House of Commons
Thursday 23 January 2003
The House met at half-past Eleven o'clock
PRAYERS
[Mr. Speaker in the Chair]
Oral Answers to Questions
TREASURY
The Chancellor of the Exchequer was asked—
Public Service Agreements
1. Peter Bottomley (Worthing, West): If he will make a statement on the system of assessing performance against the targets he has set for outputs from his public spending increases. [92731]
The Chief Secretary to the Treasury (Mr. Paul Boateng): The Government have invited the Comptroller and Auditor General to take responsibility for the validation of systems used in reporting on public service agreement targets. The National Audit Office is conducting a pilot study and full implementation will get under way from April this year.
Peter Bottomley : I hope that the Treasury and the National Audit Office will survey passengers, pupils, parents and the police about what they feel about the targets being set and that the feedback will go to Departments. While people still receive letters from hospitals saying that appointments made more than a year ago have been postponed for a further year and that the hospitals hope to receive the funding that is necessary for them to meet their targets—I have such a letter with me—many will need a lot of convincing that the targets for the Departments' work or for the Treasury's standards are being set properly or met. The past five years have been disappointing.
Mr. Boateng: I will, of course, be happy to receive and respond to the letter that the hon. Gentleman mentioned. I know that he takes these issues seriously and that he thinks about them. He will therefore recognise that public service agreement targets represent a major reform in public administration. He will also recognise their importance in focusing Departments on delivery, and that point applies to Departments across the board. He will further recognise the technical challenges in relation to data collection and, yes, the need to ensure that customer satisfaction and opinion are taken into account in measuring outcomes. That is why I know that he will welcome the National Audit Office's involvement. That will produce results that he
and I know will assist in making sure that this tool—it is no more than that—becomes effective in promoting delivery.
Alan Howarth (Newport, East): Does my right hon. Friend agree that the question of the hon. Member for Worthing, West (Peter Bottomley) would be academic if we were to enter the euro? Far from there being increases in public expenditure in Britain, we would be required to accept deep cuts in public investment. Does my right hon. Friend accept that, whereas the Chancellor's prudent interpretation of the stability and growth pact would drive a coach and horses through it, the Commission's destructive interpretation would unfortunately drive another coach and horses through the Chancellor's spending plans?
Mr. Boateng: My right hon. Friend is stretching the question somewhat, but I am bound to say that the questions of the hon. Member for Worthing, West (Peter Bottomley) are always academic and thoughtful. This one was no exception.
Mr. Michael Howard (Folkestone and Hythe): Can the Chief Secretary confirm that the Chancellor has been invited to attend and give evidence to the Public Administration Committee on the question of targets? Will that invitation be accepted?
Mr. Boateng: The Chancellor—or rather the Treasury—has indeed been invited to give evidence. As the Minister responsible for PSA targets, I look forward very much to doing that.
Mr. Howard: I am delighted to hear that the Chief Secretary is going. Will he confirm that, at the Treasury's request, we provided it as long ago as 25 November with a 300-page dossier that shows that the Government have failed or are failing on 40 per cent. of the targets that they set in 1998 and on 75 per cent. of those set in 2000? The Treasury has repeatedly been asked to provide the calculations on which its ludicrous claims are based. Will he now provide the justification?
Mr. Boateng: We have provided the calculations. The true figures are 87 per cent. and 93 per cent. I look forward to studying the evidence that the right hon. and learned Gentleman would seek to produce to substantiate his figures, which, on the face of it, appear to be absolute nonsense.
Mr. Howard: The Chief Secretary has had that evidence since 25 November; it is in our document. Despite repeated requests, he has failed to provide any supporting evidence for the figures that he has just given. Is it not the truth that the target regime is a shambles? Did not the Secretary of State for International Development tell the Select Committee there has been a proliferation of targets and that they are seen as what she described as control freakery? The Chief Secretary's Customs and Excise department described one of its targets as a crude selective measure, and five major Departments, including the Department of Health and the Home Office, have still not published the reports that were promised last autumn. Does this total shambles not tell us more about the Government's
failure to deliver on the public services than any of the right hon. Gentleman's weasel words? Is it any wonder that the Chancellor did not have the guts to answer this question himself?
Mr. Boateng: The right hon. and learned Gentleman is going on a bit, but I think that he has missed the point. Is he really suggesting that any management system, business or enterprise worth its name should not use targets? Even he will know from his experience at the Bar that the most rarefied of chambers—I have no doubt that he was a member of a rarefied set of chambers—has targets. It has targets for responding to the telephone and for fee levels. Is he suggesting that we should not have targets because, frankly, that would be absurd?
Mr. Dennis Skinner (Bolsover): Is my right hon. Friend aware that the question asked by my right hon. Friend the Member for Newport, East (Alan Howarth) is indicative of the fact that Labour Against the Euro is a broad church? Surely the setting up of the Franco-German axis in the past few days strengthens the arm of all of us who are against the euro and encourages the Chancellor to keep weaving and dodging.
Mr. Boateng: As someone who worships and preaches in a broad church—but not that broad church—I must say that my hon. Friend stretches the point, although he is entitled to do so. He might reflect on the issue of targets, however, and in particular whether the 20 per cent. across-the-board cut on spending proposed by the Conservatives would enable us to deliver on our commitment to improving public services, health, education, transport and infrastructure. The cut would be a disaster and I am sure that the whole House—or at least its Labour Members—will join me in condemning that approach.
Matthew Taylor (Truro and St. Austell): Can the Chief Secretary tell us how many of the targets that the Treasury claims have been met have been only partially met—or what is commonly known to the layman as not met?
Mr. Boateng: I have a little list, which I am happy to share with the hon. Gentleman in detail. Some 87 per cent. were met or partly met—[Hon. Members: "Ah!"] Hold on a minute. Is the hon. Gentleman seriously suggesting that it is not worth setting a target that requires 75 per cent. of 11-year-olds to meet numeracy standards when the Department for Education and Skills has ensured that 73 per cent. of those pupils perform to that standard, which is up from 62 per cent. when the Conservatives had stewardship of the nation's affairs? I think that that is a target worth striving for.
Debt Relief
2. Ms Julia Drown (South Swindon): What action he is taking to discourage UK companies from pursuing litigation against heavily indebted poor countries. [92733]
7. Mr. Mark Lazarowicz (Edinburgh, North and Leith): What his assessment is of the International Monetary Fund's latest proposal for a sovereign debt restructuring mechanism. [92739]
The Chancellor of the Exchequer (Mr. Gordon Brown): To avoid individual creditors blocking the restructuring of poor countries' debt, we are proposing the adoption of collective action clauses on a worldwide basis and we are supporting at the IMF meetings in April the proposed new sovereign debt restructuring mechanism. I can also tell the House that, in the case of vulture funds, we are calling on the World Bank to announce expert support to highly indebted poor countries dealing with debt. I can also announce that the UK Government will provide legal help to poor indebted countries facing those problems.
Ms Drown : I welcome the Chancellor's response. When companies such as Iceland sue Guyana for £12 million, does not that undermine the Government's commitment to debt relief? If Guyana gives in, that will create a further problem because it will be breaking the UK's agreement, through the Paris club, that one creditor should not be given preferential treatment. However, given the huge support for debt relief in this country, surely the big issue is that the customers and shareholders of Iceland probably do not want it to sue in the first place.
Mr. Brown: Because the system of debt restructuring is voluntary, and until we get the collective action clauses and the debt restructuring mechanism in place, moral suasion will remain important. We have to look at individual cases to see what can be done. The Nestlé case in Ethiopia was well publicised. There have also been cases in Sierra Leone, Uganda, which involved Yugoslavian vulture funds, and Nicaragua.
The Guyana case arises from 1976 and involves a company called Booker plc. It concerns the ownership of a plant and Booker is asking for compensation from the Government. The issue will go to collective arbitration. In other words, the international court for settlement of such issues will rule whether the debt is valid. Even if it were ruled to be valid, I would hope that, in the interests of resolving the problem, the company would make the resolution of it part of the general debt forgiveness that is being given to Guyana. I hope that it can be solved on that basis.
Mr. Lazarowicz: Can my right hon. Friend give some indication of the time scale for the establishment of the new debt restructuring mechanism? Will he assure the House that he will take a lead in international
negotiations to establish such a mechanism, and ensure that it is established somewhat more quickly than the many years that the IMF said that it would take?
Mr. Brown: My hon. Friend raises an important point. If we are to have a sensible system of crisis prevention and crisis resolution—after all, nearly 100 financial crises have led to the need for debt restructuring in the past decade or so—we must get a new mechanism in place. Collective action clauses exist in Britain, and we propose them for the rest of the world.
The sovereign debt restructuring mechanism proposed by the IMF board would produce an internationally validated and respectable system to which each country could sign up. That would require a change in the IMF articles of association, which is why some have proposed that, in the meantime, there should also be a voluntary code that banks and bondholders could follow as well.
The important thing is that we see progress, with all countries supporting the need for such a mechanism at April's IMF meeting, and that transitional measures that deal with my hon. Friend's point that there is a need for action on this matter now are put in place. It is in all our interests to avoid the kind of financial crises that have led to poverty as well as economic dislocation in some countries. The proposals from Britain will make a huge difference.
Mr. Laurence Robertson (Tewkesbury): The Chancellor mentioned Ethiopia. I had the pleasure of leading a parliamentary delegation to Ethiopia in December, and we saw at first hand the absolute desperation of people there, who are already becoming hungry. Is it not iniquitous for Nestlé to claim up to $6 million from that country? Is it not claiming that sum at rather a sensitive time, especially given that the claim arises from a business deal that it did when Ethiopia was under a Marxist Government? Should it not have taken rather more care then? Does the Chancellor agree that the Treasury should join the Secretary of State for International Development, who has been very generous towards Ethiopia recently, in trying to persuade Nestlé to drop the claim completely?
Mr. Brown: I am grateful to the hon. Gentleman. I hope that there is all-party support for resolving the issue. There are 60 million people in Ethiopia. The average income is about $100 a year, which is about $2 a week. There are 40 million people facing starvation. It would seem strange at this point to demand extra repayments from a country that is attempting to reform, having got rid of the Government who incurred the debt with Nestlé in the first place. Nestlé has now said that, although it is important that the money is paid, it will give all that is received to famine relief in Ethiopia.
I think that the hon. Gentleman would agree, however, that we need a system that avoids such problems recurring—or at least if they do occur, one that offers a quick way of dealing with them. That is why we propose the collective action clauses and the new sovereign debt restructuring mechanism for future debts. That is also why we are helping Ethiopia at the moment. I shall meet the President of Ethiopia—as will the Prime Minister—when he is in Britain in the next few weeks so that we can offer help with legal advice and by
other means to resolve some of the problems. In addition, as the hon. Gentleman knows, much of the Secretary of State for International Development's aid budget has been diverted to help tackle the famine in Africa.
Adam Price (East Carmarthen and Dinefwr): Is the Chancellor aware of reports that point to the IMF's role in turning a food shortage in Malawi into a severe famine? Indeed, the IMF was implicated in the Malawi Government's disastrous decision to sell their food reserves. In the light of that fact, and given that debt repayment last year constituted 20 per cent. of Malawi's budget, would it not be right to write off its debt?
Mr. Brown: The important thing is first to implement the poverty strategy mechanism—in other words, to ensure that IMF and World Bank policies do not run counter to each other, and that we can take the steps necessary, where decisions are being made, to match economic restructuring with social justice programmes. I think that the hon. Gentleman would agree with that.
Only 50 per cent. of the aid necessary has so far been pledged for the famine. Even though countries have given some money, it is simply not enough. I hope that, on an all-party basis, we can support other countries in joining us in giving the money necessary to avoid the famine that is hitting not just Ethiopia but all the countries surrounding Malawi.
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