Clause 1

Part of Debt Relief (Developing Countries) Bill – in a Public Bill Committee at 10:00 am on 9th March 2010.

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Photo of Sally Keeble Sally Keeble Labour, Northampton North 10:00 am, 9th March 2010

I will pick up the points that the hon. Member for South-West Hertfordshire made and give some assurances to the hon. Member for Worthing, West. There is a criticism that the Bill is too narrow. Indeed, my original Bill went wider, but that was a different Bill for different purposes. To be honest, if we start to cast the net more widely, we will have problems of definition, and then we will get into issues of uncertainty for countries that might be looking to raise loans, and potential sources of finance might say, “Is it going down or up? Might it bump into or bump out of the provisions?” In addition, there has not been international discussion about how countries might be treated, and therefore the uncertainty that the hon. Gentleman wants to avoid would be created if we cast the net more widely. As I said, in my previous Bill, we considered different definitions and there were problems with them.

Another important matter is that the Bill has two logics to it. One is about justice for developing countries; the other is about justice for British taxpayers, which gets overlooked a bit. One of the big arguments about this, and why I was interested in including HIPC countries in my original legislation, is that there is a logic that says, “Why should British taxpayers pay money to write off debts for developing countries when private, completely uncontrolled vulture funds can swoop in and cream off some of the money?” Therefore, it is about different types of debt being treated equitably but also about protecting British taxpayers’ interest. The HIPC countries have benefited from UK taxpayers’ funds, so there is a need to ensure that different types of debts are treated equally. That second logic is often overlooked in some of the discussions.

There is also the issue of moral hazard, about which the hon. Member for South-West Hertfordshire is right. It has come more to the fore because of the credit crunch and the banking crisis. The moral hazard of letting people off their debts is why it is so important that the legislation is carefully defined with safeguards so that we cannot suddenly extend the list of countries and extend the debt to others. My right hon. Friend the Financial Secretary has set out why new debts are not included. If we look at the other part of the HIPC initiative, the debt write-offs and the protection against profiteering by vulture funds and others have a quid pro quo, which is that developing countries have to engage in the programmes that are required as part of the HIPC process. That also gives some protection against what otherwise might be seen as the moral hazard of the excuse of private debt.

The Bill is properly targeted, because it deals with the worst cases of indebted countries, it deals with the protection of British taxpayers’ interests, and it has safeguards against the moral hazard of excuse from debt, which the hon. Member for South-West Hertfordshire identified. I hate to say it, but it is a much better way forward than my original Bill was. It will provide consistency and stability, ensuring that those countries can demonstrate sound governance and that the international process has been fair, sound and consistent. As my right hon. Friend said, if those countries need to take on debts, the international markets will be well disposed towards them.