House of Commons Hansard Debates for 21 Oct 1991

BUSINESS OF THE HOUSE

Ordered,

That, at this day's sitting, the Lords Amendment to the British Technology Group Bill may be proceeded with, though opposed, until any hour.-- [Mr. Boswell.]

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Orders of the Day

British Technology Group Bill

Lords amendment considered.

Lords amendment : After clause 6, insert the following new clause-- Offers for sale of securities --

"Where an offer for sale of any securities of the successor company is to be made by or on behalf of the Crown or any invitation or advertisement is to be issued by or on behalf of the Crown in connection with the offer, the Secretary of State shall consult such persons appearing to him to be representative of the universities of the United Kingdom as he considers appropriate."

Read a Second time.

Mr. Speaker : With this we will take amendments (a), (b) and (c) to the Lords amendment, and consequent Government amendments Nos. 1 and 2.

10.30 pm

Dr. Lewis Moonie (Kirkcaldy) : I beg to move, as an amendment to the Lords amendment, amendment (a) : in line 6, after universities', insert and research councils'.

We remain implacably opposed to the principles behind the Bill. We believe that it is ill conceived, and poses a real danger for the future of the British Technology Group. However, that is not the substance of our discussion tonight. I have to recognise that the House has already made its decision on the British Technology Group Bill. It therefore remains only for us to consider the Lords amendment and to see in what way it might be improved.

The Lords amendment, a cross-Bench amendment, was carried last week. As we can see from the amendment paper, the Government have agreed to accept it. It offers a small concession from the Government on the safeguards surrounding the sale that we attempted to have built into the Bill--that, before offering for sale any securities in the successor company

"the Secretary of State shall consult such persons appearing to him to be representative of the universities of the United Kingdom as he considers appropriate."

The purpose of our amendment is merely to tease out some additional concessions from the Government. As they have been decent enough to accept this small amendment, they might be broad-spirited enough to consider some further improvements to the Bill. Our amendment (a) seeks to insert "and research councils" after universities. That is self-explanatory. We seek to broaden slightly, and only slightly, the terms of consultation which have already been agreed in principle. In amendment (b) we have attempted to specify some of the information about which universities should be consulted. After all, in theory it is possible for the Government to phone the Committee of Vice-Chancellors and Principals, tell it that they are selling securities and call that consultation. I am sure that, being a decent man, the Under-Secretary would not dream of doing anything so underhand and out of keeping with the spirit of the Lords amendment. Nevertheless, we feel that it would be valuable to add this additional safeguard.

Amendment (c) is also self-explanatory. We feel that the Secretary of State ought to allow a reasonable period for consultation on the Bill and have suggested a period of three months to allow the Bill to be gone into in proper detail.

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Much of the argument in Committee, in both this House and another place, dealt with the independence, integrity and impartiality of the British Technology Group following any privatisation. To some extent, the Government have met those concerns. Indeed, in Committee I remember the Under-Secretary saying clearly that he intended to safeguard those three important principles. He appears to have done so in two ways. One is by certain inclusions in the articles of association. He has certainly tried to do so. The other is by accepting the Lords amendment.

I should be grateful if he would spend a few minutes looking at those principles in tandem with the articles of association and explain to the House how he feels that his objectives have been achieved. There was no disagreement on those objectives in Committee, merely considerable discussion of how they might be achieved. In conclusion, I reiterate that we are opposed to the sale in principle. Should the Bill not go through before a change of Government, which happily will occur in the next six months, we will certainly reverse the proposal. If the reports in the press are accurate, it may well be that a rather more interventionist Secretary of State is about to be chosen to see out the twilight of this Administration, in which case we might see changes in the Bill before then. Who knows? I am sure that neither the Minister for Corporate Affairs nor the Under-Secretary of State would welcome that. I ask that Under-Secretary to give some explanation of how he thinks that those important safeguards have been handled.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh) : I am grateful for the constructive spirit in which the hon. Member for Kirkcaldy (Dr. Moonie) moved his amendment. He is right that there is no agreement on the principle of privatisation, but that matter has been well aired in this Chamber, and we do not need to go over that ground again. Both sides of the Chamber are united in the firm hope that the impartiality, independence and integrity of the British Technology Group can be retained. I give a commitment on behalf of the Government that we are fully committed to those three Is. The concessions made in the House of Lords will allay any residual concerns in those areas.

The hon. Gentleman mentioned the articles of association. There are two key provisions in the articles of association protected by the special share. These are, first, a 15 per cent. limit on individual shareholdings, which will continue in the articles even after the special share is redeemed at the end of five years. The Government will be prepared to consider higher individual shareholdings, should that prove necessary, to attract the right consortium, but we are looking at a benchmark of some 15 per cent. The second is a restriction on substantial disposals of assets above a certain level--25 per cent. of net assets or of the income raised by the assets disposed--without the special shareholder's consent. In addition, there are two further safeguards in the articles of association. The first is a provision for one director of the company to be directly appointed by the universities in consultation with the polytechnics. The universities will thus have the power of appointment to the board, in contrast with the current situation, in which universities have no right of representation on the present board. Secondly, one director, in addition to the

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Committee of Vice-Chancellors and Principals, shall be someone who appears to the members to have wide experience in the

commercialisation of public sector research. Those will be entrenched in the articles of association. In my judgment and the Government's, there is no doubt that those provisions, entrenched in the articles and protected by the special share held by the Government, will preserve the impartiality, independence and integrity of the BTG. As the hon. Gentleman said, we accept the amendment proposed by Lord Flowers in another place. It will ensure that there is full consultation with the universities. We believe that the hon. Gentleman's amendments are unnecessary. Amendment (a) would require the Secretary of State to consult the research councils. I should draw the attention of the House to the role of Government research councils. They have historically provided the BTG with a small proportion of its inventive ideas. In the year ending 31 March 1991, about 10 per cent. of new inventions accepted by the BTG came from this source, compared with around 50 per cent. from the academic sector.

I hope that the hon. Member for Kirkcaldy will accept that the fact that we have accepted the Lords amendment, and will ensure that there is proper consultation with the universities, will meet any concern that might exist.

Amendments (b) and (c) attempt to set out some of the details of the kind of consultation which the Secretary of State must conduct with the universities and to fix a three-month period for that to occur. The Government do not consider that that is appropriate. We will conduct proper consultation with the universities before any offer for sale is made. We will certainly ensure that there is sufficient time for them to make representations and for us to consider them.

We do not believe that it will be in the interests of the long-term viability of the BTG to extend the consultation period over a fixed three months. I can only assume that there is something else behind the amendments--that the Opposition are attempting to delay full privatisation beyond next spring. I cannot understand why. If one was solely concerned with the future of the BTG--there is considerable interest in the country in purchasing it as a viable entity--on should reject the amendments.

Dr. Moonie : Implicit in that statement is the suggestion that the BTG will be privatised immediately. Is that the case?

Mr. Leigh : There will be a full consultation period. I cannot give a firm date when privatisation will take place. As soon as Royal Assent is received, an information memorandum will be issued. I can tell the House that considerable interest has been expressed in purchasing the BTG. We are confident that we will find a purchaser or purchasers who will ensure that the impartiality, independence and integrity of the BTG is maintained.

I cannot give a firm date when the privatisation will take place, but I hope that it will be some time in the new year or shortly after.

Mr. Simon Hughes (Southwark and Bermondsey) : The Minister and his colleagues will be aware that I, in common with the hon. Member for Kirkcaldy (Dr. Moonie), have been extremely sceptical from the outset about the interests and motivations of the Government.

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We believe that the Government consider the BTG to be yet another publicly owned asset which, for dogmatic reasons rather than anything else, they want to privatise.

It is welcome that at least the cross-Bench proposal--described as minimalist--was approved by their Lordships. That will lead to some consultation with the universities. Effectively, that has been the only concession wrung out of the Government by electoral defeat. However, I am glad that they have not sought to overturn that in the fag-end of the parliamentary Session.

On the amendments, although the Minister has sought to say that the research councils have a lesser share of BTG business that does not invalidate the point that they should be the subject of consultation. As a result of the amendment in the other place, which the Government now recommend to us to accept, there will be consultation with the universities. However, that does not exclude the advantage of consultation with the research councils as well. The Minister's answer did not deal with that point effectively.

The amendments seek to ensure that the consultation exercise is wider and longer than it might otherwise have been. That is the risk behind the procedure. I accept that one normally would not specify that the details of consultation should be contained in legislation. However, the danger is that the Government will proceed more quickly than would be wise even if one accepted the premise of their privatisation proposal. The Minister did not deal with that problem. My party, in common with the Labour party, does not accept that premise.

I accept that the Government made some consessions in the other place on the articles of association, and dealt with some of the concern about the independence and integrity of the BTG being sustained. The large bulk of the employees of the BTG work in my constituency. Apart from the senior management, those employees have never been persuaded that the privatisation proposal was in their best interests, so those concessions on the articles of association are welcome. The fact that there will be some protection and that the BTG will not be sold off wholesale to one interest is at least progress. It appears that the argument has been won.

However, it will be unfortunate if the Government do not accept the amendments tabled tonight. They do nothing disadvantageous but give some protection, and they would be welcomed by the employees. They would not be disadvantageous to the British Technology Group or the public interest. Therefore, although the Minister's initial response was to resist them, I hope that he will accept them in the same way as the Government have accepted the principal Lords amendment before us, which provides for consultation. Our scepticism, however, remains. We think that the Government are wrong and, if the opportunity arises, we--like the Labour party--would seek to change the course that the Government are piloting for the BTG. We hope that that opportunity will arise. In the meantime, I hope that the Government will accept that the amendments have been tabled in good faith and will, even at this late stage, accept them.

10.45 pm

Dr. Jeremy Bray (Motherwell, South) : The Minister is right to say that a number of the points that Labour Members have argued on Second Reading and in Committee were subsequently accepted in the Lords, and

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that some of them have been embodied in the published articles of association. However, I am surprised that he has not continued in that spirit in reply to our amendments to the Lords amendments before us tonight. They were tabled in good faith with the intention of serving the purpose of an efficient future for the British Technology Group.

It may be true that, in the past and until now, the research councils have directly accounted for only a relatively small proportion of the IPR that has come to BTG. However, I should be surprised if the Department of Trade and Industry, of all Departments, were to take the view that that would necessarily be so in the future. Does he value the link programme so little that the joint interest between the Minister's Department and the Science and Engineering Research Council might not produce a more abundant supply of IPR which BTG might wish to consider in the future?

As for the scope of the consultation, I expected the Minister to stand up and say, "Yes, of course we shall consult on those matters. It would only be common sense to do so. It is not necessary to put it into the legislation, but it is certainly our intention, in safeguarding the integrity and impartiality of the BTG, that there should be scope for consultation." There is a practical reason for this : there have been reports, confirmed in a sense by the Minister, that more than one group is interested in bidding for BTG. However, the universities have been approached by only one potential group, and they have no knowledge of what other bidders may be in the market.

Surely the Minister sees that it would be in the DTI's interest and the interests of the future of the BTG, for the universities to be properly consulted about the bids that are received. In recognising that one might well be more closely associated with the universities than others, it is not beyond the wishes of the Minister and his Department to handle such consultations. It need not be a sensitive matter but may be related to the acceptability of the partners, what is known about them, and so on. A vast fund of knowledge exists within the universities and the research councils, which I should have thought the Minister would want to tap.

Had we wished to table a blocking amendment, the period would not have been three months but six months or a year. Had our intention been to wreck the Bill, you, Mr. Speaker, would not have selected the amendments for consideration, because they would have been out of order. So it is a bona fide point that there are substantial issues on which practical consultation is needed about the nature of the Bill, particularly given the concessions that the Government have made--the special share, the 15 per cent. holding and the disposal of more than 25 per cent. All those factors point to a desire to carry with BTG the support of the public in the higher education and research council sectors.

Therefore, even if the Minister is not of a mind to accept the amendment--I understand the procedural complications that that might cause, because, if the amendment were to return to the Lords further amended tomorrow, that might lead to delays and embarrassment for the Government--surely, in view of the worries felt in the universities and research community, the Minister could say that it was his intention to conduct consultations in the manner and with the scope suggested in the amendments.

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Mr. Leigh : I am grateful to the hon. Members for Southwark and Bermondsey (Mr. Hughes) and for Motherwell, South (Dr. Bray). We believe that the universities can be taken as representatives of the whole research community. That point was made by Lord Flowers in another place, when he moved the original Lords amendment. I shall remind the House of the figures that I gave previously. As the hon. Member for Motherwell said, they might change but as a benchmark they provide useful information. In the year ending 31 March, about 10 per cent. of new inventions accepted by the BTG came from research councils, compared with about 50 per cent. from the academic sector. Therefore, the universities are in a wholly predominant position, and enjoy a unique relationship with the BTG. We do not believe that it is necessary to make similar provisions in the Bill for other interest groups.

Dr. Bray : Is the Minister saying that the universities, which were the source of the proposals, were not funded by the research councils in any of the research leading to their proposals?

Mr. Leigh : I can only repeat what I said, which I think was absolutely clear. We were rightly told that the universities have a predominant role in BTG's affairs. They provide BTG with about 50 per cent. of its inventions. Lord Flowers told us that the universities can represent the research councils in the consultations. Therefore, we accept the amendment in a spirit of conciliation.

If we were to accept the logic of what the hon. Member for Motherwell, South said, we would have to broaden the further consultation provided for by the Bill to include a raft of other interested parties, including private sector companies, investors, management and employees, polytechnics and licensees--all of which have legitimate interests. We have listened to representations on the Bill made to us while formulating our policy on the special share provisions. However, we do not intend to include special provisions in the Bill to consult all those groups, because it simply would not be feasible to do so.

Timing was mentioned by the hon. Members for Motherwell, South and for Southwark and Bermondsey. We believe that a period as long as three months is neither necessary or possible. The best way to explain the subject to allay any fears--particularly those expressed by the hon. Member for Southwark and Bermondsey--is that the consultation process will not be rushed. It will take as long as is required--no longer and no less. With good will on both sides, it need not be a process that takes months rather than weeks to resolve. Preparations for the sale are well advanced, and there are a large number of potentially interested parties. Therefore, it would send the wrong message to the market and have a prejudicial effect on the sale if there were now to be a three-month hiatus in the privatisation process to allow for consultation. I hope that I can reassure the hon. Gentleman that there will be proper consultation, but it would in no way aid the group's future as an organisation maintaining impartiality, independence and integrity if there were to be a three-month hiatus.

The hon. Member for Motherwell, South said that the privatisation of the BTG was ideologically driven. The BTG already operates on a fully commercial basis. It is

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entirely self-financing and profitable, with no Government subsidy. It no longer enjoys the right of first refusal on public sector inventions. It has been competing for this business since 1985. Lastly, and most importantly--this meets the charge that our privatisation is merely ideologically driven and not concerned with the better management and future of this organisation--its current public sector status restricts the commercial freedom of the business and has restricted its development, especially overseas.

We believe it right not for ideological reasons but for the future of this group, for its impartiality, independence and integrity, that we should complete the process tonight which will, incidentally, result in the abolition of the National Enterprise Board.

Dr. Bray : Does the Minister intend to consult the universities on any bids received, given the universities' right to nominate a director to the board?

Mr. Leigh : No, because the universities may place a bid themselves. We have taken great care to allay all their

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concerns. I met the Committee of Vice- Chancellors and Principals, as did my noble Friend Lord Rea. It is very possible that the universities may want to bid for a share in this consortium. In that event, it would be inappropriate to give preferential treatment to the universities in the bidding process. We will be bound by this Lords amendment--I hope that the House will accept it in a few moments' time--at the time when the memorandum of information is sent out, to consult the universities on it and on the advertisements associated with it. That will reassure the universities that we intend to continue the constructive dialogue that we have held with them on this issue in recent months.

Dr. Moonie : We are not very happy with the Minister's reassurances, but I see no point in pursuing the matter. I therefore beg to ask leave to withdraw the amendment.

Amendment, to the Lords amendment, by leave, withdrawn. Lords amendment agreed to.

Consequent Government amendments Nos. 1 and 2 agreed to.

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Aid to Developing Countries

[Relevant documents : European Community Documents Nos. 6515/90 relating to guidelines for co-operation with developing countries in Asia and Latin America and 7576/91 relating to generalised tariff preferences for certain products originating in Costa Rica, Honduras, El Salvador, Guatemala, Nicaragua and Panama.]

Mr. Bowen Wells (Hertford and Stortford) : On a point of order, Mr. Deputy Speaker. How much time do we have to debate this order ; and why was it not considered, as recommended by the Select Committee on European Legislation, by European Standing Committee B?

Mr. Deputy Speaker (Sir Paul Dean) : We have one and a half hours to debate the order, if that much time is required. On the other point, apparently the House voted accordingly.

10.58 pm

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

That this House takes note of European Community Document Nos. 4051/91 and the Supplementary Explanatory Memoranda submitted by the Overseas Development Administration on 18th and 25th February 1991, and 5896/91 COR I, relating to financial co-operation with developing countries in Asia and Latin America ; and endorses the Government's policy on Community aid to Asian and Latin American countries. The motion invites the House to take note of two documents, 4051/91 and 5896/91. The first is a Commission communication to the Council proposing guidelines for technical and financial co-operation with the developing countries of Latin America and Asia during the period 1991 to 1995. The second is a proposed regulation on the same them. If a regulation is adopted by the Council, the guidelines will become redundant. This we hope to do at the Development Council on 28 November.

The earlier draft, 4051/91, was deposited with an explanatory memorandum on 8 February, and a supplementary explanatory memorandum on 25 February. The second document, 5896/91, was deposited with an explanatory memorandum on 5 June. There was a previous Commission communication, document 6515/90, which the Select Committee on European Legislation also considered relevant for debate. It is therefore tagged to this motion. However, it has been overtaken by events. It was a general policy paper entitled "Guidelines for Cooperation with Developing Countries of Latin America and Asia". One further document is tagged to this debate : the Commission's recent proposals on the tariff preferences for certain products originating in central America, Document 7576/91. I will come to this later. Since the United Kingdom joined the EC, British Governments of both parties have supported a global EC development programme going beyond the African Caribbean and Pacific countries covered by the Lome Convention. These documents do not deal with aid to Lome countries, of which there are now 69, nor does it cover food aid, on which about £120 million per year is spent for Asia and Latin America alone. It concerns only the EC's programme of aid to Asia and Latin America--the ALA programme--started in 1976. A Council regulation of February 1981, adopted after five years of discussion, gave it a clear focus on the poorest countries and on the needs of rural areas.

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Implementation has since then been governed by annual guidelines. In December 1990, the Council of Ministers agreed a five-year framework figure for development aid to Asia and Latin America of £1.92 billion or 2.75 billion ecu. The documents propose the basis on which that money should be allocated.

Asia and Latin America are regions of great importance to us. They include major trading partners, both dynamic growing economies in the Pacific rim and our more traditional partners such as India, Pakistan and Bangladesh. They are regions of great political significance, with many countries especially in Latin America emerging from murky military regimes to the light of democracy. They also contain a large proportion of the world's poorest people and environmentally sensitive forests and savannahs. It is therefore right that we should accord them a high place in the EC's external relations.

Dr. Norman A. Godman (Greenock and Port Glasgow) : I agree with almost everything that the Minister has said, especially about murky military regimes. Will she assure the House that agricultural exports, especially the export of tropical fruit from Latin America, will not harm the interests of Caribbean producers? As the Minister knows, many banana producers are now small family farms in the Windward Islands and elsewhere. The Germans do not appear to give a damn about such producers. May we be assured that those producers' interests will not be harmed by the developments that the Minister outlines?

Mrs. Chalker : I can give the hon. Gentleman that assurance. He and my hon. Friend the Member for Hertford and Stortford (Mr. Wells) will know how hard we have worked to try to get a proper regime for Caribbean countries, which are the main suppliers of bananas to the British market. It would be wrong to go into more detail, but I assure the hon. Gentleman that the subject of bananas is never far from my desk, and we shall discuss it further in the future.

Mr. Jacques Arnold (Gravesham) : Will my right hon. Friend bear in mind that the Commonwealth Caribbean countries should not rely on our good will and supply us with inferior quality bananas? Will she note that a much higher quality of banana is obtainable from the republics of central America, which in many ways also deserve our good will?

Mrs. Chalker : I should be in your bad books, Mr. Deputy Speaker, if I went into the subject of the quality of bananas at this point in the debate, but I assure hon. Members that the aims of our bilateral aid programme in the Caribbean, which is not covered by these documents, are not only to improve the quality of the produce of all the dependencies, such as the Windward Islands, but to encourage diversification into other products. Without diversification, all banana growers, whether in the Caribbean, central America, Latin America, Asia or Africa, will be in difficulties.

Mr. Jeremy Corbyn (Islington, North) : Watch out for the skins.

Mrs. Chalker : The hon. Gentleman is too kind.

In 1989, largely at United Kingdom insistence, the Commission produced an evaluation of the 13 years of its ALA programme. At the Development Council in November 1989 I insisted that we should maintain the

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poverty focus of the programme, increase the role of women in its projects, and make it more sensitive to environmental concerns. I am glad to say that the Council agreed. It was in response to those conclusions that the Commission produced the documents which are the subject of tonight's motion.

The new Development Council policy shows a number of welcome improvements. For example, it has been a goal of British Government policy under Governments of both parties to secure a basis for EC aid to Asia and Latin America which allows for coherent planning of aid in each of the major recipient counties. Hence, we welcome the creation of a multi-annual programme, which should allow more effective aid programmes linked to the implementation of development policies by the Governments concerned.

We also welcome the way in which aid is to be tailored to the varied needs of recipients. The Commission documents refer to two axes : development aid for poor countries and population groups, and economic co-operation with more advanced countries and sectors. For the latter countries, economic co- operation, with its emphasis on trade and the private sector, is clearly the right approach. We have been in the forefront of the pressure for greater access to markets of the developed world, for more effective support for the development of the private sector, and in the promotion of the right climate to encourage investment.

For this to work, there must be a real prospect of markets for the goods produced. We have therefore argued very strongly for an open and liberal trade regime through the general agreement on tariffs and trade, GATT, and continue to believe that this is the best mechanism to advance the development of all economies. Trade is more effective than aid as an engine of growth, and contributes much more income to the developing nations.

However, for poor countries, that trade engine may need help to get started. Aid on concessional terms is vital to help build the infrastructure, both physical and human, that the private sector needs to grow. We also have a duty to seek to alleviate the acute poverty that blights so many lives in these countries. I have repeatedly emphasised the importance that we attach to improving the position of women. Women bear most of the burden of poverty in these countries and we must continually seek to design our aid to meet their needs. For example, we are contributing £6 million and the EC a similar amount to the Chitral rural support project in Pakistan, in which, alongside the Aga Khan Foundation, we aim to help women improve their skills, participate in decision making, and gain genuine control over their lives.

We have therefore worked hard in the negotiations on the new ALA programme to maintain the poverty focus of the development aid axis, so that grant aid goes where it is most needed. We have also pressed hard for a high priority for the needs of women. We expect to succeed in both areas. Our partners now see the crucial importance of these dual focuses.

The conservation of the environment is another key theme of British aid policy. The 1990 Houston summit charged the Commission, together with the World bank, with developing a programme to conserve the Amazon rain forest. Earlier this year, I visited forest areas in Brazil

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and saw for myself both the scale of the need and the contribution that we are making through our bilateral aid programme there. We have already launched six forestry projects, and appointed a forestry expert to make sure these are effective and to design more projects there. However, the theme is too large for any single donor, so we have argued strongly for a substantial proportion--at least 10 per cent.--of the EC's ALA programme to be set aside for projects specifically to conserve the environment throughout both regions. We have also pressed for a special place to be given to the fight against drugs. This is a scourge of most regions of Asia and Latin America. We have ensured that there is a special place made in the regulation for aid to combat drug production and trafficking. We therefore welcomed the allocation of 60 million ecu--about £40 million--to the worst affected countries of the Andean region last year. These countries were also accorded special treatment under the Community's trade preference system for developing countries, the generalised system of prefer-ences. Since we do not wish to dilute that advantage, we have reservations about extending the same benefits to central America, as proposed in the Commission proposal 7576/91 which is tagged to this debate.

We believe that human rights and good government are fundamental to the success of development.

Mr. D. N. Campbell-Savours (Workington) : My hon. Friend the Member for Cynon Valley (Mrs Clwyd) has done some interesting work on the question of renewables and how they could be slotted into the aid programme. Does the Commission have a view on the extent to which the export of renewables technology to third-world countries might be further developed ? Do the Government have a view on these matters ?

Mrs. Chalker : I can answer for my Department. We are examining that question to see where it can fit and where it will work. A country has to have a certain ability to accept and utilise such exports before they are sent. I am not aware that the Commission has taken a position on the issue, but I will check and write to the hon. Gentlemen.

I said that I believe that human rights and good government are fundamental to the success of overseas development. My right hon. Friend the Prime Minister made a clear and powerful statement of our views on this topic in Harare last week at the Commonwealth Heads Of Government meeting. It is critical to look at the broader policy environment when considering aid allocations. For example, are the institutions to which the aid is being directed effective, open and accountable? What are the democratic processes? Does the country respect human rights and the rule of law? Answers to questions of that kind indicate whether resources are being used effectively. They also help to tell whether the recipients are, in fact, committed to those goals in the context of their own societies.

Where improvements can be encouraged, there are positive measures that we can take. These include support for the legal sector, customs, police, public administration, accounting and audit, and a free press. On the other hand, while it is right to emphasise the help that we can give to those who wish to move forward, in cases where the abuse of human rights is serious, we have to be prepared to redesign or withdraw support. That is true for the ALA programme but, of course, it also goes much wider.

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Mr. Wells : Are the Government's broad policy aims shared by the European Community? How can my right hon. Friend ensure that, if they are, they are enforced through the policies of the European Community?

Mrs. Chalker : My hon. Friend anticipates my next comments. The Dutch presidency is preparing operational guidelines on "Human Rights, Democracy and Development", and we must ensure that these threads are sewn into all Community aid. My discussion with our 11 partners in Holland in July this year was open and first class, and I believe that all countries are prepared to follow the lead that we have given in aid policy. We are also negotiating clear provisions in the ALA regulation in particular. That is very important, because it means that we are starting with the ALA regulations as we mean to go on.

Good government is essential for aid programmes to be effective, but there are other aspects of effectiveness, and here again we are pressing hard for improvements. The United Kingdom's share of the EC aid programme forms an integral and important part of our overall aid programme, and we work for high quality in it as we do for all our aid. I have to say that I do not believe that the Commission's systems are yet up to our standards, but we have seconded a number of staff to build them up. We are also working to improve monitoring and evaluation procedures in the Community.

The House will have noted that the second draft was a good deal better than the first. At least in part, that is due to our efforts. We now await a further revised proposal which, I trust, will be better again.

Mr. Peter Bottomley (Eltham) : My right hon. Friend will have noticed the comment in the explanatory memorandum, which states : "the new proposal does not accurately reflect the conclusions which were reached at Council."

Can she share with the House her opinion on whether that refers to an insignificant mistake that we are now pointing out or whether it was a result of deliberate confusion? In the administration of a programme, it strikes me as rather important to translate Ministers' wishes at the Council into what is put before the European Community.

Mrs. Chalker : As so often happens in some of these discussions, there is a good reason for improving the draft. I will check on my hon. Friend's point. As far as my memory serves me, it was a question of improving the draft. There was nothing sinister behind it.

Mr. William Cash (Stafford) : Has my right hon. Friend had discussions with the United States on these matters? The question of protectionism in Europe and the increasing interest of the United States in south America as a result of that is developing. Has my right hon. Friend observed any change in the United States position? Why are we taking such a specific interest in those countries when it appears that the United States is beginning to take a greater interest in the north-south grid of central and south America, and in the developments that that might have with respect to protectionism and the European Community?

Mrs. Chalker : As the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) has already said, the United States has always taken a

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tremendous interest in central and south America. It has also taken an interest--one might not always describe it as a free trade interest--in what happens to products coming not only from those countries, but from countries further afield. My hon. Friend may remember that I said earlier in my speech that one of the most important things for the developing ALA countries--and, indeed, for all other developing countries--is trade access. Getting a successful outcome to the GATT round is fundamental. That was underlined by the G7 summit and was repeated by my right hon. Friend the Prime Minister during the summer months. We are determined to ensure, as we have succeeded in doing in the ALA regulation, that there is improved trade for the developing countries. All our EC partners have signed up to that. I hope that I can put my hon. Friend's anxieties to rest on that.

When we come to the Development Council on 28 November, I intend to ensure that the final version of all the documents incorporates and fully reflects the goals that I have outlined in my speech today. I have no interest in programmes that do not meet those goals, They must meet those goals for the sake of the developing countries, for their future, for alleviating poverty, for improving the lot of women in those countries, improving the environment of those countries and, above all, helping them to gain growth in their own economies, which will help their nations more than anything else.

11.18 pm

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