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2 Feb 2000 : Column 204WH

European Union Development Fund

11 am

On resuming--

Mr. Tony Worthington (Clydebank and Milngavie): This debate is timely, for two reasons. First, we now know the new structure for development within the European Commission: the former Danish Development Minister, Poul Nielson, is, by and large, the Development Commissioner for the European Union. In theory, that is a great improvement on the previous structure, whereby all sorts of Commissioners appeared to have responsibility for development in various parts of the world. The new arrangement should not only ensure consistency in the implementation of development policy in different parts of the world, but make it easier to tackle the issue of coherence between development policies and other community policies such as those on trade, agriculture and foreign policy.

However, the role of the External Affairs Commissioner, Chris Patten, needs to be explained. It is reassuring that he is well known to the House and that he has a development background in this country; but the confusion of external affairs and development has held back development, both in this country--under the previous structure whereby the Overseas Development Administration was part of the Foreign Office--and in Europe. Let me give an example. In May 1999, the Council of Ministers, the European Parliament and the Commission--that is, every part of the EU structure--reached agreement on the European Community budget. However, the agreement on the external budget did not acknowledge the EU commitment to tackle poverty in developing countries, even though that is prioritised in the EU's development co-operation objectives set out in the Maastricht treaty.

The second reason why the debate is timely is the successful conclusion of negotiations on the Lome convention. I believe that this is the first opportunity that the Minister will have had to address hon. Members since the successful conclusion of the renegotiated Lome agreement; I congratulate him on his role in that respect. I hope that he will take this opportunity to point out the gains to be derived by developing countries from Lome. It is a great relief that Lome did not become caught up in the Seattle debacle, although, at some stage, Lome will have to be superseded by an arrangement that is World Trade Organisation-compliant. It is interesting to note the different scales of the publicity given to the successful conclusion of the Lome negotiation and that given to events in Seattle.

The importance of the debate arises from the fact that 30 per cent. of our own aid money--British aid--is distributed by Europe; that figure has increased from 12 per cent. in 1980. The proportion of aid for which the EU is responsible has been rising all over Europe as the amount of aid has fallen. Because, by international treaty, we are pledged to give a certain amount to Europe and because Europe has been so inefficient in spending effectively, the fall in the sums devoted to aid--not in this country, but elsewhere--has been even more catastrophic. Sixty per cent. of development assistance in the world is given by the European Union, either collectively or by nation states. There is not the slightest

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chance of the world community meeting its ambitious anti-poverty targets--on reducing poverty and establishing universal primary education and universal access to reproductive health services--by 2015, unless Europe gets its act together. Up to now, the record has been very unsatisfactory and has cheated the poorest people in the world.

European Union development funding has been criticised for a multitude of reasons. First, there is no sense of co-ordination: there are multiple outlets for development or external assistance. Will that now stop? Secondly, there is confusion between development purposes and external affairs: EU activity has not been focused on poverty, and that trend has increased in recent years. Thirdly, there are huge delays between commitment of expenditure and its disbursement. If people are told that they have the money, they are well advised not to hold their breath while they wait for it; if they do, they might pass on before they receive it. That is not satisfactory.

Fourthly, there has been a substantial underspend, so that the large falls in aid that have occurred in recent years--not in this country--are made even worse by the sums committed not being spent.

Fifthly, the Commission and its staff have lacked the capacity or skills to disburse large sums of money, but have refused to decentralise to local offices. According to ActionAid, the European Union has only two gender experts and one education expert. How on earth can they deal efficiently with hundreds of projects? All that adds up to gross inefficiency, a lack of strategic vision, and a rising demand to return aid to nation states if matters do not improve. If matters do improve, there is a case for a large role for the EU. If European aid were administered effectively, everyone could gain.

Let me explore each of the issues that I have listed. What is the thinking behind the new European Union structure and what commitments has the new Commissioner given to improvement in terms of the focus on poverty? Development assistance is not skewed to the poorest countries, and that trend has been worsening. The most recent figures indicate that, leaving aside the special circumstances of the former Yugoslavia, the countries that receive most European aid are countries such as Morocco, Egypt, Tunisia, Jordan. Those are Mediterranean middle-income countries, not the poorest countries in the world; aid to sub-Saharan Africa barely registers.

There appears to be a chronic underfunding of Asia--the region in which the highest numbers of the poorest people live: 73 per cent. of the world's poorest people live in Asia. However, the European Union does not have a spending package spread over several years for Asia, unlike its programme for the countries covered by the Meda programme--measures to accompany the reform of economic and social structures in the framework of the Euro-Mediterranean partnership--or for sub-Saharan Africa. Instead, the EU budget for Asia is a yearly budget, which becomes squeezed.

What can the Minister tell us about the Meda programme for the Mediterranean and middle east, which ought to be reduced if the EU development budget is to be poverty focused? That programme also ought to be reduced because it underspends and the resources could be used elsewhere: in 1997, only

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64 per cent. of allocated Meda funds were spent. I understand that Meda is being renegotiated and that a conclusion will be reached within the next few months. What stance are the British Government and other Governments taking on that failure to focus on the poorest countries in the world and on the inefficiency of the Meda programme?

What steps are being taken to make a much clearer division between development assistance and external assistance? That is a serious issue. The UK and the EU vote funds that are intended to contribute to the achievement of international targets on cutting poverty. That money should be spent on the poorest people in the poorest countries; unfortunately, much of it has been used for other political purposes. Some of those purposes have worthy goals on which money should be spent, but they should not be called development purposes. Let me quote a couple of examples. It is right that those countries that want to join the EU should be helped to adjust. Large funds have been made available through the Phare programme of Community aid for central and eastern European countries, and through the Tacis technical assistance programme for independent states of the former Soviet Union and Mongolia. Those countries trying to adjust their agriculture should be assisted through agriculture funds, which form the largest part by far of the EU budget. The money that we allocate to development should not be used for those purposes.

Similarly, in the case of the Meda budget, money is used to reduce immigration from the Mediterranean countries into the EU. That is understandable from the viewpoint of countries in southern Europe, but, again, it is not a development priority--it is a political goal.

What assurances can my hon. Friend the Minister give that, under the new structure, there will be a more scrupulous definition of development? I have no doubt that the importance of development and the quality of aid have been enhanced since the Department for International Development was established and escaped from the preoccupations of the Foreign Office. We should seek to achieve the same kind of independence in Europe.

Over the years, a surprisingly small amount of European Union aid has been allocated to social sectors such as health and education. Rising sums have been allocated within the EC, but we would be deluding ourselves if we thought that that has meant increased commitment to development for the poorest people in the poorest countries, both because of the underspending on those programmes--allocated resources budgeted by the member states but not used in that year by the Commission have led to a loss of resources for overseas development assistance amounting to 3 billion ecus per year--and because of the diversion of those funds to political funding, rather than development funding.

Although it is quality that matters, I welcome the assurance of the Commissioner that the next European development fund will allocate more to health care and that, as was stated in a letter to the Danish family planning association, there is likely to be an increased role for the European Union in the matters of reproductive health and population aspects of the third world. However, despite changes in policy rhetoric, more than 60 per cent. of Commission development

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funding is still spent on infrastructure projects--projects that may well be attractive to EU countries because of the money that they bring to European firms.

There are further important issues. I noted in the Lome agreement negotiated by my hon. Friend the Minister that there were provisions to suspend development assistance where there was substantial corruption in the recipient country. That is a bold step forward and a welcome one. Can my hon. Friend give us more details?

Was there agreement within Lome, and elsewhere in the EU, that there should be much more decentralisation of decision making to country offices, to end the appalling delays between the commitment of funds and their distribution? What progress is being made to end aid tying? I believe that there are substantial differences of opinion between member countries on this issue. Aid is given, with the specification that it must be spent on personnel or firms in the donor country.

At the ministerial summit meeting--presumably of the G8--in Okinawa, a move to untie aid is on the agenda. Will the EU agree that that should occur? Will we press for the untying of aid? Are we winning the struggle to ensure that aid is made more effective and that the needs of the recipients come first?

The EU development fund has tended to be project rather than strategy oriented. What steps are being taken to improve the quality of the work and the monitoring of that work? European development fund activities have tended not to be transparent, and not to involve the local community and civil society. What proposals are there for greater transparency and for capacity building and ownership to be at the centre of development?

I welcome the proposals that there should be short-term measures within Lome to help countries whose revenues suddenly fall for reasons such as a collapse in commodity prices. That will be an improvement on the previous arrangements, such as Stabex--the stabilisation of export earnings. I particularly welcome the European Union commitments to providing duty free access to its markets to virtually all products from the least developed countries by 2005 at the latest. It is good that that will go ahead, despite the collapse of Seattle.

I should be grateful if the Minister would share his thoughts with us on how he sees Lome gradually being integrated into the WTO world, as it must be, and if he would tell us more about European development funding and the changes that he helped to negotiate.

11.15 am

Mr. Christopher Chope (Christchurch): The hon. Member for Clydebank and Milngavie (Mr. Worthington) has delivered a serious indictment, but he is dreaming an impossible dream if he believes that the situation can be resolved. If the past is used as a guide to the future, the prognosis is grim. I am surprised that he has not called for the repatriation to our own country of decision making about the overseas aid budget.

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We are speaking of British taxpayers' money. When we in the House could decide on expenditure and hold Ministers to account, we had much greater control over that money and could ensure to a much greater extent that it was well targeted and well invested.

Mr. Worthington: Does the hon. Gentleman agree that there was less money every year?

Mr. Chope: As the hon. Gentleman acknowledged, what is important is not the amount of money, but its effectiveness. Throwing money at a problem is not the same as solving it. More money is going into aid through the European Union, but, as the hon. Gentleman said, it is not achieving the desired results.

I agree wholeheartedly with comments made by the Secretary of State, for International Development particularly in her speech on 28 July last year. She called for a number of changes. I shall not recite them all, but one of her most important points was that we need a more effective poverty focus in allocating resources. She pointed out that the share of European Community assistance going to the poorest countries had fallen from 75 per cent. in 1987 to 50 per cent. in 1997, and said that that was a scandal. I agree. She said that she found it impossible to reconcile EU policy statements on poverty.

Mrs. Cheryl Gillan (Chesham and Amersham): I thank my hon. Friend for giving way and hope I that am not interrupting his train of thought. What is his opinion of the intervention by the hon. Member for Clydebank and Milngavie (Mr. Worthington)? I have a table produced by the Department for International Development, showing the share of the DFID budget channelled through the European Community between 1980 and 1997. The hon. Gentleman is wrong. It was only in four years that the amount dropped. In the remaining years between 1980 and 1997, the amount of aid money going from Conservative Governments to the EC programme rose. Has my hon. Friend seen that table?

Mr. Chope: I have not, but I am grateful to my hon. Friend for drawing it to the attention of a wider audience. I, perhaps naively, took at face value the assertion made by the hon. Member for Clydebank. My hon. Friend has told me in no uncertain terms that I was at fault for doing that.

Mr. Worthington: So that we may draw the matter to the attention of an even wider audience, my point is that, when the Conservative party came into office, we were giving 0.51 per cent. of our gross domestic product to overseas development. When the Conservative party left office, that was down to 0.26 per cent. Because of the way in which the funds are disbursed, that would mean a larger amount going to Europe, but less going to the bilateral programme.

Mr. Chope: I recall that, when the Labour party was in opposition, it made all sorts of rash promises about increasing the proportion of gross domestic product that would be spent on aid. Those promises were never fulfilled to the people who were taken in by them.

Dr. Jenny Tonge (Richmond Park): I cannot refrain from putting in my oar. Does the hon. Gentleman agree

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that neither the Conservative Government nor the Labour Government made significant progress towards the internationally agreed 0.7 per cent. of GDP for international aid? Many of our Scandinavian partners have achieved that target.

Mr. Chope: The hon. Lady speaks for the party whose commitments to spending taxpayers' money know no bounds. She enthusiastically represents a party that believes in much higher personal and corporate taxation. I disagree with her about that. The money that taxpayers already contribute to aid programmes should be spent more effectively.

In her speech last July, the Secretary of State said that the United Kingdom, with Ireland, the Netherlands and Sweden, had asked the Commission to introduce proposals to increase the proportion of EU assistance to low-income countries every year from 2000 to 2006, reaching 70 per cent. by 2006. I hope that the Minister will tell us whether he is satisfied that that objective will be achieved.

The Secretary of State made approximately 10 recommendations in her speech. Her final recommendation was for a formal, published annual report. She said:

Hon. Members who had the chance to peep at the Official Journal for 3 December 1999, which details the Court of Auditors' annual report for the financial year 1998, would have read a strong condemnation of the way in which the European Commission has run the programme and continues to fail to fulfil successive promises, made year after year, to try to put its house in order. My patience is running out. That is why I began my remarks by saying that we are dreaming an impossible dream if we believe that the Commission will provide an aid budget that is as effective as the budget that we could provide if it were under our control.

I shall not refer in detail to the range of criticisms and recommendations in the European Court of Auditors' report, but I shall provide a flavour of it. Paragraph 60 states:

Paragraph 64 states:

    "The accounts are qualified due to both the absence of a table of revenue and the incompleteness of the table of debts despite the disclosure of this information being defined in detail by the Financial Regulations"--

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    which are set out in a series of articles--

    "and furthermore in respect of the errors arising from the issues dealt with in paragraphs 65 to 67." Paragraph 85 states:

    "For 1998, even though the situation had improved since 1997, there was a significant incidence of formal errors across most instruments of the EDF." Paragraph 79 states:

    "Contrary to Article 311(1) of the Lome IV bis Convention, the Commission did not appoint the Chief Authorising Officer of the eighth EDF, who is responsible for managing the resources of the EDF, until July 1999. This leads to a situation where all actions taken in 1998 which were to be taken by the Chief Authorising Officer, as well as those to be taken by all persons acting under subdelegation of powers, are not covered by the formal authorisation." If Ministers or civil servants came before the Public Accounts Committee and admitted such errors, they would be forced to resign. I have described an intolerable position. The Commission remains arrogant beyond all bounds and takes the European Court of Auditors' criticisms inappropriately lightly. I hope that the Minister will explain why he has confidence, which I do not share, that the Commission will put its house in order.

The Official Journal for 29 September contains a special Court of Auditors report, numbered 499. That report gives many specific examples of non-payment or misappropriation of money that was allocated to the development programme for needy countries. I commend all those who naively believe that there is a way forward with the European Commission to consider those examples.

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): I am intrigued by the hon. Gentleman's line. He says that he has no confidence in the new Commission. He will recall that the old Commission resigned and was replaced. Does his lack of confidence extend to Chris Patten, a former Conservative Development Minister, who was very effective?

Mr. Chope: I do not totally lack confidence in him. However, the burden of my comments is that the system is so riddled with corruption that even someone as able as my noble Friend Lord Patten will be unable to cope with it.

Mrs. Gillan: Neil Kinnock, who is vice-president of the Commission, recently said that there was a new sense of responsibility in Brussels. Does my hon. Friend believe that the reports to which he referred are embarrassing to the vice-president of the new Commission?

Mr. Chope: Certainly. In my enthusiasm for Chris Patten, my former right hon. Friend, I ennobled him. I am sure that he will be ennobled in due course. That will be warmly welcomed by hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) and me, if not by Labour Members. I hope that my admiration for the new Commissioner is not in doubt, but I despair that even he, with all his talents, will not be able to change the system. Doing that is of paramount importance.

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I hope that the Minister will explain why he retains such confidence in the system, and why he does not believe that it would be far better if provision for aid was repatriated to this country so that the House could control it.

11.29 am

Dr. Jenny Tonge (Richmond Park): I congratulate the hon. Member for Clydebank and Milngavie (Mr. Worthington) on securing this debate. The issue is serious and deserves much more airing than it has received. However, the debate is developing into the usual scene--the Euro-sceptics descend, like a pack of hyenas on a corpse, as soon as anything bad is said about Europe. It is a sad little pack of hyenas this morning, but they are doing quite a good job. The matter is also of great interest and concern to the Europhiles, among whom I count myself. As a Liberal Democrat, I am a great supporter of the concept of the European Union.

Mrs. Gillan: I think that the hon. Lady would agree that it would be wrong to keep quiet when one reads such headlines as "Brussels wastes £18 million in Ivory Coast aid fraud". Also, she should withdraw her remarks about those who are anti everything about Europe and her description of my hon. Friend the Member for Christchurch (Mr. Chope) and me as hyenas. I hope that she understands that it is our right and duty to speak out against fraud and wastage, in particular when it involves money that is to go to the poorest people.

Dr. Tonge: I thank the hon. Lady for her intervention. I described the Euro-sceptics descending like a pack of hyenas upon the corpse. If she wants to include herself in that description, she can, but I did not necessarily intend her to be a part of it.

I said that the matter was also of great concern to Europhiles. I am concerned and worried about the issue. The hon. Lady knows, because she has heard the story before, although I am going to repeat it, that my introduction to the problem was as a member of European Standing Committee B when it discussed a Court of Auditors report on European Community development aid to South Africa. I think that the hon. Lady has a copy.

I remember telling the Committee that I had sat down the night before with a glass of wine to read the report, expecting to be asleep in five if not 10 minutes. I did not take it seriously. However, I became crosser and crosser as I progressed through the report, which was a ghastly tale of inefficiency and ineffectiveness.

Given my medical experience, I was particularly affected by the fact that, in 1994, a lot of money had been earmarked for an HIV-AIDS prevention project in South Africa, but, by 1996, none of that money had been touched--the project had not even got off the ground. Now, the HIV-AIDS infection rate in South Africa is 25 per cent. One wonders how many of the present cases were due to that two-year delay--I expect that it would be several thousand in that part of Africa. That was disgraceful. That is one small example and we have

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heard many others from the hon. Member for Christchurch (Mr. Chope), who has obviously done his homework well.

I have three questions. First, should we be spending one third of our aid budget on European aid, which goes to Europe to be spent with that from other European countries? The argument is always that it probably is a good idea because some projects are best done with small amounts of money by individual countries working alone, others are done much better by larger organisations such as the World Bank, the International Monetary Fund, the African Development bank or whatever, but European countries pooling together can be much more effective for some other projects than one country working alone. Therefore, we must agree than an argument can be made for effective European aid and working together.

My second question, with which the hon. Member for Clydebank and Milngavie dealt well, is whether development aid is going to the right countries. The most up-to-date chart that I could find gives EC development aid by income group for the countries that receive European aid. In 1986-87, 50 per cent. of European aid went to the poorest countries but, by 1997-98, only 35 per cent. went to such countries. In 1997, Morocco was the biggest recipient of European aid, which had far more to do with French politics than with alleviating poverty.

The White Paper on the aims of development, which has never been debated but which was published by the Government in 1997--[Hon. Members: "It has been."] I do not think that we have debated it, but the aim was to relieve poverty--the number of people living in poverty was to be halved by 2015. The European Union made a commitment to tackle poverty in the poorest countries, but it is not included in the Commission's Agenda 2000 proposal; nor is it in the financial outlook for 2000 to 2006. It seems to have been dropped altogether. However, I understand that that commitment to the relief of poverty was in the Maastricht treaty. I want to know where it has gone. The Minister must answer that question.

The Commission's agenda makes no reference to people living in extreme poverty, 75 per cent. of whom live in Asia; nor is there any reference to sub-Saharan Africa, which includes two thirds of the least developed countries. The emphasis has been switched to Europe's near neighbours: central and eastern Europe, the old Soviet bloc and the southern Mediterranean. We must try to bring the agenda back to the alleviation of poverty and the poorest people.

My third question is, is EU aid efficient? I do not need to reiterate that matter. I have seen an example in which it was wholly inefficient and the hon. Member for Christchurch gave us many other examples, so it clearly is not.

We should consider those questions and suggest solutions. First, we must have some sort of assurance that European aid has to be refocused on the least developed countries. The non-governmental organisations are suggesting that 70 per cent. of the financial perspectives--in the external actions budget--should go to the least developed countries. Our Government should be pushing for that.

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Also, we must ensure that humanitarian emergency aid, which is always needed somewhere, is not reduced. We must keep up our contributions to such aid and it must be adequately protected in those financial perspectives to meet all the United Nations appeals for relief, which happen every year, year in and year out.

My third suggestion is that the three directorates in the European Union that all deal with development issues cause terrible confusion and delay. Problems are tossed between the directorates. They must be streamlined into one and I think I see the Minister assuring me that they have been.

Is monitoring and reporting back sufficiently frequent and accurate? Do we know where the money is going? The report by the Court of Auditors that was considered in the European Standing Committee that I mentioned--some of us were members of that Committee--was for 1986 to 1996, but we were discussing it three years later at the end of 1999. That is no good: that is not the efficient monitoring of projects. It is ridiculous. We need to monitor the situation on a yearly or even a six-monthly basis.

Furthermore, if aid is to be combined and the money is to come from all the countries in the European Union, one member country could be targeted as the lead country for a project. It could be financially responsible as well as responsible for setting up the project, taking it through and reporting back to the EU and member states on how it was progressing. I do not see any other way to manage projects efficiently. A key group of people has to work on them and be in overall control. At the moment, the system is chaotic. Having a lead country for every project would help considerably.

If the present muddle continues and, in three years, another European Standing Committee B is considering another Court of Auditors report and we are all sitting around stroking our beards and agonising about how inefficient things have been, I for one will begin to think that we should indeed suspend our contributions until the European Union can get its act together.

11.39 am

Mrs. Cheryl Gillan (Chesham and Amersham): I congratulate the hon. Member for Clydebank and Milngavie (Mr. Worthington) on obtaining a debate on this worthwhile subject, and my hon. Friend the Member for Christchurch (Mr. Chope) and the hon. Member for Richmond Park (Dr. Tonge) on their contributions.

I am delighted that our proceedings are being observed by the Chairman of the Select Committee on International Development, my hon. Friend the Member for Hertford and Stortford (Mr. Wells), who has joined us from Select Committee business, which shows how important the subject is, particularly to Conservative Members, although hon. Members on both sides of the House show a great deal of interest and concern for the subject.

The hon. Member for Clydebank and Milngavie did not roll over and take an ameliorating line with the Minister, and I was delighted to hear him pose many questions to which I hope the Minister will reply. I am sure that the Minister is delighted to have such a generous amount of time in which to deal with the serious issues that have been raised. That commonality

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is to be welcomed, but there are some hard questions to which he must respond. This is a probing debate, in the spirit of a probing amendment.

I have the most sympathy with my hon. Friend the Member for Christchurch, who made a valuable contribution. He described the hon. Member for Clydebank as dreaming the impossible dream. Like him, I too, am surprised that the hon. Gentleman stopped short of calling for the repatriation of funds. The hon. Member for Richmond Park certainly gave the impression that she was calling for the repatriation of funds, or moving towards calling for that as a result of the evidence that she had received.

Whether our contributions to the EC have diminished or decreased over the years, they remain high. The expenditure profile of total contributions to the EC range from £533 million in 1997-98 to £760 million in 1998-99 and £750 million in 1999-2000. Of that total, the European development fund received £137 million in 1997-98, £228 million in 1998-99 and just under £250,000 in the current financial year. As the hon. Member for Clydebank said, those are sizeable sums. They have risen from 12 per cent. to more than 30 per cent. as a proportion of the total aid spend. Such sums must be effective and properly scrutinised.

I understand that the United Kingdom has a backlog of payments for Stabex under the EDF totalling about £65 million, which I believe it has been agreed with the Commission will be paid over future years. I should be grateful if the Minister would give us an update of the position and fill us in on that particular annotation.

The Department produced a document entitled "Working in Partnership with the European Community, in December 1998, which I read with care, and with some of which, like others, I can agree. It states:

The document also states that

    "patchy implementation of project cycle management techniques impairs the quality of the Commission's programmes. These difficulties are reinforced by inappropriate staffing, and systems which centralise most authority in Brussels. It is important to note that weaknesses in the EC's programmes arise partly from constraints imposed by member states." Will the Minister update us on what action has been taken to remedy the inappropriate staffing, who has been moved on, retired or fired, who has been taken on and with what expertise, what detailed constraints have been imposed by member states and what efforts have the Government made to persuade other member states to change those constraints? What success have the Government had on that agenda? There is no doubt that the difficulties and the lack of accountability are causing great concern, as has been reflected in all of today's contributions.

My hon. Friend the Member for Christchurch referred to the recent Court of Auditors' annual report, published on 3 December 1999, and I make no apologies

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for doing the same. I see the Minister nod. I hope that he does so because he is intimately familiar with the document. I assume great knowledge on his part and I am sure that I am not mistaken.

I am extremely concerned by that report, including the Commission's responses, which overall give the impression of much complacency. What action has the Minister taken following receipt of that report? What are his views on the Commission's responses and what does he see as the way forward to deal with an increasingly difficult problem?

Chapter 2, paragraph 7, on technical co-operation, states:

Mr. Foulkes: Will the hon. Lady tell me again what year that was?

Mrs. Gillan: The report was published on 3 December 1999 and I was referring to chapter 2, paragraph 7, on technical co-operation. The audit was carried out in 1996 and was communicated in 1997, but no action was taken. I hope that the Minister will be able to allay my fears on that.

Similarly, paragraph 23 on regional co-operation under the sixth EDF, states:

Paragraphs 30 and 31 relate to putting works contracts out to tender. Paragraph 31 is a short simple sentence, but it reflects the worsening performance of the organisation. It states:

    "The Court has not obtained any information which indicates improvement in this area." Despite criticisms and constructive suggestions, there have been no improvements. That, Mr. Deputy Speaker, seems to be a pattern that is being constantly repeated.

The Chairman (Dr. Michael Clark): Order. It is pleasant to be called Mr. Deputy Speaker, but I am not an appointed Deputy Speaker, although Mr. Winterton, who follows me, is. Therefore, while I am in the Chair, it would be better to address me by my name.

Mrs. Gillan: I apologise, Dr. Clark. I thought that you had been elevated to great station. I shall continue to refer to you by name.

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My hon. Friend the Member for Christchurch pointed out the qualifications of the audit, but it is worth looking at the summary of the Court of Auditors report. No table of revenue was included and the table of debts was incomplete, despite being an explicit requirement of the financial regulations. He referred to two other matters: in respect of the eighth EDF, the chief authorising officer as well as all persons with sub-delegated powers had acted without being covered by formal authorisation and the audit showed a significant number of formal errors. In addition, the audit showed a high incidence of failures to comply with regulations affecting the assigned funds of the eighth EDF and often indicated both a failure properly to apply control procedures and--where no direct effect on the amount involved in the transaction was identified--formal errors. The court's audit again revealed a significant incidence of formal errors affecting the primary commitments and continuous substantive errors, as evidenced in the summary.

What sort of confidence can we have in an organisation that is responsible for taking taxpayers' money and distributing it on their behalf to the poorest around the globe when an audit report carries such severe indictments? I said in an intervention that we have a duty to challenge what happens when we see headlines such as "Brussels wastes £18 million in Ivory Coast aid fraud". A newspaper reports that, according to a document seen by it,

I hope that the Minister will tell us whether he has called for a full investigation and disciplinary action and his reaction to what has been described as a scandal that

    "represents the worst single abuse of aid funds in European Union history." These events are embarrassing for the new Commission vice-president, Neil Kinnock, who only a couple of weeks ago promised a "new sense of responsibility" in Brussels spending. What is the Minister's assessment of whether this matter could lead to further resignations of Commissioners? After all, 20 resigned last March after disclosures of fraud and mismanagement. The report goes on to say that local companies in the Ivory Coast had for almost a decade

    "routinely over-billed and produced false bills" without Brussels noticing. Most of the missing money was intended to boost the African state's health sector. Perhaps he will join me in condemning that corruption and give me the reassurance I need that he is hot on the trail of rooting out such examples of fraud and corruption.

I have obtained a list, which runs to 12 pages, of projects that are in line for future funding from the EDF. I am sure that the Minister is familiar with them and hope that he will tell hon. Members--perhaps not during the debate, but by placing evaluations in the Library--his view of the individual projects that have been suggested. Following reports such as the audit to which I have referred, there will be a great deal of concern about the way in which money is spent. We need to know our own Government's attitude towards the

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proposal to spend 18 million euros on environmental and human resources development programmes in Fiji. Those programmes may be worth while, but I want our Government to make a detailed evaluation of all projects that are suggested, whether for Jamaica, Kenya, Mauritius, Mauritania, Mali or Mozambique. I hope that he feels able to respond on each project, stating our Government's view on whether it is worth while.

In a speech on 28 July 1999, the Secretary of State said:

I shall be generous with the time that I leave for the Minister. We need to know what steps have been taken to establish real accountability and his assurance that the fine words, which have been echoed by him and the Secretary of State, are being followed through with action. We need greater transparency and we must ensure that the money that the British taxpayer gives to Brussels to spend on the poorest in society is spent effectively, not wasted in fraud and corruption.

11.57 am

The Parliamentary Under-Secretary of State for International Development (Mr. George Foulkes): This is my first opportunity to reply on behalf of the Government to a debate in the new environment of Westminster Hall, which takes some getting used to as we have seen this morning. This is also my first debate under your distinguished chairmanship, Dr. Clark, and it is a great privilege to participate. I have known you for many years and co-operated closely with you on all-party matters.

Other hon. Members have referred to my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) as the hon. Member for Clydebank, but I am able to pronounce his constituency perfectly and can give him his full title. Like others, I congratulate him not only on obtaining the debate, but on seeking it in the first place and on the commitment and concern he has shown over many years. I am glad that he is a member of the International Development Committee. Its Chairman--the hon. Member for Hertford and Stortford (Mr. Wells)--is also present and I am sure he agrees that my hon. Friend makes a significant and positive contribution. For the benefit of readers of our proceedings, I should say that he is nodding.

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In Lisbon last week, I had the pleasure of attending the informal meeting of Development Ministers--the informal Development Council--which focused principally on the role of the European Union in security, democracy and development in Africa. All the discussions and all the other Development Ministers present reminded me once again of not only the importance but the current weaknesses, of EU development assistance, which have been eloquently described by others. I notice that hon. Members quoted extensively from the Secretary of State's speech, so I am sure that they will acknowledge that the Government have been on the job on this matter. The hon. Member for Chesham and Amersham (Mrs. Gillan) referred to that. Above all, we focused on the steps that need to be taken to maximise the potential of all the European Union programmes to eliminate poverty. That potential is there, but it needs to be realised, as the Government recognise and have for the two and a half years of their lifetime.

Mrs. Gillan: I assure the Minister that I am not going to become part of a mutual admiration society. I quoted from the Secretary of State's speech because I wanted to know what progress had been made. Hon. Members need to know that this is not all hot air.

Mr. Foulkes: Hon. Members will know what progress has been made when I can make progress with my speech.

I remind the hon. Lady that our White Paper was the first development White Paper for more than 20 years. In all the years of their existence, the last Government never produced one. In our White Paper, we said that the single biggest challenge the world faced in the new millennium was that one in four of our fellow human beings was living in extreme poverty. That is an awful indictment.

In a series of United Nations conferences in the last decade, all the Governments of the world have committed themselves to a series of targets for poverty eradication. We cannot alleviate awful, grinding poverty; no sticking plaster will help. Such poverty must be reduced, and ultimately eradicated. The main goal is to halve the proportion of the world's population living in such abject poverty by 2015. Associated targets include universal primary education, access to basic health care and reproductive health care for all, and sustainable development plans, including commitments to reverse the loss of environmental resources in every country.

Those targets were agreed in all those international conferences. It is this British Government who have taken them off the shelf, dusted them down and placed them at the forefront of our policy. The contents of our White Paper have been taken up by other countries throughout the world.

I remind the hon. Member for Richmond Park (Dr. Tonge) that a statement made in the House of Commons on 5 November 1997--I hope that she was present--provided an opportunity for all sorts of questions to be raised about the White Paper. There have been opportunities to discuss it throughout the

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country in various forums, and it has been discussed in the Select Committee. We have not shrunk from discussing the White Paper and all its aspects, including international development targets, either in Parliament or outside.

Dr. Tonge: Does the Minister recall that, at the time of the statement to which he referred, the Secretary of State assured me that the aims of the White Paper were fully supported and applauded by every Department?

Mr. Foulkes: Absolutely. I shall follow that up shortly.

The international development targets are practical and achievable, but to achieve them we need to generate the political will, mobilise the resources and adopt the right policies, not just in this and every other bilateral donor country but internationally. My right hon. Friend the Secretary of State made an announcement last week--she was going to do so in oral questions, Mr. Deputy Speaker, but you and your colleagues managed to ensure that that was not possible--[Hon. Members: "Not true."] She therefore made the announcement in the form of a written answer. She said that the Government planned to produce a second development White Paper--as I said, none were produced in the lifetime of the last Government--that would place the challenge of globalisation at the heart of our development policy. There would be no change in direction, but our work would feature a greater depth and more detail. I hope and expect that there will be a great deal of consultation before and after the publication of the White Paper.

My hon. Friend the Member for Clydebank and Milngavie emphasised the importance of European Community development assistance to meeting the challenges that I have described. The statistics speak for themselves, and are worth repeating. The EC is the world's second largest multilateral donor, spending approximately 5 billion euro each year. Together with the bilateral programmes of its member states, the European Union provides two thirds of global development assistance. That is a formidable amount. Through our Department, the United Kingdom contributes about 15 per cent. of EC aid resources, which, as my hon. Friend said, take up about 30 per cent. of our budget.

Incidentally, the percentage was agreed at a European summit in Edinburgh, where I received my university education, in 1992. It was not my party that was in power at the time.

Let me tell the hon. Member for Christchurch (Mr. Chope) that--as my hon. Friend pointed out--in 1979 United Kingdom development assistance amounted to 0.52 per cent. of gross national product. Under the last Government, it fell to 0.26 per cent. What the hon. Gentleman does not realise is that it is now on its way back up, surely and steadily. It is now at 0.28 per cent., and we intend to go even further. The hon. Gentleman

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is out of date in that regard, and I regret to say that some of his other comments were based on out-of-date facts and perceptions.

Mr. Chope: Will the Minister tell us the Government's present target for aid as a percentage of gross domestic product? Does it differ from the pledges given before the last general election?

Mr. Foulkes: We have adopted the United Nations target of 0.7 per cent. of GNP, and we aim to move towards that figure steadily. Indeed, we have already done so: each year we have shown that we are moving up. We shall move up next year and the year after that, and throughout the 15 or 20 years of Labour government.

Mrs. Gillan: Obviously the Minister is backing his commitment to move towards the 0.7 per cent. target, but he must surely agree that the words he utters are meaningless unless he gives us a timetable. Will he put us all out of our misery, and tell us in which year the Labour Administration will achieve the target? We need to know the year now.

Mr. Foulkes: What a familiar question. I could have predicted it. I did not have it written down, but I had it in my head.

Of course we will achieve the target as quickly as possible, and the fact is that we are already moving up. I can tell the hon. Lady that, if we had continued at the level established by the last Government, by 2020 we would not be spending anything on development assistance.

If we are to meet the international development targets, we must deploy the full potential of the international system, and that includes the European Community. As everyone has said, however, the effectiveness of EC development assistance is far below its potential. Independent evaluations have highlighted a range of problems. Too much effort has been focused on spending and input, and not enough on achieving an impact and monitoring it. The Community lacks an overall and coherent development policy, which means that decisions have no clear development focus. As a result, a decreasing share of EC development assistance has been going to the poor countries--54 per cent. in 1997, compared with 75 per cent. 10 years earlier.

The hon. Member for Richmond Park asked for a target. We accept that a minimum of 70 per cent. should be our target for assistance to the less developed countries: that is what we are achieving in Britain, and we want to increase it. Most other member countries are doing the same, and we think it sensible for the EC to adopt that policy.

The major recipients of EC aid, which a decade ago were the poor countries in Africa and Asia, are now--as the hon. Member for Richmond Park pointed out--the better-off countries of the southern Mediterranean, and poverty has not diminished in those poorer countries. These trends seriously impair the EC's contribution to the international poverty eradication strategy.

There have been references to the report of the European Court of Auditors. We welcome the report. The Court of Auditors is a good and careful watchdog

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and monitor of what is happening with the expenditure of the Commission and what is happening in the Community. It makes valuable recommendations for improvements. We need these criticisms to highlight weaknesses and to enable us to know what we have to tackle. It is wrong, however, to say that it is only in the Commission that there is fraud or misappropriation that needs checking.

For example, the Public Accounts Committee discovers certain things that are happening in the United Kingdom from time to time. France, Germany and other member states have not been without their own problems. The Europhobes, who are so paranoid about Europe, think that things go wrong only within the European bureaucracy, but they go wrong within member states.

It has been said that given what has been revealed in the Court of Auditors report, the members of the Commission should resign. That is precisely what they did, in an entirely unprecedented act. The entire Commission resigned following scandals and revelations. It was the right decision. A new Commission was appointed, which gives the EU a chance to make radical improvements to its development programmes, which we believe it is starting to do.

There have been two main changes. First, instead of five Commissioners responsible for different aspects of development, there are now only two. That is a great improvement. The two are Poul Nielson, the former Danish development Minister, who is now the Commissioner for Development and Humanitarian Aid, and Chris Patten, a former Conservative development Minister, who is the new Commissioner for External Relations. We welcome the simplification and we welcome also the two appointments for the personal qualities that each individual brings to the job.

Mrs. Gillan: Will the Minister give the House his view on whether anybody should take responsibility for the £18 million that has gone missing in the Ivory Coast? I hope that you will think, Mr. Deputy Speaker, that this is a good time to raise the issue. I would like the hon. Gentleman's comments on Georgio Cocchi, who runs the Ivory Coast desk in Brussels, who has said that £18 million

Mr. Foulkes: I intended to mention the matter later but I shall do so now. I raised the matter at the Development Council meeting at Lisbon. Poul Nielson told me that the money has been returned and that the matter has been and is being dealt with.

Poul Nielson is responsible for development issues worldwide and Chris Patten is responsible for political relations world wide. As we know from our own experience, successful development policy depends on having a clear and strong development focus, and then

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working closely with our colleagues who are responsible for political relations, trade policy and international finance, for example. It is what we describe as coherence.

Both Poul Nielson and Chris Patten have stated publicly their commitment to poverty eradication. I know that they work closely together, and that is essential. Although Poul Nielson has global development responsibilities, direct control of non-Lome aid and the programmes for central and eastern Europe, Latin America and Asia are with Chris Patten. However, both Commissioners are determined to tackle the procedures for implementing the Community's programmes, which remain slow and inefficient. They are reviewing all of the arrangements that are currently in place with a view to improving them.

Mr. Chope: The Minister asserts that as a result of the resignation of the previous Commission, everything is now hunky dory. How is that consistent with the Commission's complacent reply to the special report No. 4/99 of the Court of Auditors, which was published on 29 September 1999, which states:

Mr. Foulkes: I did not say that everything is now hunky dory. I said quite the reverse. I said that things are improving but much more needs to be done. I will continue saying that.

That brings me to the second main change following the appointment of the new Commission--the commitment to reform. Chris Patten and Poul Nielson can make some progress within the systems for which they are directly responsible, but some changes must be made throughout the Commission. That is why Neil Kinnock's proposals for reforming the financial and staff management of the Commission are so important and need to be implemented. We need fundamental changes in financial procedures--such as delegation of authority to local officers and more rational audit arrangements--that will improve financial responsibility and cut unnecessary delays. It is not enough to design good aid programmes if they are delivered too late to address the problems that they are meant to tackle. The hon. Member for Christchurch cannot say that I am claiming that everything is hunky-dory.

We also need fundamental improvements in staff management in the Commission so that it can develop the skills that are needed to design and deliver modern aid programmes. The Commission needs to be able to meet the standards which other developing agencies, including my Department, have set. I tell the hon. Member for Richmond Park that we have seconded 20 officials to the Commission to help to improve its efficiency and effectiveness.

The new Commission is a crucial opportunity for improvement. The key Commissioners have strong development backgrounds and the Commission as a whole is committed to reform. We support it and urge it to carry this reform through as quickly as possible. However, we are not complacent. Change is always

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difficult and our job is to scrutinise the Commission's actions as much as its words, and to maintain the pressure for the improvements that we all know are needed.

It is important to recognise, however, that the Commission, member states and the European Parliament share responsibility for past failures due to the pressure to reach spending targets irrespective of impact, the pressure to spend in the spheres of interest of individual member states and procedural constraints that make it impossible to respond quickly and efficiently. We, too, share the responsibility for making improvements. As the House and the Select Committee on International Development know, the Government have been working with the Commission and other member states to improve the quality and effectiveness of EC development assistance. My Department published a strategy paper--it has not been much quoted and I hope that Members have read it--on this issue in December 1998. My right hon. Friend the Secretary of State set out a number of proposals in a speech in Brussels last July. I know that Members have read her speech because they have quoted from it. We have made some progress in achieving our objectives, but there is still a long way to go.

I agree that we must all work strenuously to secure a clear development policy for the EU which is focused on poverty eradication, and not on using precious aid budgets for political gestures, as has been done in the past. We must all work to equip the Commission with the skills and the systems that it needs to manage the EC aid budget properly, and to deliver real change on the ground in poor countries. We must all work also to co-ordinate more effectively our development programmes--that applies not only to the EC but to World bank and bilateral programmes--in a way that puts the needs of developing countries first, rather than the short-term interests of companies and contractors in our own countries. We will take on board the suggestion of the hon. Member for Richmond Park about one-country lead. That has already been considered by the European Community and it is something that we would like to consider. I am grateful to her for raising the matter.

We must seize every opportunity to maximise the contribution of EC development assistance to the goal of poverty eradication. One such opportunity is to redress the imbalance in non-Lome EC aid. European Union Foreign Ministers agreed last July that the Commission should table proposals for the overall allocation of the EC non-Lome aid budget across the various regional spending programmes for the next seven years. That is a great improvement. It would allow Ministers to discuss EC development priorities as a whole. Without these proposals, regional allocations will be agreed individually and there will be no improvement in the EC's poverty focus. First come, first served is a bad method for setting a global policy. We are asking the Commission to come up quickly with proposals for an overall examination of the EC's development spending.

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Hon. Members have mentioned the disproportionate amount of EC aid that goes to richer countries. EC Mediterranean programmes, known as MEDA, warrant particular attention, as my hon. Friend the Member for Clydebank and Milngavie said, as they receive one of the largest allocations of aid commitments. However, as Commissioner Patten has acknowledged, the Commission has been unable to spend, and the recipient countries unable to absorb, more than an embarrassingly small fraction of those commitments, thus locking funds that could have been spent on more poverty-focused programmes in Asia and sub-Saharan Africa. That matter is being looked at.

My hon. Friend rightly asked what the British Government and other member states are doing to reduce MEDA funding. As our objective is to increase the proportion of EC aid to the poorest countries, we believe that MEDA funds should be reduced. We have argued and are arguing strongly for improvements to the development quality of MEDA programmes. Several other member states share our concerns and support us, particularly Sweden, the Netherlands and Germany.

My hon. Friend rightly objects to the move by the Commission to use MEDA funds to combat migration. That is not a proper use of development money. I assure him and other hon. Members that we are opposing that strongly within the EU Councils. Again, we have support from other member states. We are arguing for any such expenditure to be excluded from all development budgets.

As I have said, instead, we need a comprehensive development policy for the Commission that commits us to working with the international community to meet the development targets. The policy should therefore focus on poverty eradication and should call for a coherent approach across all EC policies, including international trade, agriculture, fisheries and others, so that they do not undermine the EU's development policy. Commissioner Nielson is due to table a draft development policy next month for discussion with EU member states and with civil society. That is a big step forward. I hope that Members realise that and that strong voices, here and elsewhere, will scrutinise the Commission proposal in detail.

We need the underpinning structure and procedures in the Commission, so that it can implement our policy effectively and efficiently. Whatever the successes of EC aid in the past, they have been overshadowed by the appalling delays in implementation. The effect has been to minimise the impact of European aid and has led some developing countries even to reject EC money.

My hon. Friend raised the issue of aid untying for the least developed countries. Discussions on that are continuing in the OECD development assistance committee. A large majority of DAC members are agreed on measures to be taken. However, one or two members still have reservations. I assure him and other hon. Members that we will continue to work for agreement at the DAC high-level meeting in May. It will then be possible to report to the G8 Okinawa summit, as

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he requested, that a successful outcome has been reached, in line with the wishes expressed at the two previous G8 summits.

Mr. Worthington: The key issue is the definition of development. My hon. Friend may not be able to give the answer today, but if there is to be purity and quality in European development, external affairs and development will have to be separated. It is legitimate, for example, to support the middle east peace process, but that should not be categorised as development. Will there be a redefinition of what in the European budget counts as development money?

Mr. Foulkes: That is exactly the sort of comment that can be made in the consultation on Poul Nielson's paper. We will examine that matter.

I come to one of the more positive stories of EC development assistance--there are positive stories--the successor to the Lome convention. I thank my hon. Friend for his kind remarks about my small part in it. Negotiations are not quite complete. They started in 1998 and were almost concluded last December, but, as I speak, Ministers from African, Caribbean and Pacific countries as well as the EU are meeting in Brussels to tie up the loose ends of the new convention. I hope that it will be agreed today and tomorrow.

As hon. Members know, Lome is a unique collaboration, covering trade, development and political co-operation between the EU and the 71 ACP countries. The current negotiations mark the most important revision of the convention since its inception nearly three decades ago. The Select Committee on International Development looked at both Lome and the general EC budget spending on development in 1998 and made a number of helpful recommendations. The Government have been pursuing those and other points in the negotiations.

I am pleased to report significant improvements in the new convention, which will benefit developing countries. They are a direct focus on poverty elimination as the convention's overriding objective; reform of the financial management of the EDF; abolition of the complex and slow procedures--I expect a cheer--notably Stabex and Sysmin, which will be replaced by a new system to provide support to countries whose development efforts are compromised by a downturn in export revenue; and more up-to-date management of development assistance.

In exchange for those improvements, there will be an ample replenishment of the EDF. The importance of good governance is highlighted by making it a "fundamental element" underpinning the new convention. Civil society's role in the convention has been enhanced. For the first time, it will be possible to take action in cases of severe corruption. That could include suspending countries from the convention and will work in the same way as for breaches of the convention's "essential elements"--human rights, democracy and the rule of law. So far, under that rule,

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development assistance has been partially suspended for four countries that have suffered coups d'etat.

I hope that hon. Members will agree that those are significant steps forward, which have been agreed by the British Government, who have pursued recommendations from the International Development Committee, argued the case effectively in Brussels, secured the agreement of other countries, and worked effectively within Europe as a powerful voice.

The new convention, necessarily, does not detail how development co-operation will be implemented. That is the function of a separate agreement between EU member states, which we shall discuss over coming months. We will push for increased decentralisation of authority from Brussels to improve the speed and quality of delivery.

I know that the Commission, which is well aware of current problems, wants to do that, too. We will continue to encourage the Community increasingly to provide its assistance in the context of government-led, joint-donor programmes, rather than stand-alone projects.

One of the most important aspects of the new convention and the one that has involved the most difficult negotiations is a new trade deal that maximises African, Caribbean and Pacific countries' access to the EU market, while promoting their gradual integration into the global economy. The preferential trading arrangements will be maintained until 2008, after which new World Trade Organisation-compatible arrangements will come into effect. Those will be free trade agreements between groups of ACP countries and the EU, but they will initially allow mainly non-reciprocal access to the EU market. To allow ACP countries time to adjust, fully reciprocal free trade would not be expected until probably 20 years from now.

One of the British Government's concerns in the negotiation has been countries that are not able to join those free trade areas in 2008. Two important commitments have been secured. Lesser developed countries--the poorest countries--will benefit from the EU's commitment to allow duty-free access for, effectively, all their products by 2005. For other, more developed countries, the EU has undertaken to examine all possibilities to provide a new, WTO-compatible trading framework with benefits equivalent to those under the current convention.

ACP and EU Ministers have agreed that the EDF will be used to make a substantial contribution to the heavily indebted poor countries initiative. A total of 1 billion euro from previously unspent EDF funds is being made available for debt relief for the poorest and most indebted countries in Africa. It is an ill wind that blows no one any good.

The Chancellor of the Exchequer and the Secretary of State for International Development have been leading the world in debt cancellation. The money released must be used for poverty eradication, education, health, water and sanitation.

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This has been a good debate. I hope that hon. Members will agree that the Government are moving in the right direction--the direction that all hon. Members who spoke in the debate have encouraged us to take.

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