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Mr. Bowen Wells (Hertford and Stortford) : Is not it true that the British system of taxation relief is more generous than that of any other country and that our banks have provided against third world debt more

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extensively and at greater speed certainly than the United States of America banks have been able under their legislative regime, and more quickly than those under European legislation? Therefore, it seems strange that the new clause should be advanced on this Finance Bill.

Mr. Ryder : There has been a great deal of criticism of British banks by some--not all--Opposition Members, and I am certainly more than happy to confirm what my hon. Friend says. In view of the argument that he has just deployed, I am surprised that British banks come in for the amount of criticism that they often get from some Opposition Members. It is a pity that that is so. Most British banks are extremely keen to help developing countries. After all, they have lent a lot of money to those countries and they want to do everything that they can to get it paid back. It would be against their better interests to do anything else.

I hope that the hon. Member for Brent, South will feel able to withdraw the motion. However, I do not expect that he will. This is my final word in the passage of the Bill. It has been great fun to speak opposite the Labour Front Bench team. I much look forward to the Third Reading speech of the hon. Member for Newcastle upon Tyne, East (Mr. Brown). I have heard his Third Reading speeches before. They are a turn that should not be missed. I hope that all my hon. Friends will rush into the Chamber when they see his name on the monitors.

Mr. Boateng : I should not want to be churlish after the valedicatory remarks of the Economic Secretary as we reach the end of the passage of the Bill. The Economic Secretary should be able--I am sure that he is--in relation to banks and their approach to third-world debt, to make a distinction between debt provision and debt relief. The act of provision is of no comfort to the developing world. The act of relief is of considerable comfort. We are seeking to encourage the banks to move from provision to relief. It is as simple as that. This modest new clause pushes, prods and encourages the banks along that route. Given the chance, several Opposition Members would prefer a little more stick and a little less carrot, but we recognise the strictures of the Ways and Means resolution. As for the good Dr. Witteveen, I am now aware of the good doctor's somewhat chequered past, but it is a past in which he played a role in the economic history of our country. We have moved on. I do not envisage that his services will ever be required again by a Labour Government, and I do not intend to hold against him the fact that his services were required in the past. He is now a repository of considerable wisdom on the issue.

I commend to the current Economic Secretary more of what Dr. Witteveen had to say about the proposal, which we developed upon the basis of work done by Dr. Stephanie Griffiths-Jones of the institute of development studies at the University of Sussex. On her work and, therefore, the new clause, Dr. Witteveen said :

"Dr Griffiths-Jones has correctly pointed out that in most European countries provisions against country debt are tax deductible, so that no fiscal incentive remains for banks to actually reduce the debt of these countries. Her proposal to limit the tax deductibility to banks that participate in debt reduction plans seems quite reasonable to me. It seems a somewhat anomalous situation that in most European countries commercial banks have now built up provisions of more than 50 of their total country debt, which in many

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cases have been deducted from their taxable profits, while in the Brady Plan debt reductions of much smaller percentages are being proposed."

That goes directly to the heart of the new clause and approves it in circumstances in which the current level of provision is such as to warrant a measure of this nature.

The four major United Kingdom banks--Lloyds, Midland, NatWest and Barclays- -made provision of £4,290 million in the past financial year. That is 55 per cent. of their cumulative provision in recent years. Ultimately those provisions would attract--it goes precisely to the point that was made by the hon. Member for Hertford and Stortford (Mr. Wells)--£1,501 million in tax relief, which is roughly equivalent to one year's aid budget. Those figures are astronomic. The new clause would address the challenge that they present to convert some of that provision into relief for countries most desperately in need.

At times during the Economic Secretary's speech there was a degree of complacency about the Government's record on overseas aid and development. It was a particularly unhelpful degree of complacency. In real terms we are donating less now than we did under the previous Labour Government. Let me reiterate the pledge that has been made by the Opposition time and again. We shall move, as a matter of priority, towards fulfilling the United Nations' objective. We shall not rest until 0.7 per cent. of our gross national product is devoted to overseas aid and development. That is the United Nations' objective, and we readily embrace it. It is one which, once again, has been commended by the World bank in terms that are directly in opposition to the implications of the speech of the Economic Secretary when he suggested that all that was really required--no, perhaps that is not entirely fair to the hon. Gentleman, when he suggested that what was required was largely that the developing world should embrace the rigours of the market and have a shot or two of privatisation. 7.30 pm

I am afraid that life is not as simple as that. We have learned in our own country that life is not as simple as that. Life is certainly not that simple in the developing world, which is precisely why the World bank's recent report made it clear that a two-pronged approach is now required. Yes, it should recognise the importance of restructuring the economies of the developing countries, but it should also recognise the importance of cushioning the shock of that restructuring with welfare plans that go hand in hand with that process. That makes sense. That is the pattern of development aid that the Opposition are promoting. We look to the Government to respond to the World bank's report. We pledge ourselves to a target of 0.7 per cent. of gross national product because we recognise that if that were done, in conjunction with the rest of the developed world, as the World bank has asked us to do we would together have increased the flow of assistance to $144 billion by the year 2000 from its current shameful level of $51 billion. To do less is not good enough.

The Opposition are not complacent and we therefore intend to push our new clause to a Division.

Question put, That the clause be read a Second time :

The House divided : Ayes 189, Noes 244.

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Division No. 298] [7.31 pm

AYES

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashley, Rt Hon Jack

Ashton, Joe

Barnes, Harry (Derbyshire NE)

Barron, Kevin

Beckett, Margaret

Beith, A. J.

Bell, Stuart

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Bruce, Malcolm (Gordon)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

Carr, Michael

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Frank (Stockton N)

Corbett, Robin

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Duffy, A. E. P.

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Eastham, Ken

Evans, John (St Helens N)

Ewing, Harry (Falkirk E)

Ewing, Mrs Margaret (Moray)

Fatchett, Derek

Faulds, Andrew

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fyfe, Maria

Galloway, George

Garrett, John (Norwich South)

Garrett, Ted (Wallsend)

George, Bruce

Godman, Dr Norman A.

Gordon, Mildred

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Hardy, Peter

Harman, Ms Harriet

Hattersley, Rt Hon Roy

Heal, Mrs Sylvia

Healey, Rt Hon Denis

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Home Robertson, John

Hood, Jimmy

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Howells, Geraint

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Simon (Southwark)

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Lambie, David

Lamond, James

Leighton, Ron

Litherland, Robert

Livsey, Richard

McAllion, John

McAvoy, Thomas

McCartney, Ian

Macdonald, Calum A.

McFall, John

McKay, Allen (Barnsley West)

McKelvey, William

McLeish, Henry

Maclennan, Robert

McNamara, Kevin

McWilliam, John

Madden, Max

Mahon, Mrs Alice

Marek, Dr John

Marshall, David (Shettleston)

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Martlew, Eric

Maxton, John

Meacher, Michael

Michael, Alun

Michie, Bill (Sheffield Heeley)

Mitchell, Austin (G't Grimsby)

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliot

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mullin, Chris

Murphy, Paul

Nellist, Dave

Oakes, Rt Hon Gordon

O'Brien, William

Orme, Rt Hon Stanley

Parry, Robert

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

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