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UK Worldwide Interests

My Lords, I need to go carefully; I cannot match the elegance of my noble friend Lord Brooke of Sutton Mandeville. My noble and learned friend Lord Howe was, for a while, my ultimate boss, and though they are not now in their places, there have been two of my semi-ultimate bosses in the House today: my noble friend Lady Chalker of Wallasey, and my noble friend Lord Patten of Barnes. Since they are not here, but my noble and learned friend Lord Howe is, I will repeat a conviction I have had for many years: £1 spent on the Foreign Office is worth £2 spent on DfID. In considering resources, there will be general agreement that it is in British interests that the developing world, country by country, achieves that degree of economic development to bring it into the developed world, and that Britain is right to commit resources to the endeavour. Some countries successfully attracting foreign investment—a precondition of success for most—will get there by themselves, as did Japan and Singapore, and as will China and probably India. Many countries with less obvious economic opportunities—some beset by that description of market failure, so familiar to bureaucracy—need positive action by others. At present, we concentrate on the easy and historically less effective options of debt relief and aid. These were not the roads to the economic performance of the United States, Bismarck’s Germany, or ourselves—not forgetting the exceptional circumstances of the Marshall Plan. Aid has a role to play, but it is a limited role and more a matter of necessary alleviation than a sustainable solution. Trade is much more significant than aid, but not an easy option for developing countries, for where is the leverage in the cut and thrust of the marketplace? We might look at what lies behind the current negotiations on bananas and sugar. Finally, there is investment. Creative investment in the producers of goods and services was our way out of poverty, as defined by the World Bank today. Why should it be different for developing countries? However, investment does not feature highly, or at all optimistically, on the Government’s agenda—certainly not if we take the Africa commission’s report as a guide. Yet, in 1948–49, the then government set up the Colonial Development Corporation. I was with CDC, by then the Commonwealth Development Corporation, and that was when my noble and learned friend was my ultimate boss. Indeed, he once stopped me in my tracks by saying that he did not need a lecture on the constitution. Mind you, the point I was making was correct, but it did not happen to be in the Foreign Secretary’s brief, and, as is the way with Ministers who are lawyers, he knew how to defend himself. Where is CDC now, though? It has dropped ““development”” from its name. We do not hear of it. It lies low because of a failed government policy towards it. One suspects that the Government—at least, the Chancellor and the Treasury—would gladly be rid of it. Perhaps the Minister will be able to tell us whether Her Majesty’s Government consider that CDC is a significant resource in support of British interests overseas and to be nurtured; indeed, whether they have a policy towards CDC, or are simply leaving it to fend for itself under a false label of ““independence””. In pursuing the road to economic success, we can list countries such as South Korea, Taiwan, Malaysia and Thailand. They needed three primary resources. First was equity capital: capital that is willing to wait for its return, often at lower levels than those obtainable in western silicon valleys. In many countries, domestic savings will be insufficient. Foreign capital will be vital, and British equity needs to play its part. The second resource is people. Where equity is invested, particularly in start-ups, an arm’s-length relationship will be unsatisfactory. Partnership is needed, along with skilled people. Thirdly, Her Majesty’s Government need to be present on the ground to provide a continuity of relationship—as has been referred to several times in this debate—with developing-country governments. We are in the endeavour for the long term, and agreements will be needed to reinforce the prospects of economic success in places where legal systems lack certainty on contract, tenure, employment, tax, exchange controls and many other matters; for example, work permits for partners. If we are serious about our contribution to development, particularly that of Africa, we will redefine and change our policy towards the deployment of British resources. Our present analysis and programme lack both depth and credibility. Indeed, if we just wait until all the capacity-building that can be achieved proves both expensive and insufficient for economic success, as it has and will, and at the same time chip away at the cost of being present on the ground, we shall fail to serve both our own best interests and those of the developing world.