. I believe that the development will benefit the island.

One can only draw upon one's experience of having visited other places and having seen the effect of tourism there to judge what the effects will be. Altogether, I do not believe that the picture is as bad as some people paint. Each island must decide for itself. I cannot say whether these developments will be good or bad. It depends so much on the mentality and attitude of the people and what they want. It is a critical report. Many people should read it and learn its lessons.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South 5:54, 14 March 1983

My remarks will be short and the excellent Hansard reporters will no doubt punctuate them properly.

We are discussing a Supplementary Estimate of £1,000. The hon. Member for Stroud (Sir A. Kershaw) and my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) have moved a reduction of £500. The most appropriate outcome might be for the Minister to accept the amendment in view of the sums involved and the criticisms that have been made.

The hon. Member for Harrogate (Mr. Banks) said that $13 million had already been spent and asked why the Turks and Caicos development could not go ahead. I asked the Minister that on 9 December 1982. He said that the money was probably being used on extensions to hotels, and other matters, but I do not find that answer acceptable. In the Committee's first report of 1 July 1981 we said that it had become evident that the Foreign and Commonwealth Office had not carried out a proper survey of the benefits to the islands.

I asked the responsible official about salt. It is clear that the islands could produce up to one million tonnes of salt, but the problem is transport. Until now a port has always been costed on the assumption that 70,000-tonne bulk carriers would be used. Why is it not costed for bulk carriers of 20,000 tonnes or less? The official said that the matter would be studied. I hope that the Minister can tell me that it has been studied and what the answer is.

I come now to the important subject of land speculation. My hon. Friend the Member for Heeley asked which firms were involved. The report makes it clear that the company involved is Grace Bay Ltd., which is a subsidiary of Provident Ltd.—an American firm. I believe that it acquired Crown land because the site of the village was Crown land until 1969. That subject is mentioned on page 31 of the Committee's last report. The value of any land can be increased by suggesting that it is to be developed. Whether it is is another matter.

The Committee did not know about the report, commissioned by the Turks and Caicos Government through the ODA, of Mr. Percy Selwyn of the Institute of Development Studies, at the university of Sussex. That report was published in November 1981. Paragraph 2.18, on tourism, said: It may, however, be suspected that some of the more grandiose projects which have been submitted—for large hotels, casinos and other facilities—are not genuine, and that the promoters are concerned more with land speculation than with the development of the tourist industry. That report was written long before we knew that Club Mediterranee was not going ahead with this scheme. The hon. Member for Hertford and Stevenage (Mr. Wells) said that it was a fine scheme. Alas, it is not a fine scheme, and it has not been built.

The figures are serious because they and the changes to them were large. Appendix 2 to the Committee's first report, on page 113, made it clear that the consultant had said that the police buildings would have to cost $1,040,000. After consultations with the ODA, the figure was reduced to $100,000. The consultant said that the police revenue costs would be $385,000. The ODA reduced that figure to $50,000—one-seventh of the revenue costs. These figures were not given to the Minister. I believe that we are justified in asking why the figures were changed to that extent when it is known that the island has a drug problem which would be much bigger once the airport and the village were built. When we said that in future such changes should be reported, we were given a typical reply which would be worthy of "Yes, Minister." The Minister's reply in paragraph 13 accepts the principle that the changes should be set out clearly.

Paragraph 14 states: 'before their Report is finally presented, ODA officials should not discuss with consultants the details of the consultants' findings, nor their consequences for ODA action, before their report is submitted to the ODA'. The ODA replied that that recommendation was unacceptable. It stated: Discussions with consultants are an important and valuable part of the process of ensuring that projects are well designed and often result in the removal of misunderstandings and the heightening of the value of the Report without in any way prejudicing the independent judgment of consultants. I do not believe that that is true. The Government's attitude was an invitation to corruption. If consultants are asked to give figures, they are bound up with the reputation of the consultants, and it would be intolerable if, before the Minister saw the figures, ODA officials could discuss them with the consultants and change them without letting the Minister know.

It is clear that the decision was political, not developmental. In Committee, the Financial Secretary to the Treasury told me: but in general it was a political decision to go ahead based on the over-riding political need to do something which actually worked and to provide jobs and income for these people. In other words, if there was a bit of hanky-panky with the figures, it was done to fit the developmental aspect to the political situation. It is clear that a political decision was taken by the Financial Secretary, not by the ODA.

The drug trade on the islands has been mentioned in colour supplement articles. How do the profits of the drug trade compare with the income of the Turks and Caicos Government? Is it not a fact that, being situated halfway between Colombia and the United States mainland, the islands are an ideal place for the transfer of drugs? Will not the drugs trade be a. serious problem?

We must look at the future of our smaller dependencies, pending their internationalisation, which might be a possibility. Can the House stand by while dependencies of this size, and perhaps some territories that will become independent soon, are subjected to such risks? Can we look on while the Union Jack flies over islands facing such problems? I suggest that we cannot.

The Foreign and Commonwealth Office ought to look again at its administration of former colonial territories. We have had a problem in the south Atlantic and we face another in the Caribbean. We need to review what is left of our old Colonial Office, because it is clear that things have not worked out well in at least two groups of islands.

Photo of Mr Anthony Nelson Mr Anthony Nelson , Chichester 6:02, 14 March 1983

I shall be brief, because a number of more important contributions are to be made. I pay tribute to those who produced the reports and to the members of the Committee that has enabled us to debate the reports.

The significance of the debate lies not so much in the issue before us as in the influence that it may have over the administration of other matters. The fact that we can debate such issues and look at the detailed reports of Select Committees is of great significance. I did not serve on the Select Committee, but I have read its report. It is important that members of Select Committees should know that other hon. Members are interested in their work.

If the facts that we are debating had been suggested for inclusion in the programme "Yes, Minister", the copy would have been rejected as being too implausible. It is remarkable that we should have built £5 million international airport for islands with fewer than 1,000 inhabitants and where there is no major tourist development.

However, we place much reliance on the understanding that we have gained from my right hon. Friend the Minister that, if the contractual arrangements are not complied with by the end of this month, they will be legally enforceable.

I join my hon. Friend the Member for Harrogate (Mr. Banks) in asking which lawyer was involved. If the legal agreement was neither intelligible nor enforceable, a head ought to roll. We look to Ministers not to gloss over such matters but to give the House the assurance that proper action will be taken.

I did not know that there were such things as bed taxes. Reference was made to bringing sex to the islands. I hope that the House will not think that I am responding to that, but I was surprised to see that the British Government appear to have taken on themselves the role of negotiator, on behalf of Club Mediterranee, with the Turks and Caicos Government for a bed tax of 50 cents a night for the next five years and, in perpetuity thereafter, at 50 per cent. below the going rate elsewhere on the islands.

That was remarkable for two reasons. I have no idea how long Club Mediterranee customers spend in bed, but, however long it is, there is surely a strong case for them to pay the full rate that applies in the islands and elsewhere in the Caribbean. Secondly, a large part of the rationale for such subventions is to assist the Governments involved to obtain hard currency that they would not otherwise obtain. What right do the British Government have to start negotiating lower rates? If we are trying to reinforce the economies of those countries, that is surely a spurious line of negotiation.

In any case, the arguments for capital investment in a holiday project would not seem to be determined by a current cost element such as a bed tax. I hope that my right hon. Friend will refer to that aspect.

I am grateful for the opportunity to take part in the debate, and I hope that there will be other such opportunities to look at cases where there appears to be, if not maladministration, at least a suggestion that things could have been better managed.

Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow 6:07, 14 March 1983

Like the hon. Member for Hertford and Stevenage (Mr. Wells), I am a former member of the Foreign Affairs Committee. I was present for its first investigation but not for the second. The House needs to be made aware of the peculiar relationship between the British Government and the colonial Government of the Turks and Caicos Islands. It is not clear who was responsible at any point in this long saga. We are told that some initiatives came from the Turks and Caicos Government and that some important negotiations were undertaken by the British Government on behalf of the Turks and Caicos Government.

The Government of a dependent territory, such as the Turks and Caicos, consist of part-time politicians who, in their capacity as Ministers or members of the legislative and executive councils of that territory, are allowed to have business interests, provided that they do not conflict with their duties.

It appears that some dubious business deals have taken place. We must ask what assurance we have that at least some members of the Turks and Caicos Government are not involved in the speculation and business ventures that have taken place as a result of decisions taken by the British and Turks and Caicos Governments. I suspect that we have no such assurances.

I hope that the Minster will be circumspect in his reply. The debate is not the end of the matter. We await with interest the outcome of the legal case against Club Mediterranee, either for specific performance, which is unlikely, or for compensation. The basis of that compensation will make interesting international law.

I do not know whether we shall be able to reclaim the whole cost of the airport, which would not have been built but for the agreement with Club Mediterranee, but, if we take legal action and there is no specific performance and the compensation is patently inadequate, there will be a case for a public inquiry into the whole affair, including what has been going on in the Turks and Caicos Islands from the time that Club Mediterranee first made its approach.

The Minister is new to this matter. I am sure that, like his predecessor the right hon. Member for Banbury (Sir N. Marten)—who I know wants to speak in the debate if there is time—he will be careful in what he says. I hope that by the end of the debate we shall have given the Minister some guidance on how the House is likely to react if the suspicions of some hon. Members are not allayed by the final outcome of the affair.

Photo of Mr Neil Marten Mr Neil Marten , Banbury 6:10, 14 March 1983

I realise that the Front Bench spokesmen want to reply at 6.10 pm. I want to make the point that every overseas development operation carries a greater or lesser degree of risk. The Select Committee could, by nit-picking, find out all sorts of things about almost any project—even whether the project had succeeded or failed. I hope that in his reply my right hon. Friend will tell us the exact position. If the contract is finally made with the contractors to put up the Club Mediterranee, I believe that it will be a great advantage to the Turks and Caicos Islands and to their Government. We want to enable such countries to stand on their own feet. The airport might well lead to much more development on the island of Providenciales, to the great benefit of the Turks and Caicos islanders. It might eventually enable them to stand on their own feet without any more aid.

Photo of Mr John Sever Mr John Sever , Birmingham, Ladywood 6:12, 14 March 1983

We are grateful that the new procedures have enabled us to hold this debate. We are also grateful to the hon. Member for Stroud (Sir A. Kershaw) and my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) for tabling an amendment that has promoted an interesting and worthwhile debate.

I have been asked by my hon. Friend the Member for Greenwich (Mr. Barnett) to offer the Minister his apologies for his absence. As the Minister may know, my hon. Friend is abroad.

The scheme that we are considering is at best ill-conceived and at worst scandalous. If we regard it in its worst light—and I think that is is justifiable to do so—we see that a proposition was put to the British Government and accepted by them which should by now have resulted in an airport and a tourist development. However, there is no tourist development. Hon. Gentlemen seem to have forgotten that there is an agreement that should have resulted in a substantial tourist development being provided by a multinational company on the island of Providenciales, but the development is not there.

Many hon. Members have referred to the various problems and difficulties identified in the recent Select Committee report, which contains about a dozen conclusions. They present a picture of a Government Department that is not working efficiently and that has presided over and participated in a scheme which is, by any reasonable standard, dreadful. Comparing the airport complex with what might have been provided in other areas of our overseas development programme for the same amount of money, we who are concerned about overseas development are right to be worried about the way in which the Department is run. I accept that the present Minister of State has not been involved with the issue for long, but his duty is to respond to the many valid and reasoned questions put to him.

My hon. Friend the Member for Heeley referred to the two local international airports. I am surprised that we should be involved in a scheme to give £5 million of British taxpayers' money to provide a third airport of international standards for a community of about 1,000 people. I wish that it had been so simple to find the money for the development of Birmingham's international airport. Instead, we had to argue for years with successive Governments the reasonable case for an international airport for a conurbation serving about 4 million people in the heart of a major industrial centre. If that scheme had gone through so simply, we should have rejoiced in the west midlands long ago.

The proposed scheme involves taking thousands of happy tourists to the island. When they arrive there will be nothing for them to do, except perhaps become involved in the mysterious developments about which we have heard from shadowy developers who have acquired $13 million for development projects. The hon. Member for Hertford and Stevenage (Mr. Wells) said that the Club Med village was not yet established but that there were other developments. Later the hon. Gentleman said that development on the island would be confined to the village complex. Neither he nor the Minister can have it both ways. Either there is a major village complex to accommodate the tourists or other major developments are taking place at the same time, none of which we know much about.

I hope that the overseas development agencies and the Foreign Office know something about the other developments, but in view of their record I would not put money on it. Perhaps the Minister can explain what other developments are taking place and whether they are promoted by the same people who promoted the ill-fated scheme that we are discussing. The House will be interested in any information about that.

Hon. Members who usually argue about overseas development in a slightly different context believe that if the Government cannot find schemes that are more satisfactory and acceptable to the House they should have a thorough rethink about the whole of their development and aid programme.

I do not know how many people could be provided for in other, more sensible and attractive schemes for the same amount of money being disbursed by the Department for the scheme in Providenciales, but moneys voted by the House to the Department should primarily be for the development of Third world countries, for the advance-ment of people who are disadvantaged in the extreme and for countries with starving populations and little or no local infrastructure with which to promote their own interests. Many inside and outside the House believe that it is scandalous that so much money should be spent on a scheme which is so ill-conceived and so badly managed by the Department.

I hope that the Minister accepts that the House should have the fullest responses to the questions and conclusions in the Select Committee report. It contains a dozen or so conclusions, none of which reflect too well on the Department's work. At the simplest level we can argue that the Minister is obliged to provide the House, now or later, with the fullest responses to the Select Committee's observations.

A great deal of work has been done by hon. Members serving on the Committee to bring to the attention of the House the shortcomings and failures of the Department. The scheme itself is now approaching some sort of crisis. As has already been made known, it appears that by 31 March, if a satisfactory solution is not found to the problem, the Minister. presumably Club Med and presumably the Turks and Caicos Islands Government will have to start all over again to prepare a feasible and workable scheme. I am sure that the House would be reluctant to be told that this is likely. However, it appears that between now and 31 March the Minister has a great deal of work to do if he is to pull out of the fire a scheme that is already well burnt and likely to disappear.

I wish to place on record what I am sure are the thanks of the House to hon. Members who have brought this matter to our attention. I welcome the advancement of what appear to be worthwhile new procedures for discussing Estimates and Supply. I hope that the measures which have resulted in our debates today will enable the House to quiz more closely and carefully on a number of issues that have caused disquiet over recent times. I am sure that few matters will cause more disquiet both here and outside the House than that now under discussion.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury 6:21, 14 March 1983

This has obviously been a critical debate. It is reasonable that it should have been held. I believe that there are answers to the points that have been made. I shall deploy as many of them as time permits. I should like the House to bear in mind some of the special considerations that apply to this project. First of all, it is in one of our dependent territories and, I might add, one of our least developed dependent territories. We have a moral duty, and indeed an obligation under the charter of the United Nations, to develop our remaining dependent territories, not only constitutionally but also economically. For these reasons, the needs of our dependent territories are a first charge on aid funds.

It has long been agreed by those who have a detailed knowledge of conditions in the Turks and Caicos Islands that the only hope of developing a viable economy lies in the development of tourism. I know that this point has been argued. My hon. Friend the Member for Stroud (Sir A. Kershaw), I think I can claim, supported it, as did my hon. Friend the Member for Hertford and Stevenage (Mr. Wells). I can assure the House that there is little scope, as I understand it, for improving the general standard of life in this dependent territory other than by investment in tourism and in the infrastructure that tourism requires.

Photo of Mr William Hughes Mr William Hughes , City of Durham

I suspect that I am the only hon. Member present 'who has been to the Turks and Caicos Islands in the last 20 months. The proposal that tourism is the only solution is not acceptable to much of the rest of Turks and Caicos outside Providenciales.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

All I can say is that the development of tourism, I should have thought, must be central. If there were other activities, I do not suppose that anyone would worry. It seems to me a reasonable decision to concentrate on the development of tourism.

The grant of funds by Her Majesty's Government to improve the airport and roads on Providenciales is the direct result of a request made to us by the Turks and Caicos Islands Government. I hope that hon. Members would agree that such a request from a dependent territory, badly in need of development, should always be sympathetically considered by the Government of the day. Hon. Members will be aware that the grant was not approved until there had been a full feasibility study by independent and expert consultants. They recommended that the project should proceed. I repeat that the islands need developing. It is hard to see a way of achieving that apart from tourism.

As the House knows, at the end of February 1983 the work of the project was about 92 per cent. complete overall. I am talking, of course, of the Government's side. I cannot, on this occasion, comment at length on the merits of the project itself. There has already been a full and lengthy inquiry into all its aspects by the Foreign Affairs Committee, which published its first report in July 1981. That report was critical but the criticisms contained in it were robustly answered by the Government in their observations on the report, published as Command 8386. Last week, the Foreign Affairs Committee published the report of a second inquiry. Despite the debate that has taken place today, it is my understanding—I am answering here the hon. Member for Birmingham, Ladywood (Mr. Sever)—that the Committee will also expect a detailed and considered response to its several criticisms as set out in the report. It is therefore the Government's intention to publish our response to it in a White Paper which will be issued in a few weeks' time.

I should like to try to pick out some of the significant points made in the debate. My hon. Friend the Member for Stroud stated that the project must provide employment for local people. I know that the evidence submitted by the ODA to the first inquiry of the Overseas Development Sub-Committee pointed out that the Club Med village would provide direct employment for 200, in addition to any islanders who might be selected to join the Club Med organisation itself. Consultants estimated that over five years total employment, direct and indirect, would amount to nearly 600. If further hotel development follows, a total of 1,300 to 1,600 jobs may be created over a 10-year period—that in an island group with a population of 7,500. The hon. Members for Sheffield, Heeley (Mr. Hooley) and for Norfolk, North-West (Mr. Brocklebank-Fowler) asked why there should be a third international airport. The other two airports are on Grand Turk, which is the capital, and South Caicos. Grand Turk and South Caicos are already fairly well endowed with hotels. The view is taken that Providenciales is the most attractive of all the islands and therefore the most likely to be in favour with tourists. It is not considered practical to transfer tourists to Providenciales from Grand Turk or South Caicos, a distance of over 50 miles.

I wish to concentrate on what are perhaps the major points. The first with which I should like to deal is the allegation that the ODA failed to show sufficient determination in pressing Club Med to fulfil its side of the agreement to build the village. There was a period of nearly three years between the signing of the agreement and the date on which the village should have been opened. During this time, Club Med had to design the village, to negotiate with the contractors and then, finally, to construct. Given the estimated period for construction, it would not have been reasonable for either the Turks and Caicos Islands Government or Her Majesty's Government to intervene with Club Med and press for a start to be made on construction until the end of September 1981.

As soon as this deadline had passed, my right hon. Friend the Member for Banbury (Sir N. Marten) took immediate action and wrote to M. Trigano, the president of Club Med, on 5 October expressing his concern at the delay. M. Trigano replied on 5 November confirming his intention to build the village, which he hoped would be open by the end of 1982 or by spring 1983 at the latest. That letter was acknowledged on 16 November with a request that we should be kept informed of progress. Between November and February 1982, Johnston Construction Ltd. was in weekly contact with Club Med but little progress was made.

On 16 February 1982, ODA officials, in my right hon. Friend's absence, sent a telegram to M. Trigano again expressing concern, asking for swift completion of contract negotiations and seeking an early response. M. Trigano replied on 2 March stating that Club Med had always respected its commitments. He sought a meeting, which took place on 22 March. At this meeting, M. Trigano gave further reassurance that he expected to complete negotiations to build the village in a matter of a few weeks. When this did not happen, the French Government were asked to intervene but declined to do so.

Last August, my right hon. Friend the Member for Banbury warned M. Trigano on behalf of the Turks and Caicos Islands Government that the right to pursue legal remedy was reserved. This would seem to have caused Club Med to resume urgent negotiations, this time with two British contractors. It was not, of course, until 1 January this year that Club Med was in fact in breach of the agreement. As the House knows, I saw M. Trigano on 21 January and informed the House on 24 January that he had assured me that a binding contract would be signed by 31 March. I made it clear to him that unless a contract satisfactory to the Turks and Caicos Islands Government is signed by that date, the Turks and Caicos Islands Government will initiate legal proceedings.

I have not had any communication with M. Trigano since that meeting, but hon. Members may be aware that on 28 February Club Med issued the following press release: Club Med and Johnston Construction Limited of Redhill, Surrey, signed an agreement in Paris on Friday 28 February in connection with the building of a Club Med resort on the island of Providenciales in the Turks and Caicos group. The total investment involved amounts to US $23 million for a complex of 576 beds. Work is scheduled to commence in April 1983. A copy of this agreement has just been received from Club Med and it is being studied urgently. I understand that it expresses the intention of both sides to work together with a view to entering into a binding contract by 31 March. I hope that Club Med seriously intends to fulfil its agreement. If not, legal proceedings will be initiated.

This brings me to the second point expressed today, that the agreement between Club Med and the Turks and Caicos Islands Government is ineffective. Several months ago, the opinion of a leading counsel in commercial matters was sought, and he advised as to the remedies for breach of the agreement by Club Med. He certainly did not say that the agreement was defective in any way so as not to secure adequate remedies against Club Med. The agreement is not ineffective. It specifically provides for any breach to be referable to arbitration. Any award against Club Med would be enforceable in law.

Another point that has been made today concerns the possible increase in drug trafficking arising from the building of the airport. I am advised that this conclusion is based on the flimsiest evidence, if there is any evidence at all to support it. My Department does not consider that the improved airport on Providenciales will contribute to an increase in drug trafficking on the island. There appears to be a misunderstanding of the nature of the problem in the island. The territory has been used for the covert refuelling of drugs-carrying aircraft in transit from south to north America. A fully manned and well-operated airport is more likely to be avoided by illegal flight operators than the previous substandard airstrip, and the development of Providenciales has also meant an increase in the number of police, customs and immigration officers on the island. I have no evidence either that there has been corruption in connection with the airport project.

I am afraid that I cannot reply to all the questions that have been raised today, but I reiterate that we shall be publishing a White Paper in response to the Select Committee's recommendation. Although there may always be differing opinions about the merits of this project, I am convinced that it is a reasonable use of aid funds. It it is successful, as I very much hope it will be, and the village is built, the economy of the Turks and Caicos Islands will benefit.

If, on the other hand, the village is not built, the House may be assured that, with the full support of Her Majesty's Government, the Turks and Caicos Islands Government will vigorously pursue the legal remedies open to them. I stand by what I told the House in January, and I am glad that at least the Select Committee endorsed that.

Photo of Mr Anthony Kershaw Mr Anthony Kershaw , Stroud

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Original question deferred, pursuant to paragraph (2) (c) of Standing Order No. 18A (Consideration of Estimates).