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Debt Relief (Developing Countries) Bill

It is a pleasure to speak on Second Reading of the Bill. I add my words to those of the hon. Member for Hazel Grove (Andrew Stunell) in wishing the hon. Member for Denton and Reddish (Andrew Gwynne) well, and I congratulate the hon. Member for Northampton, North (Ms Keeble) on her long-standing interest in the matter and on presenting the Bill so effectively this morning. She is absolutely right that there is a cross-party consensus and real concern about debt. We believe that the Bill is extremely well intended and addresses an important issue, and we are grateful for the opportunity to examine it closely to see what we can do about the problem. In our view it should have an opportunity to go to Committee, and we hope that it will have a fair wind, to use the words of the hon. Member for Hazel Grove. I should explain the Conservative party's long-standing interest in debt relief. I know that there is consensus on the matter, but it is worth pointing out that our interest has long existed. In 1988, the previous Conservative Government negotiated the Toronto agreement to reduce debt payments by a third, and in 1990 they negotiated the Trinidad terms to reduce them by two thirds. In 1996, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), as Chancellor of the Exchequer, was much involved in the heavily indebted countries initiative to write down debts by 80 per cent. In the course of those initiatives, the Conservative Government unilaterally wrote off virtually all Britain's aid loans— £1.2 billion-worth, which was the single biggest contribution to easing the debt crisis. I pay tribute to the current Government, too, for their work in building on that, and there is consensus on supporting debt relief. It is perhaps worth my saying a word or two about why we believe that debt relief is so important. I make a comparison with what happens in market economies, in which individuals and companies can write off bad debts and start again. Countries cannot do that in the same way. Their debts cannot be written off automatically through bankruptcy or a voluntary liquidation regime, so they remain. They are incurred by impoverished countries, usually as a consequence of corrupt and incompetent rulers, but repaid by the population, who are both blameless and impoverished. It would be interesting if the Economic Secretary could say something about the Government's position on sovereign debt work-out mechanisms. I know that they were raised at the Doha financing for development conference in November and December 2008, at which there was an attempt to find a fair mechanism for developing countries that could not repay their debts. I would be interested to know what the Secretary of State for International Development has done to pursue that matter. Individuals and companies in this country have a mechanism by which, subject to preferential treatment for particular entities, the pain can be shared among all their creditors, who each get a proportion of the debt repaid to them. Developing countries do not have that mechanism. Some creditors may voluntarily waive their rights, as certain countries have done. As the hon. Member for Northampton, North pointed out, a substantial number of commercial lenders have also done so. However, others continue to claim repayment of debt that cannot be afforded, and as I have said, there is no liquidation or administration procedure available. In many respects, one could describe the Bill as attempting to find such a mechanism, to prevent creditors that refuse to participate from benefiting from a free ride. I say that because countries could not repay any of their outstanding creditors without the steps taken by some of them to waive a substantial proportion of the debt. We need fairness for creditors, whether Governments or commercial lenders, who have taken a view that they will not pursue the full amount, which makes available funds that the more ruthless creditors can pursue. A central point is the effect that the Bill would have on developing countries. The hon. Lady mentioned Liberia, which is topical given the judgment at the end of last year and given that it featured heavily in the "Newsnight" report on the matter last night. It is clearly grossly unfair on the people of such a country, who are deeply impoverished, to find a substantial part of their Government's budget taken up in repaying aid over which they had no control and no say. That is at the heart of the Bill, and we share the concerns that drive it. We will support its Second Reading today. Although there is cross-party consensus, that should not prevent the House from examining various points in the Bill closely. The responses to the Treasury's consultation document raise a number of important points that we should consider with due care and attention. That is why it is proper that we have Committee stage, and I hope that the Government will be able to find time to ensure that that happens. There are essentially two big issues to consider, and although the Bill is not contentious, it raises fundamental questions. The fact that there is a consensus is all the more reason to scrutinise it properly. I turn first, because it is perhaps the simplest and quickest argument to summarise, to the fact that the Bill clearly affects contractual rights—that is the intention behind it. By and large, we in this country take a view that contractual rights should be respected. Contracts provide certainty, are part of our tradition and are one of the reasons why English law is a favoured choice of system throughout the world. It has clearly been to the advantage of the UK that we have a system that provides such certainty. Alongside the tradition of respecting the sanctity of contracts, we have the terms of the European convention on human rights, which of course are now protected by the Human Rights Act 1998. They include the protection of the right to property under article 1 of protocol 1 of the convention. The Government argue in their response to the consultation document that there are compelling policy reasons why contractual rights should be overridden, and to a large extent I have made the same argument in my remarks, as have other hon. Members. However, we should go into this matter with our eyes open. We should be aware that the Bill would disturb contractual rights, which has certain consequences. The Government say that the ECHR arguments can be overcome because there are compelling policy reasons. I do not dispute that, but it is right that we have an opportunity to debate such reasons in detail.