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Column 273
Trotter, NevilleTwinn, Dr Ian
Vaughan, Sir Gerard
Viggers, Peter
Waldegrave, Rt Hon William
Walden, George
Walker, Bill (N Tayside)
Waller, Gary
Ward, John
Wardle, Charles (Bexhill)
Waterson, Nigel
Watts, John
Wells, Bowen
Wheeler, Sir John
Whitney, Ray
Whittingdale, John
Widdecombe, Ann
Wiggin, Jerry
Willetts, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macc'f'ld)
Wolfson, Mark
Wood, Timothy
Yeo, Tim
Young, Sir George (Acton)
Tellers for the Noes :
Mr. Sydney Chapman and
Mr. Irvine Patnick.
Question accordingly negatived.
It being after Ten o'clock, Madam Speaker-- interrupted the business.
Madam Speaker-- then put forthwith the Question which she was directed to put pursuant to paragraph (1) of Standing Order No. 53 (Questions on voting of estimates, &c.).
Supplementary Estimates
1992-93
Resolved,
That a supplementary sum not exceeding £833,362,000 be granted to Her Majesty out of the Consolidated Fund to defray the charges for Defence and Civil Services which will come in course of payment for the year ending on 31st March 1993, as set out in House of Commons Papers Nos. 44 and 45.
Bill ordered to be brought in upon the foregoing resolution relating to Supplementary Estimates 1992-93 by the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Michael Portillo, Mr. Stephen Dorrell, Sir John Cope and Mr. Anthony Nelson.
Consolidated Fund Appropriation Bill
Mr. Stephen Dorrell accordingly presented a Bill to apply certain sums out of the Consolidated Fund to the service of the year ending on 31 March 1993 and to appropriate the supplies granted in this Session of Parliament : And the same was read the First time ; and ordered to be read a Second time tomorrow and to be printed. [Bill 40.]
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Points of Order
10.12 pm
Mr. Nigel Spearing (Newham, South) : On a point of order, Madam Speaker, relating to the manner in which Secretaries of State present reports to Parliament. You may be aware that, last August, the Secretary of State for Transport published a report by the marine accident investigation branch into the "Marchioness" tragedy. It precipitated some controversy, because of the nature of the report and its failure to mention six accidents involving the dredger "Bowbelle". Subsequent parliamentary questions and requests led the Secretary of State to appoint a Mr. Hayes to report on river safety in general.
That report was published today. I had given evidence, and had tabled a question asking when the report would be published. This afternoon the Secretary of State for Transport published an extensive press release relating to the report, a copy of which is in the Library. I understand that the Minister for Aviation and Shipping, Lord Caithness, has given television and radio interviews on the subject.
According to the press release,
"Mr. Hayes recommended that there should be an early review of the rescue arrangements and equipment on the Thames. The Government has given careful consideration to the recommendation but has concluded that further review of this kind would not be justified."
My point of order is that, having asked the question as to when this report would be published and having submitted evidence to the inquiry, neither I nor the hon. Member for Southwark and Bermondsey (Mr. Hughes), who is the constituency Member concerned, was informed about this report, or about the press conference, or about the statement that is in the Library. We were told about it by, ironically, Thames Television. If a report is made to Parliament, it is surely made to Members of Parliament. In particular, it should be available to those who have some concern about and knowledge of this matter, as well as to the generality of hon. Members. I ask you, Madam Speaker, so to rule.
Mr. Simon Hughes (Southwark and Bermondsey) : Further to that point of order, Madam Speaker. I confirm everything that the hon. Member for Newham, South (Mr. Spearing) has said. He and I have discussed the issue since these matters were drawn to our attention early this evening. There is no difference between us.
The points that I should be grateful if you would also consider are these. First, when any hon. Member tables a question that specifically asks about the publication of a report that is either known to be or is believed to be imminent, is it a proper procedure or an abuse of procedure for a planted question subsequently to be tabled so that the question is then asked by somebody who has no constituency or previous interest in the matter? That appears to be a breach of the traditional link between a constituency Member, or a Member with a wider interest, and the Department concerned. The second matter relates to the sequence of events once a decision has been made to produce a report to Parliament. I understand that there may have been an appropriate time of day when that report could be published, but, like the hon. Member for Newham, South, the first knowledge I had that the report had been published today was a telephone call to my office at about
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5.30, two hours after it had been confirmed by Thames Television that it had been published. I was out of the House. I asked that inquiries should be made of the Department as to the contents of the report. The anwer that was given to my assistant was that that information could not be divulged because a press conference was at that very moment going on. I had to wait until after the press conference was over before I was allowed to have the information contained in the press release that had been issued earlier in the day.There have been similar sequences of events on other issues. I hope that you, Madam Speaker, will feel it appropriate, either now or at an early opportunity, to rule on the proper procedure so that all Departments and all Members can believe, on behalf of those whom they represent, particularly in the case of tragedies such as this, that the proper procedures have been observed. I hope, too, that an appropriate apology will be made regarding what has happened today.
Madam Speaker : I take the view that those Members who are directly involved in such incidents should be the first to be informed when there is any statement to be made, but I also take the view that I am biased in favour of this House in its entirety being informed when the Government have something to say to the House and that statements of such a nature should not first be made outside it. We in this House have the right to know first.
Sir Ivan Lawrence (Burton) : On a point of order, Madam Speaker. I do not know whether you witnessed the quite disgraceful incident that took place on the previous vote. What I saw--it may be confirmed by a large number of colleagues--was two Opposition Members trying to get through the door after you, Madam Speaker, had ordered it to be closed. What then followed was the attendant--doing his duty as the servant of the House-- trying to hold the door closed while those two hon. Members tried to force it open. They were not able to do so, but only after a protracted struggle and, no doubt, a great deal of energy having been expended by the servant of the House who was following your orders. One of the most disgraceful aspects of this incident is that those hon. Members who are sitting on the Opposition Front Bench saw this incident, but have not seen fit to come to the Dispatch Box and apologise for the behaviour of those two hon. Members. I respectfully ask, Madam Speaker, that, having seen that incident yourself, you will do something about it, because it is totally wrong that such an incident should go unredressed.
Madam Speaker : I sit here very quietly and watch what goes on at the door once a Division is called. I saw precisely what happened tonight. Members who were going through the door did so in a very leisurely fashion, and I feared that they would not get through in time. However, hon. Members know the rules of the House, and there is nothing I can do about that, other than, when I instruct the Doorkeepers to close the door, to see that they obey my instruction. I deprecate the incident that occurred tonight when two Members forced their way through the door. I hope that this is the last time that I shall sit in this Chair and see anything like that happen. The Doorkeepers are, like me, servants of the House. We all know the rules. Let us now proceed with our business.
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Finance Bill
Not amended in the Committee and as amended (in the Standing Committee), again considered.
New clause 5
Additional Relief for Developing Country Debt
After section 88C of the Taxes Act 1988 to insert the following section--
"Additional relief for overseas Government debt
88D--(1) Where in relation to a debt to which section 88A(2) above applies, a company has included a provision in its accounts for any accounting period ending on or after 30th June 1992 which exceeds the aggregate amount which has been deducted under section 74(j) above in relation to that debt for that and any previous accounting period, then it shall be entitled to additional relief under subsection (2) below, subject to the clawback provided for by subsection (3) below. (2) The additional relief shall be a deduction from profits chargeable to corporation tax for that accounting period equal to the difference between the aggregate amount mentioned in subsection (1) above and the lesser of
(a) the provision mentioned in subsection (1) above and (b) the maximum provision which would have been made in relation to the debt had the company followed the recommendations contained in the Bank of England's guidelines for overseas debt provision in force at the end of that accounting period ;
and for the purposes of subsection (1) above any relief given by virtue of this subsection shall be regarded as an amount deducted under section 74(j) above.
(3) The additional relief granted by subsection (2) above shall be withdrawn to the extent that, at a date one year from the end of that accounting period, the company has not made a relevant release of the debt ; and an assessment made to give effect to this subsection (or subsection (5) below) may be made at any time up to six years after that date.
(4) For the purposes of subsection (3) above, a "relevant release" means
(a) a release of the debt in favour of the Creditor Overseas State Authority for no consideration, or
(b) a disposal of the debt to the Creditor Overseas State Authority for a consideration equal to or less than its book value at the end of that accounting period, or
(c) a disposal of the debt by the company under a development plan or an environmental protection plan approved by the Treasury ; and the Treasury shall be empowered by this subsection to issue regulations demonstrating the criteria which it will use in deciding whether or not to approve under this subsection a development plan or environmental protection plan submitted to it for approval. (5) Nothing in subsections (1) to (4) above shall cause the aggregate profits charged to corporation tax of any person for the accounting period in question, and all previous accounting periods in relation to which he was chargeable to corporation tax, to exceed those which would have been so charged had this section never been enacted, and this section shall have no effect to the extent that it would otherwise cause such excess to be charged to corporation tax.".'.-- [Mr. Boateng.]
Brought up, and read the First time.
10.20 pm
Mr. Boateng : I beg to move, That the clause be read a Second time.
This clause is debated in the aftermath of the Rio summit, where the disparity between the nations of the north and of the south was revealed in all its reality and we
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saw the impact, not only in terms of poverty and life expectancy but in terms of environmental degradation, of the ever- growing burden of third-world debt.This clause seeks to focus the attention of the House on that issue and to put forward a practical proposal to encourage banks and those commercial lenders who currently require from the developing world a degree of interest, a degree of repayment, that all too often has the effect of crippling those countries to forgo the debt and to see that it is applied in such a way, in the alternative, as to promote environmental and development objectives.
No one should be under any illusions as to the extent of the global crisis in debt. The figures speak for themselves. In 1989, the figure was $1.3 trillion--44 per cent. of the gross national product of the developing world. Money paid to developed nations in interest was $77 billion ; money repaid, $85 billion ; net flow from poor to rich countries, $50 billion.
The figures are enormous and they speak for themselves. What they do not reveal, however, is the enormous burden of human suffering that flows from those figures. In the last decade debt has emerged as the main cause of hunger and misery in the world. One thousand children are estimated to die every day from its effects alone. That is a clear indication of the extent to which the matter with which the House is concerned tonight has an immediate impact on the world outside the House.
If we take one example, the impact on one country, Ghana, of the burden of overseas debt, the position becomes very clear. In Ghana, the current position is that to meet its crippling burden of debt it devotes one half of the foreign exchange earned by its cocoa farmers to servicing that debt. The cocoa farmers provide the countries of the north with drinking chocolate and chocolate to eat, at a time when, Oxfam informs us, more than half of the children in Ghana do not have enough to eat. That is an indication of the extent of the crisis.
But it does not end there. No doubt we shall hear that some measures have been taken by the developing world to address the problem. The Trinidad terms that were proposed by the Prime Minister when he was Chancellor of the Exchequer were welcome so far as they went, but they did not go far enough.
Mr. Tim Smith (Beaconsfield) : They have not been accepted.
Mr. Boateng : The hon. Gentleman is quite right. The Trinidad terms, limited though they were, were not accepted by many of our partners in the European Community or, indeed, by the United States. The result is continued failure to address the problem of world debt. When one peels away the rhetoric of Rio--and, indeed, when one examines the rhetoric itself-- one sees that a great deal was said about the importance of at least aiming for the United Nations target of the expenditure of 0.7 per cent. of gross domestic product on overseas aid. That fact is not insignificant. But the target was dismissed by President Bush as being unrealistic, and the British Government regarded it as a dim, distant objective. However, at least there was talk about the matter ; at least the objective was focused upon.
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How much time did the participants at Rio devote to discussion of the issue of debt?Mr. Boateng : Indeed--none. But a good deal of time was devoted to keeping it off the agenda, to ensuring that it was not given the negotiating position that it merited as a matter of urgency to the developing world. Indeed, the action programme for Governments managed to reach it only as agenda item number 21, at which point it was said that a reduction of up to $80 billion in debt should be given consideration. That is the extent to which the Rio programmme of action was prepared to take this matter on board. We seek to give the banks some kind of incentive to address the issue. That is modest enough, but it should be welcomed by all and every hon. Member, on whichever side, who cares about development.
It is interesting to note how this is being addressed through the current tax provisions--a matter that was referred to by my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) in a recent question to the Chancellor of the Exchequer. The Economic Secretary responded to my hon. Friend's question about the amount of corporation tax that had been forgone from British banking institutions through the writing down of developing country sovereign debts in the past five years. My hon. Friend asked :
"how much sovereign debt has (a) been cancelled or (b) been made available for debt-for-environment or debt-for-development swaps, in each of the last five years as a result of this writing-down." The answer was :
"Provisions for doubtful sovereign debt by banks operating in the United Kingdom are estimated to have reduced corporation tax receipts in the last five years by the following amounts :
|£ million
-------------------------------
1987-88 |240
1988-89 |550
1989-90 |360
1990-91 |720
1991-92<1> |190
<1>Official Report, 25 June
1992; Vol. 210, c.278.
10.30 pm
The last figure is provisional. It was not possible to provide the information requested and to show the benefit in terms of debt for environment or debt for development swaps, and how the forgoing of corporation tax had benefited the developing world.
The most commendable feature of this modest new clause is that it at least begins to make a start in that direction. At least it requires, through subsection (4)(a), (b), and (c), that there be a notion of what the objective of the "relevant relief" is. We shall be able to recognise to what end reliefs are directed. That important aspect of the new clause should commend itself to the House. We do not hold out this modest new clause as being the whole answer to the problem, but at least it makes a start towards encouraging the banks to resume an attitude towards such debts that is conducive to development and makes a start to recognising the link between the burden of debt and environmental degradation. The developed countries of the north have condemned the developing countries of the world to a labour of Sisyphus in which, day in and day out, their agricultural and industrial
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production, such as it is, is used to service an ever-increasing mountain of debt. That crushes their efforts and has a devastating effect on their environments and peoples.We hope that the House will give a warm welcome to this new clause, which will make a small start in the right direction.
Mr. John Battle (Leeds, West) : In May of this year, a report was published by the Washington-based Population Crisis Committee in the form of an "International Index of Human Suffering". It pointed out that almost three quarters of the world's population live in conditions that tax human endurance, and that the gap between the rich and the poor countries is massively widening. It pointed out that more than 430 million people live in conditions of extreme suffering and 3.5 billion in conditions of what it terms high suffering. We do not recall often enough in the House or in our society that we live in a world in which 1 billion people have less than the equivalent of £1 a day on which to live.
Economic distress, national disasters, persecution and war are turning millions of people into refugees and migrants. This year we need only consider the evidence of drought in sub-Saharan Africa. Zambia set out at the beginning of last year with a new planting programme. It managed to plant 130 per cent. more of the land than had been planted the previous year. In other words, it was on target for a better harvest than ever before. The spring shoots came through, but people then had to sit and wait for the rain, and it did not come. The crop failed and the lack of sales of that crop to other countries will mean hardship and economic distress in Zambia. Some development bodies, including the World bank, are referring to the 1980s as the lost decade of development. Since our previous debate on the issue in 1990, the burden of third-world debt has increased. When we last debated the issue in a Finance Bill debate, the debt figure was $1,180,000 million. In 1992, the projected figure is $1,223,000 million. Some 55 per cent. of the debt is in the poorest 46 countries.
The debt that has built up is equivalent to half the developing countries' combined gross domestic product and nearly twice their annual export earnings. In 1991, the debtor nations paid out $24 billion more in debt payments than they received in new loans. For example, Peru is now paying $50 million a month back to the International Monetary Fund and the World bank since Mr. Fujimori took office. In other words, the net flows of funds are clearly from the south to the north specifically as a result of the volume of debt.
Debt servicing is continuing to transfer wealth from the poor to the rich countries. In April, the United Nations development programme report spelt out how the gap between rich and poor had doubled in the past 30 years with the richest one fifth receiving 150 times the income of the poorest. Even the author of the report, a former Minister in Pakistan, said that he was shocked by that figure and that the international community should be shocked by it as well. Some 1.2 billion people live in acute poverty and suffer grossly inadequate access to resources such as education, health, infrastructure, fresh water, land and credit. That number has been increasing annually.
The restrictions in the global market--otherwise known as trade barriers-- cost developing countries about
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$500 billion a year. Farm and industrial production protection cost third-world countries $55 billion a year in lost earnings. Although that protection is in place and although, even today, we are told that the Prime Minister has not managed to make any breakthroughs in the GATT third-world trade talks, third-world countries are being told by the World bank, the IMF and northern Governments that, conditional to their getting aid and trade, they should liberalise and open up their national markets, precisely when the world will not do that when it is not in its interests. Apparently, it is fine for third-world Governments to have open and fair trade, but it is not fine for the world system to open up so that there is some justice in the trade system for third-world countries as well.We need to remember that only 17 per cent. of global capital is available to poor countries in the south. Only0.2 per cent. of global commercial credit goes to poor countries. Africa, which now has to be the most marginalised continent from the world economy, now accounts for only 1 per cent. of world trade. In the 1960s, it accounted for 4 per cent. In other words, in terms of trade, Africa is being marginalised even further.
In practice, the World bank and the IMF have become institutions for recycling debt, rather than sources of new resources. Again, the United Nations Development Programme report spelt out that the IMF is now taking$6 billion a year out of the south and that the World bank is taking $0.5 billion a year out of the poorest countries. What is being done to tackle the debt burden? The United Nations Secretary-General, in his acceptance speech, commented :
"tackling the crippling problem of international debt is central to achieving a healthy world economy."
We have had the Brady plan and we have had the Prime Minister's Trinidad terms initiatives. Of course, they related only to Government official debt relief, especially aimed at the poorest. We would have pressed for them to be extended certainly to middle-income countries as well, such as Peru, but not even they have been accepted at the G7 summit. At the previous summit, the issue of international debt was pushed off the agenda by the new east- west negotiations with what was the Soviet Union. It would be helpful if world debt were even on the agenda of the G7 summit which is now meeting. On commercial debt, in 1990, the Government changed the rules, as we know, on corporation tax relief, but only in relation to how much relief could be claimed in any one financial year. In practice, tax relief in Britain has not meant debt cancellation in third-world countries. Many middle-income countries and many Latin American countries owe most of their debts to commercial banks. At present, if a commercial bank has a developing country debt in its portfolio, it can claim corporation tax relief when it writes down that debt in its books. It does not, however, have to cancel the debt to the country concerned. In other words, provision seems to be set aside in the accounts of the bank but it does not necessarily benefit third-world countries.
The new clause would insist that in order to qualify for relief from corporation tax, a bank must cancel the debt to the debtor nation or transform it, as my hon. Friend the Member for Brent, South (Mr. Boateng) has suggested, into a debt-for-development swap, for example. The new clause would grant immediate tax relief to overseas debts if the banks released or disposed of the debt to the country
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concerned. At present, British taxpayers are subsidising the banks, but without much relief to the world's poorest. The subsidy is said to have been worth £650 million last year. My hon. Friend gave the table of figures that were available for each year from 1988 to the present. It strikes me that that relief alone is worth more than half of what the Government are currently giving in aid to third-world countries.Debt has fundamentally undermined the value of trade earnings and flows of aid to developing countries. In the immortal words of Michael Manley, it seems to third-world countries that they are trying to go up an escalator that is coming down against them and speeding up in the process. What chance do they have of going up the down escalator? Two thirds of the world is being drained of capital by the industrialised world. External debt is a major obstacle to economic development and social progress in the poorest countries of the world.
10.45 pm
The way in which our corporation tax operates is crucial. We ought not to pretend that it contributes to the alleviation of world poverty when nothing of the sort happens in practice. Ministers tell us that aid has to be tied for third-world countries. Countries are told that the aid must go to certain projects and according to certain conditions. The same rule should apply to the banks. If tied aid is good enough for third-world countries, it ought to be good enough for banks in the western world. The tie should be that if banks are to receive corporation tax relief on debts, those debts must be cleared.
The new clause would be a minor measure in the Bill, but we do not have too many opportunities to take practical, political and economic action on the problem of world poverty. It is important that the attention that the world paid to the Rio summit is not simply dissipated with words without any action resulting. Tonight, the Government have a chance to support the new clause and carry through a tiny measue which might make some difference.
Sir David Steel (Tweddale, Ettrick and Lauderdale) : I rise to support the amendment on behalf of my party. When I spoke in the post-Rio debate in the House, I dwelt at some length on the symbolism of our aid programmes and their failure to meet the United Nations target. But I said in parenthesis that I recognised that the aid target was less important to the developing world than the terms of trade and debt write-off. The figures that were given by the hon. Members for Brent, South (Mr. Boateng) and for Leeds, West (Mr. Battle) justify the observation.
The developing world owes in total approximately $1,300 billion to the developed world--to the Governments and banks of the industrialised nations and to the international financial organisations. The blunt truth--public opinion does not seem to have grasped it--is that the amount of debt repaid from the developing world every year in capital and interest to the developed world exceeds the amount of aid that we give every year. So there is a net flow of resources every year from the developing world to the developed world.
As the hon. Member for Leeds, West said, the new clause is modest. However modest, such measures would be warmly supported by the public if people knew that
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