§ Order for Second Reading read.
§ 3.30 p.m.
§ The Under-Secretary of State for the Colonies (Mr. Rees-Williams)
I beg to move, "That the Bill be now read a Second time."
The Overseas Resources Development Act of 1948 authorised the setting up of the Colonial Development Corporation and the Overseas Food Corporation. Under the Act the Treasury is enabled to guarantee the payment of principal and interest on any loan negotiated between either of those Corporations and a lending authority. Section 12, subsection (2) of the 1948 Act, while enabling the Treasury to guarantee repayment of principal and payment of interest on such loans, does not enable His Majesty's Government to guarantee a loan from the International Bank so far as other charges are concerned.
I think the circumstances will be well within the knowledge of the House, since we had the same point arising on the 915 Colonial Loans Bill. Briefly, these other charges which are required in the case of a loan from the International Bank are first a statutory commission of not less than 1 per cent. and not more than 1½ per cent. which is charged by the Bank when it makes or participates in direct loans out of funds borrowed by the bank during the first 10 years of its operations.
That is Article IV, Section 4 (a) of the Bank's Charter. There is also the commitment charge which is, in effect, a reduced rate of interest charged by the bank on the undisbursed part of a loan. The full rate of interest and commission is charged only from the date of disbursement.
There is nothing more I need say on that point. The House is well aware of the obligation on the Bank to charge a commission on loans from funds from which it has borrowed and not, of course, on funds which are obtained from subscriptions of its members. The commission is not a banker's profit but is set aside to special reserve for the protection of the bank creditors and for the protection of members.
Negotiations for such a loan are now proceeding between the Colonial Development Corporation, one of the Corporations affected by the main Act, and the International Bank. There is a loan of somewhere in the region of 10 million dollars now being negotiated. This Bill is necessary to enable that loan, and in due course there may be other loans, to be obtained from the International Bank. Hon. Members will have seen that the Colonial Development Corporation has recently published its first report for the year ending 31st December, 1948. They have nine projects in operation and 57 under consideration, and the need for these loans from the International Bank, and it may be from elsewhere, has already become apparent.
§ 3.34 p.m.
§ Mr. Lennox-Boyd (Mid-Bedford)
The Under-Secretary has stated that this point is no doubt in the minds of hon. Members, because we had the same point before us a few weeks ago on the Colonial Loans Bill. I hope it will not be thought ungenerous if I point out that this is the second time in one or two months when a Bill which is, in effect, an amending 916 Bill has had to be introduced. No one would blame the hard-pressed officers of State who drew up the Bill, for the omission which necessitates taking up Parliamentary time with an amending Bill. The real fault is with those who introduce too much legislation, which clogs up the Parliamentary machine and makes this sort of mistake almost inevitable.
However we welcome the Bill because it is a colonial development Bill, and because it fills a gap in the machinery of the Corporations, and indeed, we hope of any other bodies who wish to be able to borrow money. As the Under-Secretary of State said, the original Measure which set up the two Corporations enabled them to borrow from the International Bank with the Government guaranteeing the interest and the repayment of the principal, but, by the error that he pointed out, statutory commissions and one or two others were not included in this guarantee.
§ Mr. Rees-Williams
The hon. Gentleman talked about an error, but actually it was only as the result of the Second Reading Debate that our attention was drawn to this requirement of the Bank in the original Colonial Loans Bill. It was not something we had left out. It was something we did not know anything about.
§ Mr. Lennox-Boyd
I am very glad to know that Parliamentary discussion does teach the Government these very important things. I hope that that lesson will not be lost sight of in the future, and that some of the other Debates we have had on other and even more important issues will have the same satisfactory result. We had, a day or two ago, the publication of the annual report and statement of accounts of the Colonial Development Corporation. We have not had much time to read it, but the little reading that one has been enabled to do shows it to be a fascinating document, well worthy of full Parliamentary discussion. By good fortune it came out at just about the same time as the annual Blue Book on our Colonial Empire, and both publications can, of course, be referred to in the forthcoming full Colonial Debate next Wednesday. That being so I do not propose to go at any great length now into the various schemes for which this loan may 917 be used. It would not, I imagine, be out of Order to discuss them, but I do not propose to go into them now because in the 20 minutes or so that we have now available a worth-while discussion of them is not possible. We shall return to the subject on Wednesday next.
However, there are one or two points I should like to put, and I know that at least two of my hon. Friends have other questions they want to put to the Under-Secretary. He spoke of the Colonial Development Corporation's negotiating for a loan. Has the Overseas Food Corporation, which is similarly entitled under the two Measures to do so, started negotiations for a loan? In regard to the loan to the Colonial Development Corporation, a loan which is, I believe, to be something in the nature of 15 million dollars, will the same facilities for raising a loan be given to private industries in Africa and elsewhere, which are desperately anxious for this dollar aid in order to buy much needed machinery? We are anxious to help the Government Corporations, but we are not anxious to help them at the expense of other and older businesses which are yielding far richer dividends to Britain and the Empire than the new Corporations. Will the same facilities be available for businesses of that kind?
There is another question I should like to ask. Does the Chancellor's ban on dollar purchases apply to any purchases that may be made out of loans advanced by the International Bank? If it does, then, of course, we are merely undertaking giving powers to the Corporations which in practice they will not be allowed to use. If it does not apply, it again seems incalculably hard that East and West African businesses, that are anxious to buy dollar machinery, should not be able to do so while the Colonial Development Corporation can, and, being a Government Corporation, is expressly excluded from the Government's own ban on dollar purchases. The third and last question I should like to ask is this. The loan that was mentioned by the Under-Secretary of State has to be advanced for the purchase, I believe, of essential equipment, such as machinery, in America. Which body, either within or outside the Corporation—and the Treasury must remain wholly outside—settles that it is necessary to go to America for this machinery, and that it 918 is not possible to produce the machinery here?
Though not in quite the same category, the one experiment in Gambia—the only one to which I should like to draw attention—by the Colonial Development Corporation does raise this point, though not in regard to machinery, but in regard to poultry and poultry appliances. There has lately been a good deal of interest in farming circles in this country in the project in Gambia which is to produce many millions of eggs a year and a vast quantity of poultry for food.
I believe that all the eggs and a great part of the hatching equipment of this scheme came from the United States and that, presumably, dollars were paid for them. We are told by our own National Farmers' Union that neither they nor the Ministry of Agriculture were consulted as to whether at least the eggs and stock could not have been provided by British farmers, and we should be very interested to know what is the answer to that query. I waited to see if there was any reference to it in the Report of the Colonial Development Corporation, but, although it gives an interesting summary of this project in Gambia, as far as I can see it does not mention the source from which supplies are taken.
Perhaps in answering that question the hon. Member will also answer the more important question of who settles whether we need involve ourselves or the Corporation in dollar expenditure, or whether we could supply these commodities ourselves? Apart from these one or two points, I do not propose to deal further with the work of the Development Corporation, but to leave that to the full Debate next Wednesday.
§ 3.42 p.m.
§ Mr. Gammans (Hornsey)
I wish to ask why there is no one here today from the Ministry of Food, considering that this Bill deals with the Overseas Food Corporation. Like my hon. Friend the Member for Mid-Bedford (Mr. Lennox-Boyd), I gladly support this Bill and all the efforts of the Colonial Development Corporation as a most interesting experiment of what we hope can be done in colonial development. But this particular Bill is of vital importance, not only in the economic field, but in the political field as well, because it increases the 919 extent to which in effect the International Bank, which is predominantly American money, can be used for colonial development.
As we are spending other people's money, it certainly behoves this House to see that that money is properly spent. I believe that perhaps the greatest danger which exists for us at the moment in our economic difficulties is that the Americans may get tired of continuing to finance us and, if they get into their heads the idea that we are wasting their money in the colonial field, we may find them inclined to draw away from us, not only in the economic, but in the political field as well. Therefore, this Bill, which may seem a very small Bill, represents a matter of the greatest importance.
This is the first opportunity we have had of seeing and studying some of the projects of the Colonial Development Corporation and, although I hope we shall have time to discuss them more fully next week, I feel that we should have some explanation today of why so little information is given regarding the capitalisation of these projects. After all, this is supposed to be a business proposition. I suggest that if people in the City of London tried to float a proposition like this hen-coop business in the Gambia on this sort of information they would probably finish in gaol. We are not told what it is going to cost.
§ Mr. Rees-Williams
The hon. Member is making a very serious and quite unjustifiable accusation. To bandy about accusations of that kind across the Floor of the House is, in my view, improper. This is a statutory Report and the first and, if I might say so, a very good one showing an excellent year's working and I think it quite unjustifiable to make that accusation.
§ Mr. Gammans
The hon. Gentleman need not get touchy about it; I am not suggesting that he, or his hon. Friends, should go to gaol. All I am suggesting is that this is a business proposition and if anyone tried to spend shareholders' money without giving an explanation of what it was to be spent on, and how they would run the risk of a prosecution, and quite rightly. Let me take the example in regard to the money invested 920 in the gold-dredging company in British Guiana. We are not told how much money has been invested, or what are the terms. We are told that the Government are coming in with convertible debentures. At what rate of interest, and what are the terms of conversion. If we are spending not only our taxpayers' money but foreigners' money as well, more particulars than that should be given.
With regard to hens in the Gambia, we do not know what that is to cost. We are not told whether any pilot experiments have taken place in regard to the rearing of poultry. I suppose that there is no quicker way of losing money than poultry keeping unless possibly on groundnuts. I should have thought that after the experience which the Government have had in East Africa they might have tried out some pilot experiments for poultry keeping in the Gambia. Perhaps they have done so. Why not tell us if that is so? The hon. Gentleman knows as well as I do of experiments which have taken place in tropical countries in keeping European poultry, and what ghastly failures they have been on the whole, and what a tremendous amount of money has been wasted. Here we have a project which we sincerely hope will be successful, but more information should be given of what purports to be a strictly business proposition.
Is the hon. Gentleman satisfied with the information which is given on page 19 that:The total capital commitments in respect of undertakings in operation is £3,034,000 …"?That is all we are told; that sum is not divided. We are not told what is the likely income or how the money is to be recovered, if at all. I do not think that I am being in any way unjust to the hon. Gentleman or to this Corporation, which is supposed to be working on businesslike lines, to suggest that they should put up their propositions in a businesslike way.
Further the Corporation is going into the hotel trade. I do not know why. There may be very good reasons why they should, but I must again warn the House that there is no more speculative business in the world than building hotels and trying to run them. Perhaps the Corporation is getting mixed up about whether it is a welfare service or whether it is supposed to be a strictly business 921 service. I suggest that the two should have been kept absolutely separate.
I wish to ask one more question. Could money from this Corporation be used to do what perhaps is needed almost more than anything else in the Colonial Empire today, namely to replant old rubber? Does that come within its terms of reference? Have any schemes been put up? I believe that this country and the Colonial Empire will benefit from helping some of the existing schemes rather than by entering into these new schemes such as hotel-keeping, chicken-keeping, etc. These are the sort of things about which we are entitled to know more before we pass a Bill which extends the scope of the Corporation. I warn the House that if this money is wasted it may have serious repercussions on our relations with the United States.
§ 3.49 p.m.
§ Mr. Niall Macpherson (Dumfries)
It seems that the purpose of this Bill is to enable loans to be obtained from the International Bank. As my hon. Friend has just said, the International Bank is authorised to make loans only upon determined schemes, that is schemes actually laid before it, and which it can itself consider and decide upon as economic propositions. That in itself is a certain guarantee that the money which we are here considering will not be wasted; but that is not the only consideration because the International Bank is not in a position to fix the relative priorities as between one project and another; and that is the sort of thing we, in this House, have to consider.
I think it would, therefore, be right and proper to ask the Colonial Secretary to say just to what projects the £10 million loan to which he referred is to be devoted. If he will tell us that and will give us an idea of how the first of these experiments in what I might call the international financing of the Colonies is to take place, I think he will be giving the House an opportunity of coming into the picture from the start. In my view it would be wrong for us to allow this Bill to go through without that information.
§ 3.52 p.m.
§ Mr. Charles Williams (Torquay)
I welcome the Bill, but I have heard, and other people have heard, that in the Colonial 922 Development Department there is a tendency to support big new schemes or to support very big companies. The smaller company or the older scheme which may be perfectly sound is very little helped. Something which was said by my hon. Friend the Member for Hornsey (Mr. Gammans) would confirm that. I should not like to give an illustration, but perhaps I can explain it in this way. If a small shipping company is developing in West Africa I should like an assurance from the Under-Secretary that he would see that such a company was not pushed on one side by the bigger monopoly companies or by any of the bigger schemes financed entirely by the Government. I make this point because I think that small firms should have a chance to develop as well as big firms.
§ 3.53 p.m.
§ Mr. Rees-Williams
As the hon. Member for Mid-Bedford (Mr. Lennox-Boyd) has indicated, it would be much better to deal with the broader issues when we come to the Debate next week, but there are one or two points which I can answer today and which I feel I should try to answer.
The first is that concerning the Overseas Food Corporation's borrowing. As far as I am aware they have net yet entered into any negotiations. Although they can, of course, do so if the Bill is passed. The whole question of whether equipment should be bought from the United States is a process which has been carefully worked out and to a large extent is the same for the Colonial Development Corporation as for private enterprise. They go through the various Governmental committees and they have to justify the necessity for the particular equipment they require. In the case of the equipment for Gambia they put a case that equipment of the type they required could be obtained only in the United States. It was equipment particularly suited to the tropics and so were the eggs. That is a commercial matter they felt very strongly about, and the necessary capital was issued and the necessary dollar allowance made.
§ Mr. Rees-Williams
I am unable to say without notice. I think the hon. Member for Hornsey (Mr. Gammans) was very 923 unjust to the Corporation. This is the first of their Reports. The nature of the Report must, of course, be varied from time to time and we should be only too glad to take into account the views of hon. Members on it; but to say of the first Report, detailing a large amount of work that has been done by the Corporation under very difficult conditions, that if such a Report were prepared and issued by a private company it would land them in jail, is to my mind a statement which should never have been made. It is quite improper. I think the hon. Member, who is interested in colonial matters, should withdraw it. It does not give any encouragement at all to the Colonial Development Corporation.
The hon. Member for Torquay (Mr. C. Williams) asked me whether small companies would be safeguarded, and not pushed aside by large companies. As far as the Government are concerned, I can assure him we shall do everything we possibly can to safeguard the interests of those small companies, but I cannot vouch for some of the larger ones doing as we do.
§ Mr. Rees-Williams
I know the point the hon. Gentleman has in mind. We shall do all we can. An account of a wide range of activities is given in this Report. The little I have had to do with this Corporation gives me cause for considerable satisfaction in the feeling that one can play a small part in such a mighty endeavour. This is a matter of which I think the House can well be proud. We have passed the original Act and we are now promoting further legislation which will support this venture.
§ Mr. Lennox-Boyd
Has the hon. Gentleman any statement to make about the result of the Chancellor's ban on dollar purchases, on the 15 million dollar loan to the Corporation?
§ Mr. Rees-Williams
I have not. I will look into that point, and into others which have not been mentioned. I will deal with them at a later stage.
§ Mr. N. Macpherson
Can the hon. Gentleman say what projects are covered by this 15 million dollar loan?
§ Committed to a Committee of the whole House for Monday next.—[Mr. Snow.]