House of Commons Hansard Debates for 14 Jun 1990

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of Health and Social Security, told members of the Social Services Select Committee that the word "poor" was one which the Government actually disputed. The Government seek to eradicate poverty not by helping poor people, but by removing the word "poverty" from their dictionary. That is their response to the huge increase in poverty and human misery over the past decade.

The hollowness of the Government's claim that wealth has trickled down to the poorest people has been clearly exposed. Poor families know exactly what is going on. They know that their income and standard of living have been the target of Government policy. 9.39 pm

Miss Ann Widdecombe (Maidstone) : From the bustle, I gather that it may be convenient if I speak for less than my allotted six minutes, so that hon. Members may have limited experience of the eloquence of the hon. Members for Caernarfon (Mr. Wigley).

I shall concentrate on targeting. I do not believe that it helps to talk about groups of people as though there were no strong differences within those groups. The problem in the approach of the hon. Member for Oldham, West (Mr. Meacher) and that of his party over many years is that there is insufficient discrimination within groups. Therefore, it does no good to talk about child benefit alleviating poverty if child benefit is available to a mother on the day on which she puts down her son's name for Eton. However, it makes great sense to talk about child benefit alleviating poverty if that benefit is targeted specifically and with discrimination. The same applies to the Opposition's policy on pensions. We are promised that, in the remote future when they finally become a Government--not a terribly likely contingency--their immediate action to alleviate poverty will include an across-the-board basic increase for pensioners. That approach is flawed if the aim is to alleviate the poverty that is suffered by the poorest pensioners.

Within the group we call pensioners are those who enjoy substantial occupational pensions and who have paid into such schemes all their lives. In the same group are those for whom, when they were working, occupational pension schemes were not so universal, who do not have the benefit of such schemes and must rely wholly on the state pension and whatever additional benefits they may qualify for. There is a vast disparity between the circumstances of those two groups, yet all that the Opposition can offer is an across-the-board increase that will benefit rich pensioners as well as poor pensioners.

If we are to target, it makes sense to limit across-the-board increases and spend the money that is saved on those who actually require additional help. That would help those pensioners who did not have the benefit of an occupational pension, who became pensioners at the beginning of the last Labour Government, who have suffered years of inflation during which their savings have been eroded and who have since had to survive on the results of that period of Labour Government. They are the people whom we must help. The Opposition must take that point on board. They are not talking about alleviating poverty and alleviating the circumstances of the poorest ;

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they are talking about popular, easy, uncosted and totally unrealistic measures that help nobody except those who do not need help.

9.42 pm

Mr. Dafydd Wigley (Caernarfon) : I am grateful to the hon. Member for Maidstone (Miss Widdecombe). I congratulate the Select Committee on its valuable work. The results bear considerable thought. We want figures that honestly and effectively highlight the real problem of low pay so that we can have policies that correspond to it. We in Wales know what low income means. If the European definition of pay decency is adopted--in 1989 it was £163 a week--35 per cent. of all employees in Wales are below it. In 1989, whereas the average weekly earnings of all males in Britain was £270 a week, men in Wales were earning £31 a week less. In some parts of Wales matters were chronically worse. In Dyfed, the average male manual earnings were the lowest of any county in Britain--20 per cent. of all workers in Dyfed earn less than £120 a week. Four out of 10 men and six out of 10 women in my county of Gwynedd earn less than the European decency threshold.

One of the tables in the regional analysis has shown how patterns are changing. In Wales, 41 per cent. of families earned less than 20 per cent. of average family income in 1980-82. By the period 1983-85, that had worsened from 41 per cent. to 47 per cent. below the 70 per cent. level, whereas in south-east England the figure had decreased from 29 per cent. to 24 per cent.--which means a 5 per cent. increase in that area.

If those trends continue, we in Wales will have a serious problem. That is why it is vital that we have more up-to-date statistics than those which have been made available. It is ridiculous that we do not have the figures for 1985-87 now. I hope that the Minister will give some thought to what can be done to overcome that difficulty. I turn to the Committee's conclusions about the inaccuracy of the lower decile, where the increase in real income was only 2.6 per cent. compared with the claimed 8.4 per cent. That must lead to a change of Government policy. If the figures are that different, we must have a change of policy to respond to them.

Two or three groups of people need our particular attention. The figures relating to families have shown how those with children are overwhelmingly likely to have an income level that is below the average. To that extent, I believe that child benefit is an effective way of trying to get money to those who most need it. I take the point made by the hon. Member for Maidstone that some who do not need it will receive the benefit. However, when we consider the failure to take up other benefits--the report highlighted this, and I am aware of problems in my own constituency about the take-up of family credit--the price of giving the benefit to even those who send their children to Eton is more than made up for by ensuring that those who need the benefit actually get it.

I should like to draw the attention of the House to something of which I know hon. Members are well aware. I refer to the poverty and low incomes of those who care for disabled people and for the need to establish a carer's benefit or payment to ensure that we are not taking unfair advantage of people who are working for next to nothing. As there are 6 million disabled people in our community, that must be important to all of us.

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When we have finished arguing about the way in which we calculate the figures, it is the policy that the figures lead to that is important and the way in which we can overcome the problems of low income and ensure adequate pay. I believe that we need a national minimum wage. Although there is no time to discuss this now, I have studied some of the work on the subject that has been carried out in other countries. We need to look closely at the family credit system to ensure that it responds more quickly and sensitively to those on low incomes, and especially to those who are self-employed and on a low income, of whom I have many in my constituency.

As I have said, child benefit and provisions for carers should be improved. We have a tremendous responsibility to get the policies right and to respond to what the figures are telling us. I hope that the Minister will tell us how the Government intend to do that. 9.47 pm

Mr. Andrew F. Bennett (Denton and Reddish) : In the few minutes available to me, I join my hon. Friend the Member for Birkenhead (Mr. Field) in pleading with the Minister to make the 1987 figures available to us. From the questioning of his civil servants, we know that those figures have now been placed on his desk. It would help all of us if he could give us those figures at the earliest possible opportunity and certainly before he and his ministerial colleagues appeared before the Select Committee in two weeks' time to answer our questions. We need time to consider the figures carefully. I heard the pleas for more targeting that were made by the hon. Member for Maidstone (Miss Widdecombe). However, it seems odd that the whole thrust of our report was that, despite the Government's claims to have carried out so much targeting in at least the first five of their 10 years in office, targeting had missed. It had failed to reach the target. We should therefore call into question that whole process.

I regret that the Government are not prepared to consider publishing budgets to show the way in which Ministers think that the money should be spent. However, I understand why they do not do it--because they know it is an impossible task. Nevertheless, it would be helpful in the task of convincing the rest of the country and in ensuring that other people are prepared to take a little bit less so that people on the lowest incomes can have a little bit more. In the early part of this century, it was people such as Charles Booth and those involved in the Rowntree effort which showed people the impossibility facing those who had to survive on the lowest incomes who convinced people that we had to start a system of benefits. Publishing budgets would be a useful approach.

I plead with the Government to look carefully at the problems of those who are in poverty for long periods. My hon. Friends have challenged Ministers on whether hon. Members could live on benefit for a week. We know the difficulties that at least one of our former colleagues encountered when trying to do that. For many people, the greatest problem is the long period in which they are in poverty. What help can the Minister offer one of my constituents whom I visited the other day? He is 65 and a widower. He is on basic pension and a little income support. He has not

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worked for the past eight years, not through any fault of his own but because he was one of those made redundant to make industry in Denton leaner and fitter.

My constituent's flat is spotlessly clean, but everything in it cries out his poverty. He has a black and white television. His only form of entertainment is a black and white television. His cooker and his fridge are extremely old and worn. He has worries about the safety of his electric kettle, but he has patched it up. There is nothing new in the flat. Even his newspaper comes pushed through from next door a few hours late to keep down his expenses. His carpet is threadbare. His curtains need replacing.

My constituent has lived in poverty for eight years since he lost his job. He is just starting life as a pensioner. His prospects are that he will live the rest of his life in poverty. It is long-term poverty. He has lost any savings that he had.

What sort of help can the Minister offer my constituent? There are many millions of such people in this country. What hope can the Minister offer that, in the next few years, their lives will be made more pleasant and that they will enjoy some of the luxuries that some of us take for granted?

9.51 pm

The Minister for Social Security (Mr. Nicholas Scott) : I hope that the House will understand that in replying to such a wide-ranging debate in the minutes that are left, I cannot deal with every point that has been raised.

The subject of the debate is immensely complex. Anyone who studies it carefully rather than superficially knows that poverty cannot be solved by waving a wand or by any particular policy approach. Indeed, when one reads some of the academic work on the subject, one is convinced that it is not merely complex but arcane in the extreme. Yet, for some reason, some people use it--I might limit myself to saying one person--as a political ping-pong campaign simply to score points against the Government, knowing full well that when their party was in office--this would be so if it were in office again--it found that the problem was not susceptible to easy, simplistic solutions.

Mr. Meacher : I did not say that there were simplistic solutions, but we could make some improvements.

Mr. Scott : If the hon. Gentleman will resist making sedentary interventions, I shall deal with some of the points that he made. I listened carefully to the points made by the hon. Members for Roxburgh and Berwickshire (Mr. Kirkwood) and for Caernarfon (Mr. Wigley) and my hon. Friend the Member for the Isle of Wight (Mr. Field) about regional differences. I am not convinced by the arguments. I shall read each of their speeches in detail and the points made, as well as the comments of the Institute for Fiscal Studies and the regional work that it has done. I am not convinced that we would benefit greatly from putting considerable resources into regional work. There would be differences between regions and within regions. The special position of particular towns, communities and hamlets within a region might mean that simple regional work is not particularly illuminative.

I am grateful for this opportunity to respond to the debate and, indeed, for the work of the Select Committee. I was never a Chairman of a Select Committee. I was what

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the Americans would call a majority leader on a Select Committee at the beginning of the experiment. The Select Committee system has developed effectively.

The Select Committee has done effective work in producing its report. Neither the Chairman nor the members will expect me to agree with every word of it, but we shall respond constructively in due course to the suggestions that they have made. I hope that that will be acceptable.

I shall make some general observations on the issues before the House tonight before dealing with the speeches of individual hon. Members. To some extent, I repeat my opening remarks when I recall the remarks made in the New Statesman and Society in its debate on poverty. It said :

"The debate has become the modern equivalent of the Schleswig-Holstein question, which, said Palmerston, only three people ever understood--but one had died, one had gone mad, and the third [Palmerston himself] had forgotten all about it."

It is easy to get to grips with the subject briefly, but it is difficult to sustain a command of all of it.

I was especially impressed by the speech of the hon. Member for Birkenhead (Mr. Field), who is Chairman of the Select Committee. However, he made a few points with which I must take issue. He mentioned the position of the poorest in our society, and his remarks were echoed by the hon. Member for Denton and Reddish (Mr. Bennett). I know that there are people in our society who suffer poverty. They do not go in and out of poverty, but suffer it for prolonged periods. It would have been proper for the hon. Member for Birkenhead to recognise the steps that the Government have taken recently to help the poor, especially pensioners and families with children, by seeking to concentrate the resources available in an attempt to alleviate their position.

In case I do not have the opportunity to advert to it again, I must say that I had considerable sympathy with the comments of the Select Committee on the need to make some study of the composition of the lowest decile of the poor--the extent to which people move in and out of poverty, what traps people into those circumstances, what might move them down from higher in the scale, and what might be done to alleviate it.

The hon. Member for Birkenhead asked me three particular questions. First, he asked when the 1987 figures would be available. We are anxious to produce them as soon--

Mr. Frank Field : Soon?

Mr. Scott : Yes, as soon as possible. My right hon. Friend the Secretary of State has written to the hon. Gentleman explaining the time scale. We want to respond to the Select Committee, publish the figures and meet the sort of suggestions put forward by the Committee in producing both the reports.

Secondly, the hon. Gentleman suggested that we might privatise all that work and hand it over to the Institute for Fiscal Studies. It is interesting that such a suggestion should come from an Opposition Member. I do not doubt that the Institute for Fiscal Studies has done excellent work, but it has done so with the fullest and most

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constructive co-operation of the statisticians within the Department, who work with tremendous dedication and utter integrity. At the risk of not being able to respond to many of the other points raised, I wish to deal with some of those raised by the hon. Member for Oldham, West (Mr. Meacher)

Mr. Frank Field : The Minister has not answered my third question. Has he seen the 1987 figures, and are they better or worse than the 1985 figures?

Mr. Scott : I have seen only a preliminary analysis of those figures. Obviously, I want to see the final outcome of that work. I shall see that at about the same time as the House and everyone else sees it. The hon. Gentleman has made a brave effort to rescue his hon. Friend the Member for Oldham, West from some of his more absurd allegations.

The hon. Member for Oldham, West suggested that the Government withdrew the low-income families figures because they showed an uncomfortable rise in 1985. If he had taken the trouble to look at those figures, he would know that the numbers on supplementary benefit or below 140 per cent. of that level actually fell, not rose, between 1983 and 1985, so the hon. Gentleman's allegation was absurd. Secondly, he alleged that we have made it our policy to delay and conceal the low income statistics, but that simply does not stand up to the light of day. On only one occasion did we publish the statistics on the day that the House rose for the recess. None of the hon. Gentleman's allegations stands up to analysis. He said that the Institute for Fiscal Studies had produced figures in the low-income family series for 1987 showing that the number for those below income support for that year was 18.5 million--7 million more than in 1979. That is an utter perversion of reality. The figure does not refer to those on supplementary benefit, but to those on or below 140 per cent. of a hypothetical income support level--

Mr. Meacher : That is what I said.

Mr. Scott : I shall consider carefully what the hon. Gentleman said, but in any case it is a wholly discredited low income level. Had the hon. Gentleman read the IFS report in full he would have seen on page 2 the following words, which are underlined :

"These tables are not low income families' tables for 1987." The IFS was doing its best to ensure that no misguided reader would compare the figures with those for 1979, but that is precisely what the hon. Member for Oldham, West has done. The report goes on to describe in seven lengthy paragraphs three major reasons why the 1987 IFS analyses could not be compared with the low income families figures for earlier years. I hope that the hon. Member for Oldham, West will withdraw his remarks.

The Question necessary to dispose of the proceedings was deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of Estimates) .

It being Ten o'clock , Mr. Speaker-- proceeded, pursuant to paragraph (5) of Standing Order No. 52 (Consideration of Estimates), to put forthwith the deferred Questions necessary to dispose of proceedings on Estimates, 1990- 91 (Class VI, vote 1 and Class XIV, vote 7) .

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Class VI, vote

Question , That Class VI, vote 1 be reduced by £100,000 in respect of Subhead H1 (Skills Training Agency running costs), put and negatived .

Resolved ,

That a further sum, not exceeding £1,286,770,000, 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 31 March 1991 for expenditure by the Department of Employment on improving, promoting and disseminating training among individuals, small firms and employers, encouraging enterprise, running services for small firms and the Enterprise Allowance Scheme, providing training programmes for young people and adults, providing employment rehabilitation services, technical and vocational education, work-related further education and the costs of the Skills Training Agency until privatisation, on the administration of training and enterprise, and central and miscellaneous services.

Class XIV, vote

Resolved ,

That a further sum, not exceeding £991,572,000, 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 31 March 1991 for expenditure by the Department of Social Security on administration, for agency payments, and for certain other services including grants to local authorities, voluntary organisations, and major capital works projects for the Department of Health, including

telecommunications capital.

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Overseas Development and Co-operation

10.1 pm

The Minister for Overseas Development (Mrs. Lynda Chalker) : I beg to move,

That the draft International Fund for Agricultural Development Order 1990, which was laid before this House on 8th March, be approved.

The International Fund for Agricultural Development--IFAD--was set up to help the most-disadvantaged sections of society in rural areas of developing countries to increase food production. Its focus is the small farmer, nomadic pastoralists, artisarial fishermen, the landless and rural women. IFAD's operations are relatively small-scale. In its first decade of operations, it has committed $2.8 billion for roughly 260 projects, an average of $10 million per loan.

Smallness is a characteristic of the organisation in other ways. It was designed to have only a small professional core staff, and to work primarily through other international agencies. Funding has also been on a relatively modest scale. These factors have shaped the institution and explain the rather special place it occupies in the network of institutions channelling assistance to developing countries.

Partly because of those various influences--its specific mandate to assist the rural poor, its small size as an institution and the relatively modest financial resources at its disposal--IFAD has been making greater efforts over the past few years to target its activities more closely on disadvantaged groups.

The causes of rural poverty are complex. They include scarcity of land, harsh environmental and climatic conditions, isolation and lack of assets to cushion the poor against unforeseen events or emergencies. Improving access of the poor to resources--water for irrigation and sanitation, fertilisers and seeds for increased agricultural production, marketing facilities for the sale of produce and so on--is one of the main aims of IFAD-assisted projects. IFAD gives high priority to beneficiary participation in all stages of the project cycle, from design and appraisal onwards. One way it does this is through group lending--that is, village groups, farmer organisations, women's groups and other grassroots organisations. IFAD has pioneered a number of ways of facilitating access to credit by the rural poor, who are frequently ignored by traditional financing mechanisms.

Group lending, because of peer pressure, reduces the risk of default, as well as making it cheaper to reach small-scale borrowers. Perhaps the best- known example of this is the Grameen bank in Bangladesh, which has successfully provided credit to those traditionally regarded as the greatest credit risks, the landless or near landless and women. About four fifths of the loans are to women, whose repayment record, I am sure the hon. Member for Cynon Valley (Mrs. Clwyd) will be glad to know, is better than that of the men, although the bank's overall default rate is extremely low. The loans finance a wide range of income-generating activities, including livestock, poultry and fisheries, small-scale processing and manufacturing, and trading or shopkeeping. IFAD was the first international agency to provide assistance to the Grameen bank. A similar group lending approach has been used in the small farmer development programme in the hill regions of

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Nepal, in the village development fund project in Mali, in the small-scale rural operations project in Senegal, and in many other IFAD-assisted projects.

IFAD is conscious of the link between rural poverty and environmental degradation, and how the weight of population growth in many regions, especially Africa, will exacerbate these pressures. Last year, IFAD produced an excellent discussion paper on the need to ensure effective integration of environmental issues into its lending operations. IFAD recognises that unless those issues are directly addressed, its efforts to alleviate rural poverty will be frustrated and the long-term sustainability of its projects undermined. In Mali, IFAD has a project which aims to rehabilitate a poor pastoral community in an area devastated by drought, by focusing on improved soil and water conservation techniques. In Senegal, an agro-forestry project is helping to arrest environmental degradation caused by overcropping and excessive tree clearance. In Bangladesh, IFAD's ox-bow lake fisheries project is helping small-scale fishermen to develop sustainable fisheries by introducing biologically sound management practices.

Another policy orientation that we welcome is IFAD's efforts to promote the economic welfare of rural women by incorporating specific components into projects that are targeted at their needs. I have seen this recently in Bangladesh, where a credit union scheme through BRAC--the Bangladesh rural action committee--is working very well. We are now supporting BRAC through a new project which will extend the geographical coverage of BRAC's rural development programme and establish a new rural credit finance mechanism. The total cost is US$50 million. We will contribute 25 per cent. A recently approved Smallholder project in Ghana, for example, was preceded by a socio -economic survey that indicated that households headed by women accounted for more than one third of the target group ; and a credit allocation of appropriate size specifically earmarked for women was incorporated into the project.

In India, the Tamil Nadu women's development project will offer opportunities in a wide range of income-generating activities, from horticulture and silkworm rearing to business courses and marketing skills. There is a dovetailing of formal and informal credit schemes with women's groups. The project is targeted to benefit some 40,000. In the north-west province of Cameroon, an IFAD project has helped to increase food output significantly, and women farmers have been able to sell surpluses of maize to neighbouring areas. The project has introduced a soil conservation programme that promotes integrated crop and animal husbandry and safeguards the environment. Because of these efforts to target assistance more effectively towards the poorest and most disadvantaged groups, IFAD attaches great weight to evaluation activities. It needs to weigh which approaches are successful, and which are less successful. We welcome its efforts systematically to incorporate lessons learned from previous activities in the design of new projects. The bulk of IFAD's resources, some two thirds of the total, are concentrated on the poorest countries.

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IFAD also operates in middle-income countries, however, in areas where there are pockets of poverty. To some extent, IFAD's desire to maintain a broad geographical coverage is understandable. But its projects are small in size, and the active loan portfolio in any one country is also small--often no more than two or three projects. We think that operating in so many countries is not warranted given IFAD's small size ; and we should prefer to see a greater concentration of resources and effort in the poorest countries, espicially in Africa and Asia.

There are calls to the contrary, of course, especially from Latin American members of the fund, but we think management risks overstretching itself in attempting to respond to those demands. In our view, IFAD would stand a better chance of demonstrating the effectiveness of its approach to rural poverty alleviation if its resources were not spread so thinly across the globe.

Apart from the issue of regional allocation of resources, IFAD's credentials are solid. It has a dedicated team of professionals under the leadership of its president, Idriss Jazairy, a national of Algeria. Given its poverty-focused mandate and efficient operating style, the question may be asked why it has such difficulty in raising the resources it requires. The answer to that conundrum lies in the institutional structure of the organisation. IFAD was founded on the basis of a partnership between three distinct groups of countries. Each holds one third of the voting power and one third of the seats on the board of directors. Category I consists of OECD countries, category II of OPEC countries, and category III covers non- oil exporting developing countries.

Because IFAD is a partnership, it receives its funding from contributions negotiated jointly between category I and category II. It started off for the period 1977-80 with just over $1 billion. Of that, 57 per cent. came from OECD countries and 43 per cent. from OPEC countries. The western donors argued from the outset that categories I and II should contribute equally, as each holds an equal stake in the institution. That was resisted by OPEC members and has been an issue at the root of IFAD's subsequent funding difficulties. The third replenishment negotiations were concluded last year. In an effort to raise a higher total than last time, and in recognition of the continuing financial constraints on OPEC members, a two- pronged strategy evolved. First, OECD donors agreed that they would match contributions by OPEC donors in the traditional way, in a burden-sharing ratio of 60 : 40. That was the ratio established during the second replenishment negotiations. That element became known as the core funding.

Secondly, OECD countries agreed to match contributions in convertible currencies by other developing countries in a favourable ratio of 3 : 1, in the expectation that exceptional efforts by that group of countries would act as a spur to the OPEC donors. This became known as the supplementary funding element.

In the event, category II, OPEC donors, pledged $124.4 million, compared with $184 million last time. That sum will be matched by category I, OECD donors, in the ratio 60 : 40--that is, $186.6 million. The United Kingdom's share of that core-funding element is $8.9 million, representing 4.78 per cent. of category I's total contribution.

Category III, other developing countries, set itself a target of $75 million. Pledges of $63.8 million were realised. The OECD matching element for that

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supplementary financing, therefore, will be $191.5 million. The United Kingdom share will be $10.9 million. Thus, the total resources raised in the third replenishment, will be $566 million. Of that, OECD countries will provide $378 million--two thirds of the total. That will cover IFAD's operations for the period up to 30 June 1992. The outcome was more successful than the second replenishment, which raised only $487 million. Nevertheless, the underlying issue of the relative burden sharing between OECD and OPEC countries remains. Category III, other developing countries, regard their efforts in this replenishment as an exceptional measure, not establishing a precedent for future replenishment exercises.

The results of this replenishment have reinforced the view that serious examination must be given to IFAD's future financial basis before the negotiations on the next replenishment begin. A so-called high-level intergovernmental committee began consideration of these issues in 1986, but after some useful initial work, its work was suspended while the third replenishment was negotiated.

The committee will be resuming its work soon, in an effort to find a more acceptable solution that will put IFAD's resources on a more secure footing for the future. The crucial aim, as we see it, will be to engage OPEC countries in a frank and open dialogue, to see how their perceptions of the assumptions underlying the original foundation of IFAD have changed. We may need to realign the structure, and the voting power, so that it better reflects relative financial stakes in the institution.

The draft order authorises the Secretary of State to pay the British contribution to the new replenishment. Subject to parliamentary approval, we shall contribute £11.3 million, which is equivalent to over $19 million at the agreed exchange rate. As I said earlier, our share of the total OECD core contribution remains the same as for the last replenishment --about 4.8 per cent. We intend to pay in three instalments, by depositing

non-interest-bearing promissory notes. The first of the notes has to be deposited within 30 days of our instrument of contribution coming into effect, the second on the anniversary of the entry into effect of the replenishment, and the last by 30 June 1992. We expect them to be encashed over a period of years from about January 1992. The arrangements include provision for other countries to modify their contributions pro rata if one or more donors fail to meet their obligations in full.

I know that some of this may seem complicated, but the hon. Member for Cynon Valley wanted to know the detail of the IFAD replenishment, and as it crops up only once every few years, and I thought it worthwhile to put it on record. I commend the draft order to the House, in the conviction that its approval will help IFAD to continue its profoundly important work with the full support of the British Government and people.

10.16 pm

Mrs. Ann Clwyd (Cynon Valley) : The Minister's enthusiasm for the International Fund for Agricultural Development is widely shared. IFAD plays a vital and unique role in development. As the only multilateral agency with a mandate to focus exclusively on agriculture, and particularly on poor farmers, it deserves our full support.

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IFAD's focus on agriculture is unusual in today's world of economic adjustment. Its social focus on poor and marginal people in developing countries is even more remarkable. Most important of all, it succeeds in reaching and assisting poor farmers. The democratic basis of IFAD is also unique, thanks to the equal distribution of power between the Organisation for Economic Co-operation and Development, the Oil Producing and Exporting Countries and developing countries. IFAD has the full confidence and participation of Governments of developing countries. It is perceived in both the north and the south as more responsive to the needs of developing countries than other United Nations or World bank institutions. The importance of agriculture in development cannot be underestimated. More than two thirds of the labour force in most African developing countries work in agriculture. For the poorer citizens, agricultural production is the basis of their livelihood. Nothing--except perhaps water--is more important than the production of food. Farmers rely on what they can grow, and herdsmen rely on what they can obtain from their cattle.

The importance of agriculture is increasing for several reasons. With the world's population set to double to 10 billion, it is essential that agricultural production increases at the same rate. However, that is not happening. Agricultural output per head is declining in many countries, especially in Africa, where there were 100 million undernourished people by the early 1980s. Urban populations are increasing rapidly and that puts an extra burden on farmers, who must produce enough to support themselves and urban dwellers. The importance of agriculture is also increasing, because the pressure of rising population makes improvements in agriculture not only more urgent, but also more difficult.

In many areas there is not enough fertile land. Pressure on the land causes declining crop yields and overgrazing. Competition for land pushes farmers on to marginal land on the edge of the desert or in newly cleared forest. That only exacerbates the process of soil erosion, land degradation and the encroaching of the desert. Those environmental problems are mounting. We know now that the effects are cumulative and tend to be irreversible. It has proved only too easy to set off the vicious circle of land clearance, soil erosion, decreased fertility of the land, disappearing vegetation and an increasingly arid climate. There is no evidence that we can so easily reverse the process to achieve thicker vegetation and improved land fertility, humidity and productivity.

Therefore, immediate action to invest in environmentally-sound agricultural techniques is essential. That means that the long-term value of IFAD's investments in environmental protection, such as its projects to assist families with soil and water conservation in Lesotho, is immeasurable.

Despite the overwhelming importance of agriculture, it has been pushed to the sidelines over the past decade. Many donors and institutions tried with enthusiasm to work with small farmers in the 1960s and 1970s, but encountered problems and gave up. They are now focusing on structural adjustments, macro-economic planning and free markets.

IFAD continues to promote agricultural development. It is persevering and succeeding where many others have failed. For example, in Niger, IFAD projects have resulted in a 40 per cent. increase in crops.

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Unfortunately, the British aid programme of the Government puts less priority on agriculture than other donors and institutions. In 1988, according to the OECD, only 9.1 per cent. of British aid was committed to agricultural developments, less than average for the Development Assistance Committee of OECD donors. It is a poor comparison to the 22 per cent. of Irish aid, 26 per cent. of Danish aid, 23 per cent. of Dutch aid, 21 per cent. of Swiss aid, 17 per cent. of Belgium aid and 23 per cent. of EC, World bank and United Nations aid.

Therefore, a renewed focus on agriculture is urgently needed. More research is needed on agricultural techniques which are appropriate for poor farmers, and on methods of adapting to a warmer climate, but the Government are cutting funding for agricultural research. If IFAD had invested in agricultural developments by funding large private high-technology farms, producing cash crops from the labour of landless peasants, I would probably not have bothered to be here tonight. The strength of IFAD is that it works with the poorest and the most marginal in society. It supplies credit for investments, as the Minister said, to exactly those people who have least access to credit from the usual sources.

It is not just the quantity of agricultural crops produced that matters, but the quantity of food available to families. Too often development planners overlook the critical issues of food security in their eagerness for gross national product growth. Markets do not supply the family food ; the family does. IFAD's approach recognises that.

Working with the poor is difficult at times, but also essential. Let me take Ethiopia as an example. Even if the rains fall for the next harvest, many farmers will have no tools or cattle to work with ; they sold them off in sheer desperation to obtain food. IFAD has made loans to 70,000 peasants to buy oxen so that they can produce their own food next time round .

A major factor in IFAD's success is its willingness to take up new ideas and new approaches, particularly ideas from farmers at the bottom, not the planners at the top. By building institutions within the local community, it provides projects with a secure foundation. Making loans through peer groups has achieved repayment rates of 95 per cent. in many countries.

Development funds have shifted away from the poor since the 1960s commitment to basic needs. Too many development planners are forgetting what development is, or should be, all about--improving the quality of life for the majority of people in developing countries. It is not just about percentage changes in gross national product, or about tonnes of concrete or miles of roads, or about changes in the trade balance. They are important, but they are only means to the desired end of improving people's lives. By working directly with poor farmers, particularly women, IFAD goes straight to the heart of development.

Of course IFAD could do even better. On the ground, it is not quite as ideal as it appears to be on paper. Like many international organisations, it faces the problems of bureaucracy and inflexibility. Its lack of field staff compounds the problem. Implementation of projects is slow. Its commitments to working with women and to taking full account of the environment are yet to be fully translated into action at every level. However, there is evidence that IFAD is doing better than many in limiting

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these bureaucratic difficulties. I hope that the Government will play a constructive role within IFAD to ensure that it intensifies its efforts to reach women farmers and to adapt to their special needs, such as lack of legal status or of property to serve as collateral.

Given the importance of IFAD's work, the third replenishment is disappointingly inadequate. It does little to make up the losses suffered in the second replenishment. When IFAD began work in 1978, it had $217 million a year. That is equivalent to $396 million in 1990 terms. Therefore, this year's funding of $211 million represents a cut of 47 per cent. since 1978. The third replenishment would need to be increased by 40 per cent. if IFAD were to regain its initial financial strength in 1991. Nevertheless, with the Minister, I am glad that agreement has at last been reached on a third replenishment.

I particularly applaud the exceptional contributions made by category 3 members--the developing countries. Nigeria, Gabon, Venezuela and others have increased their contributions, despite going through a difficult period of economic adjustment. I welcome the decision by the Organisation for Economic Co-operation and Development members, category 1, to match these contributions on a ratio of 3 : 1. I am glad, too, that a high-level intergovernmental committee is considering the future financial situation of IFAD. I hope that at the meeting in Rome next Monday, and in future meetings, the United Kingdom Government will seek to ensure stable and sufficient funding for IFAD in the future. I welcome the Minister's assurances on that point.

The third replenishment was disappointing, but the Government's attitude to the special programme for sub-Saharan Africa is, I am afraid, lamentable. The special programme for sub-Saharan Africa was launched in 1977 to enable IFAD to give greater support to agricultural development in Africn countries, stricken by drought and the encroaching desert, at a time of acute economic crisis. Since then there has been general approval of its work. By the end of the year, IFAD will have 30 projects in 24 sub-Saharan countries. However, when a second phase of the special programme for sub- Saharan Africa was suggested in January, the Government stood out alone against a chorus of support to oppose the proposal. France, Belgium and Italy all supported the programme. Every African member of IFAD supported it. Latin American countries--Colombia and Argentina--supported it. Australia and Pakistan gave their support. Why did the United Kingdom oppose it? There can be only two explanations of the Government's opposition. First, perhaps the Government believe that the first phase of the special programme for sub-Saharan Africa has not been successful. I ask the Minister whether the programme has been successful in raising the target funding of $300 million through voluntary contributions. Has it been successful in committing those funds for projects in sub-Saharan Africa? Has IFAD successfully co-ordinated the special programme with the work of the regular programme in sub-Saharan Africa? Has the Minister evidence of that? Does the Minister agree with the analysis of the United States and other donors that IFAD's work in Africa is generally positive? I doubt whether the Minister can answer no to any of those questions. The right hon. Lady can surely not oppose the second phase of the special programme for sub-Saharan Africa on the ground that it has not worked.

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