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Debt Relief (Developing Countries) Bill

We support measures to address this matter, for the reasons that I have been outlining. Questions still need to be answered to ensure that this Bill is the right approach, and I hope that we will be able to resolve those issues in Committee in the next few weeks. The concern is that the Bill will set a precedent for future legislation, although the Government are clear that that is not the intention. As the hon. Member for Hazel Grove pointed out, we want to be on the other side of the House in a few months' time, and we would want to ensure that any measures that we took were very carefully targeted. We all have a responsibility to be careful about the language that we use in this debate. Most of us instinctively feel that it is wrong for rich western financial institutions to seek to enforce debts against poor African countries. But I would also make the tough-minded but pragmatic and realistic point that this Bill is rightly carefully targeted and the Government—we support them in this—do not believe that there is a broad principle that rich western financial institutions should never be able to enforce debts against poor African countries. I hope that that position is supported across the House because if we ever expressed our views in that way, it could easily be interpreted as suggesting that the Bill could be extended in future. We have to make the realistic point that if we were to accept that broad principle, financial institutions would not lend to developing countries, and that would be a huge disadvantage and place enormous restrictions on the potential for growth of developing countries. In some quarters, that point may be controversial, but it is right to express it explicitly to provide some reassurance that the Bill is carefully targeted, very restrictive in some respects and should not undermine confidence in future. It is helpful to the success of the Bill to make that point explicitly and I hope that all parties will agree. I make that point partly in reference to an earlier intervention by the hon. Gentleman. We recognise that this measure needs to be calibrated correctly, and that raises various questions. I have highlighted the two principal restrictions—it only applies to HIPC countries and to debts that have already been entered into, and it is entirely retrospective in that sense—but I have some other questions that I would like the Minister to address if he has an opportunity. The group that attracts most ire—as the hon. Gentleman and the hon. Member for Northampton, North said—is the vulture funds. They are the institutions that have bought up the debt in secondary markets at a low price and then sought to enforce it. This issue was covered on "Newsnight" last night, and I expect that many hon. Members will have seen that. It is worth noting that, according to the impact assessment published by the Treasury, of the £145 million that is identified as being of benefit to the HIPCs that will be affected by this legislation some £78 million relates to original creditors, not the vulture funds. Assuming that every creditor that is not an original creditor is a vulture fund, that means that £67 million of debt has been bought on the secondary market. Those who responded to the Treasury consultation unanimously believed that no distinction should be made between original creditors and those who bought the debt on the secondary market, but this issue is worth exploring given that public concern is focused on vulture funds. One can see, morally and ethically, why that is the case, but perhaps the Minister could explain why the Bill does not focus specifically on vulture funds. The Treasury methodology used to produce the £145 million figure has been criticised. A previous consultation paper produced by the Treasury stated that the amount that the HIPC countries would benefit by was £254 million. There were arguments that that methodology was wrong, out of date and failed to address several points, and the Treasury acknowledges, in the response to the consultation paper, that it""remains true that any estimate of the effect of this legislation attempts to quantify an intrinsically uncertain process."" That flags up a degree of uncertainty, and I hope that we have an opportunity to explore that point. I would also like to touch on a question that other hon. Members have mentioned: will other countries follow suit? Our principal concern is the impact on developing countries, but there could be a commercial knock-on effect for the UK, were contracts simply to use a different form of law—for example, New York law. Whether that happens partly depends on what happens in other jurisdictions, so can the Minister shed some light on progress in other countries? We have heard about what is happening in the US, but it would be interesting to know whether the Government can provide more detail on the likelihood of this legislation coming into effect in the US. That would help the House. It is important that we get the Bill right. It is an attempt to address an important issue, and everybody wants to reduce the debt that these impoverished countries face. Equally, however, I am sure that nobody here wants to make it harder, or more expensive, for developing countries to raise funds. The legislation is designed to help. We want to ensure that it does, and we wish it well.