I didn't believe it would ever happen. I was wrong

The Chancellor's decision to cancel Third World debt is a defining gesture for a new age

Something has happened which I never thought possible. Last week I yet again asked Tony Blair and Gordon Brown to write off - unilaterally - all the unpayable debts owed to Britain by the world's poorest countries. The cancellation of debt bondage, I told both the Prime Minister and the Chancellor, would be as profound in its consequences as the abolition of slavery.

To do that now, on the threshold of a new millennium, I said, would be the kind of grand gesture that befitted the coming of this new age. It would not be wheels and domes and fireworks that future generations would use to define us, but an act of such political confidence, by which Britain, the world's fourth richest nation, would lift the onerous burdens which make life intolerable for some of the most wretched people in our world.

That is what I said. It is what I believe. It was what I hoped for. And yet most of me believed it would never happen. I was wrong. And I rejoice today in saying so. Blair and Brown have seized this unique moment it and all there is to say is: well done.

The news that the Government is to write off hundreds of millions of pounds of debts is a triumph in which many can claim the credit, for it is result of a confluence of the right people, the right politicians and the right time.

It is a victory for the fact that ordinary people can make a difference and can change things. We knew that, of course, from Live Aid. But the lesson we learned then was that aid and famine relief were not enough. Nor even was development assistance. What was needed, if the poor were ever to stand on their own feet, was structural change in the way international debt, finance and trade were ordered. It seemed an impossible task to mobilise popular opinion behind such an arcane and technical issue. So it is a remarkable achievement that the campaigners working under and around the Jubilee 2000 umbrella have accomplished just that - by bringing together a broad coalition that embraced individuals as disparate as the Euro-sceptic MP Bill Cash and the Pope, and that included everyone from environmentalists and aid workers to trade unionists and retired bank managers.

But there was more to this than people power. It came at a time of emerging consensus among political scientists that the economic formulae of Seventies and Eighties were flawed. In the US hard-boiled globalist free-marketeers such as Paul Volcker, Larry Summers and Robert Rubin began to acknowledge that the burden of debts placed upon the broken backs of the poor were unsustainable. In the UK a succession of Tory chancellors began to draw up a series of debt relief proposals to begin to address the problem.

What everyone was realising was that these debts could never be repaid. The state of poor nations of Africa and Asia was such that - even if their whole economy was turned over to just the repayment of debt (and, in many Third World countries, IMF restructuring tried to do just that) - there would not be enough money even to pay the interest on what was owed. Since 1988 compound interest is all that has been repaid on the bulk of Third World debt. The current economic formula, both right and left began to agree, would produce no solution.

This, then, was the climate in which Tony Blair and Gordon Brown came to power. They were the right men at the right time. Their instinct that debt-forgiveness was right was deeply rooted in their backgrounds. They had been politically formed in an organisation, the Labour Party, which next year celebrates the 100th anniversary of the date it was founded to empower the disfranchised, support the poor, give voice to the dumb and aid the weak. They both professed a faith, Christianity, which proclaims the notion of a Jubilee every 50 years in which, following the Judaic tradition, debts are forgiven and slaves are freed.

Initially they had to do battle with the traditional arguments against the idea. Civil servants told them that forgiving debt set a bad precedent. And anyway, if we forgave our debt, others - like the Japanese, French and Germans - would simply demand all repayment of their debt more quickly. Worst of all it would mean we would "lose our seat at the table" when the debtors and indebted meet for discussions.

Eventually, though, Gordon Brown saw off such specious arguments. There were singular circumstances to the build-up of Third World debt that demanded a singular response. If other nations responded in a niggardly manner they would simply give Britain the moral high ground. And, in any case, the real power-broking forums in international finance lay outside the negotiations on the endless rescheduling of debt. Finally Blair and Brown decided to leap their conceptual Rubicon and put our money where their mouths had been.

Inevitably yesterday there were some who quibbled with the Chancellor's dramatic move. Campaigners began to talk about how much more was needed; free-market theorists began to warn of "moral hazard", saying that letting people off debts just encouraged them to run up more.

All this is mere cavilling. The Chancellor has set up a process that will insist that the relieved debtor nations spend their newly freed-up finances on education, health, small-scale farming and the like. In future, loans must be requested and accounted for through a clearly transparent process. Tyrants and dictators will receive no relief. The process must be monitored, of course, but it is in place and is to be applauded.

With all this comes the realisation from Gordon Brown that the conditions imposed upon poor nations by the World Bank or the IMF are preposterous and that the organisations themselves are in need of profound structural change. By his actions he does more than pay lip-service to this. Where the IMF once demanded that poor countries adhere for six years to an austerity programme before they would qualify for debt relief, the Chancellor has created a system whereby four countries will qualify by January, with another 21 to follow in the months ahead, and with the prospect that the scheme could eventually be extended to the other 26 countries on Jubilee 2000's list.

At last, the possibility of breaking Africa's vicious circle has occurred and a continent can now break out of its ruinous cycle of ill-health, poor education, low production, poverty and ill-governance and begin its long trek towards a semblance of human dignity.

Something has happened here that enables Britain at the end of an extraordinary thousand years to stride into next century with its moral head held high, the fourth-richest nation now arguing for the poor. It is a creative response to the advent of a new millennium which addresses the level of expectation within the nation that a thousand domes are not big enough to fill or contain. It is a momentous occasion and we have done a momentous thing - to start a billion people on the path to some sort of recovery, to be a little more educated, a little healthier, a little more productive. It was something which, in my heart, I never thought would happen. But it has. Half of it: 25 countries assisted, and 26 more to go. Technically the new millennium does not begin until 2001. Gordon Brown has another year to complete the revolution he has begun.