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Mr. Lilley: We believe that some 150,000 people will gain from the back-to-work bonus, and that that could be more if more people respond positively to the existence of the bonus. Some 20,000 people should gain from the change in the partners' earnings rule; again, that could be more if people respond positively. Some 70,000 people will gain from the £10 disregard for couples where only one of them is working and, again, that could be more if people respond by working and declaring their earnings in those circumstances. It would not be fair of me to make a comprehensive judgment on the proposals announced by the Borrie commission today, but I have not so far been able to see in any of the reports that have come through or from my own perusal of the document anything as comprehensive or as positive as we have been able to announce today. The commission is rather stronger on analysis than on diagnosis and proposals for the future.

Mr. Dennis Skinner (Bolsover): Is the Secretary of State aware that his announcement is nothing short of an insult to the intelligence of more than 4 million people in Britain who do not have a job--never mind the fiddled figures--and to the 30,000 miners who were chucked on the scrapheap by the Government? They are not workshy--they had their jobs taken away from them. It is an insult to the shipyard and textile workers and to one third of those in our manufacturing base who have lost their jobs. We are faced with a Government who are backed by Tory Members who line their pockets with five, six and seven other jobs, and the Secretary of State

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accuses people who want to work of being workshy. They ought to be ashamed of themselves. Why don't they get out of the road?

Mr. Lilley: The hon. Gentleman does not seem entirely to support the proposals which I made earlier, but he will find them of benefit to his constituents. We have put in place special measures in mining areas and, as one would expect, miners--being the aristocrats of labour--have often been extremely successful in getting jobs elsewhere. They are certainly not workshy. I know that, and I said that the majority of people in this country are not workshy. The minority who are will benefit from the motivation that the measures which we have introduced today will give them to find work. That is only right and proper and is part of their contract with the taxpayer.

As for fraud and abuse, the biggest fraud with which I have had to deal since I have been in office was the £500 million hole left in pension funds by the socialist millionaire Robert Maxwell.

Mr. Patrick Nicholls (Teignbridge): In complimenting my right hon. Friend on the proposals that he announced today, may I suggest that the White Paper might give an opportunity to address a situation where somebody who is unemployed and is actively seeking work is using his spare time to undertake a course of study? What can happen--it varies from locality to locality--is that the mere fact that someone is doing a course of study is held to be in some way incompatible with his being available for work. Surely there is nothing incompatible when a person says that if a job is available, he will take it, but that, in the meanwhile, he would like to use his time constructively to get himself back to a better-paid job, where we can tax him more and raise money to apply to what we would want. Surely the White Paper at the very least gives us an opportunity to look at that situation.

Mr. Lilley: We will, of course, look closely at those rules, but, broadly speaking, the intention is to carry over much of the way in which people are treated at present into the new system. We will look closely at how that is done to ensure that we can still keep to the principle that people must be available for work without inhibiting unnecessarily their ability to acquire skills, to study and to develop their employability.

Mr. Barry Jones (Alyn and Deeside): How many of our people in Britain are unemployed and how many of those are long-term unemployed?

Mr. Lilley: My right hon. Friend the Secretary of State for Employment reminds me that the figures are 2.6 million and 1 million respectively. Either way, I can tell the hon. Member that it is too many. The intention of the measures I have announced is to reduce the number of unemployed people, but particularly to reduce the number of long-term unemployed people, because the longer people are unemployed, the more demoralising it is for them and the more their motivation is reduced; their skills get stale and they become potentially less attractive to

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employers. That is why we want to get those people speedily back to work through the job seeker's agreement and the measures that will be spelled out in it.

Several hon. Members rose --

Madam Speaker: Order. I shall attempt to call those hon. Members who have been standing up to ask a question because they have been waiting for a long time, but I plead again for brisk answers to questions. We have taken almost an hour on this statement and we will be coming back to it at some time in the future.

Mr. Iain Duncan Smith (Chingford): Does my right hon. Friend agree that the key factor about the job seeker's agreement is simplicity? Will he confirm that the allowances will all be claimed on one form and from one location, which is what I and others have recommended for some considerable time? That will benefit those who most need to know about it.

Mr. Lilley: Yes, I can confirm my hon. Friend's point.

Mr. Derek Enright (Hemsworth): Does the Secretary of State agree that his statement proffers no solution--which is more quality jobs--but essentially props up employers of slave labour, who pay cheap wages and provide rotten conditions? Does he therefore agree that he is, essentially, subsidising the inefficient and the unimaginative?

Mr. Lilley: No, Madam Speaker.

Madam Speaker: Thank you.

Mr. Bernard Jenkin (Colchester, North): I thank my right hon. Friend for his imaginative proposal, which will be welcomed by the British public, principally for two reasons, which I shall cite briefly. They will welcome it, first, because it unequivocally links the business of being unemployed with the business of looking for a job and, secondly, because it does not increase the burden on the working taxpayer, who is already paying £15 a day towards the cost of our social security system. Most people believe that that is too much.

Mr. Lilley: I entirely endorse the points that my hon. Friend has made with considerable clarity. I could not have put it better myself.

Mr. Paul Flynn (Newport, West): Does the Minister agree that his statement means that we will have a benefits system that has more in common with the handout principle of the Poor Law than the principle of a national insurance scheme of benefit? Surely the reason why income support payments and unemployment benefits are the same or less than they were 15 years ago is the salami cuts made to those benefits, which have been imposed while the amount available for contribution has increased. Will he answer this simple question: how many people will lose out?

Mr. Lilley: The hon. Member epitomises the backward-looking tendency in the Labour party, always harking back to the 19th century and never looking forward to the 21st century. I hope that the proposals will put us in a position to have a much better working labour

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market in future than we have had in the past. I would hope that, if he cannot, at least his party will endorse them.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury): Does my right hon. Friend agree that the vast bulk of the unemployed want work and, therefore, welcome the proposals in the job seeker's agreement? Will he also confirm that there is a direction for people who disobey the agreement? Will the White Paper address the problem of the small number of people who breach that direction and will the job seeker's allowance be put at risk thereby?

Mr. Lilley: I can confirm that there will be a direction to people to undertake specific courses of action that will increase their chances of getting work. Should they refuse to do so, they would, of course, suffer sanctions, though I would hope that they would generally do what is in their own interest.

Mr. Eric Illsley (Barnsley, Central): Will the Secretary of State accept that the problem, particularly in areas such as mine, is the lack of any jobs, not just suitable ones, for the long-term unemployed? Many of my constituents, such as the 14 per cent. unemployed and the 30 per cent. of males who are economically inactive, will regard the tightening of the test --the agreement is merely restating the availability for work test--as an insult. Can the Secretary of State also tell us how many Department of Employment staff will be made redundant as a consequence of combining the two agencies to provide the new job seeker's allowance?

Mr. Lilley: I appreciate that unemployment is higher in some areas of the country than others and that it is therefore much more difficult and disheartening. None the less, even in those areas, a considerable number of people get back to work and we must give every help to others to do likewise. In the region in which the hon. Gentleman's constituency is situated, the reduction in unemployment over the past eight years has been about one third. That may still leave a way to go in his constituency and others, but this measure will help achieve that.

Mr. Nigel Waterson (Eastbourne): Does my right hon. Friend accept that many people will welcome the extension of the employment on trial scheme? I have met people in my constituency who are not workshy, but genuinely apprehensive about some of the jobs for which they are sent for interviews.

Mr. Lilley: That is very much the purpose behind the employment on trial measures, which have been successful as implemented so far. We are easing them in in a way that will help some 200,000 extra people try out jobs. I hope that, in most cases, they will choose to stay with them, but in some cases they will find that they are not suitable and will suffer no penalty as a result of leaving after four weeks.

Mr. Tony Banks (Newham, North-West): As the Secretary of State has made a number of references to the workshy, what is his estimate of the current number of workshy among those who are unemployed?

Mr. Lilley: I believe that the vast majority are keen on getting back to work and all the evidence that I have is to that effect. But we all know that a minority of workshy people exists. There is no point in trying to put a number

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on it because if one sends out a questionnaire people will not list themselves as workshy-- [Interruption.] The hon. Gentleman might do so, but others would not be so frank. A significant minority still needs motivating in this way and it is in their interest to receive this kind of help and encouragement.

Mr. Peter Hain (Neath): Having admitted savings or cuts of more than £200 million, why does not the Secretary of State call this the job fleecer's allowance? It fleeces the unemployed of the right to benefit, just as his economic policies fleece them of the right to work.

Mr. Lilley: Success in this area must ultimately result in less spending on unemployment, not more. Our objective is to ensure that spending is well focused where it can do most good but, above all, to ensure that people get back to work as rapidly as possible.

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Foreign Office and ODA Spending Plans

Motion made, and Question proposed , That this House do now adjourn.--[ Dr. Liam Fox .]

4.32 pm

Mr. David Howell (Guildford): The Foreign Affairs Select Committee is grateful for this opportunity, in Government time, to have a short debate on its second report. This is in lieu of a normal estimates day debate, for which there was not time in the summer.

The second report covers a number of issues concerning Foreign Office and Overseas Development Administration expenditure. In particular, it looks at the planned fall in the size of the diplomatic service over the next three years; the growth in expenditure on UK contributions to the UN, to UN peacekeeping and particularly to the European Union's overseas aid budget, all of which are legally binding and over which Britain has little control; and the effect which that has on the overall aid budget, in that the bilateral budget will shrink to less than 50 per cent. of the UK's total overseas expenditure as the European Union aid budget increases.

The report also looks at the changing pattern of overseas aid and investment in developing countries. What were hitherto regarded as marginal institutions are becoming increasingly central to the development effort. Those include such bodies as the Commonwealth Development Corporation, the Natural Resources Institute and the know-how fund.

We looked at the need for a new role for the Commonwealth Institute which, since we wrote our report, seems to be groping its way towards finding such a new role. We examined it in the general context of the growth in support for the Commonwealth--a global institution whose membership is increasing. It is a club that is growing, not shrinking, and becoming more significant in tomorrow's world.

We returned to the subject of cultural diplomacy and reaffirmed the Committee's support for, and strong feelings in favour of, the work of the British Council and the BBC World Service.

The report discusses a wide range of issues and I shall concentrate on only one or two aspects. I shall concentrate especially on what is happening to our aid and development policy and to those parts of Foreign Office expenditure that support the policy.

Two major things are happening. First, our aid and development budget is becoming multilateralised. In other words, Foreign and Commonwealth Office and Overseas Development Administration votes are now being led by demands over which the United Kingdom has less and less direct influence and for which, by definition, accountability to the House is minimal, and which are binding on the UK. We have undertaken to adhere to treaties that commit us legally and unavoidably to those increasing demands.

The second thing that is happening is that traditional patterns of development aid throughout the world are being replaced with a vastly greater role for the private sector in development, leaving aid--that is, Government resources, or taxpayers' money--to be focused more on poverty relief, basic needs, emergency relief, humanitarian aid and so on. That certainly applies to this country's development activities.

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I shall discuss both changes in detail. First, on

multilateralisation, one can see exactly what is happening by reading page 32 of the Foreign Affairs Committee's report. The UK's contribution to the United Nations' regular budget is increasing from £26.5 million in 1991-92 to £38.8 million this year. The UK contribution to UN peacekeeping is increasing from £177.6 million in 1992-93 to £310 million in 1994-95. The part of the overseas aid budget that is spent via the European Union is increasing from £564 million in 1993-94 to £745 million in 1996-97. The proportion of our aid budget that is spent via multilateral agencies, including the European Union, will have increased from about 29 per cent. in 1979-80 to 52.8 per cent. in 1996-97-- much more than half. All those types of expenditure are increasing at a time when public expenditure is under extreme restraint, and in many cases being reduced. That has caused, in the minds of my colleagues in the Foreign Affairs Committee--I think rightly--a double worry, which we have tried to air in the report.

The first anxiety is whether the European Union proportion of our aid budget, which is being removed from the control of Government and of the House, is being properly evaluated and monitored. We can argue, and no doubt will, about whether it is a good thing that it is happening at all; to find the answer, one must seek out agreements in the margins of past European summits to discover what was taken away, what was conceded and who wanted which slice of power transferred to which directorate in Brussels.

However, given that that has happened, is that large, and growing, chunk of our aid budget--and of other member state countries' aid budgets--being properly administered, evaluated and monitored? The Committee has set itself that question and, since finishing the report, has prepared, and is about to complete, another detailed report on precisely that question, which it will present to the House shortly. Without anticipating the work that we have done there, there are some worries about what is happening to the strict control and monitoring of that enormous chunk of our aid programme, which in the past was under the direct administration of Whitehall and Ministers and accountable to the House.

The second worry is whether the priorities are right in that aid sector. The European Union budget is soaring upwards--it has been greatly increased. It is a budget for administering aid in a variety of ways--much of it is in the form of traditional

Government-to-Government grant; some of it is of the concessionary finance variety. That is happening while, as our report states, the diplomatic service is being cut over the next three years and while--although this is outside our report's scope--Army manpower is being cut. It is happening while support for agencies such as the British Council and the BBC World Service is being reduced over the next three years. Many people would argue that such organisations are moving to the centre of our overseas effort and the promotion of this country's interests, as well as the promotion of development and improvement in developing countries.

One is compelled to ask whether the right budgets are being increased and the right ones decreased. Above all, is it right for European Union aid to be expanding at this great rate and for all the new plans to be developed by the appropriate directorates in Brussels--for aid and support in one place and grants for development in

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another--when priorities throughout the aid establishment, if one can call it that, are changing radically and private investment flows are replacing the role of aid in development? If one wants proof of that, one can see it in the entirely new line being taken by the international financial institutions. They now say that the main thrust of development work should be through encouraging the private sector to wheel in and deliver the improved infrastructure and many of the better-quality services that have not been developed as a result of handing aid from Government to Government through the budgetary systems.

It is my personal view--not a conclusion of the Committee's report--that, at the very least, there is a strong case for re-examination of policy in the light of those two huge developments, one of which was pinpointed so clearly in the report. If I were asked to name the headings of the policy re-examination, I would suggest that the first should be to clarify the response of our policy-makers, the Foreign Office and the Overseas Development Administration, to the new ideas being promoted by the international institutions for private sector development to take some weight off the traditional aid budgets. The development assistance committee of the Organisation for Economic Co-operation and Development issued a detailed set of guidelines urging Governments and officials responsible for aid policies to promote private sector development by transferring the emphasis of many of their programmes.

It was with such thoughts in mind that the Committee, when taking evidence for its short report, asked whether there was a new role for our Commonwealth Development Corporation. That is a classic example of an organisation which, over the years--it was originally called the Colonial Development Corporation--has combined the best of public support with the best of private enterprise and investment. Is not that the sort of model for future development aid that the Government should be studying? It is worth asking whether the CDC should be encouraged and expanded rather than regarded as a sideshow among the Government's development policies.

We note that Ministers are planning increased borrowing powers at some stage for the CDC. It would be interesting to hear when those borrowing powers are to be increased. Would such a policy require legislation before the House and, if so, when will time be made available for it? If we are now in a world in which private investment can fill the gap and take some of the budgetary pressure off aid budgets, which all Governments are having to

re-evaluate--particularly the American and Japanese, but also our own and the French--we should be building up organisations such as the CDC, which can deliver development in a way that merely pushing aid between one Government and another did not seem able to achieve.

Mr. Dennis Canavan (Falkirk, West): I am all in favour of encouraging private investment in genuine development projects, but surely private investment should be a supplement rather than a replacement for public investment. One of the report's most serious revelations is contained on pages XVIII and XIX, where the Committee refers to the reduction in real terms in United Kingdom Government expenditure on aid. It also states that we are moving away from the United Nations target of 0.7 per cent. of GNP. Table II on page XVIII

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shows that we are nearer the bottom of the league than the top in terms of expenditure on overseas aid. The Government must address that important issue.

Mr. Howell: The view of the international finance institutions on private sector development is that it should be additional. Aid budgets around the world are to be increasingly constrained and private sector development can fill the gap much more efficiently. The hon. Gentleman rightly said that aid budgets, including this country's, were not conforming to the United Nations target. Although he and I were in complete agreement over the report, we differ as to the importance in the world into which we are moving of the old United Nations targets. They are reiterated year after year and everybody pays lip service to them. But if we want the sort of development that is happening in the booming Asian economies, is beginning to happen--one hopes that it will happen much more--in parts of southern Africa, and has happened to a great extent in the developing countries of Latin America, we must expect the overall investment and flow of funds into those countries to come increasingly from the private sector rather than Government aid. I think that the hon. Gentleman and I differ on that subject and I hope that he will have an opportunity to put his view. I did say that I was voicing my views and straying outside the Committee's report. My final question for my right hon. and hon. Friends in the appropriate Departments is whether the time has come to review the Bretton Woods institutions. They were constructed in a world where the developing third-world countries were all seen as being stuck in a morass of poverty which, in many cases, was getting worse all the time. Now, some parts of the societies in the developing third-world countries have rapidly lifted themselves out of that morass. A good part of the dynamic growth of the world economy now comes from the developing world. This year the so-called less-developed countries will grow by 5.6 per cent., which is well above the level that will be achieved by the developed world. We are beginning to see both trading power and economic power shifting to the booming Asian economies that are starting to deliver living standards as high as, and in some cases higher than, those of the European powers. I believe that political power will follow. I say that not just because I think that it will happen, but because when international institutions come together there is a change of tone.

The so-called third world is no longer prepared to take lying down the diktats of the institutions representing the views of the so-called rich west. The balance is changing and our policy should accept that. The fastest growth in the developing world is being driven not by old-style Government aid or United Nations targets--as mentioned by the hon. Member for Falkirk, West (Mr. Canavan)--but by increasing flows of inward investment, liberalisation, cutting taxes and unravelling state monopolies. That is going on in almost every developing country, sometimes with benefit, sometimes with little benefit, but it is going on.

It may be that, given our increased worry in this turbulent world that emergency relief will be more and more in demand and that humanitarian relief, help with basic needs and a focus on poverty and the poorest people is the real No. 1 priority, we should realise and accept that aid is not necessarily the most powerful instrument

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for economic development in the medium term. Therefore, the more we can focus what aid resources we have--it would be nice, of course, to have more--on humanitarian and basic needs, the better. I notice that a number of organisations outside the House are urging just that.

Mrs. Ann Clwyd (Cynon Valley): The right hon. Gentleman raised the issue of development in Asia. May I remind him of what is still one of the poorest countries in the world, Cambodia, in south-east Asia? I notice in the Foreign Office answers to the Committee's questions that we are cutting back on the British embassy in Cambodia, a country that was denied access to the world institutions--the International Monetary Fund and the World bank--and a British embassy until very recently. Given that Cambodia is still troubled, is still developing and still has major problems, does he believe that the size of the British embassy should be cut?

Mr. Howell: Perhaps my right hon. Friend the Minister of State will comment later on that issue, but the hon. Lady is right. In Asian countries such as India, areas of enormous prosperity and wealth stand side by side with areas of still blinding, breathtaking and increasing poverty. No generalities can be safely sustained in Asia.

Dame Elaine Kellett-Bowman (Lancaster): Does my right hon. Friend agree that Cambodia, like some countries of Africa, illustrates the point that countries that have concentrated on economic development and have not been at each other's throats fighting are the ones that have got ahead? Does he further agree that if we can do something to reduce the warfare, we shall do a great deal towards improving those countries' welfare?

Mr. Howell: My hon. Friend is profoundly right. Peace, stability and a degree of reliance on some sort of rule of law are the fundamental requirements for economic enterprise to grow. Where those things have been applied in Asia, there has been a miracle growth in wealth; where they have not, nothing of the sort has occurred. Our report considered the work of the Foreign Office in relation to the European Union and to preparations for the intergovernmental conference in 1996. We hope that papers will be available to the House in ample time. The Government made an observation in reply that was not quite clear to me and about which I should like to hear more. In observation (h), Ministers talk about the possibility of a United Kingdom parliamentary report being made to the intergovernmental conference study group, which I think was set up last summer in Corfu. The group has a funny Spanish name that I cannot remember at the moment. Supposedly, it will be a preparatory group for the IGC's agenda, which is important for our country and for the House. What does that mean? How will we initiate a United Kingdom parliamentary report? Who will write it and who will read it? I should certainly like to know what the Government have in mind.

The world has totally changed, both with the evaporation of the Soviet Union and the end of the communist threat, and the rising economic dynamism of the Asian economies, which are delivering growth at rates that make even the post-war European miracle look mild.

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They are delivering not low-technology, but high-technology, high-quality manufactures at a pace that will make any challenge we have had so far, including that from the Japanese, look mild. The Committee's deeper concern is that, although the world has changed, the spending priorities of the Foreign Office and Overseas Development Administration still are inclined to reflect a bit too much the old order.

Where there is a new order, it is not necessarily the right one. It is being dictated by the moguls of the European Union, who are inclined to look inward rather than outward on these issues.

Mr. Michael Jopling (Westmorland and Lonsdale): I should like to say how much I agree with my right hon. Friend about the need for flexibility, particularly in the Asian region. That takes me to the point that the hon. Member for Cynon Valley (Mrs. Clwyd) made about Cambodia. If she were to read, on the first page of the minutes of evidence, the memorandum submitted to the Committee by the Foreign and Commonwealth Office--it comes at the end of the conclusions--she will find that flexibility has been applied in relation to Cambodia. A number of Committee members visited Cambodia not very long ago. The memorandum states:

"With the ending of the UN operation in Cambodia, the size of the British Embassy in Pnomh Penh is to be reduced producing savings of some £100,000 annually."

Most of those hon. Members who went there would agree that that was the right policy as the UN operation had been run down. That displays the flexibility that my right hon. Friend was talking about.

Mr. Howell: I have come to the end of my remarks. I hope that the debate will encourage, or begin to encourage, the realisation that a change of priorities is needed. I hope that some of the points that Committee members raised in the report, such as those on the virility and activity of the Commonwealth, will be reflected a bit more in policy developments in the future. We used to be all in favour of the Commonwealth. Then it was written off. Now we suddenly find that everyone wants to join it and that it is becoming a rather useful global network. On that final thought, I think that I had better sit down. My right hon. Friend the Minister will no doubt have a chance to intervene later.

4.56 pm

Mr. Allan Rogers (Rhondda): I congratulate the Chairman and members of the Select Committee on their exhaustive report and on choosing overseas development aid as the highlight of their report. It is an issue that concerns all hon. Members very much. Such a spotlight is a good thing at this stage in our development and our relationships with other countries. Many aspects of the report concern us, but I know that many of my hon. Friends want to participate in the debate and will deal with more specific matters. With some exceptions, I should like to generalise in my remarks. I hope that many of our overseas friends, who from time to time bend our ears about the problems in their countries, will not be offended if their particular issue is not brought out in the debate. Obviously, time does not allow to us deal with every problem in the world. One important issue dealt with in the report is the British Broadcasting Corporation World Service and the British Council, which has been alluded to by the

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Chairman of the Committee. I admit that I read the section of the report dealing with the BBC World Service and the British Council with some dismay. It is yet another manifestation of the Government's consistent inconsistency. On the one hand, they extol the virtues and importance of those organisations; on the other, they cut the resources available for the organisations to carry out their functions. For example, there will be a cut in BBC World Service resources from £175 million a year to £158 million in real terms. Those organisations have unparalleled reputations. The Select Committee said that they have

"a record of providing cultural, technical and educational assistance worldwide and of encouraging international understanding and the growth of democratic institutions."

The World Service has a global audience of 130 million--three times, I believe, that of Voice of America and five times that of Radio France. It broadcasts in 41 languages. Last year, I understand that it received more than half a million letters from viewers, far more than even most Members of Parliament. It immeasurably disseminates our democratic and social aims throughout the world--what an area in which to penny-pinch. It is a British flagship, but the Government can only count the coppers. I am sure that some of my hon. Friends will emphasise the shabby treatment of the BBC World Service and the British Council.

In just over two years, Hong Kong will be returned to the People's Republic of China after many years of British rule. One would have hoped that at this stage, after 10 years of discussion and negotiation, we would now be dotting the i's and crossing the t's in the extensive and important matters that have to be decided for the future well-being of all involved--not only those in Hong Kong but those in China--and for the sake of the future trade, political and cultural links between Great Britain and the People's Republic of China.

Where are we in that process which has been going on for 10 years? We are bogged down politically, commercially, legally and almost every other "ally" one can think of. Indeed, we seem to be up a blind alley in a morass of bad faith, bad tempers and lack of trust. We are not merely blocked at a point along the path or the through-train line; there is a real possibility that in two years everything will be turned back beyond the starting point. That is the Chinese threat. Something has gone disastrously wrong, but it is no good simply blaming China.

Let us consider what the Chinese have done in the past 10 years. They have signed the joint declaration and passed the Basic Law. We should remember that the Basic Law is a Chinese law passed by the People's Assembly in Peking. It was an acknowledgement that there would be one country and two systems and that there would be an evolving process of democracy in the first two years of Legislative Councils after 1997, taking us roughly to 2004. The Chinese acknowledged that there had to be change, so what has gone wrong? They were significant acts for a communist country and a totalitarian regime, but the Government's report gives a most disappointing summary of them. Indeed, it is an almost offhand dismissal of the situation and, frankly, does a great disservice to the problem. The Minister with

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responsibility for Hong Kong will perhaps be able to clarify the situation, if not today, then at some future point.

Mr. Nigel Waterson (Eastbourne): Before the hon. Gentleman moves on, does he accept that there are three possible explanations for the lamentable, if partial, breakdown of negotiations with the People's Republic of China? The first is bad faith on our part, which I wholly reject. The second is bad faith on the part of the Chinese. The third is simply the change of climate inevitably brought about in Hong Kong and, more particularly, in the leadership in Beijing following the events of Tiananmen square?

Mr. Rogers: Yes, indeed. Like members of other parties, we have no sympathy with the abuse of human rights in the People's Republic of China and unequivocally condemn those abuses, but the hon. Gentleman perhaps illustrates the reason why the problem exists: he talks about bad faith instead of trying to engage in a more positive dialogue with the Chinese. A solution must be found.

In 1997, Hong Kong will be handed to the Chinese. For the sake of the population of Hong Kong, for the sake of Hong Kong's future relationships within the special area designated under the Basic Law, and for the sake of the relationship between Great Britain and the PRC, a solution must be found--and quickly. Because of its importance, we shall be looking for a full debate on Hong Kong in the coming parliamentary year.

Mr. Mike Gapes (Ilford, South): Perhaps I can help my hon. Friend. The Select Committee on Foreign Affairs has produced a report on China and the Government have responded to it. So far, however, the Government have not chosen to allow time for the House to debate it, even though it was produced before the report that we are debating today.

Mr. Rogers: I thank my hon. Friend for his help. It is not often that a prophet can call for a debate and have that call endorsed so quickly and efficiently. I am sure that the Minister will have heard my hon. Friend and that, when he is able to gather his thoughts on the matter, he will enable such a debate to be held.

We recently debated the Intelligence Services Act 1994, which we supported. It is alluded to only briefly in the report, especially in relation to the designation of expenditure available for our security services. We supported the Bill at the time, but I must admit that it has been a grave disappointment to us. We tabled some constructive amendments but, except for those involving the number of people to sit on the Intelligence and Security Committee, the Government were unable to accept them.

We did not and do not want details of operations or any information that would put the security of individuals or the country at risk, but the Act has created only a facade of openness. The circle of tasking, operating and accounting for our intelligence services remains closed. The Intelligence and Security Committee will comprise parliamentarians, but it will not be a parliamentary Committee. It will have very limited powers, it will not report to Parliament, and we shall receive only information that has been filtered through the Foreign Secretary and the Prime Minister.

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As I have said, the report that we are debating rightly highlights expenditure on overseas aid. I think that it was out of loyalty to his party that the right hon. Member for Guildford (Mr. Howell) perhaps failed to emphasise the neglectful way in which the Government have handled the problem of overseas aid. I know that some of my hon. Friends wish to speak on the subject, so I shall not go into detail. I understand that the Pergau dam scandal is being dealt with separately by the Select Committee, but I will say that I do not think that it was the best example of bilateral aid. However, we await the report with interest. I fear and am sure that it will be another sad, sleazy story that will reflect badly on the Government and their approach to overseas aid.

Mr. Canavan: The Select Committee has published a report on the Pergau dam and the Government have published their response. We now need Government time for a debate on the matter so that we can bring the Government to book for their disgraceful behaviour in this instance.

Mr. Rogers: Yes, it was the debate on the report to which I was alluding. It is clear from both reports that the resources available for overseas aid in general are falling, as the Chairman of the Select Committee said.

As the Chairman also said, more and more money is being sucked into the European pot for uncontrollable multilateral aid rather than into bilateral aid over which we have some control. Indeed, the fact that multilateral aid will rise from 45 per cent. to 53 per cent. over the next few years fills me with alarm. Where is this European money going? I was rather amused by the suggestion made by the right hon. Member for Guildford as to how it was decided how the money was to be spent--"in the margins of some summit" was, I think, the expression that he used. I do not understand how we can control this aid. What are the mechanics for reporting back to us where the aid is going? Some adjustments need to be made in our overseas aid programme. Bilateral aid to Africa is to fall by 17 per cent., or some £60 million over the next three years, and that to Asia is to fall by £31 million. Clearly, we need to consider how we are to develop a poverty focus for the aid that is available.

Another point in relation to diplomatic expenditure is the issue of Cuba and the Government's attitude towards it. We feel that the continuing United States embargo of Cuba is as much an act of political spite as the result of any great strategy. We support the Government in their criticism of the embargo, but we ask them to press harder so that the movement within Cuba towards a more open and pluralist society can gain influence and momentum. It surely makes sense politically and morally for America and the rest of the world not to reduce a country's economy to ruins and not to subject the most vulnerable--women, children and old people--to degradation, as is the case in certain parts of Cuba.

Two years ago, we debated the Foreign Compensation (Amendment) Bill in Committee. Only last week, the issue of our relationship with Iraq arose again. The Bill was intended to enable the United Nations compensation commission to handle the compensation to be given to those affected by Saddam Hussein's brutal invasion of

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Kuwait. What has happened since the Bill was enacted? On a number of occasions, we have asked about the operation of the Act, but we have had negative responses from the Government.

What is the present position on Iraq's observation of and adherence to UN resolution 687, from which the funding is supposed to originate? What action is proposed to enforce the resolution? Is oil being sold illegally? What has happened to the sequestered Iraqi assets? Have millions been spent simply on funding the bureaucracy set up within the UN? How many of the 3,000 United Kingdom claims have been processed by the UN compensation commission? How many have been settled? There are people who have lost substantial personal assets and who require substantial compensation; yet they are still waiting, two years after the Bill was enacted.

I will briefly refer to President Clinton's test ban proposals and the Government's attitude towards them. The report refers to our relationship with the United Nations, which is important. The specific problem that faces us, however, is acute. France, our Community partner, Russia and America have already announced their participation in a moratorium on the testing of nuclear weapons. Of the five major nuclear powers, only Britain and China oppose such a complete test ban agreement. The scientific community has said that no further testing is necessary either for defence or for scientific reasons, and that whatever work requires to be done can easily be done under laboratory conditions. Why does the Foreign Secretary not make the adoption of a nuclear test ban one of the tests of a common foreign and security policy and approach in the European Community? If agreed, it would be a big step along the road to promoting the non- proliferation of nuclear weapons, which is a vital step towards successful renegotiation of the non-proliferation treaty, which is due for renewal in 1995.

Mr. David Howell: If the hon. Gentleman checks, he will find that the United Kingdom, with the other nuclear powers, has agreed in principle to the comprehensive test ban treaty. We consider it important that any future requirements might have to be met by simulations and not by nuclear testing. We have agreed to that. The question is whether agreement should be made a condition of a successful non-proliferation treaty, which is a matter that the Select Committee on Foreign Affairs is currently considering and on which it will report to the House quite soon.

Mr. Rogers: The point that I am trying to make to the right hon. Member for Guildford is that on all occasions when a ban has been proposed in the UN--and as recently as a year ago--the Government turned their face completely and utterly against subscribing to a nuclear test ban. They say that they might decide to subscribe to such a ban in principle, but when will the action take place? The non-proliferation treaty will come up next year and unless the Government make their mind up fairly quickly about taking action rather than merely saying that they subscribe to a ban in principle, I am afraid that we shall not get a non-proliferation treaty signed next year.

We have a unique position in international affairs. No other country is at once a permanent member of the Security Council, a leading member of NATO, a member of the Commonwealth, a member of the European Union, a member of G7, a member of the conference on security and co-operation in Europe and a member of the Western

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