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Dr. Tonge: Does the hon. Gentleman agree that this whole debate is nonsense? The front page of the International Development Act 2002, which went through the House recently, contains a provision for sustainable development, and the Secretary of State for International Development considered that provision to be the most important in the Bill. Furthermore, the Prime Minister told us this afternoon that he has signed up to all the aims of the sustainable development conference to be held in Johannesburg in September. Is this debate not complete nonsense?

Mr. Berry: I am not sure that the debate is complete nonsense, but it is confusing. I believe that the Government are committed to sustainable development, and the International Development Act 2002 contains a definition of it. However, I do not understand the argument for amending the Lords amendment. I have explained why that would make the Bill weaker and that the Lords amendment would not stop the Government doing what they want to do. I have never before heard the argument that the Lords amendment might put us in breach of the EU code, and I am still awaiting further clarification on that. I cannot believe that it does, certainly not according to the legal advice that other organisations are receiving.

I am enthusiastic about this important Bill and the last thing I want to do is vote against my Government's amendment, but I cannot understand why they have tabled it. The Lords amendment is superior. I am sad to say that if the mystery is not explained before the end of the debate, I will not be in the same Lobby as my hon. Friend the Minister. I will deeply regret that and hope that he gives me a reason to be in the same Lobby.

Dr. Vincent Cable (Twickenham): I am in favour of the Lords amendments and against the Government's proposed changes. Like the hon. Member for Kingswood (Mr. Berry), I, too, am confused about how the argument is progressing. There have been several triple-reverse somersaults on how we should approach sustainable development. Unfortunately, the confusion is infectious. I had hoped that the same broad coalition that operated in the other place would be in action today. It comprised a large group on the Government Benches who shared the well informed scepticism that we have heard this afternoon and Members on the Liberal Democrat, nationalist and Conservative Benches.

I listened with mounting bafflement to the hon. Member for Salisbury (Mr. Key). Only a few weeks ago,

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the Conservative spokesman on international development questioned the Secretary of State for International Development. She said:

I do not know whether the hon. Gentleman outranks his colleague or has not consulted her, but he is taking a diametrically opposite point of view. I will not pursue that too much, but I hope that he will explain why for the past year or so his colleagues have said the opposite of what he now proposes.

Mr. Key: I am grateful to the hon. Gentleman for giving me the opportunity to remind him of what happened in the Standing Committee in November and on Report and Third Reading when we made it clear that we might have abstained had we got a straight answer. We got the answer in the other place, the Government have moved on the issue and we have been back to Scott. I wonder whether the hon. Gentleman has read the Scott report if he thinks that the proposal conforms with what it recommended. That explains my position. For goodness' sake, it does no one any good if we never move forward in politics.

Dr. Cable: Perhaps the hon. Gentleman should have consulted his colleague because she made her remarks long after the illuminations that he describes emerged.

The more important issue is the Government's position on the matter, on which there have been several significant shifts, to which the hon. Member for Clydebank and Milngavie (Tony Worthington) referred with characteristic pithy accuracy. We started with a draft Bill. The Government accepted that the schedule of purposes should embrace the principle of sustainable development. That principle was fairly uncontroversial in the White Paper, the Green Paper and the draft Bill, but then it was changed.

The Bill went through the Commons and the House of Lords. However, at the last moment, to avoid putting words into the schedule of purposes, the Government explained that the schedule of purposes was not what it was originally supposed to be. They effectively turned the Bill on its head and are now defending amendments that relate to the language that should be used. Many of us who followed the Bill through its stages and who are interested in the Scott report find those amendments unsatisfactory.

I shall take up specific points. We are told that consideration will be given to sustainable development. That is the weakest language that one could find in this context. The other phrase which is much more controversial—the hon. Friend the Member for Kingswood (Mr. Berry) referred to it—is "if any". To critics of the Bill, that appears to give Ministers the option of not considering sustainable development. That is how it appears from the outside.

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5.30 pm

The Government's view, which the Minister has restated, is that they could be involved in considering many extraneous issues such as trade with the United States or with France. He cited legal opinion to that effect. There are, however, alternative legal opinions. Matrix chambers is one of the most reputable set of barristers, and it makes the point that the Government's legal interpretation is bizarre. I do not want to read the legal language in great detail, but there is a key passage that needs to be put on the record. As for the problem of avoiding dealing with extraneous details, the lawyers say that it would be possible to disregard them

In other words, if an application arrives on the Minister's desk relating to parachutes from Britain to France, he may simply say, "The sustainable development issue carries no weight, or minimal weight, in these circumstances. We will therefore not pursue that line of inquiry." It is an easy way of dealing with the problem. It is difficult to understand why a diametrically opposed legal opinion has been given on this important point. As the Government have changed their mind several times on the legal status of the Bill, I hope that they will give fresh consideration to the issue, which makes them look rather foolish.

We are talking not only about matters of legality but broader issues of principle. In essence, the Government are trying to tell us, "Trust us. We will interpret sustainable development in the right way at the right time. Providing that there is provision in the guidance, we will look after this concern." In principle, I am always willing to take the Government on trust. However, there are good reasons why we cannot do so in this instance. The first has been taken up twice by the hon. Member for Cynon Valley (Ann Clwyd). In her interventions she asks the highly relevant question why the Government chose to disregard the Scott report, and why the four Select Committees, with all-party consensus, recommended that individual applications be considered through parliamentary scrutiny.

The Government have rejected that approach. By doing so, they sacrificed one of the key safeguards to ensure that applications were properly considered. When the hon. Member for Salisbury intervened on me to say that the amendment is not compatible with the Scott report, that must be seen in conjunction with the fact that the Government have already rejected one of the central propositions of the Scott report, which was parliamentary scrutiny. Had there been that scrutiny, we would not be having the argument. It would not be necessary. It is because the provision is not in place that the relevant language needs to be written much more firmly and strongly in legislation. That is what the debate is about.

The second reason why we cannot trust government—I do not mean the present Government or the Minister—is the way in which the Tanzanian case was dealt with. That illustrated the weakness of the process of export licence applications in relation to development, in precisely the same way that the Matrix Churchill case illustrated the failures of the old regime. I know that my hon. Friend the Member for North Norfolk (Norman

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Lamb), who has done a great deal of work on the Tanzanian case, would like to talk about the issue at considerable length. However, I shall make a few points because the matter specifically illustrates the difficulty that Government have in dealing with development issues in export licence cases.

The importance of the Tanzanian case is that that was one example where the development argument was clearly set out, first by the World Bank and latterly by the International Civil Aviation Organisation, which examined the project and concluded roundly that it was not in the developmental interest. There was a specific and quantifiable test of sustainable development in the conditions set by the International Monetary Fund for the conditions of credit.

The story of the project, as many people know, is that Barclays bank, working together with BAE Systems, produced a project that appeared superficially to conform to the terms of the IMF definition of sustainable development. In other words, there was a 28 per cent. grant element in the loan. People have examined the project. My hon. Friend the Member for North Norfolk has much more detail than I have, and papers are becoming available. Questions are now being asked about how the project managed to satisfy that test of sustainability.

Three hypotheses are being offered. The first is that the bank suddenly developed a fit of generosity and decided to give Tanzania, effectively, a grant of £10 million—a third of the value of the loan. That sounds to me highly implausible. The bank has not claimed credit for doing it, and its shareholders certainly have not been told, so it seems unlikely that it did that.

The second hypothesis is that the bank and BAE Systems fiddled the contract price and overstated the tender price by 30 per cent. so that they could then give a concessional loan. To do that, however, they would have had to engage in what amounts to fraud, with collaborators in Tanzania. We do not know whether that happened, but it seems highly possible that it did.

The third possibility is that the bank and/or BAE Systems were given a quid pro quo—"You sign this contract for the air traffic control system; we will give you access to banking or another arms contract"—involving, probably, illegal and covert relationships with senior Tanzanian civil servants.

We do not know what happened. It will emerge, because papers are coming out of the international organisations which are building up the story. One of the Select Committees of the House—I do not know which; it could be the International Development Committee, the Foreign Affairs Committee, the Treasury Committee or the Defence Committee—will get their teeth into it, and Ministers and their officials will be called to explain what happened, in precisely the same way as Ministers and officials were called to explain what happened in the case of Matrix Churchill. We shall then understand the dynamics of what happened in Government.

My understanding is that the Department of Trade and Industry, backed by the Ministry of Defence and 10 Downing street, enthusiastically supported the project. They were opposed by the Secretary of State for International Development and probably the Chancellor

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of the Exchequer, who saw it driving a coach and horses through his sustainable development work in relation to debt relief. The story will emerge, but the key conclusion is that the mechanisms of Government, as they operate at present, do not allow a proper test of sustainable development to take place, even when all the evidence is in front of them and is mobilised by Departments of State.

That is why it is absolutely fundamental that we have strong language in the legislation. If the Tanzanian case can occur under the present Government, far worse things can happen under other Governments. The legislation must be strengthened. That was the purpose of the amendment, and I urge hon. Members in all parts of the House to support it and to reject the weasel words that have been incorporated in amendment (a) to Lords amendment No. 17.

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