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Education (Student Loans) (Amendment)

Mr. Nick St. Aubyn accordingly presented a Bill to amend the law relating to student loans in respect of the entitlement of borrowers to defer repayment of loans and in respect of the rate of interest payable on loans: And the same was read the First time; and ordered to be read a Second time on Friday 23 March, and to be printed [Bill 57].

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Orders of the Day

International Development Bill

Order for Second Reading read.

3.51 pm

The Secretary of State for International Development (Clare Short): I beg to move, That the Bill be now read a Second time.

The purpose of the Bill is to establish in legislation the reduction of poverty as the aim of United Kingdom development assistance and to ensure that it is spent for that reason alone. The House will be aware that over the past four years, we have established the reduction of poverty as the guiding principle of all our efforts. I am pleased that the change has been widely supported in the House and the country, and by the International Development Select Committee, which is chaired so ably by the hon. Member for Hertford and Stortford (Mr. Wells).

Existing legislation allows the Secretary of State to do virtually whatever that person may wish. Without change, a future Minister or Administration could reinstate the use of the aid budget to soften the terms of commercial contracts through mixed credits, as under the old aid-and-trade provision. An Administration could re-tie aid, thus distorting its use and decreasing its efficiency, as under the previous Government, or use that aid budget to serve the short-term political or commercial purposes of the UK. We believe that it is much better to clarify the purpose of our country's development efforts to ensure that our legislative power means that our funds and efforts are devoted single-mindedly to the systematic reduction of world poverty.

The House will know that the Government have led the international effort to place the systematic reduction of poverty and the meeting of the international development targets at the core of the international development effort. We have not simply refocused our bilateral programme on the reduction of poverty; we are using our influence throughout the international development system to get a commitment to reduce poverty systematically in every poor country across the globe.

We have had remarkable success in that effort. The International Monetary Fund, the World Bank, the United Nations development agencies, the UN millennium assembly, which met recently, the African Development bank, the Asian Development bank, the European Union and the Cotonou agreement, the Development Assistance Committee of the Organisation for Economic Co-operation and Development and the G7 have all firmly lined up to make the international development targets the objective of the international development effort.

We believe that that is very important. The biggest and best UK programme cannot alone ensure that the international development targets are met across the world. However, an international development system dedicated to that objective can do so. As hon. Members will know, the world is on track to meet the first of those targets--halving the proportion of people living in extreme poverty between 1990 and 2015, enabling a billion people to make the journey out of extreme poverty. That is a considerable achievement, but we need to go on,

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as the world population will grow. The Bill's purpose is to underpin the improvement in the quality of international development efforts and the contributions that we make both through our own bilateral programme and through multilateral development agencies.

The second major objective that the United Kingdom Government have pursued in their development efforts is achieving a shift in the way in which international development assistance is applied. Far too often in the past, it was applied through a massive fragmentation of well intentioned charitable projects in developing countries, which led to a weakening, rather than a strengthening, of the capacity of developing country Governments to improve their economic performance and the delivery of health care and education services to their people. Such services improve people's prospects of bettering their life opportunities and climbing out of the condition of extreme poverty.

For that reason, we have tried to redirect the whole international effort by supporting poverty reduction strategies laid down by Governments of developing countries, which have been openly consulted on with their people and which combine macro-economic policy and social policy objectives to make sure that resources from revenue, debt relief and aid funds can all be directed through Government institutions to make a much stronger effort to improve services and economic management. Again, that requires international development efforts to have as their objective the systematic reduction of poverty, which is leading to a massive improvement in the capacity of the international system.

World Bank research shows that if aid is focused where the poor are and where the national Governments are committed to reform, the effectiveness of the US $50 billion or so in the international development system is increased by 50 per cent. The United Kingdom Government have worked hard on that objective, and the Bill requires that a much more effective international development system focused on the systematic reduction of poverty be the objective of the Secretary of State, unless that person introduces alternative legislation in the House of Commons.

All of that is of profound importance to the poor and the future stability and safety of the world; it was the basis on which the House approved the reversal in the decline of the development budget under the previous Administration. There has been an increase in the contribution of 0.26 per cent. of gross national product that we inherited from that Government to 0.33 per cent., to which we are committed. I hope that growth continues, so that we get our country's aid budget to the United Nations target of the 0.7 per cent. of GNP. As the House has increased the budget on the basis that those resources would be spent on poverty reduction, not on ulterior objectives, it is right that the legislation underpinning the spending of that money should entrench the requirement that any Minister or Administration use those funds to achieve the systematic reduction of poverty.

Mr. Gary Streeter (South-West Devon): The Secretary of State went straight from the 1997 position to looking at least two years ahead to the figure of 0.33 per cent.

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What percentage of gross national product did the Government spend on aid at the end of the last financial period, three years into a Labour Administration?

Clare Short: I do not know whether the hon. Gentleman has noticed, as he is busy writing press releases and does not usually read much published by my Department, but we will achieve 0.29 per cent. this year, as we said we would.

In our 1997 White Paper, we committed ourselves to considering the case for new legislation. The overriding response to our consultation, which took place in two rounds of policy forums across the country, was that there is popular support for a change of legislation to entrench the objective of reducing poverty.

The current legislation on the statute book is the Overseas Development and Co-operation Act 1980, which is a consolidating Act drawing its provisions from 33 previous statutes. Much of the Act is outdated or obsolete, and we need new legislation to update it, to entrench the poverty reduction objective, and to take new powers to support civil society and to provide financial guarantees and hold securities when we try to develop the private sector in developing countries, in order to enable those countries to grow their economies and thus to reduce poverty.

The House should note that the courts found in the Pergau dam judgment, which shamed our country so deeply, that the powers in the existing legislation were so widely drawn that they caused the Minister to mislead himself into believing that he could use aid to back economically unsound projects. We would all agree that it is desirable to protect any future Minister of any conceivable alternative Government from making such a mistake.

Mr. John Bercow (Buckingham): I am grateful to the Secretary of State for giving way. Given that the Government indicated by a written answer on 10 April last year that they intended "as soon as possible" to bring forward legislation to enforce the OECD convention on bribery, and on the assumption that the right hon. Lady did not judge the Bill to be the appropriate vehicle for achieving that objective, can she tell the House when she intends to act on that important subject?

Clare Short: I agree with the hon. Gentleman that the subject is enormously important, but it is not the responsibility of my Department to introduce such legislation. The Bill would be rather longer than it is, and legislation has not been prepared, although the Government have made a commitment in principle to enact stronger legislation. I cannot tell the hon. Gentleman when it will be introduced, as it is not in my remit, but I share his view that that should be done as urgently as possible.

I should draw to the attention of the House two exceptions to the overriding requirement set out in the Bill that poverty reduction must be the purpose of spending on international development assistance. The first exception relates to assistance given to the overseas territories. The Government recognise the responsibility that the UK has for the overseas territories beyond a commitment to help them reduce poverty, although any assistance that we provide would include that objective. The requirement

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that assistance to the overseas territories must be likely to contribute to a reduction in poverty is therefore set aside and replaced with a requirement that our assistance to those territories must be provided for the purpose of furthering sustainable development or improving the welfare of their population.

The second exception relates to assistance provided in response to disasters or emergencies. Obviously, such assistance will not be likely to contribute to a reduction of poverty in all cases. For example, the terrible earthquake in Gujarat, which we all agree was of overwhelming concern, affecting as it did such large numbers of people, occurred in an area that was not the poorest part of India. If the requirement to provide humanitarian assistance always had to serve the poverty reduction objective, it would restrict our ability to move rapidly across the world when people are in trouble, and maintain the UK's record for speed and flexibility, of which hon. Members in all parts of the House are proud. Exceptions should be made in those two cases.

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