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23 Jan 2003 : Column 428—continued
Oil Supplies
10. Norman Baker (Lewes): What recent assessment he has carried out to establish the correlation between the cost of oil supplies and the performance of the British economy. [92742]
The Chancellor of the Exchequer (Mr. Gordon Brown): In the last five years, Britain has had to cope with an oil price that has ranged from $10 to $35 per barrel. In these circumstances, and given the changing dollar exchange rates, it is all the more important for the growth of the British economy to hold to a disciplined monetary and fiscal policy. OPEC has said that it seeks an oil price of between $22 and $28 and, following the events in Venezuela, it has recently announced increases in its production target of 1.5 million barrels a day.
Norman Baker: Given the global increase in oil consumption, and the fact that the supply of this finite resource is set to peak and be exceeded by demand, which will inevitably lead to further price increases, and that oil is disproportionately found in the volatile middle east, is it not important to the long-term economy of this country that the Treasury should have a strategy to reduce our dependency on oil? What is that strategy? It is not working, because renewable energy generated only 3.1 per cent. of our electricity last year, compared with 3.3 per cent. the year before. We must reduce our dependency on oil. What are the Government doing about that?
Mr. Brown: The hon. Gentleman must wait for the energy paper, but I disagree with him: we have taken measures in successive Budgets to discourage dependence on one sole fuel. I also disagree with his first premise. The international community must act to increase oil supplies at this point, and that is why OPEC made its decision. The initial problem arose from Venezuela, which produces 3 million barrels of oil a day. Ninety per cent. of production has been withdrawn, and it is right to increase production.
Iraq is responsible for 2.4 million barrels of oil a day, 1.7 million of which are exported. It is also right for OPEC to ensure that its supply is established for the months to come.
Miss Anne Begg (Aberdeen, South): Does my right hon. Friend agree that, while low prices are tempting to motorists, who always want low oil and petrol prices, the British economy—particularly the economy in my area—depends on a relatively high price? If the oil price drops below $8 a barrel, production on the North sea continental shelf shuts down overnight. If the Exchequer is to secure its return from taxation of the oil industry, and if at the same time there is to be a viable oil industry in north-east Scotland and indeed throughout the United Kingdom, the price of oil must be about $20 a barrel, if not slightly more.
Mr. Brown: My hon. Friend, along with her fellow Members representing north-east Scotland, campaigns consistently for the oil industry and the contribution it makes to the British economy. We are still an oil exporter as a result of the wealth in the North sea. We want to encourage the future development of fields in the North sea, and we will continue to pursue a policy that gives the oil industry huge incentives to develop future fields and the new production that is available from the North sea. Obviously we must balance the need to keep the price low to help the growth of the domestic economy with our needs as an oil producer.
Mr. Henry Bellingham (North-West Norfolk): Did the Chancellor see yesterday's disastrous figures showing that the number of firms operating below capacity is at a 20-year low? Is that due to oil price increases, or does the Chancellor agree with the Confederation of British Industry, which says that it is almost entirely due to a huge increase in red tape and bureaucracy, which is stifling enterprise?
Mr. Brown: I know it is the hon. Gentleman's policy and that of the shadow Chancellor to suggest that Britain is somehow in recession. The fact is that America has been in recession, Japan has been in recession and Germany has been in recession, while the British economy is growing. The hon. Gentleman should be congratulating us.
Development Aid
11. Mrs. Betty Williams (Conwy): What discussions he has had with (a) Churches and (b) other faith groups about his proposals for increasing development aid to the poorest countries. [92743]
The Chancellor of the Exchequer (Mr. Gordon Brown): Meetings to consult on our proposed international finance facility have been held with the major non-governmental organisations. After private discussion with faith leaders, we will put our proposals on additional aid for investment—an increase from $50 billion to $100 billion a year—to a joint seminar with
faith groups at No. 11 Downing street. I wish to thank Churches and other faith groups for their continued support for such an initiative.
Mrs. Williams : I welcome the initiative launched yesterday at Chatham house. Members and friends of Penuel chapel in Bangor, and other organisations in my constituency, will also welcome it.
Does my right hon. Friend accept that the millennium development goals are very ambitious? Does he agree that if they are to be achieved we must build a strong coalition at local, national and international level?
Mr. Brown: As I said yesterday in the speech that I was privileged to make at Chatham house to a conference on these issues, it is important for a coalition to develop between business, Governments, international organisations, and faith groups and Churches, as well as the NGOs. We are arranging a series of meetings to inform people nationally and locally. Today we are publishing a programme for the international finance facility, which will be sent to all Members of Parliament. I hope that they will be able to inform faith groups and NGOs in their constituencies of what we propose. As I said earlier, I hope that there can be all-party support for the initiative.
Mr. John Bercow (Buckingham): In rightly seeking to provide further aid for those who need it most, the Government have specified the importance of streamlining conditionality and enabling greater ownership among emerging markets and developing countries. What did the Chancellor mean by that, what has he done, and what does he intend to do?
Mr. Brown: The whole point of replacing what was called the structural adjustment facility of the International Monetary Fund—which, as the hon. Gentleman knows, was very unpopular with developing countries—with what are called poverty strategy reduction reports is that there is both country and community ownership of the poverty strategies. There is a requirement to consult civil society before the reports are produced. It is conditional on the production of programmes to tackle health and education problems and poverty that grant aid is disbursed by international organisations. Conditionality is now being built into the way in which the World Bank and the IMF view the position, but there is also conditionality in relation to genuine measures to tackle the problems of poverty. The IMF and the World Bank are working closely on that.
Helen Jones (Warrington, North): During his discussions, has the Chancellor had any discussions with faith groups on building links with their sister organisations in other countries, particularly in the United States, to urge them to support the millennium development goals? Can he report any progress on urging the United States Government to increase their contribution to development aid and to recognise that to make the world a safer place, there must be a war on poverty as well as a war on terrorism?
Mr. Brown: I agree that a world disfigured by poverty can be neither just nor stable. I think that there is general agreement that action must be taken to deal with
poverty. What the United States has done is pledge $5 billion extra aid by 2006. What we are doing is talking not only to the United States Administration but to NGOs and other groups in the United States. I believe that there is to be a joint conference between British and American Churches on aspects of that proposal.
Mr. Eric Forth (Bromley and Chislehurst): Meaningless verbiage.
Mr. Brown: From a sedentary position, the shadow Leader of the House says that what we were saying on those things was meaningless. I hope that he will withdraw that allegation.
Mr. Peter Lilley (Hitchin and Harpenden): Will the Chancellor take it from someone who spent some years of his life working on development programmes in underdeveloped countries that what the developing countries most need is free access to developed countries' markets, not least in agricultural products, for which the Churches are rightly campaigning? What they do not need is for us to export policies that we now reject in this country, namely, subsidising and protecting our industries. If we recognise that they will not work here, should we not be so demeaning of the underdeveloped countries to suggest that they might work there?
Mr. Brown: It is the opening up of trade and of opportunities for investment that, combined with the programme for aid, will help the developing countries most. The two things must go together. If the developing countries are prepared to open up to trade and to allow private investment to play its role in the development of their countries, we must in turn support them with rises in our aid budgets and with the new international finance facility. The two must go together. I hope that the right hon. Gentleman will support the European Union's anything but arms initiative to open up trade for developing countries, so that we get rid of the agricultural protectionism that has been such a problem. I hope also that he will support what must be the other side of the bargain: the increased resources, so that children can go to school, ill health among babies and mothers can be removed, and poverty can be halved at least.
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