Low-income Countries: Debt Cancellation

Brian Mathew Excerpts

Thursday 6th February 2025 Westminster Hall

[Brian Mathew (Melksham and Devizes) (LD)]

I commend the hon. Member for Southgate and Wood Green (Bambos Charalambous) for organising this debate on a vital and extremely timely topic. As all hon. Members present are likely aware, we face the most acute debt crisis in history. According to CAFOD, more than 3.3 billion people are living in countries where they are forced to spend more on debt servicing than on providing for their citizens. Such high debt-servicing costs prevent those countries from spending on vital public services such as education and health, and investing in sustainable development goals.

Private lenders make up the largest group of creditors, with many based in the UK and 90% of their contracts governed by English law. Many hon. Members will also be aware that 2025 has been declared a jubilee year by Pope Francis. It is 25 years since the last jubilee debt forgiveness, known as Jubilee 2000, when 40 countries called for the cancellation of third-world debt. Biblically, an important part of the jubilee celebration was the cancellation of debt to give those in need a fresh start. We are told in the Bible not to be hard-hearted or tight-fisted towards others, but instead to be open-hearted and freely give what is needed.

For this jubilee year, Pope Francis has made debt cancellation a priority, stating:

“More than a question of generosity, this is a matter of justice.”

We must act now to end the vicious cycle that these countries are trapped in. Without being able to invest in development, countries are unable to grow their economies or fully escape debt. Furthermore, while in debt distress, countries may look to quick solutions that involve exploiting or exporting their natural resources to do so—extracting fossil fuels, mining or logging—and, in the process, worsening climate change. That disproportionately affects those in the global south, but also affects us here at home.

The UK has a significant role to play in solving this problem. As we have heard, 45% of all foreign sovereign debt is governed under English law. The Government have promised to tackle unsustainable debt and must hold private lenders and creditors accountable for that. Furthermore, the previous Government cut international aid from 0.7% to 0.5% of gross national income—an act that withheld billions of pounds from those most in need. We must restore our aid spending to what it was before, and restore our leadership in the field of international development; in doing so, we will restore our reputation as a kind and generous nation.

--- Later in debate ---

[Andrew Rosindell]

The hon. Member touched on this in his speech earlier, as did the hon. Member for Melksham and Devizes. That is another new constituency name, and I think it includes Chippenham. Is that part of the hon. Gentleman’s constituency?

[Brian Mathew]

No, but it is in Wiltshire.

[Andrew Rosindell]

It is in Wiltshire, so it is in that part of the world—a great part of the world.

Many churches and faith organisations, not just Christian, do a huge amount in all our constituencies to help raise funds to alleviate poverty. In my constituency, churches and the Christian organisations take the lead in this, and it is a wonderful thing. If we are to alleviate world poverty and deal with the restructuring of international debt, it has to be a collective thing. It is not just about Governments; other sectors must be involved in these discussions. We must all give credit to the charities, church organisations, faith groups and other parts of the voluntary sector that raise money week in, week out, to help to alleviate poverty and for disaster relief in different parts of the world. As Members of Parliament, we all know that from our constituencies. I commend the hon. Member for Strangford (Jim Shannon) and all Members for the charities, churches and organisations in their constituencies that do that incredible work.

We simply cannot ignore the geopolitical dimension. The belt and road initiative from the People’s Republic of China has created debt dependency, threatening many sovereign nations around the world. Will the Minister tell the House how the Government intend to counterbalance Beijing’s influence and provide a credible alternative to Chinese financing, which is of great concern? Will debt relief and the belt and road initiative feature in the Government’s China audit? Can she also confirm that any UK-backed debt restructuring would promote transparency, fair economic partnerships and long-term stability?

Beyond individual cases, will the Government tell us how they plan to advocate for more responsible lending and borrowing practices that ensure that relief leads to lasting improvements rather than repeated crisis? Does the Minister also accept that we should be looking beyond debt cancellation and focusing on investment incentives, infrastructure partnerships and trade agreements that enable these countries to generate revenue and pay their debts? How will the Government ensure that their approach fosters economic growth rather than continued reliance on external assistance?

It is crucial that any policy pursued by His Majesty’s Government is effective and responsible. Debt relief can be a force for good when structured correctly, but it must be part of a broader strategy that promotes economic resilience, accountability and sustainable development. The Government must navigate these challenges while always ensuring that British interests remain protected.