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Debt Cancellation

5. Mr. Barry Gardiner (Brent, North): What progress the Government have made, in collaboration with the international community, in cancelling the debt for heavily indebted poor countries. [141837]

15. Ann Clwyd (Cynon Valley): If he will make a statement on progress in the reduction of third-world debt. [141849]

The Chancellor of the Exchequer (Mr. Gordon Brown): The Government have announced that the United Kingdom will renounce its right to receive any benefit from the historic debt owed by the 41 most indebted countries. Along with our policy of 100 per cent. debt relief for countries reaching decision point, I urge our international colleagues to follow the UK's lead.

I will be meeting the managing director of the International Monetary Fund, Horst Kohler, on Monday to review the latest progress towards achieving the target set by the IMF and the World Bank that 20 countries will reach decision point by the end of the year and ensuring that that debt relief is directly targeted at poverty reduction. On behalf of the Government, the Secretary of State for International Development and I have written to every Member of Parliament so that they can pass on this latest information to their Churches and other organisations.

Mr. Gardiner: I thank the Chancellor for that announcement. The thousands of people who have been part of the Jubilee 2000 campaign--constituents of mine and, I suspect, of every Member of this House--will think that this is one of the most significant things that the Government have done. I congratulate him on it.

I ask my right hon. Friend, in his discussions with colleagues in the international community, to urge them to do as we have done, and to look forward to expanding the conditions for heavily indebted poor countries, perhaps to include states that do not qualify at the moment, such as Nigeria, Bangladesh and Peru. They are major indebted countries. The burden in Nigeria is, I think, £3.5 billion owing to this country alone. Will he consider expanding the criteria? The whole community would welcome that a great deal.

Mr. Brown: My hon. Friend and other hon. Members have worked with the Churches and non-governmental organisations in the past year. The Treasury alone has received 300,000 cards or letters sent by members of the public. It is an indication of the public's support for debt relief that so many people and organisations, including all the Churches of the United Kingdom, are involved in this effort. I thank people for raising the issue nationally as well as internationally.

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We have had talks with the Nigerian Government about their position. We are keen to help them as they reform their economy. At the same time, their position must be reviewed in relation to the oil revenues that they can now receive. My hon. Friend asked about other countries and debt. Over the next few months, the British Government will be involved with other Governments and organisations, internationally and nationally, to try to show that the link between debt relief, poverty reduction and sustainable development can be strengthened. We will also try to ensure that we meet the 2015 targets of every child being in primary education, of all avoidable infant mortality being cut by two thirds, and of halving poverty round the world. I hope that there will be bipartisan support for those efforts.

Ann Clwyd: No one could doubt the Chancellor's personal commitment to helping the poorest people in the world. It would be good if the churlish Conservative party were to acknowledge its debt to the Chancellor today.

Mr. James Gray (North Wiltshire): Our idea.

Ann Clwyd: I do not know what kind of comment that was, but it would be good if a Conservative Member got to his feet to acknowledge what the Chancellor has done to help the poorest people in the world.

Will my right hon. Friend spell out what reforms in particular he would like the European Commission to make to strengthen its commitment and deliver a little of the money that it has set aside for the world's poor, and use it as it should be used instead of keeping it in Brussels?

Mr. Brown: I am grateful to my hon. Friend and I applaud her efforts around the world to promote debt relief and international development. I know that she has worked with the Churches and other organisations in her constituency to promote the cause of debt relief.

As for the changes that the European Commission can make in its policy, the Finance Ministers managed to persuade it to contribute to the World Bank trust fund. Almost a billion euros will be invested in the World Bank trust fund so that the debts of the countries that qualify for the HIPC programme can be relieved. It is to the credit of the European Union that that decision was taken.

I hope that the aid and development reforms of the European Union will be involved in what I believe will be a worldwide initiative over the next year to tackle the problems of child poverty and poverty generally. New initiatives will put children into primary education-- 120 million children are not in it at the moment--and reduce the rate of infant mortality. At the moment, one in every seven children die before the age of five--a tragedy that must be prevented.

Dr. Jenny Tonge (Richmond Park): My party congratulates the Chancellor and the Secretary of State for International Development on their welcome progress on this matter. Is the Chancellor concerned, however, about how long it takes for many countries to reach decision point? Will he say more about the social factors--health and education--that must be included in structural

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adjustment programmes for those countries before the International Monetary Fund and the World Bank will accept that they have reached decision point?

Mr. Brown: I am grateful to the hon. Lady and her party for their support. Structural adjustment programmes have been replaced by poverty reduction strategies as the basis on which debt relief is provided. If a country has a programme that meets the poverty reduction strategy criteria, it is in a position to receive necessary debt relief.

The hon. Lady is absolutely right to say that there was a chance in 1997 that only one country would have passed through the HIPC process. Today there are 13, and there will be a special meeting of the IMF and World Bank boards next week to consider another seven, one of which may already be through by the end of this week. The aim is to put 20 countries through the programme by the end of the year--by the time of the meetings on 20 and 21 December--meaning that debt relief will move quickly to those countries.

I have considered the effect of debt relief and the differences that it has made. Countries, such as Uganda, where debt relief has been achieved are now able to consider reducing the primary school teacher-pupil ratio from 100:1 to 50:1 and to ensure that every child is in education in a school with a roof above his or her head.

Mr. John Bercow (Buckingham): It is to be hoped that the roofs would not be below their heads.

Mr. Brown: I am sorry that the hon. Member for Buckingham (Mr. Bercow) wants to reduce such an important matter to trivia.

Poverty reduction strategy papers were designed to achieve changes such as these, so that debt relief leads to poverty reduction. I hope that even more progress will be made in the coming year.

Miss Anne McIntosh (Vale of York): The whole House would congratulate the Chancellor on continuing the excellent work started by the Conservative Government at Montreal and would share his aim of ensuring that expenditure in indebted countries goes towards education, health and poverty reduction. Why, however, has he failed to implement the Organisation for Economic Co-operation and Development's convention on bribery? Is that not a reason why other countries have followed Britain's lead in that regard?

Mr. Brown: When we came to power, tax relief was available for bribes because of action that the Conservatives had not taken. That is amazing--one could receive tax relief for bribing someone in another country. We are taking action on those matters, and taking international action too.

I applaud the hon. Lady for her own work on debt relief. The challenge of the next year will require expenditure in the international development budget that the Opposition are not prepared to support. If we are to make progress on education, health and anti-poverty programmes, Britain must pay its share. That is why my right hon. Friend the Secretary of State for International Development has proposed expenditure of £600 million over the next three years. Why will the Opposition not support us on that?

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Treasury Supplement

6. Mr. Paul Flynn (Newport, West): What plans he has to restore the Treasury supplement. [141838]

The Financial Secretary to the Treasury (Mr. Stephen Timms): None. However, consistent with our prudent approach, we provided in the draft re-rating order laid before Parliament at the end of last month for a Treasury grant to the national insurance fund for this financial year and next year in the unlikely event that the fund should need it.

Mr. Flynn: My hon. Friend will recall that the Treasury supplement was the great achievement of the last Liberal Government and was paid for 80 years because it was thought to be affordable by all Governments for most of the past century. If it were now being paid at the rate paid in the late 1980s, when the Conservatives cut it, it would be worth £20 a week on the basic pension.

The Government have been congratulated on giving pensioners by far the best deal that they have had for 25 years, but there is enough money in the fund to ensure that the link with earnings could be maintained until 2007. In considering the policy of the next Labour Government, and the one after that, will my right hon. Friend consider complete reform of the national insurance fund to make it a truly independent fund, run by independent managers and with funds invested on the stock exchange, so that we can have what pensioners really want--a guarantee that their incomes in retirement will not be affected by inflation, but will be protected?

Mr. Timms: The intention has always been that the national insurance fund should operate on a pay-as-you-go basis. In recent years, there has been a grant from the Treasury, but that has been in times of short-term difficulty, such as in 1993-94 as a result of the boom-and-bust policies of the previous Government. Importantly, there will be significant new demands on the national insurance fund, for example, from pensions reform through the introduction of the state second pension.

My hon. Friend is right about the package of improvements that we have introduced and announced for pensioners, which has been widely welcomed. He is right that that is the best prospect for pensioner incomes that we have had for a long time. It would be a mistake to attempt to use a Treasury grant for a long-term spending commitment, in particular an indefinitely escalating one, which an earnings link would represent.

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