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Mr. Matthew Banks (Southport): Why does my right hon. Friend believe that we ought to have a fundamental change in the way in which we deal with our overseas aid programme? The United Kingdom programme is one of the finest in the world. It is not only quantity but quality that count.
Mr. Howell: My hon. Friend tempts me to make a much longer speech than I wish. We have reached the point in the post-war doctrines of donors and aid at which it is realised that aid does not necessarily equal development. Merely calling for more aid, in particular more Government-to-Government aid, does not lead to the processes of development which are hoped for. Sir William Ryrie, who has been with the International Finance Corporation for some years, has written a book on the subject which I commend to my hon. Friend. It brings home the message that, if we are to make our aid budget smaller or limit its size, that ought to go hand in hand with implementing the policies that are necessary to achieve development. It is time that the whole aid policy was reviewed. That is happening in the United States, Japan and France and I hope that it is happening in Britain. Perhaps my right hon. and noble Friend Baroness Chalker will be able to tell us that that aid policy is being changed pari passu with limitations on the size of aid funds.
I commend the book to my hon. Friend the Member for Southport (Mr. Banks). It shows that the new engines of development are not primarily overseas aid but private investment. Even some of the more enlightened African leaders, who may understand free market economics better than Labour Members, are beginning to ask for capital, not aid. They want capitalist enterprise and entrepreneurs to get their economies--even in central Africa, let alone the booming countries of Asia--going.
I have declared an interest in the private finance initiative because I advise people on such matters. It is a superb initiative. I am glad that the Labour party supports
it; it has even claimed some parentage of it. I am not sure that I would accept that, but I shall let it go for a moment. What is being done is immensely valuable. There are some points on which I hope that my right hon. and learned Friend the Chancellor can go even further and give the PFI a stronger push.
I reject the argument that the PFI simply shifts funds off-Budget. It creates the opportunity for projects to be fulfilled, even if it is only a case of sale and leaseback, with far greater efficiency. The Northern line and the national insurance over-the-counter payments system are two examples of ways in which the PFI can produce--for the same amount of money as or perhaps a little more than can public finance--vast savings, much greater efficiency and a better product.
I hope that those responsible for the PFI in Departments will be organised even more effectively than they are. My impression is that the PFI has got going in the Health and Defence Departments. They are thinking about ways in which private finance could deliver more efficiently all sorts of services hitherto financed in the public sector. However, the other Departments need to get their acts together. The Health and Defence Departments seem to be ahead of the others, which need to move more vigorously. I hope that they will be encouraged to do so by my right hon. and learned Friend the Chancellor and his officials and colleagues in the Treasury.
In the private sector, the construction consortiums should stop grumbling and realise that they have to get organised. They must win the support of, although they need not become directly mixed up with, organisations that can raise the capital and handle the financial side of the huge new operations that they are going to build, own, operate and perhaps transfer. That will require capital support. The building industry and construction firms do not have the capital--and never have had it--for that sort of operation. They must work out relationships with the operating companies that can produce the capital.
I would like a little more attention to be paid inside the Treasury to working out the implications in years ahead of such deals. Some people argue that the PFI merely postpones until tomorrow the payments that we should be making today for infrastructure. That is partly true. It is a good thing if it produces greater flexibility, but we need to monitor it carefully and count up what the future payments will be--how they will operate and how they will impact on the Budgets of five, 10 and 15 years ahead; otherwise we will be back to year-by-year, seat-of-the-pants finance that opens us to the accusation that the PFI only postpones the evil day. I am not against flexibility, but the matter needs to be handled using a more modern accounting method than appears to be used at present.
The PFI opens up enormous opportunities. What is more--again, I declare my interest--just as we exported the skill of privatisation, along with many other skills that are needed all over the world, so also, if we develop the techniques for the PFI, we shall find every country in the world, from Malaysia to China, Taiwan, India, the Americas and Africa, seeking to learn the techniques from us. We have colossal opportunities and leverage in respect of that. I hope that it happens.
My last remarks involve another set of initials which concern a bird which, in my view, will never fly: EMU-- economic and monetary union and its convergence
criteria. My right hon. Friend the Prime Minister asked some extremely pertinent questions, which I was glad to hear, when he made a speech the other day at the Guildhall about EMU. His questions have not received any answers because they are devastatingly accurate. Labour Members ought to feel that they should be trying to answer them because they are supposed to be broadly in favour of the single currency, the Maastricht criteria, the timetable and all that.
My right hon. Friend the Prime Minister asked how the relationship between the countries in the single currency and those outside it would work. How will those inside it feel about exports that will affect their textile and motor industries sweeping in from countries that cannot--or do not want to--join the single currency and have more competitive currencies?
What will the single currency do to the Euro-budget if there have to be huge compensatory mechanisms and a vastly swollen Brussels bureaucracy to increase redistribution to compensate the countries that cannot escape through a more flexible exchange rate? What will it do to the whole single market, which some of us have spent a quarter of a century encouraging and trying to build up? We are told that new barriers and divisions may have to be introduced between countries in the inner core and those outside it.
I never thought that I would make a speech in defence of the former leader of the Labour party, Commissioner Neil Kinnock, but I understand what he was thinking about when he began to say, as I believe he did, that the whole attempt to put the single currency into a political timetable over the next three and a half years or whatever was dangerous. If there is ever to be a single currency, it must come as a result of market forces and demand. It cannot be imposed by politics.
As my right hon. and learned Friend the Chancellor keeps reminding us, the Maastricht criteria--there are several others that one could add--are the normal indicators of good behaviour to which any sensibly run economy needs to adhere anyway. What discipline forces us to comply with them? It is not a lot of treaty declarations in Brussels but the dictates of the global financial system. That is the new gold standard.
People say that we should have a gold standard and that the single currency, instead, is not so bad. In fact, we have a gold standard: global financial disciplines that are so strong and which involve such a rapid withdrawal of capital in seconds--or nanoseconds--that, if things go wrong, they impose a deadly discipline on any country that seeks to move too far away from the sensible indicators of a low inflation rate, low interest rates, sensible borrowing, a sensible fiscal system and sensible rather than penal taxation on work and enterprise.
There is no need for us to submit ourselves to the so-called discipline of the single currency, even we wanted to do so. We have plenty of disciplines and they are the ones that we must obey. If we do not, the global financial system will come down hard on us.
Mr. Jenkin:
Could it be that the Labour party is lunging at the single European currency because it imagines that it can escape from those international disciplines and believes that a single currency would somehow be a refuge from the real world?
Mr. Howell:
There could be something in that. EMU may begin--although I do not think that it will fly--and
Economic and monetary union and the single currency mean bigger government. Perhaps that really explains the enthusiasm of the Labour party. It means a lot more central Government, higher taxation by Europe and higher redistribution. Even if it came together--and, heaven knows, events in France make that less likely every day-- I think that it would explode.
I realise that, in asserting that view, one is saying something rather challenging. One is saying that the whole French political establishment, which has been wedded to the idea of recapturing its monetary destiny, as it calls it, is wrong. One is saying that Chancellor Kohl, who is a great man, the small entourage around him and many other learned Europeans, great bankers and officials are all wrong. They are the ones who said that one cannot have a single market without a single currency. They said that that was essential for the future of Europe, and that, if we did not achieve that, it would be the end of civilisation.
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