First, the House will have noted that times for each debate have been printed on the Order Paper. That means that the practice on the former last day Adjournments will be followed--that, if the House gets ahead of the timetable and the Member opening the next debate is not present, the occupant of the Chair will be able to suspend the sitting until, but not beyond, the stated time.
Secondly, I propose for the three half-hour debates to follow the practice to which the House is accustomed with the half-hour Adjournment at the end of each day's sitting--that no additional Member may take part except with the permission of the Member introducing the debate, and the Minister, and of course the Chair, should be informed.
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Kirkhope.]
Mr. Jim Marshall (Leicester, South) rose --
Mr. Marshall: The House is far more crowded than one would usually expect during an Adjournment debate, and it is most unusual for my standing up to arouse a cheer as well, but perhaps we are making history in more than one sense today.
There is a certain irony in my luck in coming top of the draw, as I was one of those hon. Members and right hon. Members who voted against the change. Perhaps, Madam Speaker, either you or the gods are getting their own back by ensuring that I have to be here at 10 o'clock on the first Wednesday.
The second comment that I wish to make before I reach the substance of the debate is that, as you know better than I, Madam Speaker, and I am sure that the Leader of the House also knows, the House has sat on Wednesdays in recent times, although not regularly since 1967. The last time that the House sat on a Wednesday morning was on an overspill on the Consolidated Fund Bill debate--something that can no longer happen--on 28 March 1990.
The House decided to meet on Wednesday morning of 1 August 1984 because the House was going into recess. That is an interesting date also because now we do not reach August before we go into the summer recess. It is a sign that the times have changed with the Government. They want us out of the way now, rather than keeping us here in the House.
The House also met on Wednesday 7 November 1990, for the Queen's Speech. However, the last time that the House met regularly on Wednesday was on 25 October 1967, well before my time in the House, and I am sure a few years before your entrance, Madam Speaker. I asked the Journal Office to obtain for me the front page of that day's Hansard , and it is obvious that some things never change, even though we may change our proceedings from time to time. After Prayers, the House started with a ten-minute Bill, the Travel Concessions for Seamen Bill, moved by Mr. Hector Hughes, who was then the Member of Parliament for Aberdeen North. It will not surprise the House to know that it was critical of British Rail. Hon. Members criticised British Rail for removing the travel concession for seamen going home after arriving in port; so that, as is habitual, British Rail was being criticised 27 years ago, as it is today.
The main item of business under the Orders of the Day--is shows how important those issues were then--was the Sea Fisheries (Shellfish) Bill. Some names to conjure with: Mr. Graham Page sought to move amendments, as did the then Mr. Ronald Bell; so there are some links between now and that time, 27 years ago.
I am delighted to be able to open the first Adjournment debate. I think that it does credit to you, Madam Speaker, or to the ballot, that we should be able to have a debate that is of real significance to this country's national interest and to the position of the poorest countries throughout the world.
Column 275The Pergau dam affair shows all that is wrong with the way that Britain gives its aid to some of the less poor countries of the world. To me, and I am sure to many other hon. Members, the affair still leaves a nasty taste in the mouth. Despite protestations to the contrary, it will always, to me and to others, be associated with aid for arms.
The Foreign Secretary has admitted, in his own singular phrase, to a "brief entanglement" between arms and aid in 1988. I have taken an interest in the issues of Bosnia and Europe generally over the past few years. One of the things about the Foreign Secretary is that he can always come up with a neat phrase. The tighter the corner he is in, the smarter and neater the phrase he comes out with.
To me, the phrase "brief entanglement" implies something a bit more than just a short time span. The then Secretary of State for Defence--the scion of the Scottish industiral family--made an error when he went to Kuala Lumpur in 1988 to negotiate arms and offered aid on the side. But in the Foreign Secretary's phrase, the affair was a "brief entanglement". There are those--mainly Opposition Members--who believe that the project would not have been proceeded with without the arms connection. To me it is a long affair, not a brief entanglement.
The case is also a bad deal for the United Kingdom taxpayer, and arguably a bad deal for the Malaysian electricity consumer. Funding the project by soft loans has increased the charge on the United Kingdom public purse by approximately £56 million more than if the project had been funded by a method of mixed credits. It has been estimated--I presume that the estimate is correct as I am not aware that its validity has been questioned --that Malaysian electricity consumers will pay £100 million more than if the electricity was generated by gas turbines. In economic terms alone, the project should not have been proceeded with.
Great credit is due to the World Development Movement for its courage in taking the Foreign Secretary to the High Court to seek a judicial review on his 1991 decision. We all know the outcome--the High Court agreed that the Foreign Secretary had acted unlawfully. We now know--because of the Foreign Secretary's statement and his response to questions on 13 December 1994-- that the Government had no intention of appealing against that decision.
The Foreign Secretary must go further than his statement to Parliament on 13 December, and make two matters absolutely clear. First, he must state clearly that the Treasury will not be allowed to cut future spending allocations to the budget of the Overseas Development Administration in order to claw back future payments for the Pergau dam. The Foreign Secretary has already given that commitment for this year and for 1995-96, but his commitment must go further still to cover the lifetime of the project--for the next 10 to 11 years.
Column 276Secondly, the Foreign Secretary must give a commitment to repay fully the aid budget for all past spending, both on the Pergau dam and on the other three projects that might be deemed to be unlawful, and thus reverse the decision that he gave in the House of Commons on 13 December.
Mr. Canavan: I am grateful to my hon. Friend. On the illegality of the Secretary of State's action, does my hon. Friend agree that, if a local councillor had been found guilty in a court of law of misappropriating more than £20 million of public money for an unviable project against the advice of a senior official, that local councillor would almost certainly be surcharged, probably be banned from office for many years, if not for life, and almost certainly be bankrupt? Yet the Secretary of State for Foreign and Commonwealth Affairs carries on almost regardless. Should he not, in all honesty, resign?
Mr. Marshall: I agree with my hon. Friend's conclusion. Clearly, the Foreign Secretary should resign, together with all his Cabinet colleagues. To be fair to the Foreign Secretary--I am not usually fair to him--the High Court ruled that he acted unlawfully in using that piece of legislation. It did not rule that he was unable to provide funds to allow the project to go ahead. We are discussing the legality of the action under the 1980 legislation, not whether the Government had the right to provide money, which they clearly did. They simply chose the wrong vehicle to do so.
I was in the Chamber when my hon. Friend put the same question to the Foreign Secretary in person, and the response that I have just given was far more convincing than the one that the Foreign Secretary gave to my hon. Friend.
The Government's justification for the non-reimbursement of funding for previous years is that the aid and trade provision of the aid programme for previous and future years was set on the assumption that the cost of the Pergau dam and the three other projects would be met from it. In the Foreign Secretary's words,
"the books for those years are effectively closed".--[ Official Report , 13 December 1994; Vol. 251, c. 774.]
That is another neat phrase.
Books are either closed or not. What does he mean by "effectively"? Does he mean that, if pressure is exerted, the books could be reopened? Is he already anticipating his response when my hon. Friend the Member for Eccles (Miss Lestor) says to him, "You have been under pressure from the High Court or other quarters and have had to reopen the books; how does that tie in with your commitment of 13 December 1994?"?
I can already see the Foreign Secretary, in his usual languid manner, rising at the Dispatch Box and saying to my hon. Friend the Member for Eccles, "I said that the books were effectively closed." Perhaps that phrase means one of two things--the books are closed and cannot be reopened, or the Foreign Secretary is making an escape route for himself for the time when sufficient pressure is placed on him that the books have to be reopened and the payment repaid. I think that we all accept that the reason that the Foreign Secretary has given and the arguments advanced by the Government amount to pathetic excuses. The Government's unlawful decision prevented lawful aid and trade provisions from going ahead--only one third of the
Column 277ATPs put forward for 1990-91 were proceeded with. If the Pergau dam project had not been approved, the way would have been left open for lawful ATPs. If the House did not wish to do that, the resources could have been put into the mainstream aid budget.
As a basic principle, the money which was spent illegally must be returned to the aid budget. If that is not done, the Government will have spent resources set aside for aid on non-aid purposes, in blatant disregard of the wishes and the authority of Parliament. The £24 million that was spent on Pergau could make a significant difference to the quality of life in a poor country.
The Pergau dam affair has cast a shadow over the credibility of our aid programme which must be removed. I believe that we should take this opportunity to review overseas development administration policy as it has not been reviewed comprehensively since the 1975 White Paper. My view--I believe that it is also increasingly the view of my party--is that our aid, both bilateral and multilateral, should be targeted at the poorest people in the poorest countries.
We should never forget that 1.2 billion people continue to live in poverty throughout the world. If we are to help to eliminate that poverty, we must give increased priority to the provision of basic education, primary health and safe drinking water--just three objectives among many. I contend that £234 million would provide a great boost to that policy development.
Mr. Michael Jopling (Westmorland and Lonsdale): I rise on this important and historic occasion with a great deal of pleasure. Madam Speaker, you will recall that this Wednesday morning sitting--which I hope will be the first of a permanent series of such sittings--results from the unanimous recommendation of the Select Committee on Sittings of the House, which I had the honour to chair.
The four different types of private Members' business--the Consolidated Fund Bill debate, with its absurd all-night sittings which are hopefully now behind us; private Member's motions; Adjournment motions; and the last day Adjournment debates--can now be dealt with in the four-and-a-half hour sitting of the House every Wednesday morning. That is a very neat way of putting private Members' business on a regular footing, instead of dealing with it hurriedly just before a recess. It is a far more satisfactory forum for hearing hon. Members' concerns, and it is much more sensible for us to debate an important issue like Pergau at this time of the morning rather than at 4 am, as we probably would have done previously.
The hon. Member for Leicester, South (Mr. Marshall) referred to the parliamentary sittings in 1967. I may have been in the Chamber during the debate to which he referred--I recall taking part in the morning debates during the Crossman experiment. That experiment failed because the House was not prepared to accept those arrangements, and because the business which Mr. Crossman put on the Order Paper was much too controversial.
There is always a temptation for people to monkey about with controversial business, which is what happened in the 1960s. We are now accepting relatively non-controversial business on motions for the Adjournment, and I believe that that will prove very satisfactory for the House.
Column 278I am a member of the Foreign Affairs Select Committee, which held a number of hearings and produced a report about the Pergau dam affair late last year. I want to refer to the events leading up to the court's decision about the legality of the payments for the construction of the Pergau dam under the Overseas Development and Co- operation Act 1980.
The whole sorry saga of the Pergau dam began when my noble Friend Lord Younger, as he is now, signed the protocol in March 1988 in Kuala Lumpur. He maintains to this day that he did not do anything wrong, and he gave advice to that effect to the Select Committee. He said that he thought that the wording of the protocol was appropriate, and did not link aid with arms expenditure. However, the Foreign Office and the Government disagreed with that view, as did the Select Committee in its report. We felt that it was wrong for Mr. Younger to sign the protocol at that time.
The signing of the protocol has had a domino effect. I reflect the criticism in the Select Committee report when I say that I cannot understand why the Foreign Office or the Ministry of Defence allowed the protocol to be signed. The Foreign Office was totally ignorant of what was going on. The actions of the British high commission in Kuala Lumpur were totally disgraceful. It appeared to know very little about the reason for George Younger's visit to Kuala Lumpur, and it then failed to inform the Foreign Office what he had signed until some weeks after his return to this country. That is a lamentable state of affairs.
The whole project was appraised in a bizarre mission between 12 and 14 March 1989. Sir Tim Lankester, the permanent secretary, said--it appears in the Select Committee report--that the mission was "wholly unsatisfactory", and described it as a "lamentable slip-up." I agree with him. It is all very well for Sir Tim Lankester to complain about the viability of the scheme after the event; I think it is a pity that people within the Department did not pay more attention to the conduct of the scheme's appraisal and to the legal basis of the expenditure, which has since been overturned by the court as contrary to the provisions of the 1980 Act.
The events surrounding the Pergau dam affair have not been helped by the machinations of the consortium of contractors. The Select Committee was critical of those contractors, and I think that their behaviour does them little credit. Having said that, I entirely understand why it was impossible to stop the Pergau dam project dead in its tracks once the first mistake of signing the protocol had been made. That could have had massive ramifications for our relations with Malaysia--which are delicate at the best of times--and badly affected our important trade with that country. Undertakings had been given by the then Prime Minister, Mrs. Thatcher, and I believe that the Government were right to uphold the undertakings which were given at that time.
I now turn to the issue at the core of what the hon. Gentleman is raising in his one-and-a-half hour Adjournment debate--the judgment of the courts, which nobody really anticipated. The hon. Member for Falkirk, West (Mr. Canavan), who interrupted the hon. Member for Leicester, South, is also a member of the Select Committee for Foreign Affairs.
If he were still in his place, I am sure that he would agree with me, as would my hon. Friend the Member for Broxtowe (Mr. Lester), who is also a member of the
Column 279Select Committee, that, although the World Development Movement told us that it considered the payment to be illegal, nobody else, on or off the Committee, also reached that conclusion. Although we heard what the World Development Movement had to say, none of us set very much store by it. The World Development Movement was right, however, and the rest of us were wrong.
Returning to the intervention by the hon. Member for Falkirk, West, he sought to link the court case, which was about the legality of the payment under the 1980 Act, with the advice and the objection by Sir Tim Lankester, which was based purely on the viability of the scheme and had nothing to do with the legality of the payment. Those two issues are quite separate, and I wish that the hon. Gentleman were still in his place so that he could hear me say that.
Mr. George Foulkes (Carrick, Cumnock and Doon Valley): If the right hon. Gentleman checks back on parliamentary questions that have been tabled over a number of years, he will find that a number of my right hon. and hon. Friends questioned the legality of the project.
Mr. Jopling: I accept that there have been questions which suggested that. I would guess that those questions might have been inspired by conversations with the World Development Movement. I do not think that there was any advice in or out of the Select Committee to the effect that the payments were illegal, except from the World Development Movement. Therefore, the judgment was a surprise. I applaud the statement of the Government, complying with the judgment of the court, that money will be found from the reserves--£34.5 million this year and £31 million next year--to put right what the court has said was wrong, and that seems adequate. Referring to previous years, I am not clear how and whether it would be appropriate or sensible to reopen previous years concerning the £24 million. It seems to me that that is water over the dam, and I could not support pressure to make the Government find that £24 million as well. Of course, the World Development Movement is doing everything it can--it may go back to court, for all I know--to insist that that £24 million is found, but those books are closed. They refer to years gone by and I should be very surprised if it were possible to find that money.
The third part of the money is in future years, and that has also been referred to in the debate. There is no way in which the Government can commit themselves--before we have entered into the specific public expenditure survey rounds--to be absolutely clear about what will happen in 1996-97, but when the Foreign Secretary made his statement on 13 December, he pointed out that the overseas aid budget is to increase by £56 million in 1996-97 and by £115 million in the following year. That will be the baseline for discussions at that time.
Finally, I want to say a word about the aid and trade provision. We should remember that it was introduced by the Labour Government in 1977. We ought also to recall that only 6 per cent. of our aid budget--rather less, I think--goes on ATP and, what is most important, since the Pergau affair the rules have been changed and it would be impossible for Pergau to be financed now to ATP, as it was then.
Column 280I am glad that the Select Committee report endorsed the use of ATP, and was not in favour of its abolition. ATP is a very good scheme. I welcome the use of the aid budget to encourage British trade and the preservation of British jobs.
Although the Select Committee was not in favour of an extension of it above 6 per cent., I would not object at all if the ATP budget were increased. It would be to the advantage of British industry, as ATP has had very good effects and repercussions on jobs and industry in this country. It is a pity that the statistics are not sufficiently clear for us to be precise about just what advantages have been gained over the years from the ATP provision.
With those remarks, I look forward to hearing what my hon. Friend the Minister has to say. In particular, I think it would be interesting if he could give us some an idea of how the extra £34.5 million this year is likely to be spent. The Foreign Secretary referred to Bosnia, but there may be other provisions, and I am sure that the House would like to know where the money is going. 10.37 am
Mr. George Foulkes (Carrick, Cumnock and Doon Valley): I first congratulate my hon. Friend the Member for Leicester, South (Mr. Marshall) on obtaining his debate on this historic first Wednesday morning sitting, at least for a number of years. I am pleased to follow the right hon. Member for Westmoreland and Lonsdale (Mr. Jopling), who is responsible for us sitting on Wednesday morning. I am glad to see him here today, and look forward to seeing him regularly on Wednesday mornings.
I also emphasise that my hon. Friend the Member for Leicester, South, who so ably put his case today, has the total support of those on the Opposition Front Bench in the arguments he put forward.
Mr. Foulkes: The Minister will have the opportunity to speak later. He is noted for his sarcasm rather than his humour. My hon. Friend has the total support of the Opposition in seeking the debate, and in everything he said.
Today's much-needed debate on repayment of the money that was so scandalously wasted on the Pergau dam is an issue that, contrary to what Ministers and Conservative Members say, is in no way resolved. It may seem to the Foreign Secretary a small discrepancy in his bookkeeping, but, to millions of people throughout the developing world who are dependant on British humanitarian aid, it can mean the difference between life and death.
The Pergau dam affair, from the original infamous entanglement of arms sales and aid, arising from the improper deal signed by Lord Younger on 23 March 1988, all the way through to the High Court ruling and the Foreign Secretary's stubborn refusal to accept it, has been one of the sorriest sagas of this discredited Government. On 9 and 10 November last year-- nearly three months ago--the High Court heard the World Development Movement case for a judicial review of the Foreign Secretary's decision. The WDM deserves the thanks and
Column 281congratulations of the whole House for that action. The challenge to the Foreign Secretary's decision was based on the Overseas and Development Co-operation Act 1980.
The judgment held that the Foreign Secretary's decision was unlawful, and that future payments from the aid budget were to be halted. We do not congratulate the Foreign Secretary on doing that, because he was so instructed by the High Court. Equally important, the High Court instructed the Government to reveal to the World Development Movement how they intended to put right the aid payments made so far.
By comparison, the Government quickly stated their intention to meet their contractual obligations to Malaysia, no doubt under legal threat from its Prime Minister, Mohatmir Mohammed. However, the High Court ruling explicitly stated that the WDM must be informed how the Foreign Secretary planned to make good the overseas aid budget. When will it receive a similarly quick response? It still awaits one. Once again, the interests of British companies and of trade relations with Malaysia have taken precedence over the needs of the developing world.
In the House, the Foreign Secretary first ignored many legitimate requests for his resignation, and even mild requests for an apology for the unlawful action that had been taken. Now, the right hon. Gentleman is blatantly attempting to avoid the implications of the judgment. The High Court specifically instructed the Foreign Secretary
"to take appropriate steps to make good the deficiency in the overseas aid budget."
It could not have been clearer.
The Foreign Secretary had the gall to tell the House that he believed that not paying back the £24 million that unlawfully went to Malaysia in that "brief entanglement" as he described it, was "an equitable way" of dealing with the difficult situation that had been created. That is unbelievable. The right hon. Gentleman's view of what is equitable is of no great relevance to the House, and his view of the matter has been shown by the High Court to be fundamentally flawed, and an insult to right hon. and hon. Members and to the British judiciary. Above all, his view is an insult to the people who desperately need the £24 million that the Foreign Secretary is so anxious to keep.
The Labour party is not opposed to the aid and trade provision. We were reminded today as on previous occasions by the Under-Secretary of State, with his usual sarcasm--
Mr. Foulkes: It may seem like a sense of humour to some people, but it seems like sarcasm to this side of the House. We do not need to be reminded that a Labour Government introduced the aid scheme. We are proud that Judith Hart introduced it in 1978, but that is not the scheme currently pursued by the Government. The original scheme was intended to allow a small proportion of bilateral aid of about 5 per cent. to be available, to give higher priority to the commercial importance of a limited number--these are the key words--of "developmentally sound projects."
We find objectionable the systematic abuse and corruption of the scheme under a Conservative Government to satisfy Tory central office, the awarding of tenders to companies donating large sums of money to
Column 282Tory party funds--no doubt to pay some of the heavy legal fees that it must reimburse The Guardian and other newspapers, manipulation of the aid budget to further the sale of British arms and the financial interests of the Government's family and friends, and the Government's refusal to admit dishonesty and at least attempt to make amends.
The legal basis for aid payments was agreed by the House in 1966 and 1980. It gives the Foreign Secretary to authorise aid payments, but only
"for the purpose of promoting the development or maintaining the economy of a country or territories outside the UK, or the welfare of its people".
That was not the purpose of the Pergau dam. As the Foreign Secretary told the Foreign Affairs Committee, there were "wider considerations", such as
"a clear understanding at the highest level"
"the interests of British industry."
Ironically, the Committee and the Overseas Development Administration's own study of the programme showed that it will not create jobs or orders for British industry, so it cannot be argued that Pergau would help in that way. It boils down to
"a clear understanding at the highest level"
I cannot believe that George Younger, who was Mrs. Thatcher's leadership campaign manager, did not have his leader's words ringing in his ears when he signed that fateful arms-for-aid deal in 1988. It was not for nothing that Mrs. Thatcher was nicknamed by a former Leader of the House
"she who must be obeyed."
The following year, on 15 March 1988, Mrs. Thatcher met the Malaysian Prime Minister and sealed the deal on the basis of incomplete information about the cost to the British taxpayer. Over the next two years, it became clear that the Pergau project was not developmentally sound but uneconomic and, in the words of the ODA's own appraisal, "a very bad buy" for Britain and
"a burden on Malaysian electricity consumers."
In 1991, the ODA's Permanent Secretary, Tim Lankester, and the Minister for Overseas Development, Lady Chalker, reached the conclusion that the project was not sound, yet on 26 February 1991, after consulting the Prime Minister, the Foreign Secretary gave his final approval.
Why did the Foreign Secretary do that, against all professional and, I believe, legal advice? Why did he approve a project that would help neither British jobs nor Malaysian consumers? We should not be surprised that he did, when we realise that nearly all the companies that benefit from ATP donate to Tory party funds. We should not be surprised, because of the particular interest taken in Pergau and in the Ankara metro project by the then Prime Minister. Despite all her other tasks, she took a particular interest in those two projects. When I asked the Minister what other projects the Prime Minister had asked to be put on her desk, he said that it would cost too much to tell the House. It is time the House knew of all the ATP and other projects that found their way on to Mrs. Thatcher's desk before they were approved.
Because of her special relationship with the Malaysian Prime Minister, she was also keen to see British arms sales to Malaysia proceed. One hon. Friend pointed out to
Column 283me that a report in The Times today says that our Export Credits Guarantee Department programme is distorted by high expenditure on the arms trade. Although the Prime Minister formally de- linked the "separate but parallel letters", there was still a strong relationship between them. The Prime Minister might also have had a close family interest in the project.
Downing street's involvement in reviewing ATP projects is particularly disturbing. The overruling of countless officials, discontent of Cabinet Ministers, protests of non-governmental organisations and press editorials were all ignored by the Government. It took action by the World Development Movement in the High Court to force the Foreign Secretary to admit that he had acted illegally in spending aid money on Pergau. A further refusal to abide by the judgment and to repay the money has caused unmitigated outrage, and rightly so.
The case for repayment is straightforward. The Foreign Secretary has used the lame excuse that the books for previous years are effectively closed. However, it was made clear in response to a question put to the Foreign Secretary's counsel in a preliminary hearing that provision existed for retrospective rearrangement of funds. In other words, the Foreign Secretary's representative said that the books could be reopened, and they should be. It seems that the interpretation of the laws of the United Kingdom depend on which side of the law the Government are operating on.
The Foreign Secretary also stands accused of contempt of the authority of Parliament. He seems to be of the opinion that the aid budget was set on the assumption that the Pergau project would be financed from within it, so provision would have been less if the project had not been included. However, the House did not vote on individual aid and trade projects when it voted for the aid budget in 1991. The ATP allocation appears as a total figure, not as a list of individual projects. Parliament voted the ATP money on the assumption that it would be used for genuine developmental projects. That has not been the case. The House has been ignored.
The money refused by the Foreign Secretary also provides a compelling argument for its return to the aid budget, which has fallen to 0.3 per cent. of gross national product. The bilateral aid budget has declined, and it desperately needs the money that could come, as it were, from the Pergau project. Africa and all poorer countries of the world desperately need the money.
In conclusion--that will please Noddy, the Government Whip. Even more important, Madam Speaker, it will please you.
The Pergau dividend, which was successfully won by the World Development Movement, could be used to fund many grass-roots projects which have disappeared from the forefront of British aid. The Government must be aware that any attempt to cut the aid budget in other areas will be vigorously opposed by the Opposition. Attempts at retribution by the Foreign Secretary will not be accepted. The Labour party wants--indeed, demands--that the money misappropriated from