The Select Committee on Foreign Affairs welcomes the opportunity of a brief debate on its recent report on the role of the Commonwealth. I should explain right away that we did not alight randomly on this subject for a report; we responded to what we felt was a strong steer, in the sense that opinion about the Commonwealth in this country may be undergoing a considerable change. There suddenly seems to be a new awareness of the value of the club of Commonwealth nations, vastly varied though their cultures and geography may be. They are spread around the entire planet.
There may be all sorts of reasons for that new awareness. The old issue that bedevilled all Commonwealth gatherings from the 1960s to the 1980s—the hated apartheid system in South Africa—has vanished, thank goodness. In part, the new interest may be due to the fact that several countries have joined or tried to join the Commonwealth in recent times. South Africa, of course, is a recent re-entrant, and Mozambique and Cameroon have also arrived in the team. A club that is growing and which people want to join cannot be entirely moribund.
Our studies seemed to suggest, however, that there was a harder and deeper reason for the British to think again about their Commonwealth connections. Contrary to many political utterances, sometimes of a rather pessimistic nature, and to the slant of a good deal of British foreign policy, Britain's trade and capital investment is noticeably tilting away exclusively from Europe and towards Asia, which happens to include several of the major Commonwealth countries, and Latin America.
It is the realisation that there is a shift in the centre of gravity of the entire planet, in political and economic terms, making areas of the world which we might have felt we had cut our ties with and were not important, suddenly much more important to the present and the future, which makes us look at the Commonwealth through an entirely different lens.
Just to give hon. Members a flavour—I promise not to produce too many statistics, although there are some telling ones in the report—in 1994, 44 per cent. of Britain's total overseas earnings, visible and invisible, came from EU countries. That is obviously a significant chunk, so there could be no question of ignoring that. But during the past decade, some 80 per cent. of all British overseas investment, direct and portfolio, or so the estimates suggest, has gone outside Europe—about 40 per cent. to the United States and at least 20 per cent. to areas of the Commonwealth.
If one looks at the destination of our investment, some of which is recorded as going into Europe but which goes through the Netherlands and out again, the figures are even more striking. It could be—we have this figure in our report—that almost 30 per cent. of all our overseas investment is in the Commonwealth compared with about 13.9 per cent. in the EU. Those are our assets, our interests, and it is in our national interest to promote and strengthen those assets.
No one—I make this point clearly—or no one with a business or political nose or any sense of history is, I hope, arguing that Britain should disengage from Europe, although one hears the odd voice on those lines. Certainly, those figures do not lead to that conclusion. What they do is to cause us to question whether Europe, and western Europe in particular, is Britain's only interest, as some of our policies sometimes seem to suggest. National economic interest, in terms of looking after our assets and opening up new markets, now seems to pull us towards other regions as well.
It is arguable that Europe's sagging significance in the overall pattern of British business activity, or the relative reduction in its significance, is a reflection of the lower growth in Europe in recent years in contrast with the fact that there never was a recession in Asia; the growth simply continued right through the European and Atlantic recession years and produced an amazing recession-free performance.
But there are even longer-term influences at work than just those short-term movements in the business cycle. For instance, one of the brightest spots in Britain's strengthening economic relations in terms of capital flows, investment and expanded trade, visible and invisible, has been Australia. The media say that Australia is pulling away from the Commonwealth because it is thinking about a President rather than having Her Majesty the Queen as its Head of State—it has its reasons for that—but that has nothing to do with the reality.
The reality is that we are now closer to Australia, and to New Zealand as well—two of the world's most dynamic modem economies, not just dependent on agricultural products—than ever we were at the height of empire or in the days when the Commonwealth was called the British Commonwealth.
Another huge new market is emerging inside India. Admittedly, it is a vast area of high-income activity surrounded by a sea of poverty, but the numbers are gigantic. Another Commonwealth country that is becoming a major factor in the entire world economic system is Malaysia, despite our quarrels from time to time with that country's outspoken leader.
When I think about the G7 conference, which is just about to happen, it seems increasingly absurd that the emerging markets, as we call them, of three great countries, which will be heavyweights in the world economic order—India, China, which is obviously not in the Commonwealth, and Brazil, which is also not in the Commonwealth—are not included in the G7 summit. The days of the G7 summit complex may be coming to an end.
That is the background against which our report reaches its central and explicit conclusion that the Commonwealth is acquiring a new significance in a rapidly transforming world, and that British policy should bring that major change to the forefront of its thinking. Our report concluded that the Commonwealth of yesterday, still quite strong in British perceptions and in some quarters, has given way to something quite new and not yet fully appreciated.
In our report, we say that, far from being a "club" of countries all too ready to criticise and make demands on the former imperial power—that is us—the Commonwealth is rapidly metamorphosing into a network with quite different interests and ambitions. In particular, we pointed to the gigantic sub-governmental network of links that brings together the group of nations—there are now 53 of them—in a way that simply does not exist in any other corner of the earth. There are the regional blocs. We know all about Europe. There is the UN. We know all about that. But there is nothing to compare with this extraordinary network of intimacy that the Commonwealth today turns out to be.
In our inquiry, we encountered two disappointments. We were struck, first, by the rather cautious and downbeat initial memorandum from the Foreign and Commonwealth Office. Although it was very helpful and provided many papers, its initial memorandum was a bit faint, although we were happy to note that the evidence that Ministers subsequently gave the Committee sounded a much more positive note. Secondly, we were struck by the absolute disinterest and incomprehension about these matters in the daily newspapers. The so-called "heavies" seemed to have lost the capacity to handle and evaluate new concepts and ideas of this kind. They have squeezed out the wiser and more reflective writers in favour of the trivia masters and the superficial political commentators.
We were disappointed but not surprised that the British dailies paid no attention to the recent report. We were also pleased that—by strong contrast—some of the weeklies and the excellent BBC World Service understood the importance of what we were trying to say and supported strongly the thought that the Commonwealth matters increasingly. That was very welcome, but the report's conclusions lead us to more than mere thoughts. We recommended something much stronger: a whole new strategy to reinforce bilateral Commonwealth ties, to sustain the overall Commonwealth organisation and to deploy the advantages that Commonwealth membership gives us far more systematically, both in diplomatic endeavours and in the furtherance of Britain's worldwide commercial interests.
To anyone who suggested that we propose some great new bureaucratic layer in the Commonwealth, I would reply that that is not what we say at all in the report. We do not want to impose additional administrative structures on an international network, which has emerged of its own accord and which is emerging even further while we speak. In our view, the secretariat does a good job and makes a significant contribution, but we are talking about the bilateral ties and the need within our own national administration, and certainly within the Foreign and Commonwealth Office, for minds to be more focused than in the past on our Commonwealth role and the potential that it gives us—this is quite a cynical calculation—as a trading nation to develop our own interests.
In hard, practical terms, that means, as we recommend, greater readiness to speak up for the interests of our Commonwealth friends in the various forums of the world to which Britain belongs. We are a great "belonger" and club member. As Baroness Chalker, Minister for Overseas Development, reminded our Committee as a witness, we are the one country of the 15 in the Union that is also one of the 53, which gives us a leverage and a position that should be used more effectively.
Similarly, we expect our fellow Commonwealth members to speak up for us more effectively in the other great forums of the world that are increasingly significant in determining our future and prosperity—the Asia-Pacific economic forum structure and the Association of South-East Asian Nations. More focus also means giving renewed Government attention to the educational and cultural interchanges that used to characterise the Commonwealth and which must not be allowed to languish. In some instances, we were concerned that they were tending to languish. On the contrary, they should be fostered more energetically than ever.
In our report, we argue that that should apply particularly to instruments of promotion of Britain's interests and of diplomacy such as the BBC World Service, the British Council and the diplomatic wing of the Foreign Office itself. We are glad to note that—as a result, I hope, of some raising of voices in the Foreign Affairs Committee, and other pressures—the threat to the British Council's budget has been eased somewhat; but: it still seems that there has been a failure to convey to the policy makers just how much value and resource can be added to Britain's basic economic strength through the effective use of those agencies. As our report points out, at a time when they should be expanding, they are being cut back to a dismal extent.
According to evidence given to the Committee but not included in the report, the National Audit Office estimates that every pound spent by the diplomatic wing on reinforcing its posts in the emerging markets—including, as we discovered, many in Commonwealth countries—produces £80 in extra earnings for Britain. The Treasury's response has been to slice tens of millions of pounds off the diplomatic budget, and therefore billions off British overseas earnings and British potential. We are forced to conclude that any more of what the geniuses in the Treasury have called economies and savings will make life extremely expensive.