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Debt Relief

7. John Barrett (Edinburgh, West) (LD): What progress is being made towards ending the debt owed by the world's poorest countries. [8146]

8. Andrew Gwynne (Denton and Reddish) (Lab): If he will make a statement on his plans for cancellation of debt in the world's poorest countries under the UK's presidency of the G8. [8147]

The Chancellor of the Exchequer (Mr. Gordon Brown): Last month, G7 Finance Ministers agreed a detailed plan to match 100 per cent. bilateral debt relief with 100 per cent. write-off of multilateral debt cancellation for 38 countries. Eighteen countries will have their debts cancelled immediately at a cost of $40 billion.

I can also announce to the House today that the Paris Club has agreed in principle a further debt write-off of $18 billion of Nigerian debt which, with a buy-back of debt by the Nigerian authorities, will mean that there is 100 per cent. debt relief for Nigeria possible over the next six months. The Paris Club is now in negotiations with the Nigerians, and I believe that this is a significant advance, where we are backing reformers in Nigeria, writing off debt and enabling expenditures to go to health and education in that country.

John Barrett: I thank the Chancellor for that detailed answer and welcome any progress. He will know that some of the countries that have qualified for debt relief have had a bad track record in the realm of human rights. What mechanisms are in place to ensure that those countries that qualify for debt relief are also improving human rights for all their citizens?

Mr. Brown: Under the conditions that have to be met as part of the heavily indebted poor countries deal, countries have to prove that money is being used properly and that they are acting to make the economic reforms that are necessary. The hon. Gentleman is right. There is a new interest in human rights. There have been difficulties in, for example, Nigeria. We want to send out a message that those people who are prepared to tackle corruption, make economic reforms and go for economic development will be supported. That is why the deal that we are announcing today is important. In addition to the cancellation of debt for 18, and perhaps 38, countries that are part of the HIPC initiative, Nigeria, which is not a HIPC country—it is an International Development Association-only country—will also have its debts written off. The deal will give Nigeria and the reformers there 100 per cent. debt relief.
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Andrew Gwynne: I thank my right hon. Friend for his comments and commend his work on tackling poverty throughout the developing world. He is aware that Nigeria has had no new loans from the Paris Club since 1992 and has repaid $8 billion. Despite that and his welcome announcement, Nigeria owes $14 billion more than it did in 1992. Given the statement that he just made, will he continue to do all he can to convince both the G8 and our European partners that a fair deal for Nigeria is desperately needed?

Mr. Brown: I have just received the statement that has been issued by the Paris Club in the last few minutes, in which it announces that it is proposing to write off $18 billion of Nigeria's debt. Nigeria will then buy back the rest of its debt using its oil revenues, which will enable it to make progress. Detailed negotiations will still have to take place with the Nigerians, but I believe that this proposal represents significant progress from the position where Nigerian debt was rising. Its debt to the institutions that I have been talking about will now be reduced to zero.

Sir Patrick Cormack (South Staffordshire) (Con): As one who wholly approves of what the Chancellor has done and proposes to do, may I ask him what sanctions he has in mind if corruption should rear its ugly head again?

Mr. Brown: The hon. Gentleman makes an important point. We wish to bind the countries with which we are engaging to international rules, embodied in codes and standards, that will be accepted by rich and poor countries alike. At the centre of that process is transparency. He will know from his experience with the Inter-Parliamentary Union that, when there are effective Parliaments to monitor public expenditure, rather than rulers who refuse to disclose information about the use of money, we can make progress. I believe that rich countries, as well as poor countries, should accept the codes and standards of the World Bank and the International Monetary Fund. That would ensure a level of transparency that, to be honest, we never demanded 10 or 20 years ago. It is now right to demand it, however, and to enforce it. I believe that that is the best way forward and any work that can be done between parliamentarians across the world will make a huge difference as well. I welcome the hon. Gentleman back to the House.


9. Rosie Cooper (West Lancashire) (Lab): If he will make a statement on the effects of levels of employment on the UK economy. [8148]

The Economic Secretary to the Treasury (Mr. Ivan Lewis): There are 28.6 million people employed in the United Kingdom—the highest number on record—and we now have the highest employment rate of any of the G7 countries, and one of the highest in the European Union. Under this Government, employment has grown by 2.2 million in an economy that has seen the longest-ever sustained period of economic growth.
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Rosie Cooper: I thank my hon. Friend for that answer, which will be welcomed by the whole country. Will he make a statement about the effects of the new deal in my constituency? Having looked at the UK economy, I should like to concentrate on West Lancashire.

Mr. Lewis: The new deal has helped nearly 5,000 people in West Lancashire. Unemployment has come down by 43 per cent., and long-term unemployment by 56 per cent., in my hon. Friend's constituency since 1997. Nationally, more than 500,000 young people have been helped from welfare into work through the new deal. Every hon. Member knows the difference that this has made to the well-being of individuals, families and entire communities. Only 12 years ago, unemployment stood at 3 million, and we were told by the Conservatives that Britain could never have low inflation and low unemployment. Now they want to scrap the new deal. They might have a new generation of leaders, but they have the same old Tory values, without question—

Mr. Speaker: Order.

Mr. Rob Wilson (Reading, East) (Con): I visited the mental health resource centre in my constituency a few weeks ago. It is there to help people who suffer from mental illness to get back into work by giving them four hours work a week. Is the Minister aware that the rise in the minimum wage is affecting the ability of those people to work for four hours a week because it affects their benefits? Will he and the Secretary of State for Work and Pensions look into this issue to ensure that this unintended consequence of the rise in the minimum wage is eased for those people?

Mr. Lewis: Of course we will consider the issue in detail. However, if the hon. Gentleman thinks that the best way to support people with mental health problems and reintegrate them into the community is to abolish either the minimum wage or the new deal, he is on a different planet from the rest of us.

Miss Anne Begg (Aberdeen, South) (Lab): The unemployment rate in my constituency is below 2 per cent., which is as close to full employment as we are likely to get. This has caused a problem for many employers, because there is now a labour shortage in Aberdeen. What action will the Treasury take to encourage those who are presently economically inactive to get back into the workplace?

Mr. Lewis: I agree entirely with my hon. Friend. The Chancellor has made it clear that one of the priorities at the beginning of our third term is to look at people on incapacity benefit who are more than capable of re-entering the labour market. With support from the relevant agencies in local communities, it is possible to put together a package that will enable those individuals to have the confidence and skills to be able to re-enter the labour market. That is another reason why, instead of abolishing the new deal, we are extending it with the new deal for skills.

Mr. Tim Boswell (Daventry) (Con): Does the Minister agree that an endemic problem in the British economy is low and now declining productivity growth? Is it not
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important, if we wish to make sure that we avoid increases in unemployment, that on-costs are kept to a minimum? As the new face at the Treasury, will he be assiduous in reminding his colleague of the relevance of the overall tax burden and the effective marginal rates of taxation?

Mr. Lewis: I usually agree with the hon. Gentleman on most issues, but productivity is rising in this country—it only went down under the Conservative Government. If the argument about the consequences of the burden of taxation were true, why do we have the lowest inflation, the lowest unemployment and the most stable interest rates in the history of our country?

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