20 February 1980

The Minister for Overseas Development (Mr Neil Marten):
With permission, Mr Speaker, I should like to make a statement on overseas aid. Soon after assuming office, the Government instituted a review of its policies governing the overseas aid programme. This review is now complete. Our ability to support development overseas is dependent on the state of our economy and the need to strengthen it. Nevertheless, the Government will continue to provide aid to the developing countries on a substantial scale. Official aid continues to be an essential element in development, especially for the poorest countries. Within the limits of our resources we must seek to relieve poverty in the developing world so as to create conditions for greater peace and stability and to contribute to the growth of world trade on which Britain so critically depends.

Trade is of the greatest importance for the developing countries. If the free world were to slide down towards protectionism we would all suffer, but the consequences for developing countries would be particularly serious. We provide a substantial market for their products and will encourage others to do the same.

Private investment can and should play a greater role in development, and we hope that the relaxation of exchange controls will further encourage British firms to invest overseas. We believe that it is right at the present time to give greater weight in the allocation of our aid to political, industrial and commercial objectives alongside our basic developmental objectives.

We need to maintain the strength of our ties with the Commonwealth, to which the greater part of our bilateral aid now goes, and to fulfil our obligations to our remaining dependencies. We must also be able, when necessary, to offer help and encouragement to other friendly countries. The greater part of our bilateral aid is tied to procurement in the United Kingdom and so provides valuable orders for British firms. Our contributions to multilateral institutions also enable British firms to compete for very substantial business, financed by them all over the world. We are examining means by which they might get a greater share of this business.

Sine 1978 about 5 per cent of the bilateral aid programme has been made available from the aid-trade provision for sound developmental projects – which are also of commercial and industrial importance for British firms – in developing countries to which we do not normally provide aid, or where the planned allocation is already committed. In order to maintain the value of this provision in real terms, its share of the bilateral aid programme will now be increased.

The unallocated margin in the aid programme will be increased, so that we can respond more effectively to new developments where our political or commercial interests are involved.

Our commitments to international agencies and bodies will absorb a larger proportion of the aid programme over the next few years. As we need more room for manoeuvre in bilateral aid, we shall need to look critically at our expenditure programmes on multilateral aid programmes.

Improved interdepartmental arrangements will ensure that all these considerations are brought together.

The administration of the aid programme is being examined in a thorough-going management review of the Overseas Development Administration to ensure that the programme continues to be managed effectively and economically.

Much can be done with our aid programme, which is to the mutual advantage of the developing countries and ourselves, and we shall therefore concentrate on using it in that way.

House of Commons Official Report (Hansard), 20 February 1980 , Cols 464-465


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