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Debt Relief (Developing Countries) Bill

My Lords, I thank the noble Baroness, Lady Quin, for introducing this Bill. We are now nearing the end of wash-up and we find ourselves with a rather odd Bill, which implements an international aid policy on which there is international agreement and on which the Treasury carried out a formal consultation. However, the Government did not bother to find government time for it in the parliamentary timetable. Instead, the Treasury followed the well worn route of a hand-out Bill. In fact, the only Private Members’ Bills that I have ever handled in my capacity as a shadow Treasury Minister in your Lordships' House have been hand-out Bills from the Treasury, which seems to have form on that. I have to correct that: there was one exception, but that was my own Private Member’s Bill, which needless to say was not a handout from the Treasury. As we have heard, the Bill comes to your Lordships' House not through the normal processes of scrutiny of Report and Third Reading in another place, because those stages were achieved only by virtue of the Government finding space in wash-up in another place yesterday. Of course, the Bill will become law only because the Government have found a space in wash-up today. The noble Baroness, Lady Quin, has kindly agreed to sponsor this Bill in its final stages as a Private Member's Bill, but the House should be under no illusion that this is none other than a government Bill in Private Member’s clothing. We do not oppose this Bill. Indeed, we strongly support its aims in seeking to ensure that heavily indebted poor countries obtain relief from the burden of debt which they cannot realistically support. We have espoused this course for many years. Indeed, when we were in government it formed part of our policies and I expect that we will have the opportunity to display our credentials in this regard again soon. However, we have concerns at the way in which this Bill has been rushed through, in particular without having proper scrutiny in your Lordships' House. It had a good Committee stage in the other place, but it is always right to think that Bills have the quality of scrutiny of which your Lordships' House is rightly proud. It is easy to approach a Bill such as this and to take comfort in the belief that it will do nothing but good in relieving the debt burden on heavily indebted poor countries and that the so-called vulture funds can be easily despised for seeking to enforce contractual terms. I have not had enough time to look in depth at the detailed papers sent to me about the issues involved, which was largely because I did not believe that I would see this Bill reaching your Lordships' House. But from briefly looking at them over the past couple of days, some careful and well reasoned arguments have been put about the need for well functioning debt markets to be able to rely on contracts being honoured and debts being capable of being enforced. This Bill and corresponding legislation in other countries is very likely to reduce the availability of private sector involvement in debt for heavily indebted countries in future. It is also likely to involve a premium for the risk involved in dealing with those countries and therefore be more expensive. Our old friend, unintended consequences, may well mean that other countries, which are not currently highly indebted poor countries, might have less access to finance or access only to expensive finance because they might be deemed to be likely to fall into a category which would be covered by this kind of legislation in future. In the past, the Treasury has asserted that it believes that it is unlikely that any of this will occur. But that remains to be seen, especially if the result of this Bill becoming law is to make the debt covered by it worth next to nothing in the market. There are also concerns about the conformity of the Bill with the European Convention on Human Rights, which is amply demonstrated by the fact that three of the 11 pages of the Explanatory Notes are taken up with trying to deal with the issues that have been raised. We clearly do not have time today to delve into those intricacies, but it may be the case that this will end up being settled in the courts. Perhaps the biggest issue about the Bill, which would have benefited from being examined in detail in your Lordships' House, is whether the remedy—the reduction of the debt of highly indebted countries—will in fact lead to an increase in the funds for economic management or for the relief of poverty in those countries. There is too much evidence that greed, corruption and sheer bad management will account for most of any resources released as a result of this Bill. Indeed, the countries which stand to benefit are at the bottom end of Transparency International’s corruption index. If we had had the opportunity to scrutinise this Bill in your Lordships' House in our normal way we could have examined these issues in more detail. I emphasise again that we do not oppose the principle of alleviating the debt burden on heavily indebted poor countries, but we need to ensure that when we interfere in markets we will achieve the kind of good outcomes that first inspired the Bill. If we are not to achieve those outcomes by this Bill, we should seek other solutions to achieve the same ends. My honourable friend David Gauke unsuccessfully tabled in another place an amendment requiring the Treasury to produce a report within a year on the impact of the Bill on the availability and cost of lending and on the monetised value created by the Bill. It would also have considered the impact on the choice of law or jurisdiction on contracts as one other fear—an unintended consequence of the Bill—is that the UK’s otherwise excellent reputation as a good legal system in which to do business will be harmed. Unfortunately, my honourable friend’s wise amendment did not find favour in another place and we shall not have the opportunity today of exploring the value of that approach. As the noble Baroness, Lady Quin, said in her introductory remarks, my honourable friend David Gauke did, however, do the Bill a great service in successfully moving what is now Clause 9. This allows for more consideration of the efficacy of the Bill in a year's time and gives the Treasury the opportunity to bring before Parliament either the confirmation of the Bill permanently or to give it another 12 months of life, or, if that is the choice, to let it lapse. This goes some way to dealing with the difficult issues that are likely to or may arise from the Bill—I cannot say what will be the result of the Bill. Unfortunately, we will not have a Committee stage to tease out how the benefits will be realised and how they will be weighed in the scale against the costs or the possible costs that may arise. But we have Clause 9, which gives us great comfort that in our haste to do the right thing by heavily indebted poor countries we also have some backstop against unintended consequences. We support the Bill.