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Mr. Ted Rowlands (Merthyr Tydfil and Rhymney): The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned the roles of the BBC World Service and of the British Council and there is consensus on the enormous importance and value of those institutions.
I shall draw hon. Members' attention to two issues highlighted in the report, one of which also concerns an important institution--this place. I cannot find a single precedent in the history of the British Administration for the fact that more than half the expenditure of a major Government Department will be spent outside the control and scrutiny of this House. That fact should not merely be allowed to pass and noted with some interest. Irrespective of the merits of the case, for the next 18 months more than half the expenditure of the Overseas Development Administration will be outside the power, scope and scrutiny of the Public Accounts Committee. I am old-fashioned enough to believe and have always understood that the origins of this place were rooted in our scrutiny of public expenditure, yet the report identifies the fact that a huge and significant area of public expenditure will be beyond the scope of the Public Accounts Committee and therefore of parliamentary scrutiny.
I am sure that you have often emphasised to groups of people and organisations, Mr. Deputy Speaker, our exclusive rights over taxation and legislation--neither of those rights is now exclusively confined to the House. I am sure that you will also have explained the fundamental issue of scrutiny of public expenditure. Yet, the report states that more than half the expenditure of one Department will not be subject to scrutiny by the PAC or to the sort of scrutiny that those of us who have been brought up in the parliamentary tradition will want to uphold, and it appears that that aspect of the report will pass relatively unnoticed. That fact has been compounded by the way in which it was done.
The report identifies our annoyance and agitation. The Committee was vigilant on European issues. We spent much time asking Foreign Secretaries to come before us before European Council meetings and we tried to bring them back afterwards. Yet, the decision to allow that extraordinary situation--more than half ODA expenditure will now be spent by others and will not be subject to the scrutiny of the House--was made at the Edinburgh summit in 1992, as part of a horse-trading arrangement. We were not told beforehand that it was possible or likely
Column 673and we were not told afterwards that it was a consequence of those decisions. On both scores, a serious parliamentary issue arises from the decision and we have sought to identify it in the report. I know that other hon. Members wish to speak, but I must briefly mention another question thrown up by the report. Increasingly, our annual reports on public expenditure by the Foreign and Commonwealth Office provoke the question: what value do we place on diplomacy and how do we evaluate it, given the pressures on that expenditure? My hon. and learned Friend the Member for Leicester, West (Mr. Janner) spoke eloquently of some of those values, but historically the image of the Foreign and Commonwealth Office has not lent itself to public sympathy. I recall vividly that when I was first appointed as a Minister in the FCO I felt rather pleased with myself and rang my wife to tell her. I got a very frosty reception. She asked why I thought that it was promotion or progress to move from being a Minister dealing with housing, health and roads, to get caught up in the world of foreign affairs and diplomacy and to join an establishment that belonged essentially to the English upper middle class--historically, the Foreign and Commonwealth Office and its staff have had that image.
By the end of the week, I thought that I had got over the problem. I went home and my wife asked me what I had done in my first week. I said that she would not understand as I had been dealing with a complicated problem concerning the Banabans--the inhabitants of Ocean island. My wife replied, "I know all about that. There was a television programme on it this week. The FCO and the Government are doing them down and depriving them of essential interests." An early lesson for any Foreign and Commonwealth Office Minister or official should be that foreign policy is understandably and rightly perceived in terms of human, civic and civil rights, especially where the position of British citizens is concerned. I quickly learnt that lesson afterwards, when Dr. Sheila Cassidy was tortured by the Chileans and Mrs. Dora Bloch disappeared in Israel, and by spending four and a half years dealing with our relationship with the Argentines over the Falkland islanders. One rightly learnt the lesson that people matter in foreign policy, just as they matter in domestic affairs. Consular diplomacy is as much a matter of profound concern as commercial or grand diplomacy.
If the Foreign and Commonwealth Office is to defend its share of the cake and fight its corner, it has to work on its public image. During my four and a half years in the Department I found that the general perception was not correct. In that large and elite service there were many people who came from more diverse backgrounds than was generally perceived. There is no doubt that the public perception is that of a service that is not in close touch with the needs and wishes of the British people and of Britain.
Secondly, the report asks how, in this day and age, the Foreign and Commonwealth Office determines the British national interest when its 2,500 staff decide how to spend £350 million in overseas posts. The decision was much easier when we had an empire because the scope and nature of our power was evident for all to see--it was part and parcel of the whole ethos. The empire had a proper
Column 674dimension, which politicians and Governments of the day could utilise. In a post-imperial society--economically, almost a post-industrial society--it is much harder to identify British national interest. I must draw hon. Members' attention to an interesting exchange when the permanent secretary had a good shot at trying to identify why we should have a post in Uzbekistan. We asked him why and whether it would be of value. He said that it would and that we had just received a state visit from the President of Uzbekistan. The permanent secretary thought that he had brought all his gold over in the plane and delivered it to the Bank of England. That was a fascinating illustration of the so-called "British national interest" being defended by our having a mission in Uzbekistan. There will be increasing questioning about the nature and character of our representation overseas as the pressures grow. What is the value of diplomacy in the 1990s and what role does the expenditure of the FCO play?
Not long ago, a British Prime Minister said:
"How horrible, fantastic, incredible, it is that we should be digging trenches and trying on gas-masks here because of a quarrel in a far-away country between people of whom we know nothing." That was a statement about Czechoslovakia, which is now on the verge of belonging to the European Union. Traditionally, the country was at the heart of European civilisation in the 17th and 18th centuries. Anybody who has been to Prague has seen the wonderful physical expression of the counter-reformation. The Prime Minister expressed that view about Czechoslovakia within the lifetime of a number of Members of this House, and no doubt a similar view was expressed about Sarajevo in 1912 also.
One answer to the questions is in the Committee's report. International issues are now transmitted by television and become issues of public concern and, in themselves, become a motive for action. The United Kingdom's contribution to expenditure on peacekeeping is rising from something like £177 million to £310 million. Again, that aid and expenditure is outside the control and scrutiny of the House. Nevertheless, that has been partly engineered and driven by external events which have often been projected vividly through the media with resulting public and political pressure. The telescoping of international experiences places consequential demands upon Governments to do something. How many times have we heard this summer, "Why is not the international community doing something about Rwanda?" I do not think that we have a post in Burundi or Rwanda in central Africa, but suddenly a faraway place about which little was known became a major international issue of profound concern.
The other case for diplomacy which we make in the report--although not necessarily in the way in which it is organised now--is of course the post- cold war situation. It strikes me that cold war diplomacy was comparatively easy in many fundamental respects. Since then, not only has history come back into fashion, but I suspect that diplomacy has come back into fashion in a big way as we interpret and work out a more stable international order through diplomatic and political action.
A 75-year-old man or woman in our constituencies will have lived through two world wars. Churchill said that
"to jaw-jaw is better than to war-war".
Column 675"Jaw-jaw" requires diplomacy and political action, rather than military action. As a consequence, there will be a revaluation of the importance of the role of diplomats and diplomacy. It is vital that, in the coming years, the nature and character of, and recruitment to, our British Foreign and Commonwealth Office service matches and reflects needs--not only of Britain--as well as the role which we would expect it to play in an increasingly complex world.
Mr. Mike Gapes (Ilford, South): Many things have been mentioned which I do not wish to repeat, but, in the short time available to me, I shall look at two aspects of the report of the Select Committee of which I am a member.
Reference has been made to the reductions in overseas bilateral aid to Africa. Paragraph 38 of the report makes it clear that that is a serious problem. This country's bilateral aid to Africa is to be reduced by £60 million, or 17 per cent., between 1994-95 and 1996-97. Significantly, the report also points out that there has been a reduction of 8.7 per cent. in the number of diplomatic personnel in Africa since 1989.
Hon. Members have talked about Rwanda and Burundi, and we could draw similar parallels with other countries in west Africa and the horn of Africa, and potentially even in southern Africa and the Maghreb region, where events could have profound political consequences for the European Union, this country and the rest of the world. But we will be relying--in francophone Africa in particular--not on our own intelligence, contacts and diplomats, but on information that is provided by other countries. That is not the way in which a permanent member of the UN Security Council should behave in the future.
During the questioning of the officials from the Overseas Development Administration and the Foreign Office who came before the Committee, Mr. Vereker said that
"we shall be able to play a rather less substantial part in the development of the African economies."
What does that mean in terms of the infrastructure that is forgone, water supplies which are not provided and lives which are lost in poor countries with the poorest people in terrible conflicts or in areas of drought and malnutrition? The Committee was told by Sir David Gillmore of the Foreign Office that increasingly our diplomatic representation is trade-driven. It is all very well for this country to have the best possible people in our missions in Asia and elsewhere, where there is expanding economic potential. But if we see our foreign policy and diplomatic representation solely, mainly or to a considerable extent driven by economics and we do not take account of politics, we can get into serious problems.
There is a danger for this country. If we are to have the diplomatic service and the weight in the world which goes with being a permanent member of the UN Security Council, we must say loud and clear that that has costs. It is important that we provide resources so that we are in touch with developments in all regions of the world and in all potential areas of conflict.
The UN Secretary-General, Boutros Ghali, pointed out to members of the Foreign Affairs Committee at lunch today that a world of 184 member states of the UN requires us to have a much higher level of diplomatic
Column 676representation and involvement than in the simple days when the UN was established and there were 40 or 50 states. If this country is, to quote the Foreign Secretary, to "punch above its weight", we must make sure that it has at least a certain amount of weight so that when it does punch, it does not topple over and fall on its face. The slimming down of the Foreign Office and of our overseas development aid has political and economic consequences, not simply in other countries but in terms of Britain's standing in the world. I agree with the right hon. Member for Guildford (Mr. Howell), who said that we need to re-examine our aid policy. But, in my view, that re-examination should not be on the basis of trying to challenge or reduce the welcome increase in commitments to the UN or to multilateral aid programmes, although the scrutiny and the democratic accountability of those commitments--particularly through the World bank, and with the European Union and Parliament having a greater say --should be improved. The real answer is not to run down or hold back multilateral aid, but rather to recognise that, proportionally, this country spends just 0.31 per cent. of its gross domestic product on aid in comparison with Norway, Sweden, Denmark, the Netherlands and other European countries which exceed the United Nations aid target of 0.7 per cent. In fact, Norway spends 1 per cent. of GDP on aid.
This country should be at the forefront of the contributor countries. Our young people are concerned about the atrocities, bloodshed and starvation suffered in countries as widespread as those in the middle east, Europe or Africa. I am sure that, in time, those young people will influence politicians and make us raise our eyes above the immediate to the future of the continent and the planet. The response of the Foreign Office to our report is regrettably inadequate in a number of respects. Next year, I hope that it will give a more detailed response to the many recommendations that we will make.
Mr. John Denham (Southampton, Itchen): I congratulate the Select Committee on Foreign Affairs on its report, but I should like to draw attention to an issue that should command more attention from the Committee in the future--effective scrutiny of our expenditure on the World bank.
The Committee's report reveals that the underlying level of support to the World bank has grown to about £200 million a year. That is less than Britain's expenditure on bilateral aid or that given through the multilateral channel of the European Community, but it would be a mistake to think that the influence exerted by the expenditure of the World bank can be judged solely by the amount given. The money spent on developing countries by the World bank group has significantly greater leverage than that spent through our bilateral aid or aid from the European Community.
Those who have met people from developing countries can confirm that they rarely talk about the defining influence of British bilateral or European Community aid; rather they frequently speak about the defining influence and impact of the structural adjustment loans from the World bank and those given by the International Monetary Fund. The way in which projects and
Column 677macro-economic policy, including trade policy and public expenditure, are developed is the dominating influence in many developing countries.
To concentrate on the poverty focus of the British bilateral aid programme or that of the European Union aid programme makes little sense if the overriding effect of the World bank's structural adjustment policy is cuts in health and education expenditure. The World bank's own report on the impact of its structural adjustment policy in Africa has already identified that problem.
The role of our Government in the World bank should be subject to more effective scrutiny by the House than that currently offered. The World bank group recently launched an astonishing attack on Oxfam and other British non-governmental organisations, but we have no way of knowing whether that attack was agreed by the United Kingdom's executive director to the World bank. Was it made on the instruction of Ministers from the Foreign Office and the ODA? Were they consulted about whether British taxpayers' money should be used to launch an attack on our most respected NGOs? The truth is that the House has no effective control over or scrutiny of the work of the British executive director. We do not know what instructions that person receives from our Government.
We lag a long way behind countries such as the United States, Canada, Switzerland and Germany, which have established different but effective methods of regular parliamentary scrutiny of the role of their executive directors within the World bank group. In due course, I hope that the Select Committee on Foreign Affairs will find time to consider our ability to scrutinise effectively our representation at the World bank. I hope that it will consider whether that representation should be the subject of an annual report and regular monitoring by the Committee, to be followed by a regular debate in the House.
Mr. Tony Banks (Newham, North-West): I should like to raise a subject that is as important as most of those that we have already discussed tonight--the terrible threat to the existence of the tiger. I regularly table questions to the ODA about the amount of funds that the Government are prepared to make available to those countries that are desperately trying to preserve their rapidly disappearing tiger populations. In a written reply on 18 July, the then Parliamentary Under- Secretary of State for Foreign and Commonwealth Affairs said:
"In recognition of the fact that tigers are endangered, we would be prepared to consider providing support for tiger conservation."--[ Official Report , 18 July 1994; Vol. 247, c. 30 .]
The Minister of State is aware that the tiger is already endangered. At the turn of the century, there were between 80,000 and 100,000 tigers; now, there are just 5,000 tigers in the 14 range states--95 per cent. of them have been wiped out during the course of the century. That is a calamitous state of affairs. So many people in this country and around the world would applaud the British Government taking whatever action they could to help those countries, particularly India and Russia, which are doing their best to try to preserve their tiger populations.
Column 678Tigers are disappearing so fast because of illegal poaching. The Convention on International Trade in Endangered Species, CITES, has made it illegal to trade in any tiger products, but that trade still goes on. One must point the finger at the country that is primarily responsible for that trade--China. Because of its demand for tiger bone products and other parts of the tiger, China is almost solely responsible for the decline in the tiger population.
Hong Kong, South Korea and Singapore are also assisting in that dastardly scheme. Wherever there is a Chinese host population or a Chinese expatriate community, there is a demand for tiger products, which is unfortunately leading to ever increasing poaching of that magnificent creature. Even in London, if one visits Chinese pharmaceutical shops in Chinatown, one can buy tiger bone products. That is lamentable, because we could do so much to enforce the CITES ban ourselves. It should be our responsibility to set an example. The British Government could do many things to stop the decline in the tiger population. For example, they could offer support to Russia, which is attempting to preserve the Siberian tiger. India has already rightly demanded assistance from us. In the past, politicians from this House--we mentioned some of their names earlier--visited India to shoot tigers. Can we imagine anything worse? People went there just to take pleasure from shooting tigers. Such hunting was partly responsible for the decline in tiger population.
Although people no longer shoot tigers and put their heads on the walls of their homes, tigers are being poached to provide products with spurious claims about providing greater potency among males. I should have thought that, with a population of 1.3 billion, the last thing the Chinese would want is males with greater potency. It is also claimed that tiger products can help to heal wounds. That may be helpful to a person who has been wounded, but to think that a noble tiger must be killed to provide someone with a plaster is obscene. The British Government could and should offer material and financial support to those countries that are trying to preserve their tiger stocks. Ex-service Land Rovers would be welcomed by those countries, as would uniforms and field equipment. We might even get something from the peace dividend by asking some of our well-trained troops to assist those countries' various anti-poaching forces. Such help is important and needs to be considered by the Government. I ask the Minister to respond to my request when he replies to the debate.
The Minister of State, Foreign and Commonwealth Office (Mr. Alastair Goodlad): My right hon. Friend the Foreign Secretary has already welcomed the report by the Foreign Affairs Select Committee on the spending plans of the Foreign and Commonwealth Office and the ODA, and I very much welcome this opportunity for the House to debate it.
As always, the Committee has produced a thoroughly readable, thoughtful and balanced report. It brings much experience and expertise to its work, and we value its comments and its support for the work of the Foreign Office and the ODA. The Government's considered response to the Committee's report has been published as a Command Paper, and has been available to hon. Members in the Vote Office since Tuesday.
Column 679I am pleased that the Committee found the content and form of the Foreign Office's departmental report more informative this year. We shall continue to listen carefully to the Committee's views on that. In particular, we are consulting it about the proposed new form of the supply estimates, our guiding principle being that there should be no loss of detail in the expenditure information made available to the House.
My right hon. Friend the Member for Guildford (Mr. Howell) asked about the intergovernmental conference. As my right hon. Friend the Prime Minister made clear to the House, we attach great importance to ensuring that Parliament has a full opportunity to express its views as the next IGC takes shape. Both he and my right hon. Friend the Foreign Secretary have suggested that the Select Committee might submit its views directly to the study group, which will convene next summer. It will be for the Select Committee to decide how best to do that and who shall put pen to paper. Already I hear cries of, "Author, author."
My right hon. Friend also asked me about the review of the Bretton Woods institutions. The G7 leaders at the Naples summit announced their intention to look at the problems facing the international community in the coming years and see how the institutions that exist--including the Bretton Woods institutions--might best match up to those new challenges. Preparatory work on that is now under way, and the subject will be discussed by the Heads of the G7 Governments at their next summit in Halifax.
The world is changing fast. In certain ways, we are safer now that the cold war is over, but disorder is spreading. Violence and civil war are not confined to Asia, Africa and the middle east, but are tragically present on our doorstep in Europe. Since 1990, 22 new countries have come into being, most in the former Soviet Union and central and eastern Europe, where efforts to entrench market and democratic reforms have proceeded at different speeds and with varying degrees of success.
The United Nations, the conference on security and co-operation in Europe, NATO, the Western European Union and other international organisations have become more active. The UN Security Council passed 18 resolutions in 1989; in 1993, it passed 93. International peacekeeping has been a growth industry. In 1992, 12,000 troops were deployed in UN peacekeeping operations world wide; today, there are more than 76,000.
To protect and promote British interests and security in today's world, multilateral and bilateral diplomacy is needed more than ever before: for negotiation; for the reporting and analysis of events; for maintaining channels of communication; and for lobbying. On the economic front, protectionism remains an ever-present threat. This year's GATT accord, a significant diplomatic achievement, is designed to check it. We have all become aware--it has already been referred to--of the rapid growth of the Asia-Pacific region, accompanied by its growing political influence. Latin America, too, is on the upturn.
The improvement in Britain's export performance has been at the heart of our economic recovery. The latest figures show that our exports are up by 10 per cent. But the competition is intense. Samsung's decision to create more than 3,000 jobs in Britain is a reminder that this
Column 680country remains the preferred location in Europe for inward investment, but that position must be competed for.
The nature of overseas development is also changing fast. The UK's aid and development strategy is adapting accordingly. At an individual level, 34 million British citizens travelled abroad in 1993, which is 10 per cent. up on the previous year; and 8.6 million Britons are resident overseas. More than ever before, those people are calling on the Foreign and Commonwealth Office's consular services, and last year our posts overseas handled more than 1 million visa applications from the growing number of foreigners wishing to visit this country.
As the Committee has recognised, our security and well-being as a nation and as individuals depends to a substantial degree on what happens abroad. Our interests are best served by a stable world in which we can prosper and live in peace, and our policies are designed to serve that objective.
I should like to focus on the main themes raised by my right hon. Friend the Member for Guildford in his characteristically authoritative speech, and by other Members in the debate. As my time is limited and a number of detailed points have arisen--the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) described them as "free ranging"--I may have to pick up some of the freer-ranging eggs in correspondence.
On overseas development, the major change is the rapid progress and increasing wealth of many developing countries. There is no longer one third world, if there ever was. Instead, we see an increasing diversity. Countries following sensible economic policies have enjoyed rapid growth and increased living standards for their people. That is enormously welcome. Some of those countries are graduating out of the need for aid. One element in that success has been the great growth in private finance to developing countries, as the Committee's report recognises and as my right hon. Friend the Member for Guildford pointed out.
Foreign direct investment in developing countries was around £80 billion last year--well above total official aid. Those countries are increasingly earning their own way in the world. But that development is not equally shared. There are still major problems of poverty and deprivation. A billion people are still living in absolute poverty, most of them in south Asia and sub-Saharan Africa. Private finance is concentrated in a small number of countries in Asia and Latin America. Sub-Saharan Africa misses out almost entirely. Those countries have a long way to go, and will need our continuing help. British aid recognises that increasing diversity. Middle-income countries still need assistance, filling skills gaps and providing vital know-how to help them on their way. But it is right that the bulk--nearly 80 per cent.--of our bilateral aid should be focused where it is needed most: on the poorest. Those countries need both the finance and the expertise to help develop their infrastructures.
Mr. Michael Colvin (Romsey and Waterside): I am grateful to my right hon. Friend for giving way, especially as time is short. On the criteria for overseas aid, may I draw his attention to the fact that, the other day, the Ministry of Defence identified the mismanagement of water and overpopulation as two of the criteria that will lead to flashpoints around the world where hostilities may
Column 681break out in future? The Indian subcontinent is such an area, suffering from both vast overpopulation and a shortage of water. Will the Foreign Office have another look at the criteria for overseas aid? It seems odd that, in a part of the world that is currently in receipt of considerable aid, there happens to be gross overpopulation, the mismanagement of water and vast spending on arms. Only the other day, India asked for tenders for 600 155 mm Howitzers. Would not that country be better spending its taxpayers' money on tackling the problems of overpopulation and the management of water, rather than on arms?
Mr. Goodlad: My hon. Friend raises an important point. The criteria by which aid is given are kept under continual review. I need hardly say that India is an extremely poor country and a large recipient of aid. The Government make no conditional link between overseas aid and arms sales. There is a separate question whether the level of a country's expenditure on arms is appropriate. Our view is that each country must assess and provide for its own legitimate defence needs. Excessive military expenditure is, however, one of the factors which we take into account when deciding our allocations of bilateral aid.
I was saying that those poorest countries need both the finance and the expertise to help develop their infrastructures, and to support economic reform and good government.
Mr. Rowlands: The Minister is saying how vital the bilateral aid programme is to the poorest countries. Why, then, as is shown in the minutes of evidence, will the allocation of bilateral aid to Africa, for example, fall from £334 million to £284 million? That is a cut, and the Minister has presented it as some sort of marvellous programme.
Mr. Goodlad: I shall discuss aid to Africa in a moment. We are trying to help those countries to reach the stage where they too can earn their way. I mentioned health and education, and my hon. Friend the Member for Croydon, South (Mr. Ottaway) was right to mention the importance of the Cairo conference on population and development. The programme for action agreed at Cairo sets new standards for population programmes. The programme reflects British Government priority policies of promoting sustainable development through economic growth, poverty reduction and children by choice, not chance. Its impact on the world's people, especially women, will depend on the capacity of national Governments to find new resources and spend them effectively.
Britain has taken a lead in committing extra funds to population assistance --a 60 per cent. increase of £100 million in the next two years. We hope that others, especially European donor nations, will follow suit. In doing that, we draw on the great wealth of skills and experience of British companies, consultants and non-governmental organisations. That effort powerfully reinforces our economic and political relationships with the countries that we help.
Aid is not the whole story. We have worked hard--none harder--for freer trade. The Chancellor's recent proposals on multilateral debt are the latest in a series
Column 682of initiatives that the Government have taken to relieve developing countries' debt burden, but aid is a vital part of the mix. The United Kingdom has a substantial aid programme. The Organisation for Economic Co-operation and Development review earlier this year commended it for its effectiveness and focus on the poorest. As the Foreign Affairs Committee and my right hon. Friend the Member for Guildford have commented, on current plans, more than half the UK's aid will be passing through multilateral channels by 1996-97. I do not accept the accusation made by some people that aid funded through multilateral channels is necessarily less effective, or "less good", than bilateral aid. The aid programme has always contained a significant multilateral share.
Multilateral agencies can co-ordinate assistance. They can exercise more leverage in support of important objectives such as economic reform. To the recipient--people in the Chamber have at some time or other visited recipients of aid--it is of little consequence whence the help arrives. The key is to ensure that all aid, through whatever channel, is spent well.
Mr. Rogers: Does the right hon. Gentleman accept the argument that, if more and more of our aid, as a percentage and in total, goes through multilateral channels, given the static total aid budget, that cuts the amount available for bilateral aid? Does he accept that that has had the immediate consequence of substantial cuts in aid to Africa and to Asia? As far as multilateral aid is concerned, it seems to me that much more money is going to relatively richer countries of eastern Europe.
Mr. Goodlad: I hope that I have demonstrated that we have been commended by international institutions for giving 80 per cent. of our aid to the poorest. Of course it is true that, as a greater proportion is taken by multilateral aid, a smaller proportion is taken by bilateral aid.
The European Community, which channels more than 20 per cent. of our aid, is a specific cause for concern. That was the prime motivation behind the speech by my right hon. and noble Friend Lady Chalker on 14 June, in which she set out a more structured emphasis on our multilateral aid, including strengthening the working relationship with the European Commission, both in Brussels and on the ground in developing countries, as well as the secondment of staff to key posts in Brussels. Those steps are now being implemented. The results will not be instantaneous, but I am confident that they will gradually bear fruit.
The vital point is to ensure that the UK makes a substantial contribution to the international effort: one that is powerfully in our interest, as hon. Members have said, as well as in the interest of the countries that we help.
My right hon. Friend the Member for Guildford mentioned the European Community aid budget, and whether it should be increasing. The increase in aid passing through the European Union flows from the decisions taken at the Edinburgh European Council. Those reflected the outcome of complex negotiations to balance the interests of all European Union member states. They took into account the agreement reached at the June 1992 Lisbon European Council, that there should be a substantial increase in the resources devoted to EC external policies and, by implication, to the EC's aid programme.
Column 683My right hon. Friend the Member for Guildford also mentioned private investment. I agree with him about the importance of private finance. This country is a major provider of private investment in developing countries. In 1992, British private investment has been estimated at about £1.7 billion--about half the EC total. Only the United States and Japan do better.
My right hon. Friend the Member for Guildford also referred to the role of the Commonwealth Development Corporation. The CDC plays an increasingly important part in promoting the private sector in developing countries. Its role was endorsed and strengthened in the quinquennial review of the CDC. That agreed revised operating targets for the corporation. The Government fully endorse the CDC's plans to improve its focus overseas and to strengthen its links with British industry.
On the subject of legislation on the CDC, I cannot anticipate what proposals for legislation will be included in the Gracious Speech. On borrowing, the CDC is near its borrowing limits. However, the Government have reduced the rate of interest on the CDC's loans this year, so as to increase its cash flow, and the CDC intends to finance the expansion of activities largely from internally generated funds arising from its portfolio of investments.
The hon. Members for Ilford, South (Mr. Gapes) and for Rhondda (Mr. Rogers) and others mentioned aid to Africa. It is clear that the poorest countries of sub-Saharan Africa will continue to need substantial aid. Africa has been and remains a priority for British aid. About 40 per cent. of our bilateral aid--more than £500 million in 1992-93--goes to African countries. In addition, we are a major contributor to multilateral development organisations, which also treat Africa as a priority. The European Community's aid programme to sub-Saharan Africa for the period 1990-95 amounts to £7.6 billion; the British share is £1.25 billion.
The Foreign Affairs Committee's report, and my right hon. Friend the Member for Guildford today, have focused on the Commonwealth. The Commonwealth has major advantages for Britain. First, we have a common language, a shared history and a shared culture, and Her Majesty the Queen has a special status as Head of the Commonwealth. Secondly, the Commonwealth is a network. It manifests great diversity in geography, in regional and political links and in economic and social perspectives. That diversity is part of the strength of the Commonwealth. It gives the Commonwealth a valuable and relevant role in this ever-changing world. For Britain, the Commonwealth is an essential link in our international relations. The Commonwealth has a new task in the 1990s. Good government and democracy cannot be imposed by imperial means; democracy must be home-grown, but we need ways of persuading countries to live by democracy, ways of rewarding them for working democratically, and ways of expressing displeasure if democracy is undermined. We need arrangements that are explicitly post- imperial and
non-confrontational, but which can effectively express the views of a country's friends.
The Commonwealth has dispatched 11 election observer missions in recent years. The Foreign Office has contributed 30 per cent. of the costs--rather more in the case of elections in South Africa. The UK is the largest single contributor to Commonwealth funds; 70 per cent. of our bilateral aid goes to Commonwealth countries.
Column 684We also recognise the importance of cultural diplomacy, which has been mentioned on both sides of the House. The British Council and the BBC World Service make valuable contributions to promoting British interests overseas.
The hon. Member for Rhondda mentioned the contribution of the World Service and the British Council to our diplomatic effort. The World Service broadcasts more hours, 1,400, each week, in more languages, 38 together with English, than it has in its 62-year history. The worldwide audience of 130 million regular listeners is more than double that of its nearest competitor. It has an unparalleled reputation for impartiality and accuracy.
Mr. Ernie Ross rose --
The World Service was excluded from overall budget cuts in 1993-94. It kept every penny of the substantial planned increase in that year, because that was part of the agreed 1991-94 triennial settlement. The World Service was warned long in advance that it would have to bear its share of expenditure cuts after 1994. The World Service funding increased substantially in earlier years; a 60 per cent. real-term increase since 1980. None-the-less, with efficiency savings, the reallocation of resources and increases in revenues, there is room for some new activity in the increased broadcasts to Russia and central Asia, and the introduction of Azeri and Uzbek broadcasts. As for the British Council, the real-terms reduction in the council's grant in aid reflects the reduction that confronts the FCO as a whole. The council's combination of activities is a British strength that is the envy of our competitors. Japan, France and others seek to copy our model. The council operates in an intensively competitive business sector. Its restructuring has left the organisation much leaner and fitter, and nearly half its income is now revenue from non-grant in aid sources.
The hon. Member for Ross, Cromarty and Skye and others called for a larger aid budget. But of course the Government have to juggle a number of spending priorities. The House would not expect me to pre-empt that process. The Chancellor will announce the outcome of the current public expenditure survey in the Budget next month. We maintain a substantial aid programme, which has grown by 10 per cent. in real terms since 1987-88. This year's budget is nearly £50 million higher than last year's, at a time when many other large aid donors are reducing their budgets. In 1993, our aid amounted to 0.31 per cent. of GNP--above the average of 0.29 per cent. of all donors. We remain committed to meet the United Nations target of 0.7 per cent. of GNP as soon as possible, although we are not prepared to set a timetable for doing so-- [Interruption.] I am not aware that the Opposition are prepared to set a time scale. The Opposition talk about billions of pounds of increases in public expenditure, but they are not prepared to say where that will come from or how they will finance it. All they do is complain, and I think that people will take their complaints for what they are worth--very little. My hon. Friend the Member for Eastbourne (Mr. Waterson) mentioned the commercial work of the Foreign and Commonwealth Office in helping British companies break into new markets-- the Foreign Office's largest
Column 685single activity overseas. It is foolish to suggest--as did a writer in the Daily Mail --that the level of exports should be the sole determinant of the number of staff required in each of our missions. Most of the 83 staff in Islamabad, for example, are there for entry clearance work. At the other end of the scale, the chairman of BP has recently written to praise the efforts of our three-man embassy in Baku, Azerbaijan, where a BP-led consortium has landed a £7 billion oil extraction contract.
The hon. Member for Rhondda and my hon. Friend the Member for Eastbourne mentioned Hong Kong. The hon. Member for Rhondda also referred to subjects raised in other reports. I take note of what has been said about the desirability of a debate, which will be a matter for my right hon. Friend the Leader of the House and the business managers.
Her Majesty's Government remain committed to implementing the full letter and spirit of the joint declaration, which is the cornerstone of our policy in Hong Kong. We have no reason to believe that China is less committed to the joint declaration. As my right hon. Friend the Foreign Secretary has made clear, we wish to draw a line under our differences with China over constitutional issues.
In his speech to LegCo on 5 October, the Governor of Hong Kong set out a series of constructive proposals on the future Sino-British co-operation over the future of Hong Kong. That was intended to signal--as was my visit to Peking a few weeks ago--our continuing sincere wish to intensify work on outstanding issues during the remaining period of British sovereignty. The House can be assured that we are working hard, both publicly and privately, to achieve the smoothest possible transition, and I know that we have the support of the House in doing so.
The cost of the diplomatic service is a very small part of the £27 billion that the Government spend on defence, aid and diplomacy--just over half a billion pounds. In fact, total FCO diplomatic wing funding, including grants to the British Council and BBC World Service, accounts for less than one half of 1 per cent of total Government spending. That buys 215 overseas posts--down from 243 in 1968.
Britain depends on overseas trade and investment abroad. Exports account for 25 per cent. of our GNP. Inward investment provides 23 per cent. of net manufacturing output. We were the second largest overseas investor in the world in 1993. We have a unique spread of distinctive, worldwide interests, through Hong Kong, South Africa, the Gulf, and the Indian subcontinent, as well as our stake in the European Union and other OECD markets.
The international community holds the key to many vital UK interests--the North Atlantic Treaty Organisation for security; the United Nations for the international rule of law. To promote our vital national interests, we need an effective voice in all the important international organisations, as well as posts in individual countries.
Our distinctive assets--the armed forces, the English language, our financial skills and enterprise, our overseas experience, and the skill of our diplomats, our aid experts, the British Council and the BBC World Service--are
Column 686admired around the globe. Those assets come at a price, but the sums are tiny compared to spending on health, social security and education. They are what it takes to have a strong, effective foreign policy, promoting British interests around the world, as well as our objectives of peace and prosperity for Britain, promotion of exports and security for British citizens abroad.
There are always a few commentators who cling to myths and stereotypes. They are the voices who criticise our diplomatic effort as if the purpose of our foreign service were to serve our vanity as a nation. Those tend to be the same voices who criticise our aid effort for supposedly serving the vanity of foreign dictators. I doubt that there was ever much truth in those propositions; there is certainly no truth in them now.
Our diplomatic service is fit, lean and streetwise. It is working to clearly defined objectives that serve the interests of our country in measurable and tangible ways. As the struggle for power, trade and influence grows more and more intense, we have to make sure that we do not cede an inch of ground to our competitors. Of course, as the Committee has said, there is always scope for improvement, just as there is in the way that we run our substantial aid programme. But, here too, we are setting a world standard for effectiveness and value for money.
Power and influence do not drop into our laps--they have to be worked for. Running an active foreign policy is partly a matter of political will power. But, to deliver the goods, our foreign policy also needs a solid commitment in terms of manpower and resources. Together, those two ingredients have helped us to carve for Britain a uniquely valuable role and status. That is what the British people expect from the British Government. We will not betray that trust.