Labour clarifies policy on debt repayments for low-income countries

Labour seemed to have dropped its policy on the cancellation of debt repayments for low-income countries amid the Covid crisis, as the party last year backed the move but Keir Starmer’s spokesperson appeared to reject it on Wednesday.

Update, Thursday 11.30am: LabourList understands that there has been no change to party policy since the call in April from Gill for debt repayments to be cancelled for low-income countries to help them deal with with the pandemic.

Commenting on Thursday, a Labour spokesperson told LabourList: “Labour has a proud history of leading international efforts on debt cancellation and relief for the world’s poorest.

“Over the past year we have consistently pushed government to do more at a global level to develop a robust and workable strategy of debt cancellation and relief to help the poorest nations invest in their health systems save lives and prevent a debt crisis.

“It is only right that all resources at this time must go on fighting this pandemic in all parts of the world.”

Opposition frontbencher Preet Gill called for the government in April 2020 to push for repayments to be cancelled for low-income countries, allowing them to prioritise investment in their health systems during Covid-19.

The Shadow Secretary of State for International Development said it was “unacceptable that some of the poorest countries are being expected to prioritise debt repayments over the safety of their citizens”.

Gill added: “I am calling on the UK to use its influence to urge for the cancellation of debt repayments for low-income countries, without conditions.” She criticised the UK government for being “too quiet on this issue”.

But, asked by Left Foot Forward today whether Labour would back calls to cancel the debt of developing countries amid Covid, a spokesperson for Keir Starmer said: “That’s not a policy of the Labour Party… That’s not our policy”.

Reacting to the news, a Labour for a Green New Deal spokesperson said: “This is a deeply concerning development, particularly given that Preet Gill was rightly advocating debt cancellation just months ago.

“How can Labour lay claim to the mantle of internationalism while failing to support such a straightforward and necessary step, one that is essential for Global South states to invest in the protection of people and planet, instead of filling debtors’ coffers?

“Labour’s development team must urgently restate their call for debt cancellation, without qualification, and for good measure extend this to cover debts held by the private sector creditors profiteering from the pandemic.”

Global Justice Now director Nick Dearden told LFF: “Not only should Labour be loudly calling for debt cancellation for poorer countries, as the Lib Dems have done, they should be calling for a major change in the global debt system to prevent us getting into this situation again.”

Highlighting that Labour advocated debt cancellation in the late 1990s, he added: “There have been calls from really establishment figures, including even the heads of the World Bank and IMF, for real debt cancellation for developing countries.”

Gill explained in April that cancelling debt repayments would “free up billions of pounds to help the poorest countries invest in their health systems and help protect and save lives in all parts of the world”.

She said: “This is a global emergency and if we can ensure the most vulnerable people are protected overseas, it will help us to quickly tackle this crisis. In the long run this will also protect people and frontline services in the UK.”

The International Monetary Fund and the World Bank last year issued a joint statement urging creditors to suspend debt payments for developing countries during Covid-19. Charities encouraged them to go further by backing debt cancellation.

The international development committee chaired by Labour MP Sarah Champion has argued that the debt of developing countries should be cancelled, after hearing that $33bn was still being paid by struggling governments.

The cross-party group of MPs has said the UK government should consider options for the cancellation of debt and explain its decision on debt relief versus debt cancellation for low- and middle-income countries.