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G8 (UK Presidency)
2.8 pm
Mr. Roger Williams (Brecon and Radnorshire) (LD): I thank the Minister for attending this important debate and I hope that interruptions, due to Divisions in the House, will be kept to a minimum. I am sure that you, Mr. Deputy Speaker, will agree that, although there may be differences between the parties on the issue, the House must remain committed to the principle of debt relief. I commend the work of the all-party group on heavily indebted poor countries for its persistent work in such matters.
The year 2015—the target date for the UN millennium development goals—is drawing ever nearer and the commitment made more than four years ago must now be honoured. We are almost a third of the way to that target date and now is a good time to assess the position and renew our commitment to meeting those goals. The moral case for debt relief is simple. People throughout the world are living half lives; they are lives without hope and basic necessities, and often people lose their lives prematurely. We know that they deserve better and we, as a nation, can do better.
In July 2005, we will welcome the world to Perthshire and host a summit that began as a club for the economic elite, but which has evolved into a mechanism for helping the oppressed and needy. As an institution, the G8 has shown that it has the ability and the will to address the debt of the developing world. The 1999 Cologne summit produced a comprehensive and fairer update of the heavily indebted poor countries scheme. The United Kingdom played a leading role and we can do so again in 2005.
The structure of the G8 gives the host country real power to shape the summit's agenda and the UK presidency will be an opportunity to make a difference to world poverty. The G8 presidency will also coincide in the second half of the year with the UK presidency of the European Council. That fortuitous alignment of the stars is behind the creation of the Make Poverty History coalition—a coming together of the UK-based non-governmental organisations, aid agencies and interest groups, backed by widespread public support. The coalition is well aware of the unique opportunity that 2005 presents to our country to lead seven of the world's most powerful nations. It is up to the Government to seize it and build on the good work that has already been done.
The moral case for debt relief is clear. Nations in Africa, Asia and South America face what can only be described as humanitarian disasters on an unprecedented scale. The Zambian gross national product per capita in real terms was nearly $1,500 in 1970. By 2000 it had been reduced to just under $900. That is a reduction of more than 40 per cent. in 30 years.
Developing nations have not shared in the increases in living standards that other parts of the world have enjoyed. To isolate a single cause for that is impossible, but the state of affairs at present is clear. Life expectancy, for instance, in Botswana is only 38 years; Niger's literacy rate is below 20 per cent.; and 36 per cent. of people in Myanmar lack access to proper sanitation.
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Africa is blighted by poverty, but the problem extends to all corners of the globe. There is a danger, when highlighting the problems of the developing world, that in listing those appalling statistics we may lose sight of the individual lives that are involved. Lack of access to clean water may mean a 15 km round trip to fulfil the most basic of human needs. Walking more than 15 km every day means that a basic education is almost out of the question. Who has time to go to school when their prime concern is survival?
The third millennium development goal calls for the promotion of gender equality and the empowerment of women. Women are often responsible for gathering water in societies where opportunity is already limited. They are the first to suffer from malnutrition, as they give their children priority in the fight for survival. The lack of essential water supplies means that women are forced to sacrifice even the most basic education. Women's rights in developing countries are sometimes better served by building a well in the village than by calls for an international Bill of Rights, which might have little practical impact in a developing country.
Debt relief is not a panacea for the ills of the developing world, but it can, in most cases, make a real difference. Funding that would otherwise be used to service debts dating back to the 1970s, which were incurred to mitigate low commodity prices but which have been compounded by high interest rates and oil price surges, can now be invested in building a basic infrastructure, which will, in turn, help to address the rights and needs of local people.
So far, steps taken to reduce the debt of the poorest nations have produced real results. Debt relief has led to landmark educational improvements, essential immunisation schemes and vital water and sanitation projects. All are to be celebrated. Those achievements counter the suggestion that heavily indebted poor countries are unable to address the problems of their citizens. A recent study by the Jubilee debt campaign, to which I pay tribute for its work, shows that 65 per cent. of all revenue freed up through debt reduction has been spent on health and education projects.
Since the introduction of the HIPC project, social spending has risen by about 20 per cent. in participating countries. Uganda, Mozambique, Zambia and Tanzania have all been able to abolish school fees for primary education. Success stories are numerous and those countries have shown that they can truly help themselves if they are given a chance to do so.
Debt relief must be conditional on responsible economic policy and real efforts to tackle corruption, malpractice and unnecessary waste, but we must not forget the rights of developing states as sovereign nations. A solution to this is the creation of national debt relief committees such as those set up in Tanzania and Uganda, which allow the people of heavily indebted poor countries to hold their own Governments to account and to serve to strengthen national democracy. Work by Christian Aid in this area has shown that the demand for accountability already exists in developing countries.
We must also accept our own responsibility in the drive to ensure that development aid and cancelled debt revenue reach those who are most in need. Efforts made in clamping down on terrorists' assets should be
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extended to those who siphon off Government funds for their own benefit. Good governance is a must if developing nations are to have a chance of recovering from their parlous predicament, the origins of which can be traced back to the 1970s. We must, however, make the distinction between anti-corruption drives, which are essential, and disagreements over economic policy. Corruption is global and not solely the preserve of developing nations. It should not be used to veto or delay help that is already long overdue.
International institutions such as the International Monetary Fund and the World Bank are not a substitute for the voice of the people. They were not elected by the citizens of heavily indebted poor countries and they must accept that they lack the democratic legitimacy of elected Assemblies. A recent World Development Movement report highlighted the IMF's demand that Zambia privatise its state bank despite a vote in Parliament against such a policy. The decision taken by Zambia's Parliament was not simply a knee-jerk reaction, but a response to a 10-year process of privatisation at the behest of the IMF. In the same period, there has been negative economic growth, a rise in foreign ownership of capital and a fall in living standards. I am not suggesting that the IMF is responsible for that state of affairs, but it is absurd that Zambia was asked to take the same medicine over and over again without being allowed to look for an alternative cure.
The Zambian Government were explicitly threatened with the withdrawal of HIPC-prescribed debt relief if they abided by the decision of the nationally elected Assembly. Cases such as this fuel charges that the west is continuing a policy of neo-colonialism through institutions that it can dominate. The export of free-market ideology has not been kind to many impoverished countries, and we must learn that first-world economies do not always provide the solution for developing-world economies.
I call on the Chancellor and the Secretary of State for International Development to use their positions in the IMF and the World Bank to work towards policies tailored to specific countries and to end this one-size-fits-all approach, which has been shown seriously to damage fledgling economies. That would be an important step in addressing some problems that I have already mentioned regarding international monetary institutions.
Changes must ensure that the distinction is made between debts incurred through criminal and irresponsible activity and debt that a country should be required to pay back. In the future, there should be an administrative bankruptcy procedure for nations that cannot repay all their debt.
Finally, a shift in emphasis from a structural macro-economic policy to a focus on outcomes linked to the millennium development goals would ensure that debt relief achieved what it is intended to achieve, rather than acting as an accompaniment to economic ideology.
The much-vaunted success of the Asian tiger economies was based partly on protectionism and partly on state subsidy. Some leeway must be granted in heavily indebted poor countries to protect their firms and producers from international markets. Only yesterday, an article on the BBC's website highlighted
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the problems of international markets facing Mexican maize farmers in the state of Oaxaca. Their low-intensity farming methods do not allow them to compete with heavily subsidised US competitors, and they are forced either to adopt unsustainable practices or to face extinction. Mexico is not classed as a heavily indebted poor country, but that does not mean that it is not home to areas of extreme poverty.
The focus of today's debate is debt relief, but again it is important to note that debt relief alone will not solve the problems of a developing world or achieve the millennium development goals. We must adopt an holistic approach that combines fair trade policies with increasing aid alongside the reformed HIPC scheme.
At this point, perhaps we should consider the impact of the common agricultural policy on developing countries; the damage that it can do has been well established. However, although changes to the policy do not go far or fast enough, they are going in the right direction. When the CAP was established, it was based on intervention and subsidies. Heavily subsidised produce was exported to the world market, driving down world prices even more, which was very disruptive and damaging to developing countries.
In 1990, we moved on to the MacSharry reforms, which involved direct payments to farmers. Now we have come to the mid-term review: the emphasis is not on extending production in Britain or Europe, but on reinvigorating rural development and environmental practices in the countryside. We should compare that with what happens in America, where considerable and increasing subsidies are paid to promote production. That continues to have deleterious effects on developing countries. The European Union's common agricultural policy is not perfect by any means, but it is moving in the right direction and we should ensure that that progress goes on and increasingly meets the needs of developing countries.
The first steps of debt relief have been made, but we must ensure that our commitment is long term and that the early momentum is not lost. I welcome the Chancellor's pledge to meet 10 per cent. of the costs needed for the World Bank and the African Development Bank to cancel multilateral debts. That will ensure that those institutions' resources can be used to fund future projects in the developing world. It is important that debt relief should not be used to substitute for existing Government aid programmes. The Liberal Democrats also support the proposal for the creation of an international finance facility. If that were created and all the signatories contributed, the IFF could play an important role in increasing development aid to the world's poorest nations. It is estimated that the extra $50 million a year needed to achieve the development goals could be raised through the issue of bonds funded by long-term commitments from developed nations.
The Chancellor has referred to that as his Marshall plan for the third world. The ambition of such a project is commendable, but the Chancellor's metaphor highlights another reason for supporting developing nations. The 1948 Marshall plan was an investment in war-torn countries against the perceived threat of the Soviet Union. Today, we must again invest to ensure
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that there is prosperity and economic development throughout the world. Poverty breeds resentment and frustration with the status quo. The best way to address radical discontent is to take away the conditions in which it thrives. Ignorance, despair and alienation can be countered with education, health care and opportunity. Government-backed bonds are a real investment for the rest of the world. A more stable global environment would be one of the rewards, but there would also be increased opportunities for trade for British companies.
That view is shared by hon. Members in all parties. I welcome the comment made last week by the hon. Member for Mid-Bedfordshire (Mr. Sayeed):
"When will the EU and the US understand that the richer the world is, the more people are able to afford the goods and services that we produce? Is not it common sense, and in our common interest, to end policies that make the poorest poorer?"—[Official Report, 10 November 2004; Vol. 426, c. 833.]
We have a moral duty to the people of developing countries to build on what has already been achieved on debt relief. We also have a duty to our own country to ensure that the global economy and international security are as favourable and as sound as possible. Both goals could be advanced by the Government in the next year.
It is vital that the burden of both multilateral and bilateral debt is removed from heavily indebted poor countries, that progress is made on the reform of monetary institutions and that the promise of the IFF is turned into real commitment from the G8, without which it will lack the capacity to make a real difference. I welcome the Government's work in this area and urge the Prime Minister to underline this achievement in Perthshire next summer.
If we expect other nations to follow, we must lead by example. We have done so in the past, and we should remind the other seven G8 nations of that next July. I almost feel like breaking into song and making a contribution to Sunday's re-recording of "Do They Know it's Christmas?", but I am sure that you would rule me out of order, Mr. Deputy Speaker, and that every hon. Member present would leave the Chamber on hearing my voice.
My final message to the Minister is this: 2005 is an important year—make it the year in which we pronounce the death sentence on debt for developing countries and make sure that Britain executes that sentence.
2.25 pm
Mr. Andy Reed (Loughborough) (Lab/Co-op): I congratulate the hon. Member for Brecon and Radnorshire (Mr. Williams) on introducing the debate, which is important because it might be a little too late to drive home the agenda by the time we get to 2005.
It is important to recognise that although the half an hour of Prime Minister's Question Time is all that people generally see of our proceedings, many issues such as this, and others on which I share an interest with the hon. Gentleman, enjoy a great deal of cross-party support. Indeed, that is one of the great joys that most of us get from being in the House. When the Minister sets out the progress that he wishes to make, I am sure he will know that he has almost the entire House behind him.
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I am also grateful to the hon. Gentleman for mentioning the all-party group on heavily indebted poor countries. I am the group's secretary, and I just wish that we had a snappier title. When the Jubilee 2000 campaign was set up, the whole of civil society—the non-governmental organisations, Churches, trade unions and others—began working with Members of Parliament. Jubilee 2000 was a nice, snappy title, so being the secretary was much easier. However, the words behind the acronym HIPC probably sum up not only the issue, but the difficulties that we all face.
It is ironic that the Band Aid event is this week, because the very same issue got me involved in politics 20 years ago. Like many others, I was moved by seeing the plight of people in Ethiopia, and we felt that we had to do something. Perhaps I was a naive teenager, but I did not think it was enough to write to my local Member of Parliament—it was the right hon. Member for Charnwood (Mr. Dorrell), who is still in the House—and I got sucked into politics. Such issues have been my driving force during the past 20 years and during my time in this place.
One of my most moving experiences in this place was meeting Sir Bob Geldof recently. He told us exactly what we still need to do. We use a different language here, but Bob puts it right on the record, and there is no shirking our responsibility to sort this out. Just a few weeks ago, he showed us pictures of the situation in north and central Africa, including pictures of pot-bellied children. He said quite pointedly that, in one sense, their problem is not food, but the politics that prevent food or water from getting to them. We live in a world that can feed itself, but we are still unable to achieve that, so it is down to us to put structures in place to ensure that we can.
Mr. David Drew (Stroud) (Lab/Co-op): I, too, compliment the hon. Member for Brecon and Radnorshire (Mr. Williams) on introducing the debate.
I am sure that my hon. Friend the Member for Loughborough (Mr. Reed) agrees, but is it still valid to suggest that, as well as debt relief, we must bring peace to the various conflicts in Africa? One way of doing that is to ensure that the developed world pays for peacekeeping directly or, as in the case of Darfur, through the African Union. However, anyone who saw Hilary Andersson's "Panorama" report on Monday will understand the dilemmas of a force that is too small trying to deal with an enormous problem. We must address that issue urgently.
Mr. Reed : I am grateful for that intervention. I know that my hon. Friend has visited Sudan at least once, and probably twice, and that he knows the situation well.
That brings me to an issue that I want to develop a little. As secretary of the all-party HIPC group, I recognise that we need a multi-faceted attack. We need the trade justice movement, and many countries, including our own, to increase the aid that they provide. Last night, during the Prime Minister's speech at the Guildhall, I was interested to hear about a modernised United Nations playing an increasing role. That is the means that we must all use to make our contribution.
However, we are talking specifically about the debt part of the campaign, and, as the hon. Member for Brecon and Radnorshire mentioned, the 150 or so NGOs that have come together under the Make Poverty History
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in 2005 banner recognise that that is only one part of it. Nevertheless, it is crucial, because the matter has become very technical.
I recall from 2000 that the campaign set itself a very tight deadline—it was going to disband after 2000. Jubilee 2000 did its campaign work and disbanded, and there was a general sense that we had achieved a great deal. The headlines were good. The $100 billion of debt relief had been announced and it felt as if individually we had made an enormous contribution. However, part of the problem is that although the campaign did not disappear, because the same people are still campaigning, the mass movement disappeared, thinking that we had achieved a great deal.
The reality is that for many countries the HIPC initiative has not meant a great deal because of its complexities. Of the $100 billion that is always talked about, I think that only $29 billion has so far been delivered, because of the complexity of getting to the decision point and the completion point. Some $24 billion is still to be achieved, which I think will probably happen in the short to medium term, but in the long term we are still left well short of the $100 billion that was offered.
I must congratulate this Government, as I am sure most hon. Members will, as we and Canada have taken a lead on the issue and the agenda. People such as those who were at Birmingham a few years ago should be referred to at this point. As the hon. Member for Brecon and Radnorshire said, the G8 used to be a self-congratulatory club of the leading economies in which issues such as this were not even discussed. I hope and understand that, fortunately, it will now be top of the agenda for the duration of the presidency next year. The fact that the issue is up there, that there is a Commission for Africa and that other things are going on shows that we have made progress.
The reality is that the vast majority of the complexity and the difficulties are caused at World Bank and IMF level. Most bilateral debts with the G7 and G8 countries have been written off, but this is a question of trying to get into the complexity of how the World Bank and IMF operate. It is at that level that we need to work more closely together to ensure that the multilateral debts are written off.
I am sure that most hon. Members who are present will have visited many countries that have benefited. If not, I am sure that they have seen other programmes. I know from my brief experience in Ethiopia last year that the sustainability is not that wonderful, even when the country has reached decision point. The collapse of coffee and other prices last year and the year before had an enormous impact on local economies. Even though Ethiopia was one of those countries at the forefront of its debt relief, the benefit felt by its ordinary citizens was fairly minimal because of the collapse of coffee prices. That is why, on its own, debt relief is not enough; it must be tied in with the Trade Justice Movement and aid. What we saw in Ethiopia was a clear example of that.
I visited a fair trade coffee grower and the difference in the amount of money that that individual farmer received compared with that received by one who was selling coffee and goods direct to the market was enormous; they were probably receiving about three or four times more. Sometimes we pay exactly the same price, but 10p or 15p
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more gives an enormous benefit to an individual farmer. That shows that even if we cannot change the world overnight, at least we can make the world better, one cup of coffee at a time. I often say that to people when they feel daunted by the prospects of trying to deal with the HIPC initiative.
We have good organisations in Loughborough—Christian Aid and others—that work closely together in the constituency. They often have lunches, for example. Sometimes it is difficult to get over the complexity of the decision-making process, but it is possible for individuals to start to make a small difference, one cup of coffee at a time.
A number of organisations have been lobbying quite heavily on the issue, such as Oxfam and others. They produced a paper in October entitled "Fools gold", which puts the case for 100 per cent. multilateral debt cancellation for the poorest countries. I will briefly raise a number of points from it in the hope that the Minister will respond to them.
As the hon. Member for Brecon and Radnorshire will know, there has always been debate on which countries should and should not fit the HIPC definition. We often talk about the 42 countries, but, using different definitions, some feel that there should be slightly fewer and others that there should be slightly more. I would be interested to hear what the Minister has to say about the other low-income countries that would need additional resources through debt relief and aid to reach their millennium development goals.
The other point is that debt relief should not be financed through the existing aid budgets. I seek an assurance from the Minister that that is so in the case of the UK and also through the IMF. Debt relief should not be confined to the HIPCs; it should be extended to other countries, where possible.
As my hon. Friend the Member for Stroud (Mr. Drew) said, it is difficult to get to the decision and completion points in countries where there is conflict, but I hope that we can find other ways to ensure that debt relief, or its equivalent, gets through to the most vulnerable people. Things are particularly bad in war-torn countries or where there is conflict, so we need to find ways of ensuring that it gets through in those places. I am not sure that we have a complete answer on that.
Oxfam also suggests that we need to move things forward in countries with the greatest human development needs. That term also relates to places that suffer from conflict and deprivation.
Finally, there must be a fair, transparent and comprehensive international insolvency process. This is an interesting idea. Some proposals that get floated have little support at the beginning, such as the Chancellor's international finance facility. Support for that, however, is gaining momentum not only in this country—I am glad to hear that the Liberal Democrats are supporting it, and I believe that the official Opposition do, too—but internationally, as 40 or 42 countries have already signed up in principle.
I asked a question about that recently. I want to know how far those countries have gone towards promising to reach the $100 billion a year that is needed. I also want to
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know what time scale we are working towards in getting the IFF up and running. There are already some pilot projects, but at what stage do we say that we have completely achieved our aim and which countries have promised real money rather than letters of intent and good wishes?
So far, the picture has been mixed. There was a strong sense of purpose among those involved in the non-governmental organisations, the Church groups and civil society who put this matter at the heart of the agenda in 2000. We also congratulate the Government on what they have achieved with international partners to take things forward, but the devil is in the detail with HIPC. Things have not worked as well as they should have because of complexities and difficulties and because of the restrictions that the IMF and the World Bank have put on some programmes.
Uganda is often cited as the best example of debt relief working well. I spoke about this to the Ugandan high commissioner only a couple of weeks ago: where debt relief is directly related to Uganda's primary school building programme, it is possible to see in human terms what debt relief is all about. It is a great joy to see that, instead of the piles of documents, which each of us has seen, on the complexities of the HIPC arrangements.
I know that this is a complicated world, but let us try to look at these matters from the point of view of the person receiving the benefit upwards, rather than downwards from the perspective of the bankers, the IMF and the World Bank. We should simplify the process and get aid through by sustainable debt relief in the long term. We should use the momentum that we have to ensure that we make progress on this matter, so that we do not return to it in 20 years and say, "More could be done." I will not be around then, and I am sure Sir Bob Geldof hopes that he will not have to make another Band Aid record.
2.38 pm
Tom Brake (Carshalton and Wallington) (LD): I congratulate my hon. Friend the Member for Brecon and Radnorshire (Mr. Williams) on securing the debate. His timing is excellent. The United Kingdom's presidency of the G8 starts on 1 January. The Government's thinking about what they want to prioritise during their presidency must therefore almost be set in stone by now, so I hope that the Minister will be able to set out in detail what the UK will seek to achieve in international development terms.
I welcome the Minister's presence, and I also want to thank another member of the Government for his interest in and commitment to resolving the global debt crisis. I refer to the Chancellor, who has given support to innovative thinking on how to build the political will for large-scale debt forgiveness in the form of the international finance facility. That represents the most sustained engagement of a national Finance Minister globally. That must be welcomed.
As my hon. Friend said, the Liberal Democrats support the Government's efforts on the IFF, among other things. We welcome the Chancellor's announcement—technically it is a re-announcement—that the UK will commit up to £100 million a year to write off its share of the debt owed to the World Bank by up to 30 of the world's poorest countries.
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The IFF comes with a health warning, to which I referred in Department for International Development questions last week. I understand that France and possibly Canada are supporters of the initiative, along with a number of other countries that might expect to benefit from the IFF. Unfortunately, as far as I am aware, the world's main player, the United States, remains opposed. I hope that the Prime Minister had an opportunity to raise the issue during his recent meeting with President Bush, and to encourage the US to express greater support for the initiative. Without the commitment of the US, the IFF will find it difficult to raise the significant additional sums that will be required to ensure that the millennium development goals are met.
We welcome the momentum that was built up at the October meeting of the IMF, the World Bank and the G7 Finance Ministers in Washington. At the end of that meeting, the Chancellor spoke of a growing consensus around 100 per cent. debt reduction. However, we need to monitor closely the development of that consensus. For example, in the weeks before the meetings to which the Chancellor was referring, the US Government floated for the first time a proposal to cancel 100 per cent. of the debts for up to 42 countries in the HIPC initiative. However, the US proposal envisaged a reduction in aid budgets in order to fund debt cancellation, so it did not include any new resources for poor countries.
I am sure that that way of financing debt reduction would not be acceptable to the UK Government. Again, there may have been an opportunity for the Prime Minister to raise the issues with the President, and I hope that the Minister will tell us whether any such discussions took place. Debt cancellation cannot replace aid. In fact, the cancellation of debt must be combined with more and better financial assistance for development so that poor countries can secure a sustainable exit from debt.
That is just one of the aspects of the debt cancellation agenda that needs to be monitored closely. The nature and shape of how we go about cancelling debt will be critical to our capacity to contribute to alleviating global inequality, so in addition to securing top-line political commitment, we need to ensure that that commitment translates into effective, sustainable and pro-poor policy and practice.
A number of other features will be critical to effective debt cancellation. First, debt cancellation must be pursued by fair and transparent means. The task of calculating how much debt should be cancelled must no longer be left to creditors concerned mainly with minimising their own costs. Instead, we need a fair and transparent international process to ensure that human needs take priority over debt repayments. Of course, that will be less critical if the international community adopts a policy of 100 per cent. debt cancellation, but even then, we will need to agree the criteria according to which countries will be included in the scheme. The debt sustainability ratio that is currently used is not sufficient, as my hon. Friend pointed out.
According to the World Bank and IMF, to which the G8 has effectively delegated the operation of the current HIPC initiative, a poor country's debts are sustainable provided that the ratio of the total debt relative to annual export earnings does not exceed 150 per cent.
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That is the target for which the bank and the fund aim when assessing how much multilateral debt can be written off, taking into account the bilateral debt cancellation promised by sovereign creditors such as the UK. It is clear, however, that even by that very narrow financial definition, at least 16 of the countries currently in the HIPC initiative will still have spiralling and unsustainable debt burdens after receiving all the relief currently available.
Most importantly, if even the most basic development targets, such as the internationally agreed 2015 millennium development goals, are to be met, no debt repayments can be sustained, given that poor countries desperately lack the resources that they need to meet those goals. In fact, it would make more sense to link debt to the achievement of the millennium development goals than to the ratio currently used. Furthermore, it will make no sense at all and will not be fair to poor countries, if they are still required after having received all the assistance possible under HIPC to service debts to the rich world at the expense of vital expenditure on basic services such as health and education.
The second of the two issues associated with debt cancellation that needs to be monitored is conditionality. International institutions such as the IMF and the World Bank must stop asking poor countries to jump through hoops in order to qualify for debt relief. For instance, poor countries should no longer have to privatise basic services as a condition for getting the debt relief that they so desperately need. By agreeing to cancel their share of multilateral debt and taking a lead on the issue generally, the UK Government have played an important part in breaking the logjam that has prevented international progress on debt cancellation. The next step is to sustain that commitment and for the UK to convince its global peers to follow suit and ensure that the way in which debt is cancelled is the most effective in tackling poverty and delivering on the millennium development goals. It is a commitment to meeting the goals that should be driving us.
As we all know, in 2000, the international community committed itself to meeting eight goals by 2015. They ranged from halving extreme poverty and hunger to securing universal primary education and from reducing gender disparities to reversing the spread of AIDS. These are eight crucial goals that provide the framework for our efforts to cancel debt and increase aid, and around which we desperately need to generate an increased sense of urgency and importance.
We should be looking not to 2015, but to 2005, which is a crucial year for the fight against poverty—a year of challenge and opportunity. In September next year, the international community will return to New York to review its progress in meeting the millennium development goals. I hope that the Minister will say how he expects the Commission for Africa's work to feed into that process and what organisation at the conference he expects to ensure that any recommendations made by the commission are followed through. At that meeting, we will clearly need to consider whether we are on target for 2015.
However, 2005 is the first date of importance, because the gender equity target is due for that year. As I have mentioned in other debates, my visit to Ghana has led
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me to think that there is no prospect whatever that it will meet the gender equity target. That is true not only of Ghana, as 60 per cent. of developing countries are unlikely to meet that target on present trends, and one has to doubt whether they will be in line to meet it by 2015. That is clearly a bad start, and it is shameful that there has not been a public uprising to respond and to tackle the issue.
Primary enrolments are going up in developing countries, but more than 100 million children did not go to school this morning. Many hon. Members participated in the event on those matters a couple of months ago. Our education goals require 80 million more primary school places in Africa alone over the coming decade. At the current rate of progress, more than 70 countries will fail to achieve universal primary education by the target date. In sub-Saharan Africa, we will not achieve what we have committed ourselves to achieve by 2015 until 2129 at the earliest. That is a very long way off. At our current rate of progress, as I am sure the Minister knows, we will fail to meet the agreed targets for all the other goals.
Next year's conference to review the millennium development goals will occur in September, when the UK will preside over two of the world's most important multilateral forums—the G8 and the European Union. As my hon. Friend the Member for Brecon and Radnorshire said, CAP reform must feature significantly in the UK's presidency of the EU, as that can deliver substantial improvements to quality of life and well-being in developing countries. Next year presents an exceptional series of opportunities for the UK to take the lead in facilitating international action to cancel poor country debt, and to revitalise commitment and action on meeting the MDGs.
Delivering on those goals does not require a wonder cure or a technological breakthrough; it requires political will. The Liberal Democrats believe that the MDGs can be met and that the UK can play a bigger and more effective part in working for a better world. The Government have demonstrated their commitment by advancing solutions to the global debt crisis, but as hon. Members have said, resolving the challenge of developing country debt, important as it is, will not in itself be enough.
The Liberal Democrats believe that the Government need to use the unparalleled opportunity that they have been granted for international influence in 2005 to secure commitments to more and better development assistance and trade reform. We also have some ideas for UK-led international action, using the G8 and the EU, on HIV/AIDS, arms control, the environment and increasing corporate responsibility. We will return to those issues in the next couple of weeks.
Decades of effort to tackle global inequality remind us of the interrelatedness of the challenges that the developing world faces. As a result, we need comprehensive approaches that address the problems from a range of angles. Cancelling developing country debt is a crucial part of that comprehensive plan. As a result, the Liberal Democrats will support the Government's stated efforts to cancel debt and will encourage other players in the international community to do so, too. We will monitor closely the progress and
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outcomes of the Government's efforts. Finally, we will look for the same effort from the Government on the other challenges related to global poverty—now, in 2005, and beyond.
2.52 pm
Mr. Alan Duncan (Rutland and Melton) (Con): I thank the hon. Member for Brecon and Radnorshire (Mr. Williams) for initiating this debate. It is timely, because 2005 promises to be the year when the poor of the world find out whether the Prime Minister's bold words are matched by action. In April, the Commission for Africa will publish its report. In July, the UK will host the G8 summit in Scotland and begin its six-month presidency of the European Union. In September, a special UN summit will meet to review progress towards the 2015 millennium development goals. If we are serious about meeting those goals, then at Gleneagles next year Britain must take the lead in pressing for better aid, freer and fairer trade and faster and deeper debt relief.
Britain possesses a unique ability to facilitate action through a number of international organisations. We are the only country that is a member of the G8, the EU, the Commonwealth and the Organisation for Economic Co-operation and Development, as well as a permanent member of the UN Security Council and a major player in the voting councils of the International Monetary Fund and the World Bank. In the past, we have used that unique position to set the international agenda on development issues. Next year, we have the opportunity again to show global leadership in pressing for action on multilateral debt relief and for freer and fairer trade.
As the hon. Member for Loughborough (Mr. Reed) said, July 2005 also marks the 20th anniversary of Live Aid. That astonishing event raised £30 million for famine victims in Ethiopia and demonstrated yet again the remarkable generosity of the British people, but every year since 1985, Ethiopia has sent back to rich countries more than twice that amount in debt repayments.
Every year, the countries of sub-Saharan Africa—the world's poorest region—spend more than £7 billion on debt repayments. Despite the progress that has been made, many countries are still spending more each year on debt service than on health care and education. Clearly, the current debt relief process needs radical reform. The G8 summit next year provides us with the opportunity to secure an international commitment to achieve that reform. As U2's Bono has said,
Britain has an excellent record on debt relief. In government, the Conservative party cancelled £1.2 billion of debt owed by the world's poorest countries. It was a Conservative Chancellor, Nigel Lawson, who initiated the first round of bilateral debt relief in 1988, and three years later, John Major led the international community in securing agreement for deeper and more comprehensive debt reduction.
My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was a great champion of debt relief long before it became a high-profile public issue. In 1996, he played a key role in establishing the heavily indebted poor countries initiative, which began the
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process of cancelling debt owed to multilateral institutions. Even the right hon. Member for Birmingham, Ladywood (Clare Short) said:
"There is no doubt that the previous Conservative Government took a strong position on debt relief."
We are grateful for her recognition of that.
We have continued that record in opposition. We backed Jubilee 2000, which successfully mobilised many organisations and individuals, including all the Churches of the United Kingdom, to campaign for debt relief. Where Labour has built on the previous Conservative Government's strong record by continuing and, I am happy to say, intensifying debt cancellation, we have been and will remain supportive. We certainly welcome the Chancellor's decision to cancel the bilateral debts of the poorest countries, but there is still much to be done on debt owed to international institutions such as the IMF and the World Bank.
The enhanced HIPC initiative has made a good start in delivering multilateral debt relief. By and large, it has succeeded in ensuring that the money that is released is put to good use and does not line the pockets of corrupt dictators and arms dealers. Well managed debt relief has produced a number of success stories. Uganda used the money to double primary school enrolment and invest in a successful HIV/AIDS plan. Mozambique's debt relief has enabled its Government to immunise 500,000 children, and Benin eliminated school fees in rural areas, allowing thousands of children to attend classes for the first time.
The slow and cumbersome structures of the HIPC initiative do not, however, reflect the urgent need for faster, wider and deeper debt cancellation. Even after getting full relief under the scheme, many countries will still have difficulties in servicing their debts. In the face of a growing HIV/AIDS crisis, we cannot allow red tape and bureaucratic inertia to cost lives. Some much-needed reforms have been made. The two-year extension of the HIPC initiative announced at the 2004 Sea Island summit will potentially allow a further 10 eligible countries to benefit from relief. Additional top-up relief will help countries that have been hit by deteriorating terms of trade.
The debate will turn to whether we should go much further and match the 100 per cent. bilateral cancellation already pledged with 100 per cent. multilateral cancellation for the poorest countries. The plan that the Government announced two months ago proposes just such a radical widening of the HIPC initiative. The Government must champion that plan in the strongest of terms. We cannot afford to miss next year's golden opportunity to generate an international consensus in favour of extending multilateral relief for the poorest countries.
Any relief on debts owed to the IMF should be funded, as the Government have suggested, by the sale or revaluation of IMF gold reserves. New funding commitments would be required to secure 100 per cent. cancellation in the case of debt owed to multilateral institutions, such as the World Bank and the African Development Bank. We are pleased that the Government are pledging to pay our share of the debt service owed to those institutions on behalf of eligible countries. They must now also be forceful in securing similar commitments from the other G8 countries.
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At the same time as pressing for more relief, we must take the long view, and work towards achieving ongoing debt sustainability for poor countries. We must ensure that no country slips back into heavy indebtedness after receiving relief. We must also ensure that lending is more responsible than it has been in the past. Our Export Credits Guarantee Department has pledged to ensure that its credit is not misspent. Next year, we must push other countries to make similar commitments.
Next year will be crucial for shaping the path of debt relief for years to come. We also know, however, that it will be only a first step towards achieving the millennium development goals. People of poor countries possess the energy and dynamism to create wealth and work themselves out of poverty, but that potential is stifled by western protectionism in too many cases. Countries that secure good governance, pursue sound macro-economic policies and respect property rights should not be penalised by the protectionist approach of the common agricultural policy.
It is perverse to give poor countries aid and grant them debt relief, but impose restrictions on their produce. Most HIPCs depend on single commodity exports such as gold, copper, cotton, coffee and tobacco. Falling agricultural commodity prices have damaged the ability of almost all HIPCs to earn foreign currency and repay their debt. Reform of international rules to promote free trade and open markets would allow them to increase their proportion of world trade and help them to repay their debts. As well as being good news for British consumers, better access to western markets could be worth tens of billions of pounds for some of the poorest countries. Reform of the CAP could save the British taxpayer up to £3 billion each year. Next year, we should look beyond debt and the G8 meeting. Britain must use its EU presidency to push for a reduction in European tariff barriers, thorough reform of the CAP and a more efficient, poverty-focused European aid budget.
In Iraq, we have recognised the principle that the victims of murderous dictators who rack up huge debts should not be made to pay for their oppressors' follies. That principle should be extended to the countries of Africa. The sins and mistakes of the past should not be allowed to blight the future of an entire continent. Where stable civilian Governments have replaced military regimes, generous and carefully monitored debt relief should be forthcoming. Where people attempt to work and trade their way out of poverty, they should be allowed fair access to our markets. While the Governments of other developed nations drag their feet, Britain must push firmly for action.
The decisions on debt and trade that will be taken next year in the luxurious surroundings of the Gleneagles hotel will affect the lives of millions of the poorest people on the planet. For their sakes, we must make sure that we take the right decisions.
3.2 pm
The Parliamentary Under-Secretary of State for International Development (Mr. Gareth Thomas) : I, too, congratulate the hon. Member for Brecon and Radnorshire (Mr. Williams) on securing the debate, and I join him in congratulating the all-party group on
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heavily indebted poor countries on its campaigning work in the House on these topics. I welcome his decision to congratulate, rather than ape, Bob Geldof, Fran Healy and others, who have produced the new Live Aid single. I am sure that he, too, will welcome the decision of the Chancellor of the Exchequer to give back the moneys from VAT. I take this opportunity to congratulate Woolworths, which has, I believe, decided not to charge its usual levy for distributing the single. I hope that other distributors follow its example.
We know that one in five of the world's poor lives in abject poverty. We know also that roughly 1 billion people do not have consistent access to clean water and do not have the resources either to afford essential medicines that we take for granted, or, as the hon. Member for Carshalton and Wallington (Tom Brake) said, to send their children to school. Furthermore, some 6 million people die from AIDS, TB and malaria every year.
Those statistics are appalling, but nothing helps one to understand the impact of those epidemics quite like seeing it on the ground. It was sobering for me to see the project supported by Christian Aid and the South African Council of Churches in the Dukathole township in Germiston, just outside Johannesburg, in which a small group of remarkable women supports orphans and people dying of AIDS and TB, as well as those—often grandmothers—who look after the orphans and make sure that they go to school. Those women do a remarkable job.
We know that development assistance works. Kenya, for example, has taken the decision to abolish school fees. The UK has provided £10 million to help to pay for extra school places and to provide proper accommodation for the extra 1 million children who now want to come to school to learn to read and write—who want their opportunity to understand the world.
Another instance of development assistance working is the eradication of polio. The number of countries infected with polio has decreased from 125 to six. We are within sight of the fantastic achievement of the eradication of polio. Perhaps that will be achieved as early as the end of 2006, if we can continue not only the development assistance but the targeted effort to eliminate polio—to get the polio vaccine to the most affected areas and continue to bear down on the epidemic.
I saw for myself, on a visit to India, how the development assistance money for targeting polio is being spent. I pay tribute to the work of the Government of India, but also to Rotary International, which supports that work. I am sure that the House will be pleased to know that three children in a slum in east Delhi were inoculated against polio thanks to my efforts. I am not sure who was most terrified—the children, who screamed all the time while I was trying to administer the inoculations; the supervisors, who were with me; or the mothers. On balance, it was probably the mothers. The work is making a huge difference and we are in sight of the eradication of polio.
Hon. Members have spoken of the huge scale of the challenge of eliminating global poverty, which places on the developed world a moral responsibility to do more
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to that end. It is in our self-interest to act to eliminate poverty, because disease, political instability and pollution do not stop at national borders. What happens in developing countries has an impact on the UK and other rich countries.
The hon. Member for Brecon and Radnorshire was right to secure the debate and highlight the fact that next year, as Britain takes the G8 presidency, and in the second half of the year, when it takes the presidency of the European Union, we shall have an opportunity to move the agenda forward. Before we take on the presidency of those organisations, the Commission for Africa will report in the spring, while in September the UN millennium declaration review takes place.
My right hon. Friend the Prime Minister created the Commission for Africa, demonstrating his personal commitment to look for solutions to its problems. That commission is bringing together leaders from the developed and developing worlds—Africa and other continents—and from civil society, as well as business representatives and Church leaders. The task of the commission is to try to understand why more progress has not been made in Africa and what can be done to move things forward. The commission intends to bring forward a comprehensive plan for the international community to support African development. Its report will be published early in 2005 and will be presented to the G8 for discussion at the Gleneagles summit in early July.
The millennium summit in 2005, reviewing progress towards the millennium development goals, is another key point. At the current rate of progress some of those goals will not be met until 2165—150 years too late. That summit is the opportunity not only to review progress, but to accelerate the political momentum and the political will that are needed to make further progress.
Professor Jeffrey Sachs will publish the findings of the UN's millennium project next year. It is already clear that the international community will have to provide more financial assistance if we are to get back on track to achieve the millennium development goals by 2015. Next year will provide the international community with an important agenda, which could be set by the United Kingdom, to achieve real change for the world's poorest people.
We know that more aid needs to be provided and that there must be a dramatic increase in assistance. If we are to achieve the millennium development goals, the World Bank and the UN have estimated that $100 billion will be needed each year over the next 11 years. However, only $50 billion is being provided at present. One of the things that the UK has already done to demonstrate leadership on the issue is to give the Department for International Development its largest ever increase in spend—9 per cent. each year over the next three years. If we continue to make progress at that rate, we shall hit the UN's 0.7 per cent. target by 2013.
Tom Brake : The UK's contribution is clearly significant, but it is only a small percentage of the total budget. The Minister may be about to refer to this, but what feedback are we receiving from the Americans on the role that they might be willing to play?
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Mr. Thomas : I am grateful to the hon. Gentleman for leading me into my next remarks. We need to give credit where it is due and to recognise that the Americans have significantly increased their assistance, especially on AIDS. We must give credit to President Bush, in particular, for his lead in respect of increasing funding to the global fund and for other AIDS-related work.
The other specific point that I want to flag up in the context of the need for more aid, to which the hon. Member for Brecon and Radnorshire alluded, is the international finance facility. It is the most developed idea for raising the additional finance necessary to meet the millennium development goals. He may know that the Global Alliance for Vaccines and Immunisation—GAVI—has approached the United Kingdom to explore whether the IFF's front-loading principles might be applied to GAVI to increase the resources available for child vaccination and immunisation. We are collaborating with the French and the Gates Foundation to take that initiative forward. We hope to launch that mini-IFF in the early part of next year and I hope that it will serve to provide additional political momentum for making the case for a global version of the IFF.
The hon. Member for Rutland and Melton (Mr. Duncan) made particular reference to the need to make progress on trade. That is absolutely right, but one outcome that would show that the international community recognised the serious situation of Africa is securing a positive outcome at the World Trade Organisation ministerial meeting in Hong Kong in December. It is true that, in the past 10 years, despite rapid growth in world trade, Africa's share of world trade has halved. We accept that more progress needs to be made on this issue. Studies have shown that, if we can achieve an ambitious outcome from the WTO talks, it will produce an annual global benefit of between $250 billion and $600 billion, lifting huge numbers of people out of poverty.
The framework agreement that was reached in August this year offers encouragement that a deal is possible next year. We shall use the opportunities of the G8 and the European Union presidency to make advances and build further political momentum to make the progress that we know is necessary.
Next year we hope to focus on improving the effectiveness of the aid effort, which can be hampered when donors do not work together in developing countries. We will be focusing on better harmonisation and co-ordination of the international aid effort. A high-level forum in Paris next March will provide another important opportunity to advance the case for and the practice of development assistance.
As my right hon. Friend the Prime Minister has said, having the G8 presidency gives us the opportunity to renew the international commitment to making progress on two key issues: Africa and climate change. The G8 is required to report progress on Africa against the commitments in the Africa action plan in 2005. We will use that and the Commission for Africa report to identify gaps in international policy and push for future commitments, including actions to boost aid for Africa through debt relief and more resources elsewhere.
We believe strongly that more needs to be done on debt—I agree with the hon. Member for Brecon and Radnorshire—because we need to ensure that no
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country is hindered by the burden of unsustainable debt, which we know is already experienced by many countries, in respect of making progress towards the millennium development goals.
As a number of hon. Members have said, the Government have been at the forefront of promoting further progress on debt relief. We continue to press for the full financing and implementation of the HIPC initiative, which is delivering real benefits to some of the world's poorest countries. The hon. Member for Rutland and Melton mentioned a number of them, but a further example is perhaps worth bearing in mind—that of Ghana, which, because of the debt relief that it has secured, has been able to allocate more funding for health services, including exempting pregnant women from paying charges, and to generate more investment in schools, roads and water.
Some $70 billion of debt relief is being provided under the HIPC initiative to some 27 countries, helping to increase social expenditures by some $4 billion since 1999. We want more progress on the HIPC initiative, and I am sure that hon. Members will be pleased to know that it is being extended for two years to allow a further 10 countries, potentially, to benefit from it.
Mr. Williams : The hon. Gentleman makes the case for extending debt relief, but surely that depends on the success of the IFF. Indeed, the hon. Member for Loughborough (Mr. Reed) asked how many countries have gone beyond signing up to the IFF by making the financial contributions required to achieve the outcomes.
Mr. Thomas : The two initiatives are separate but interconnected. We want more progress on debt relief and support for the IFF at the same time, so we continue to argue the case for the two to go hand in hand. The hon. Member for Carshalton and Wallington asked how many countries have signed up to support the IFF. A considerable number have done so and I am happy to write to the hon. Gentleman with the exact details of that.
We want to use the build-up to our presidencies of the G8 and the European Union to get additional countries from the G8, and other rich nations, to sign up to the IFF. That is why the GAVI pilot—the so-called mini-IFF—provides an opportunity to show how the IFF programme would work, operate on the ground and deliver the real, tangible benefits that all parties recognise it could deliver.
We want to go further on debt relief and we need to ensure that progress is made on multilateral debt relief. The IMF already has the resources to go beyond HIPC and cancel, through better use of its gold reserves, 100 per cent. of the debt owed to it by eligible low-income countries. We also want further debt relief from the World Bank and the African Development Bank. That will need to be funded through additional donor resources. We are committed to paying our share—just over 10 per cent.—of the multilateral debt service costs to those banks for those low-income countries that have strong public expenditure management systems in place.
My hon. Friend the Member for Loughborough (Mr. Reed) asked how that additional relief will be funded. The comprehensive spending review, which
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included a large increase in aid assistance for DFID, earmarked some of that funding for making progress on debt relief as well as for traditional development assistance. We also agree that debt relief needs to be extended beyond the existing heavily indebted poor countries. The new United Kingdom initiative to which hon. Members alluded will help to pay our share of multilateral debt servicing for all low-income countries with sufficiently strong public expenditure management systems in place. We can then be sure that those resources will be used for poverty reduction.
My hon. Friend alluded to countries where there is conflict. He was right to say that they present the greatest challenge to making progress on the millennium development goals. We estimate that in countries where the policy environment is most challenging, there are more than 340 million poor people. We are seeking to bring donors together early next year to consider how to make more effective the development assistance that goes to those countries. Given the challenge of not always being able to work through Government assistance, perhaps because of corruption or conflict, we need to consider how we can be more effective in such policy environments.
My hon. Friend the Member for Stroud (Mr. Drew) spoke of the need for more ceasefire monitors, particularly in Sudan. He will be interested to know that the UK has funded African Union ceasefire monitors there. We committed some £2 million to that; we were the first donor to do so. I hope that my hon. Friend will be reassured to hear that an additional 3,000 ceasefire monitors are due to be deployed there shortly.
Mr. Reed : Clearly, the individuals in those countries that are in conflict, particularly Sudan, are in the worst situation—because of the conflict, because of
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corruption or even because of an inability to get aid through to them. What further steps does the Minister believe the Government should take, particularly in Sudan? I have received a number of e-mails from constituents on the subject—as must the Minister, in light of the "Panorama" programme—so how much further does he believe the Government can go to bring not only lasting peace, but the protection necessary to allow aid to get through to those who are most severely affected?
Mr. Thomas : We continue to put pressure on the parties in Sudan for an immediate ceasefire in order to respect the needs of those who have been displaced. We have already provided some £62.5 million of humanitarian relief, and the Prime Minister has committed us to doing more. We also seek to build the capacity of the African Union, so that it can better provide a response in places such as Sudan. Earlier this year, for the first time, it deployed troops under its banner in Burundi, helping to move things forward there.
I conclude by thanking the hon. Member for Brecon and Radnorshire for this timely debate. The hon. Member for Rutland and Melton challenged the Government to do more on international development, debt relief and the IFF. We accept the challenge. We have already shown leadership not only by launching the IFF, but by the substantial increase in assistance in the development budget and the lead that we have given in Europe on the need for more progress on trade. More needs to happen, and we on this side of the House continue to seek opportunities to build the political will and momentum to achieve just that.
3.24 pm
Sitting suspended.
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