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Committee of Selection


29 Jul 1998 : Column 355

Oral Answers to Questions


The Secretary of State was asked--

Micro-credit Projects

1. Mr. Andrew George (St. Ives): What support she is offering less developed countries to promote micro-credit projects. [51320]

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): We strongly support the provision of savings and credit to poor people. Experience shows that the poorest women use such schemes very creatively to enhance their family incomes, and are very reliable at repaying. Our current projects amount to about £60 million, and we anticipate increasing that figure. We are also working internationally to ensure that efforts are co-ordinated, and that we avoid the danger of a spread of badly organised micro-credit schemes.

Mr. George: I am grateful to the Minister for that reply. Does he agree that the guiding principle of micro-credit schemes in less-developed countries is that of empowering the poorest in society, especially women? Micro credit is one of the most effective initiatives available to donor countries and non-governmental organisations. What steps is the Minister taking to establish a programme of partnerships with others, including United Kingdom banks, to build on the good work achieved so far?

Mr. Foulkes: The hon. Gentleman is right about involving women and getting them to participate. We took part in the summits on micro-credit schemes: the first was held in Washington, and the second in New York on 28 and 29 June. We discussed expanding our activity in partnership with non-governmental organisations and banks. There are about 10,000 micro-finance programmes lending to about 15 million people. We want to increase that to 100 million people, so we have a huge task ahead of us, but we are ready to do everything that we can to meet that challenge.

Mr. Andrew Reed (Loughborough): I welcome the announcement of £60 million for micro-credit schemes. That is an increase on the £42 million that was available one or two years ago. Does the Minister agree that micro-credit schemes offer the best opportunity for people to develop their skills, to make money and to assist their local communities? Will he ensure that micro-credit schemes gain from the increase in the aid programme over the next three years?

Mr. Foulkes: My hon. Friend is right that micro-credit schemes are cost effective: the repayment rates are high, and the schemes soon become self-sustaining. But we must not forget our other priorities, particularly health and education. I hope that the Opposition will recognise that, as a result of the settlement in the comprehensive spending review, which the hon. Member for South-West

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Devon (Mr. Streeter) pooh-poohed at our previous Question Time, we shall be able to do a great deal more in those areas.

Debt Relief

2. Mr. David Stewart (Inverness, East, Nairn and Lochaber): If she will make a statement on the spending plans for her Department in relation to debt relief for developing nations. [51321]

The Secretary of State for International Development (Clare Short): The Government's policy is to speed up the implementation of the heavily indebted poor countries initiative and to apply it more flexibly to post-conflict countries. Our aim is that all eligible countries are on track for debt forgiveness by 2000. HIPC debt relief draws on resources not from budgets such as mine, but from the World bank, IMF and export credits. My Department continues to provide resources to help countries to qualify for HIPC and is helping countries committed to poverty reduction to pay debt while awaiting HIPC relief. We will continue to work in similar ways to secure debt relief for poor, heavily indebted countries that are committed to poverty reduction.

Mr. Stewart: I am grateful to the Secretary of State for her reply. Will she give an undertaking to speed up debt relief for heavily indebted countries and make a clear and transparent link between debt relief and poverty reduction in developing nations?

Clare Short: As I have said, we are strongly committed to speeding up the implementation of HIPC. Shortly after we formed our Government, my right hon. Friend the Chancellor of the Exchequer announced at the Commonwealth Finance Ministers meeting the target to bring three quarters of eligible countries on track by 2000. He and I went immediately to a meeting with the World bank and the IMF, but could not reach agreement on that. We obtained that agreement at the G8 summit, so we are having some effect, but there is more to be done. In particular, post-conflict countries do not have the track record that enables them to qualify, so we must be more flexible there. We are doing all that we can not to impose specific new health and education conditions but, rather, to require a good economic policy to obtain good economic growth to benefit the poor.

Mr. Bowen Wells (Hertford and Stortford): What proposals and initiatives will the Secretary of State put forward for the annual meeting of the World bank and the IMF this autumn to relieve debt?

Clare Short: As I have said, we must now seek to implement the agreement reached at the G8 summit between all the major donor countries to speed up the implementation of HIPC--a shift in the position of a number of countries--and the agreement to be more flexible about post-conflict countries, such as Rwanda, about which the hon. Gentleman and the Select Committee are worried. Rwanda has come out of chaos and does not have the track record over the years that would enable it to qualify for HIPC, but the levels of poverty there were so great that, without help to reduce

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poverty, chaos could well return. Therefore, we need more flexible conditions and we shall be working on both fronts at the meeting.

Mrs. Maria Fyfe (Glasgow, Maryhill): This Question Time should not go by without my taking the opportunity to congratulate my right hon. Friend on the large increase in her budget which she won from the Treasury. That will be welcome throughout the country. Will my right hon. Friend soon be able to announce how much more might be able to be done for health and education, given, as she has pointed out herself, that many countries are so heavily indebted that they spend more on repaying their debt than on the health and education of their populations?

Clare Short: I am grateful to my hon. Friend for her congratulations. The Labour party has kept its commitment to reverse the decline in development assistance which went on so shamefully under the previous Administration. Immediately after the election, we announced that we would increase by 50 per cent. our spending on health, education and water in Africa, and that is now being implemented.

I caution everyone involved with debt relief not to see it as the only remedy for poverty. We need debt relief in order to reduce poverty, but there are some poor countries without debt, and debt relief must be seen in that context. We shall be disbursing our increased resources and making announcements in the autumn. I can promise my hon. Friend that a commitment to improve spending on education, health and clean water will be a theme of those.

Mr. Gary Streeter (South-West Devon): I welcome what the Secretary of State has said about the HIPC initiative and wish her well in speeding up that process. Can she clarify the extent to which the Government support and intend to honour the specific aims and objectives of the Jubilee 2000 campaign?

Clare Short: As I have made clear before, we welcome the Jubilee 2000 campaign. In the various cathedrals in Birmingham at the time of the G8 summit, I addressed groupings from all over the country campaigning on debt. I was proud that so many of the British people came to Birmingham to ask the representatives of the richest countries in the world not to forget the needs of the poorest. We are highly committed to making improvements. It depends to which of the demands of the Jubilee 2000 campaign one listens. Sometimes it talks as though all debt should be relieved unconditionally. We do not agree with that. There are countries with high levels of debt that have spent their money on luxuries or have excessive military expenditure. We believe that debt relief should be linked to a commitment to poverty reduction and sensible economic management. We believe in implementing HIPC more flexibly, not in cancelling all debt unconditionally.

Palestine (Development Aid)

3. Dr. Phyllis Starkey (Milton Keynes, South-West): What plans there are for future development aid to the Palestinian Authority. [51322]

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The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): We expect to maintain a substantial bilateral programme of development projects that target the poor, promote sustainable livelihoods and encourage good government. We aim to help the Palestinian Authority to build its capacity as an efficient and accountable Government. We are conscious, however, that lack of progress in the peace process is causing increased poverty in the occupied territories. That undermines much of the work.

Dr. Starkey: I thank my hon. Friend for his answer. I have seen for myself the obvious benefits that the Palestinian economy can gain from projects that we, and the European Union, have funded; but, as my hon. Friend mentioned, its ability to benefit is undercut by the obstructions that the Israeli Government are putting in the way of the development of trade between the different parts of the Palestinian Authority, and between the Palestinian Authority and its neighbours. I am thinking particularly of obstruction on the border between Gaza and Egypt, where spurious security concerns are being used to limit the ability to trade. What representations is my hon. Friend making to his colleagues in the Foreign Office with the aim of removing those obstructions?

Mr. Foulkes: I commend my hon. Friend for her sustained interest in this topic following her visit to the area. She has been to see me, and has pursued the matter through questions and by all other possible means. We share her concern, and I assure her that, through officials and Ministers, we are regularly in touch with our Foreign Office colleagues. All the good work that we are doing could be jeopardised--indeed, it is already being jeopardised--unless we receive full co-operation from the Israeli Government. As my hon. Friend has said, we are not receiving it now.

Mr. David Atkinson (Bournemouth, East): Does the Minister agree that, as well as giving aid to the Palestinian Authority and the United Nations Relief and Works Agency for the Near East, the international community will in due course be required to fund the outcome of the final-status negotiations relating to Palestinian refugees, which are due to be completed by May next year? What consideration is the Department giving to the establishment of a new United Nations fund for that purpose--as proposed in the Atkinson plan, which the Council of Europe endorsed earlier this year?

Mr. Foulkes: I do not think we need ask who the Atkinson plan is named after. I am glad that the author of that plan is here to present it to us. I must add, however, that we are not enamoured of the idea of establishing new United Nations funds. We are trying to streamline and improve the efficiency of the UN and its agencies in the delivery of assistance, and I feel that such tasks might be performed better by one of the existing agencies.

Mrs. Louise Ellman (Liverpool, Riverside): Does the Minister agree that it is essential for the Palestinian Authority to develop accountable and democratic institutions to ensure that funds go to those for whom they are intended--the mass of people in its territories?

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Does he agree that the responsibility for doing that lies firmly with the Palestinian Authority, and not with the Government of Israel?

Mr. Foulkes: We continue to do a great deal to build up the capacity of the Palestinian Authority. We have been concerned about the financial arrangements, and have given advice in that regard. I assure my hon. Friend that all bilateral assistance given to the Palestinian Authority is used for the purpose for which it is intended: we make sure that that happens.

Mr. Nicholas Soames (Mid-Sussex): Does the Minister agree that, in view of the catastrophic failure of American policy in the middle east and the grave instability that continues to arise therefrom, a special duty now falls on the European Union to assume leadership in the region? Will he talk to his American counterpart to ensure that the Americans follow our very successful programme to help the Palestinians, and that an even-handed approach is adopted to aid in the area? That is the only way in which we can hope eventually to see peace.

Mr. Foulkes: Most of what the hon. Gentleman has said is principally a matter for the Foreign Secretary and the Foreign Office. I assure him, however, that the whole Government--from the Prime Minister downwards, and including the Department for International Development--are committed to making an extra effort to ensure that the peace process is enlivened, so that the money that we spend is used effectively and the Palestinian people do not continue to experience the poverty that they are suffering now.

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