INTERNATIONAL FINANCE CORPORATION BILL

HC Deb 01 July 1955 vol 543 cc687-740

Order for Second Reading read.

12.35 p.m.

The Economic Secretary to the Treasury (Sir Edward Boyle)

I beg to move, That the Bill be now read a Second time.

The object of the Bill is to enable Her Majesty's Government to accept the proposed Articles of Agreement of the International Finance Corporation. It might be for the convenience of the House if I divided my remarks into three parts. First, I will describe the history and purpose of the Corporation; secondly, I will say a few general words about Britain's share in the work of investment in the underdeveloped areas; and, finally, I will explain as briefly as I can the various Clauses of the Bill.

The purpose of the Corporation is defined in its Articles of Agreement as being … to further economic development by encouraging the growth of productive private enterprise in member countries, particularly in the less developed areas … Hon. Members may ask why it has been found necessary to establish a new international organisation for this purpose when we already have the International Bank for Reconstruction and Development, which is doing such useful work. The answer is that the operations of the International Bank are subject to a number of limitations of which I will mention just two. First, it may make loans only to its member Governments or with the guarantee of a member Government. This provision has been found to be discouraging to private investors, who are said often to fear that such a guarantee might lead to interference in their business by the Government concerned.

Secondly, there is the point that the International Bank can only make fixed interest loans and cannot provide risk capital. It often happens that a large proportion of the capital needed to establish or expand a private enterprise can be invested only as risk capital, and when the amount of the risk capital needed is more than private interests can provide, the Bank is unable to act. I think I am right in saying that the need for an Inter- national Finance Corporation was first seriously discussed in a Report prepared by the Bank for the Economic and Social Council of the United Nations in 1952.

This proposal was discussed at successive meetings of the Economic and Social Council, and also in the General Assembly of the United Nations, where it enjoyed a wide measure of support, particularly—and this was natural enough—among the representatives of the less-developed countries. Until November last year, however, the United States, and also the United Kingdom, preferred to maintain a non-committal attitude. There were a number of major points to be considered, and in particular, both the United States and ourselves were somewhat doubtful about the suggestion that the International Finance Corporation should invest in equities. Both countries felt that it was undesirable for an organisation of this kind to participate in the ownership and management of what would be essentially private enterprise.

However, in 1954 the United States announced its willingness to seek Congressional approval for a United States subscription to an International Finance Corporation. The Americans put forward a project of a Corporation which would be an affiliate of the International Bank of Reconstruction and Development, with a capital of 100 million dollars. The Corporation would have wide powers to invest without securing Government guarantees, but it was not to have the power to make equity investments.

The United Kingdom at once agreed to take part in international discussions with a view to setting up this Corporation, and in the following month, that is, December of last year, the General Assembly of the United Nations passed a resolution requesting the International Bank to prepare and secure agreement on a suitable charter. The Bank set to work at once and by 11th April this year the Executive Directors were able to approve draft Articles of Agreement which now stand referred to member Governments of the Bank.

Mr. Leslie Hale (Oldham, West)

The hon. Gentleman is rather glossing over what happened between 1953 and 1954. According to all the reports that we have the proposal was definitely turned down in 1953, and yet that is the proposal which is now being put forward. In 1953 it was shelved because it was said that there was not enough support for it. What has happened to change the minds of those concerned? Is it just that the United States has changed the mind of everybody?

Sir E. Boyle

When I describe the Articles of Agreement, the hon. Gentleman will see that there is one Article which meets the point about equity investments, and that, to the best of my knowledge, is the answer to the hon. Gentleman's question.

The Articles of Agreement and also an Explanatory Memorandum have already been made available to hon. Members of this House in a White Paper, Command 9502, but it may well be that a certain number of hon. Members have not yet had time to read the document, and, therefore, I will summarise the substance of the Articles as briefly as I can. As I have already said, the object of the Corporation will be to further economic development by encouraging the growth of productive private enterprise in member countries, particularly in the less developed areas, by making investments without a guarantee of repayment by the Government concerned. Therefore, the Corporation will supplement and not compete with the activities of the Bank.

The Corporation will hope to achieve its aim by attracting private investors to put up the bulk of the money rather than by supplying large sums from its own resources. The Corporation will be an affiliate of the Bank, and the President of the Bank will also be the Chairman of the Corporation's Board of Directors. In addition, the Corporation's principal office will be in the same building as the headquarters of the Bank, and it is expected that the Corporation will call extensively on the services of the staff of the Bank.

Naturally, in view of the Corporation's status as an affiliate of the Bank, membership of the Corporation will be confined to those countries who are members of the International Bank. The authorised capital of the Corporation will be 100 million dollars, and this will be subscribed by members in proportion to their subscriptions to the Bank. The United Kingdom's subscription will be 14.4 million dollars. I have already mentioned that the Corporation will not make or hold equity investments, but it will otherwise be authorised to make investments in any form which it considers to be appropriate, and it was that provision which was all-important in deciding whether we and the United States were able to support this project.

I now come to a feature which we must consider to be less satisfactory, and I must be perfectly frank with the House about it. Subscriptions to the Corporation will be payable only in gold or dollars. Naturally, we in the United Kingdom would have liked the Corporation not to operate entirely in terms of dollars. I am glad to be able to tell the House that there is still a possibility of the Corporation operating in sterling in those parts of the world where sterling is the traditional currency, and in due course we intend to seek to negotiate arrangements to this end.

The Articles also provide that the Corporation shall undertake its financing on terms and conditions which it considers appropriate, but it must take into account not only the requirements of the enterprise, but also the terms and conditions normally obtained by private investors for similar financing. In other words, it is a firm intention that the Corporation should pay its way and should not be regarded as a source of cheap and easy money.

With regard to immunities and privileges—and I know that this is a matter about which this House is rightly much concerned—the Articles do not exempt the Corporation from the general restrictions imposed under foreign exchange Regulations on the transfer of earnings or of repayments of principal on its investments. Otherwise, the Corporation will enjoy the same immunities and privileges as those already enjoyed by the International Bank.

I have now completed my summary of the Articles, and I should like to make it quite clear that we in the United Kingdom are well satisfied with them. They provide the Corporation with a basic constitution which will give it the opportunity to play a useful part in stimulating the flow of fresh resources of capital for the development of under-developed countries. True, its own capital resources will be limited, and it will be unable to invest large sums in single projects. So, if, as we hope, the Corporation is to make an important contribution to the economic growth of the less developed countries, it will have to attract far larger amounts of capital from private investors than it can provide from its own resources.

Mr. Hale

I am sure that the hon. Gentleman does not wish to mislead the House, but, of course, the underdeveloped countries are not members of the Bank, and, therefore, cannot receive any benefit from this proposal. The benefits can only be given to members of the Bank, or, as I undertand it—and I hope that the hon. Gentleman will correct me if I am wrong—this only relates to investments in territories of countries which are members, or to colonial territories which belong to members. Therefore, I should like elucidation as to what extent a self-governing Colony which is not a member of the Bank comes into this.

Sir E. Boyle

If I do not clear up the matter as I go along, I will certainly clear it up at the end of the discussion.

This means that the Corporation will have to build up the confidence of the principal sources of capital through the proved soundness of its judgment and the prudence of its investment policies. I have no doubt that the Corporation will be very greatly assisted by its status as an affiliate of the Bank, which has won for itself a very high reputation among both its lenders and borrowers. It certainly augurs well for the work of the Corporation that the Bank has only recently broken new ground, with notable success, by arranging loans jointly with certain private United States investors.

However, I must make it absolutely plain that the fundamental condition on which the success of the Corporation will depend is the adoption of sound and appropriate internal policies by the countries which hope to benefit from it. The conditions for profitable investment in underdeveloped areas are a good deal more complicated than people always realise.

It is obvious, in the first place, that capital will only be attracted when equitable conditions are offered to the investors and when policies conducive to economic stability are pursued. In addition, it is essential that the legal con- ditions of the territory should make it possible to introduce innovations and techniques, and I think that the House will agree with me that enlightened land laws are always essential.

The historian, Sir Louis Namier, remarked in his famous Raleigh Lecture on the 1848 Revolutions, that history is largely the story of the interplay between groups of men and tracts of land. I think that that is a very true statement. I should point out that the institution of the International Finance Corporation will be no substitute for sound action in all those regards.

I now pass to consider what advantages we in the United Kingdom will gain from participation. Since it is the intention that the Corporation should operate particularly in the less developed areas, I need hardly say that there is no likelihood at all that it will make any loans for investment in the United Kingdom itself. But there will be a great deal of scope for its operations in British Colonial Territories, and I very much hope that private enterprise will not be slow to turn to the Corporation as a possible source of capital, and as a channel through which private capital may be attracted in order to assist in financing productive development in the Colonial Territories. Certainly, we in Britain can warmly welcome a new body which should reinforce our own efforts to provide capital for economic development of this kind.

In addition, I very much hope that the activities of the Corporation will stimulate trade. The House may be interested to know that up to 30th April of last year the International Bank had financed sterling expenditure by its borrowers to the extent of £55 million. Even though the operations of the Corporation will be upon a more modest scale, they should likewise open the way for some increase in British exports.

I want to say a word about the mechanics of bringing the Corporation into being. The Articles of Agreement will come into effect when they have been accepted by at least thirty Governments, subscribing in total not less than 75 per cent. of its capital, but in any event not earlier than 1st October of this year. I did inform the House by means of a Written Answer to a Parliamentary Question on 4th May that the Articles were acceptable to Her Majesty's Government, and that proposals would be made to Parliament to provide for United Kingdom membership as soon as we had assurances that United States and other prospective members intended to take similar action.

By 1st June this year, 42 other member Governments of the Bank, including the United States, had expressly indicated that they favoured membership of the Corporation, and the total of their proposed subscriptions amounted to over 85 million dollars. I am told that Bills authorising the United States membership of the Corporation are now before both the Senate and the House of Representatives. I am further informed that the Senate Banking and Currency Committee has approved the Bill unanimously, and I understand that the United States Administration are confident that the necessary legislation will be enacted during the present Session of Congress; so there is no reason at all to fear that the Articles of Agreement will fail to win the support they need in order to bring them into effect.

Each Government that accepts the Articles must deposit an instrument setting forth that it has accepted the Agreement without reservation in accordance with its own laws, and that it has taken all steps necessary to enable it to carry out all its obligations under the Agreement. The United Kingdom Government require legislative authority if they are to accept two of these obligations; first, the payment of the subscription, and, secondly, the extension to the Corporation and its officers and staff of certain immunities and privileges.

When the Bill has been enacted the provisions of the Agreement relating to immunities and privileges will be carried into effect by Order in Council, and the Order will be an essential prerequisite to acceptance of the Articles of Agreement by the United Kingdom. The House may have noticed that Clause 3 (4) lays it down that any such Order will be subject to the affirmative Resolution procedure, and I must tell the House that this will almost certainly mean that the Order in Council and, therefore, our acceptance of the Articles, will have to be delayed until shortly after we reassemble in the autumn.

If this Order were made subject to the negative procedure this difficulty would not have arisen, but it is the Government's view—and I hope that the House will agree—that an Order of this importance should be subject to the affirmative procedure. In any case, provided that this Bill is on the Statute Book before the summer Recess, I feel that we will have a complete defence against any possible charge of dragging our feet.

Before passing to the Clauses of the Bill—and I apologise for detaining the House for so long—I thought the House might wish me to say a few further words upon the general question of Britain's share in the work of investment in the underdeveloped areas. I am glad to have this opportunity of doing so, because the House seldom gets a chance of discussing this question—I remember that we had one debate after an all-night sitting on the Finance Bill, which, perhaps, is not the best possible time—and also because the decision to support the new Corporation is wholly in line with the policy which successive British Governments have followed both during and since the war.

As I indicated earlier in my speech, the International Bank has already made a most valuable contribution to the financing of economic development in the less developed areas of the world. The financial contribution that the United Kingdom has been able to make through the Bank has so far been limited by our own balance of payments difficulties, by the strains upon our resources imposed by the needs of defence, and by the contributions we make in other ways to the finance of economic development, especially in the Commonwealth. Even so, the proportion of our subscription which is payable in dollars—that is to say, £9 million—has been at the free disposal of the Bank from the outset, and we have subsequently undertaken to release £64 million of our sterling subscription for loans by the Bank over a period of years. Of this sum, almost £20 million has been committed already, and the Bank has also raised £10 million through loans floated on the London market.

Mr. Hale

Surely the first 1,000 million dollars advanced by the Bank was advanced only to Western Europe, and the next loan was to India. The only items I know of which have concerned the Colonies are the Northern Rhodesian loan, which is somewhat disputable, and the loan to the Union of South Africa, which is hardly a depressed area within the meaning of the term. I should be very grateful if the Minister can give the House a little more information about this, because my case is that nearly every loan has been made in dollars, and nearly every loan has been made to meet the balance of United States export surpluses, and so far as I know—apart from the loan to India and the one to South Africa—nothing has gone in the way the Minister suggested.

Sir E. Boyle

I had no intention of misleading the House. I will check that matter and let the hon. Member have an answer when I reply to the debate.

In addition, there has been the United Nations Technical Assistance Programme, which has also enjoyed our support. We paid £800,000 to that programme in 1955.

Her Majesty's Government have a very special interest in the development of Commonwealth countries—not only the poorer and less developed ones, but also those which, even though they may enjoy a relatively high standard of living, yet have much scope for increased development. As the House will be aware, both at the Commonwealth Economic Conference in December, 1952, and again at the Commonwealth Finance Ministers' Conference in January, 1954, the United Kingdom Government undertook to make a special effort to provide additional capital for worth-while development. This capital comes in part from the resources of the London market and in part directly from Government funds.

So far as private sources are concerned, Governments of all the Commonwealth countries, including the Colonies, have access to the London market, provided that we are satisfied that the money is needed for worth-while purposes. Loans to Governments totalled £43 million in 1953 and £41 million in 1954. There has also been substantial investment by private undertakings involving the raising of new funds in London, and here I should like to pay a tribute to the very valuable work of the Commonwealth Development Finance Company.

So far as Government sources are concerned, Government funds are made available to the Commonwealth, including the Colonies, both through the release of our sterling subscription to the International Bank and also through the direct Exchequer channels provided by colonial development and welfare assistance and by the Colonial Development Corporation.

Under the Colonial Development and Welfare Acts of 1945 and 1950, a total of £120 million will be available to be spent over the years 1955–1960; which is an average rate of £24 million a year. Assistance under those Acts is almost entirely by way of grant; so far, less than 2 per cent. has been loan assistance. As for the Colonial Development Corporation, I am informed that at the end of last year it had fifty-six projects and investigations under way, and over £38 million had already been advanced from the Consolidated Fund. Expenditure amounting altogether to £58 million has been sanctioned to date.

We have also helped certain foreign countries. We have made interest-free loans for development to Jordan of £7¼ million since 1948, and to Libya of £3 million to be spent between 1952–1956. In addition, Yugoslavia has received £14¾ million worth of raw materials, consumer goods, and other essential supplies and services since 1951.

Finally, I must refer to the Colombo Plan. That Plan was brought into existence by the initiative of the Commonwealth countries, but it was never intended to be restricted to the Commonwealth and its membership has progressively widened, so that it now includes all the countries in South and South-East Asia. Once again, I should like to reaffirm that it is the policy of Her Majesty's Government to give the Colombo Plan their fullest support. As the House will be aware, we have made arrangements for the orderly release of sterling balances to India, Pakistan, and Ceylon over the six years from 1951–1957, at an annual rate of approximately £42 million. In addition, the United Kingdom has undertaken to provide technical assistance up to a total of £2.8 million during the period of the Plan, and we have made capital assistance available in a wide variety of forms.

For example, Ceylon raised a loan of £5 million on the London market in March. 1954, and we have extended a £10 million credit to Pakistan for food production. In addition, we have helped Malaya and North Borneo, through making grants and loans available for development and reconstruction.

In the last few minutes of my speech I will refer briefly to the Clauses of the Bill. Clause 1, which simply defines the Agreement and the Corporation, is self-explanatory. Clause 2 (1) deals with the payment of the United Kingdom subscription, and subsection (3) of it provides for the payment into the Exchequer, and subsequent application, of sums received from the Corporation in repayment of capital or in payment of dividends.

In actual fact, the Articles of Agreement provide for the repayment of capital only if the Corporation has decided permanently to suspend its operations; so there is every reason to hope that this provision of subsection (3) will have no practical effect in the foreseeable future. The payment of dividends is dealt with in Article IV, Section 12.

I should reiterate here that the Corporation is intended to function on a fully commercial basis, and if it is successful in its operations we should expect that in due course it will find itself able to pay dividends, but of course that will certainly not be possible in its early years. Her Majesty's Government would certainly agree that the success of the Corporation will be judged not so much by the size of the dividends it distributes as by its ability to stimulate the flow of private capital into productive development in the less developed countries.

Finally, Clause 3 enables the necessary steps to be taken to give effect in all territories in which Her Majesty has jurisdiction, other than the self-governing members of the Commonwealth, to Article VI of the Articles of Agreement. That Article prescribes the status, privileges and immunities to be enjoyed by the Corporation and its officers and staff. I know that this House is always very watchful—and rightly so—when it comes to granting privileges and immunities of this kind. I am, therefore, glad to be able to assure hon. Members that that Article follows very closely the corresponding Article in the International Bank Agreement. I am sure the House will agree that since the Corporation is to be an affiliate of the International Bank, operating in close association with its parent, it is clearly desirable that the Corporation should enjoy identical terms with the Bank over privileges and immunities.

I thank the House for the patience with which it has listened to what has been, I fear, a rather long exposition. When replying—if I may do so by leave of the House—I will answer the points put to me by the hon. Member for Oldham, West (Mr. Hale), and any other points which come up in the course of the debate. I am sure that every hon. Member, on whichever side of the House he sits, will unite with me in wishing good fortune to this Corporation, whose Articles of Agreement have been so carefully thought out.

1.5 p.m.

Mr. Douglas Jay (Battersea, North)

I do not know whether I ought to ask for the leave of the House to speak a second time, although we are now debating a different Bill.

We all agree with the Economic Secretary to the Treasury in accepting the aim which lies behind the Bill—faster economic development in backward and poverty-stricken parts of the world. The hon. Gentleman made a very full speech, and we make no complaint on the ground of its length, because this subject is very important.

There is probably no more important aim than this with which this House can concern itself for the future of the world, whether to preserve peace or promote social advance, or from the point of view of the survival of democracy. Our object today is to examine this particular instrument. On this side of the House we have doubts about the character of the Corporation which is proposed, and about the priorities which the Government seem to have accepted.

Is it really necessary that the proposed Corporation, to which the Government are now asking the House to assign £5 million of public money, should be rigidly limited to operating through private enterprise alone? Secondly, why do the Government still refuse to subscribe to the far more imaginative, flexible and comprehensive Special United Nations Fund for Economic Development, or "S.U.N.F.E.D.," as it is generally called, or to increase their present deplorably low subscription to the United Nations Technical Assistance Programme, and yet are able to find £5 million for this Measure, for encouraging private enterprise?

Why are these very rigid limits placed on the Corporation? When I was at the Treasury, attempting, as I am sure the Economic Secretary is, to encourage more development in backward areas, I always found that some countries were against public enterprise and some countries were against private enterprise. It seemed to me that we should all get on faster if everybody would accept both.

This scheme supplements, of course, but does not supplant, all the other agencies, like the International Bank for Reconstruction and Development, the United Nations Technical Assistance Programme, the Colombo Plan and others, all, incidentally, initiated during the lifetime of the Labour Government. They do not necessarily all fill the gap. For instance, as I think the hon. Gentleman said, the International Bank has severe limitations on its operations. The proposed Corporation deals only with private enterprise. But the International Bank does not necessarily cover the whole needs of Government enterprise. It is, of course, a proof that private enterprise on its own has not been able to fill this gap adequately that the Corporation has had to be introduced at all, to encourage private enterprise, even in its own field. Nevertheless, in spite of all these considerations, need the new scheme have been quite so doctrinaire?

Article III of the Agreement, which governs the whole matter, says: The Corporation may invest its funds in productive private enterprises". Why is it not possible to say just "productive enterprises," and leave it to the Corporation to choose what is best in each individual case? I see it adds that the existence of Government interest in an enterprise shall not "necessarily" preclude the Corporation from investing in it. I do not quite know what "necessarily" means in that connection. Perhaps the Economic Secretary will explain. Let me take one example. A year ago, with various other hon. Members of this House, I visited Brazil, which has an impressive new steel works worth £60 million or £70 million. It had just been set up by a Government-owned Brazilian Company which had raised loans from the United States through the U.S. Export-Import Bank.

Would it be impossible for the proposed Corporation to lend money to an enterprise of this kind? We find that the Corporation is not to invest in what the Agreement calls "capital stock" and so. presumably, get control over an enterprise in which it has invested. Perhaps the Economic Secretary could explain exactly why the Government are so afraid to make any investment in what he called "equity stock," which might result, as the Agreement says, in the Corporation assuming responsibility for managing any private enterprise in which it has invested?

It looks to me as though the Corporation is clearly intended to help private investors to find profitable investments and to exercise no control over them, and then to move out itself if they prove profitable. We are told in Article III that the Corporation shall resolve its funds by selling its investments to private investors. If it sells out on satisfactory terms it can do so, apparently, only to private investors. Why should it not in some circumstances, and if it is convenient, sell out its investments to a public enterprise—perhaps it may be a Colonial Government—if it can get a better price by doing so?

We cannot, in these matters, ever foresee all the detailed circumstances. The Corporation might get a better price by selling to a public enterprise than to any private enterprise which was offering purchase. Surely it would be better, even from the point of view of the British taxpayer, if that alternative were not precluded by this Agreement.

Section 4 of Article III says that if an enterprise in which the Corporation has invested is threatened with default or insolvency it can, apparently, do almost anything it likes to protect its interests, even, presumably, in the last resort, sell its investment to a public enterprise. Why should it have to be faced with default or insolvency, not just a substantial loss, before it is allowed to do that? Is not that an extremely doctrinaire arrangement?

There are three other questions I would put to the Economic Secretary, and I am sure that the House will have no objection to his speaking again in order to reply to the debate. I think I may say that for my right hon. Friends, at least. The Governments in certain underdeveloped countries which are just reaching independence, such as, for example, the British West African Colonies, naturally insist on certain safeguards for their own people when foreign private capital goes into those countries. Can we have an assurance that, in the case of capital injected through the agency of this Corporation, the views of the Government in question will be respected?

I ask this because Article I says that the Corporation shall … help create conditions conducive to, the flow of private capital … into productive investment … The hon. Gentleman himself spoke some words which could have been regarded as rather sinister when he suggested that a condition of help would be that the Governments concerned followed what, I think, he called "sound and proper policies." There are, of course, means—I do not say always—of creating conditions conducive to the flow of private capital which may be hotly resented by the people of the countries concerned, and, indeed, even by the Governments of the countries concerned.

I see that the Agreement also says, very rightly, that the Corporation shall not interfere in the political affairs of any member, but I think, in spite of that, that we should like to have an assurance that local safeguards for social standards and labour conditions and so on, will be respected. I am sure that the Economic Secretary will remember that when the Labour Government introduced their Colonial Development and Welfare Act we wrote into it safeguards relating to social conditions.

Secondly, can the hon. Gentleman assure us that there will not be an attempt through this instrument—in British Colonies, for instance—to force public enterprise out of any activity in which it is proper, such as utilities—transport, electricity, and so forth? The present Government's policy in our own country, of leaving nothing but unprofit- able industries to public enterprise, makes us just a little suspicious of what they may be intending to do overseas.

My hon. Friend the Member for Oldham, West (Mr. Hale) brought up the question of the areas of the world in which this Corporation will be able to operate. I note that India and Indonesia are members. Can we take it that all British Colonies, and the colonies of other member countries, will be automatically included? My hon. Friend raised a substantial matter when he asked about such Colonies as Nigeria and the Gold Coast—I think those were the ones he had in mind—which have achieved independence. It woud be interesting to know whether, if they are not included now, they can join at a later date if they choose to do so.

Thirdly, I think that the hon. Gentleman himself raised an important point when he said that we should have preferred our subscriptions not to have been made in gold and dollars. Our subscriptions to both the International Monetary Fund and the International Bank were wholly, or at any rate, largely, in sterling. Is it not a very backward step that we should now have to subscribe to one of these international agencies in gold and dollars? I hope that, if the Government cannot alter this now, they will strongly represent their view that this is wrong.

Sir E. Boyle

I tried to make it perfectly clear that the Government were not happy about that, and did intend to press the matter, particularly in parts of the world where sterling had been the prevailing currency.

Mr. Jay

I hope that the hon. Gentleman will say that not only to us here, who agree with him, but also to the American Government, who appear to be taking the contrary point of view at the present time.

Our main criticism of the Government's action is this. Why is it that this £5 million of public money is to be provided now, while the Government are still refusing to make any subscription to S.U.N.F.E.D. and are making so lamentably small a contribution to the United Nations Technical Assistance Programme?

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

And for the children.

Mr. Jay

And for the children, too.

After all, S.U.N.F.E.D., which has been designed after prolonged discussions, and has behind it the whole resources of the United Nations, does not suffer from the rigid doctrinaire limitations of this scheme, and since it is United Nations-wide it covers a much greater area of the world. The Government's excuse that they cannot contribute to S.U.N.F.E.D. until there is a substantial measure of disarmament seems to me totally irrational, and is now invalidated by their own action in going ahead with this other scheme. Indeed, their protracted hesitation over S.U.N.F.E.D. suggests that, in spite of what the hon. Gentleman has said this afternoon, they under-rate the urgency of economic aid to backward countries as a world-wide necessity for preserving peace and democracy in the world today.

The hon. Gentleman said he was not dragging his feet. But even the Federation of British Industries, in an admirable pamphlet issued quite recently on the subject, said: We should prefer to see the work on economic developments speeded up rather than that on health reduced. We hope that British policy will be able to provide for increasing the United Kingdom's participation in this work, both financially and operationally. Why should the Economic Secretary lag behind the Federation of British Industries in this matter?

Let us not forget that while some of the democratic countries are lagging in this great task, the Communist countries are pressing ahead. We should not blind ourselves to that because we profoundly dislike so many of the methods of Communist Governments. When Mr. Nehru arrived in Moscow, three weeks ago, the first thing the Russians did was to take him to see their All-Union agricultural exhibition, just outside Moscow. I had the good fortune myself of visiting that exhibition a few days before and though I should be the last, as a result of that, to pose as an expert on Asiatic agriculture, I can tell the House that hundreds of thousands of ordinary people, some of whom I saw there, from all over Asia, who are visiting that exhibition every week, are bound to be deeply impressed—at the very least it is very fine propaganda—by the efforts that are being made by the Communist Governments in developing Asia's natural resources. Therefore, for heaven's sake let us see that the democracies and, above all, the United Nations, can plan at least as ambitiously and work at least as fast.

1.20 p.m.

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

I share many of the misgivings which my right hon. Friend the Member for Battersea, North (Mr. Jay) has expressed in his very admirable speech. Like him, I feel that it is a matter of very real anxiety that the Government, apparently on recommendation from America, to some extent have been able to take reasonably rapid action on these proposals but have been doing practically nothing about the very wide and vital plans which are being put forward by the United Nations as a whole for economic development.

After looking at the proposals and listening to the Minister introducing the Bill, it seems to me that the field to be served by them is quite limited, and the more one looks at the conditions which are to be applied the more one feels doubtful about the intrinsic value of the proposals. We do not doubt that there will be occasions when these funds will be used and will be of value, but one sees that the Bill is so cribbed and cabined that some of the most vital schemes, which all of us on both sides of the House are anxious to see developed, are not likely to be developed by means of these proposals.

My right hon. Friend referred to many territories, particularly in West Africa, where there is a good deal of anxiety about the proper field of private enterprise development. That is very natural in territories which are just reaching self-government. Clearly, there must be proper recognition of that anxiety and it surely must be possible to come to agreement on investments which will fully safeguard the position of the elected Governments of those countries and will take full account of the national feeling in those parts of the world.

It is important, for example, that it should be quite possible for the Governments of these territories to repurchase and take over any private investments that might have taken place. After reading some of the conditions which are laid down in the proposed Articles of Agreement of the International Finance Corporation, one must be full of doubt whether there is any intention to allow newly-established Governments of this kind to achieve full control of their own affairs, such as we on this side of the House desire. One wonders, therefore, whether territories in West Africa or elsewhere will be able to make use of the funds which are to be available through the Corporation.

It is striking that here, through this Bill, we are prepared to make a useful contribution to this Fund yet are not merely dragging our feet but are not making any movement at all, as far as I can see, in connection with the vital proposals which the United Nations is discussing at present. I understand that proposals relating to the S.U.N.F.E.D. scheme are to be put forward to the United Nations Economic and Social Council within a matter of days. There has been some modification of that scheme and I am not expressing an opinion now as to whether or not that is desirable. The modification proposed is that the S.U.N.F.E.D. scheme should at least have a chance of getting going for a trial period of five or six years, to discover what use can be made of larger funds without the kind of restrictions which are proposed in the case of the International Finance Corporation.

So far, we have had no indication from the Government of their attitude towards that trial proposal. We have had only a general reply to the earlier S.U.N.F.E.D. proposals—that the Government are not prepared to do anything until some considerable reduction in expenditure on arms can be achieved. Like my right hon. Friend the Member for Battersea, North, I feel that that is a wholly irrelevant issue. There is no reason at all why we should not express our willingness and give our leadership to enable these United Nations proposals to go forward.

This is vital because the funds which are available to the International Finance Corporation are liable to misrepresentation and to arouse misgivings in the countries which we all wish to see helped in their capital development. They are the very misgivings which would be avoided if fuller support and leadership were given to the United Nations proposals, which involve an all-in world effort, an attempt to join together all kinds of nations at different stages of development and in which there is no sense of subservience or of dependence among the nations who use the funds that are made available to them. The funds which are made available under the proposals in this Bill may indeed induce those feelings of anxiety which we on this side of the House feel. Those feelings have not been allayed by the Minister's speech in introducing the Bill.

I hope very much that when the Minister replies to the debate he will give a clear indication of the Government's views about the wider, much more important proposals which are actually under discussion in the United Nations. I hope that he will indicate that the Government have at least an equal anxiety for those proposals as for the modest and somewhat doubtful proposals which are incorporated in this Bill.

1.27 p.m.

Mr. William Warbey (Ashfield)

The question which we are discussing today is probably the most important of all questions beside that of war and peace, with which it is intimately connected. I am rather surprised that the Government should have chosen to bring the Bill forward as a second Order on a Friday, when large numbers of hon. Members are necessarily occupied in their constituencies. The need for capital investment in the underdeveloped areas is very familiar today. It has become familiar very largely as a result of the investigations and discussions which have taken place through the United Nations and its Specialised Agencies.

Today, when one speaks of the fact that 1,500 million people in the world have to endure daily endemic hunger, it is something which has become almost a commonplace in the House whereas, before the war, it would have been comparatively unknown except to an enlightened few. That is the measure of the problem and the extent of the background against which we have to consider the Bill. We have to consider what contribution the Bill and the International Finance Corporation are going to make to a situation in which two-thirds of the world's population enjoy only one-sixth of the world's income.

It is a situation in which those two-thirds enjoy a standard of living which on the average is only one-tenth of that of the standard of living in the more fortunate countries, and a situation in which the expectation of life is still on the average about 27 to 28 years, compared with 68 to 69 years in the privileged countries of the world. That is a situation in which conditions of health, housing, literacy, education, and so on are at an appallingly low level, and where life is nasty, brutish and short.

The reasons for the existence of these conditions are also fairly well-known. They are due to low productivity and also to a good deal of exploitation by the wealthier countries. A great deal of this exploitation belongs to the past although there is a hang-over—and a quite considerable hang-over at that—of it to the present. The exploitation has taken the form, for example, of exporting primary products at extremely low prices and of inflicting upon the countries concerned, through the anarchy of world trade, extreme instability in the source of their main incomes. Very little has been done to cure that, as we have seen from the experiences of the last three or four years.

The exploitation has also taken the form of private capital investment, the subject of which we are considering this afternoon; and the toll in the form of interest, profits and dividends which has been taken from the underdeveloped areas by the wealthier countries is quite substantial. That toll still goes on. It may not apparently take the crude form that it did in the past, and yet I notice that this country last year received £188 million in the form of profit, interest and dividends from the rest of the sterling area. Every year we get an average of about £200 million from that source.

It does not all come from what one might call the underdeveloped parts of the sterling area. I do not know whether the Economic Secretary could give us a breakdown of that figure, because it would be very interesting to know to what extent the United Kingdom is benefiting in its balance of payments and also in respect of the incomes of the wealthier citizens of this country from that toll from the underdeveloped parts of the British Commonwealth.

Generally speaking, private enterprise has gone where it could get quick profits. It has been greedy for the big rake-off. It has gone mainly into the extraction industries. A survey made by the United Nations experts in 1953 showed that the United States investment in the underdeveloped areas is mainly in the extraction industries. About 39 per cent. of it is in oil and mining. We have seen from a recent report of the Economic Commission for Europe what very high profits can be gained from investment in oil.

So private enterprise has not a very good record, and it is not at all surprising, as my hon. Friends have said, that many of the underdeveloped countries, most of them having achieved fairly recent nationhood or are beginning to move in that direction, feel that they do not want a repetition of that sort of thing again. There may, indeed, be something owing to them, and I should have thought that we might have had a little on our own consciences about what we have drawn in the past from those countries and how much we owe in the form of debt to them which ought to be repaid now.

It is a moral obligation not merely to do one's duty towards one's neighbour, whether that neighbour is next door or in Britain, Africa or Asia, but also a moral duty to make good some of our past sins. I hope we shall begin to approach that matter with perhaps rather less self-satisfaction for what we are doing—because we are doing something—than a much greater desire to measure what we are doing against the size of the problem that exists.

What is the size of the problem? No one can estimate it accurately, but here again United Nations investigations have led to the conclusion that in order to raise the standard of living of the underdeveloped areas of the world, of the 1,500 million underprivileged peoples of the world, by the very modest figure of 2 per cent. per annum, an annual capital investment of 19 billion dollars will be required.

Something can be done internally but not a great deal, because these people have low standards of income and obviously they cannot offer very much for investment. But we cannot leave them to pull themselves up by their boot straps. It has been estimated that they could contribute themselves about a quarter to the total investment required. That would leave about 14 billion dollars to be supplied by the privileged countries of the world.

What contribution is being made towards that sum? From calculations I have seen it appears to be about one-tenth; that is to say, if we take all that is being done by this country and by the Colonies in their contributions to the Colombo Plan and to technical assistance and all that is being done by other countries in similar ways, either through the United Nations' Agencies or by local arrangements, it amounts to about a billion to 1½ billion dollars or about one-tenth of what would be required to raise the standard of living by this modest figure of 2 per cent.

That leaves about 12½ billion dollars annually to be found. That seems a colossal sum, and it is considerably larger than the £5 million which we are considering in this Bill. Nevertheless, it happens to be only just about one-fifth of what the N.A.T.O. countries alone are spending annually on armaments—I believe they are spending about 64 billion dollars a year—and represents probably one-eighth of what the world as a whole is spending on armaments.

But let us take another small measure and that is what this sum involves. It represents about 2 per cent. of the national income of the privileged group of countries, the world's more prosperous lands. So that is not a very big figure looked at in that way. It corresponds to about half the annual increment in the national income of the wealthy countries.

Since the war we have had in this country an annual increment to our national income of about 5 per cent. It averaged 6 per cent. under the Labour Government; it dropped to 3 per cent. per annum under the previous Tory Government. We hope they will do better now; it is averaging between 4 and 5 per cent. This means that if we were to make our contribution as a country towards what is required in the underdeveloped areas in the way of capital development, we would have to contribute only one half of the more or less normal increment to our national income.

Is that something beyond our capabilities or our responsibilities? Is it something beyond the capabilities and responsibilities of the United States and of the other relatively prosperous countries of the world?

Sir E. Boyle

May I ask a question, as I am interested in what the hon. Gentleman has said? Is he suggesting that the increment should be devoted to expenditure of this kind, in preference, for example, to strengthening our balance of payments? In that case, does he disagree with his right hon. Friend the Member for Leeds, South (Mr. Gaitskell) that the first call on our resources should be to strengthen our balance of payments and get a £300 million balance?

Mr. Warbey

The solution of the balance of payments problem lies in other directions. If we are to make our contribution to the rest of the world we must make some sacrifices. What it comes to in essence is that we have to sacrifice some part of the anticipated increase in our own standard of living, though not the whole of it.

The solution of the balance of payments problem is a question of controlling our imports and our exports, a question which the Government have done scarcely anything to tackle. I am surprised that the Economic Secretary should intervene on that point because he knows that his Government have rejected the kind of methods that a Labour Government would use in order to ensure that what we imported into this country was no more than we could pay for, and that we imported the kind of goods needed to build up our own productive industry and to maintain the welfare of our people.

That still does not alter the fact that if we were to make our contribution towards the development of the underdeveloped areas, that contribution would undoubtedly take the practical form, in the main, of an outflow of capital goods. That is something we must face. I believe that we should face it and that the people of this country would be prepared to face it if the issue were put fairly and squarely before them.

There are different ways of financing capital development in the underdeveloped areas, and one is proposed in this Bill. We are not objecting to it. We are not opposing the Bill as such but. as my hon. Friends have said, it is only one of the possible ways of doing it and it is only a limited and restricted one at that. In view of the magnitude of this problem we must tackle it on a worldwide scale and without the restrictions which are necessarily imposed by people who approach these questions with the mentality of private investors and bankers.

The investment under this Bill will be controlled by a set of bankers who are governed by conceptions of sound finance. We have had experience of that in this country. We know what conceptions of sound finance on the part of the Governor of the Bank of England meant to this country in the 'thirties, and we know the conception of sound finance on the part of a Tory Government in their use of the crude weapon of raising the Bank Rate in order to deal with internal economic problems. Time and again we have seen the expression used by international bankers that it would be desirable if some of the countries which are trying to expand their productive enterprises were to pursue deflationary policies in order to meet the inflationary tendencies which undoubtedly come with large-scale capital investment.

Therefore, we do not anticipate that the method of financing proposed in the Bill will go far towards helping to solve this problem or, indeed, that it will be very much welcomed by the countries where the help is most needed. I know the Economic Secretary will say that they are in favour of it, but they are in favour of it only because they have been left with no alternative. They are in favour of it only because the large-scale public investment, directed by an international development authority which would be able to ensure the co-ordinated and integrated economic development in the underdeveloped areas which they require, has been barred by this Government and the Government of the United States. And it has been barred mainly because of their doctrinaire preference for private enterprise, which is written all over the Articles of this Corporation, and which is reflected in the composition of the governing Board.

For example, I observe that two countries will have a controlling interest, that is to say controlling voting power, in this Corporation. Those two countries are the United States and the United Kingdom, the two countries which at present have Governments which show this doctrinaire preference for private enterprise in all they do.

Therefore, when they make excuses about their failure to support S.U.N.F.E.D. or the establishment of an international development authority, and try to suggest that that is merely due to the fact that we have not yet achieved the world disarmament programme, they are advancing a disingenuous form of argument. It ought to be remembered that when S.U.N.F.E.D. was first suggested, although proposals were made that savings from disarmament could make a substantial contribution towards it, it was never suggested that that should be the sole form of contribution; indeed the Resolution of 23rd June, 1952, of the General Assembly which accepted the idea of the Special United Nations Fund. stated that it would be necessary to keep in mind the utilisation of any savings that might accrue from any permanent form of disarmament as one of the sources of contribution. It said "as one of the sources" but not as the sole source, as the Government now suggest.

It is patent that if the Government can find £5 million of public money for the International Finance Corporation, they could equally find a much larger sum for S.U.N.F.E.D. and for the establishment of properly co-ordinated development in the underdeveloped areas.

I want to conclude by making a suggestion for which I do not make my party responsible as it is purely individual. I suggest that the Government should announce the imposition of a 2 per cent. sales tax on all personal consumption in this country.

Sir E. Boyle

In addition to Purchase Tax?

Mr. Warbey

Yes, in addition to Purchase Tax; a 2 per cent. sales tax the proceeds of which, after the deduction of administrative expenses, would be used solely to build up a fund for international development in the underdeveloped areas.

Such a tax would help to mop up some of the surplus purchasing power about which the Government appear to be worried and which, according to the "Economist," is likely to amount to about £300 million this year. It would mean a comparatively small burden on a public which had to bear an increasing price level over the last three years or more. I am sure it would be a burden which would gladly be borne by the people if, by an extensive publicity campaign, they were made to appreciate the purposes for which the tax was being raised. After all, it would be a matter of only ¼d. in ls. on people's purchases.

If exemptions were made in respect of essential foodstuffs and medicines and perhaps certain other items, the tax would not bear very hardly on anybody. It would be roughly graded according to ability to spend. The more people spent the more they would contribute, and some people are spending a lot at the present moment out of the capital gains they are making on the Stock Exchange. Such a tax would probably raise £150 million, and this would be more than enough to start off S.U.N.F.E.D. and bring into being an imaginative scheme which would begin to match up with the requirements of the underdeveloped areas.

If the Government were to announce such a proposal and a pledge to supplement the fund by half of what is saved by disarmament when that takes place, a thrill would go round the world. It would evoke a response on the part of the people of the United States, who are most generous and would be prepared to make a similar contribution and press their Government to apply it. It would arouse new hope among millions of people who today live in poverty, hunger and dirt. Coming from a Conservative Government, it would make people wonder whether the Conservatives had changed their colours.

1.54 p.m.

Mr. James Johnson (Rugby)

Earlier, the Minister made what seems on the surface to be a most attractive proposition. So it will appear to many of the backward peoples in all parts of the world who are living in hunger, poverty and squalor. It will seem as though the 100 million dollars of investment, particularly when over 50 per cent. of it is subscribed by the two Anglo-Saxon nations, is a fine thing.

We can all subscribe to the sentiments behind the offer: but we ought to look twice at it, and see what lies behind it: to ascertain what conditions are likely to be applied when it actually comes into practice. The facts of the situation are well known, particularly in respect of Africa. Poverty is endemic, as my hon. Friend the Member for Ashfield (Mr. Warbey) has said. Even more important, I want to emphasise that we have a conscience in these matters, and have to repay these coloured peoples in some measure the debt that we owe them, because of what we did in the past.

If this proposal is to go through as it should, it will mean some denial and shortage at home. If we do intend to play the game, to carry out what we often say on platforms we should do, and to tackle the task on the scale on which it should be tackled and not in the cheese-paring way in which we are now proposing to do it, it will mean the tightening of some belts at home.

The important field of investment needed in Africa is in agriculture. It is because of that that I look a little askance at some of the investment in industry, which will, by its very nature. because of the backward state of education, particularly technical education, on the part of the indigenous people, mean that more and more Europeans will have to go to Africa. We have seen in Uganda the danger into which it is easy to fall: technicians of all kinds are going there. One need not elaborate the point too finely, but it leads to suspicions, fears, anxieties and mistrust in relation to having not only European but also Asian Ministers in a multi-racial Government. I urge the Government to realise the importance of this point.

However, investment in industry and mining will be needed if only to take the surplus population from the land. Not only in West Africa but also in East and Central Africa there is over-population in some parts; it is by no means so in all parts, but there are pockets of overpopulation. This is so in Kenya, where the first step towards solving the land troubles of the Kikuyu, Luo and Wakambo peoples would be access to the European highlands. Important as a follow-up is industry in Nairobi and elsewhere, in order to give Africans an opportunity not only to earn wages for a higher standard of living but to gain technical skills to qualify them in their fight to hold their own with the more advanced, including more technically advanced, Western peoples who have come among them in their own land.

At first glance, the Bill appears to be a good thing, but how is the Corporation going about its job? I should like to put one or two questions to the Minister. On the basis of its constitution, it is concerned primarily and essentially with private investment. I need not go over the ground covered in such an admirable fashion by my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop). However, we shall be using public money provided by taxation in the United Kingdom to bolster up private enterprise in the Colonies.

Of course, I do not say that all the business people who go out there are villains. There are such firms as Unilever, and, indeed, on the Copperbelt itself good is being done by capitalist concerns in the way of welfare, and housing. But why should there not also be public enterprise? When the Conservative Party was in opposition it constantly sniped at the C.D.C. and other schemes of public investment in Africa. Now the Conservatives are in power, and can determine how taxation shall be used, cannot they make up for their past misdeeds in this direction, and assist public investment, never mind what they have done or have left undone in relation to S.U.N.F.E.D. and other United Nations world commitments?

I was in Brussels a few months ago, at an international conference of young colonial peoples. There is on the part of all so-called underdeveloped peoples who are emerging into independence—Indians, Indonesians, Burmese, and so on, besides Africans—an overwhelming suspicion of international capitalism when it enters young, immature and unsophisticated communities. We have seen what has happened in South-East Asia and elsewhere. So we must be very careful about the conditions in which we invest this money, particularly in East and Central Africa.

We must see that capital which is available for private use is not used for anything in the way of public works and utilities, which should be socially owned and conducted by public authorities. I hope that it will not get in the way of what in the past have been the High Commission's activities in East Africa. I cannot understand why, in page 5 of the Articles of Agreement, Section 3 (vi), says that the International Finance Corporation … shall seek to revolve its funds by selling its investments to private investors whenever it can appropriately do so on satisfactory terms. If we can visualise Uganda in the future as a black African State such as that which is now emerging in the Gold Coast; and also Tanganyika in those terms, we say that West Africans like Dr. Azikiwe, Mr. Nkrumah, and others, are tough enough to invite American capital to come in, and hold their own with this private investment. But we say that in East and Central Africa that is not so. They do not have sufficient political, social and technical education to stand up to those Western business and commercial firms.

Let us take Southern Tanganyika, where there is a coal field of almost 500 million tons of bituminous coal at Songea. Why cannot money from these international sources be used to develop that? The Royal Commission on East Africa spoke in terms of developing this Southern Province, which is well watered, fertile and sparsely peopled, and into which we could move many of the people from the more densely populated parts of East Africa. Why cannot money from the International Corporation, in conjunction with Government money, be used to develop these coal fields? Then, in the foreseeable future, when Tanganyika has its own African Government those will be wealthy holdings which can be handed over—obviously, as a commercial transaction—to that future African State Why not visualise development in those terms and not in terms of the Copperbelt, or what is happening in Kenya where, at Mrimba, south of Mombasa, there is a magnificent hill of thorium and uranium and other metals which is now being offered to public tender, for private capitalists to exploit and develop? These resources should be developed at least jointly, if not wholly, in the context of the future welfare of these people who are the indigenous people, and who will, sooner or later, govern their own land.

Can we look at it in that light and not base our ideas so much on the Copperbelt and other areas where, despite the amount which has been taken out, the people are still backward and without technical education? I am shocked. when we talk in terms of private investment and private enterprise, that in Northern Rhodesia, where, yearly, we have taken out scores of millions of pounds in mining profits, there are only eight Northern Rhodesian boys who are now at higher school certificate level. If we think in terms of the indigenous people ever holding their own with Europeans, we have to plough back very much more indeed of the money coming from industry.

Let us listen to people like Kwame Nkrumah, on the Gold Coast, who said that there had to be certain conditions for outside investment, particularly in connection with the trade unions. Mr. Nkrumah also said that employment should be given to local people; other things being equal, to the people who actually live in the territories. He also said, and this I echo, that technical skills should be taught and local technicians employed.

One of the most moving things I saw in the Middle East, in Kuwait, two years ago—there is an oil company there which is 100 per cent. private enterprise doing the job—was to see Bedouins from the desert sands, without academic education, being taught technical skills so that they could take their place alongside American and British technicians in the oilfield of Kuwait. We should have that in mind in investments of this kind in Africa. Trade union conditions should operate and trade unions with the right of association should be constituted in all those areas where this future investment is to take place.

The Labour Party did that when we were in office, in the Colonial Development and Welfare Acts. We wrote such provisions into the Acts. I do not say that they could be in this Bill, but I hope that the Minister will bear them in mind, and use all his offices to impress on his colleagues here and in the United States that the C.D. and W. terms of conditions would at the very least be essential for anything into which we enter, and on which British public money is to be spent.

To what does all this suggested for the future amount? It is simply that when we put public money into overseas private concerns, I hope that we shall be within the terms of the C.D.C. and the Colonial Development and Welfare Acts as in the past and not within the terms of the findings of the Royal Commission on East Africa. The Commission found, to paraphrase its findings, that State intervention in the economy interferes with the free play of the market and, therefore, impedes economic progress; and that, therefore, State interference should be ended or minimised.

That was much of the substance of the Commission's findings. We are opposed to the terms and philosophy, and whole spirit of this kind of Bill. We say that, particularly in the African Colonial Territories and Protectorate Territories we must make sure that we do not spend public money to help private enterprise, without being careful how it is spent. We must always safeguard the conditions of work of the indigenous peoples.

2.7 p.m.

Mr. Leslie Hale (Oldham, West)

Judging by the few Members present in the House, this may not appear to be a historic occasion, but it is historic, because it is the first time that I have listened to two consecutive speeches from this side of the House and found myself in agreement with both. This leads me to the conclusion that the unity of the party will ultimately come on the basis of agreement with me.

I hope that no remarks of mine will do any harm to the no doubt brilliant career of the Economic Secretary to the Treasury, to whose speech I listened with pleasure and interest. He always speaks with ability, pleasure and clarity, and normally with a high degree of sincerity that I have not come to expect from other occupants of that Bench. I can only explain his speech this morning on the basis of the sudden ebullition of joy of vicarious paternity—that he should look at this deformed, repellant and stunted infant, and that it should appear to him as attractive and beautiful, as he described it.

The years of disappointment which we have spent here—four of which the locusts have eaten recently—have inured us to saying that half a loaf is better than no bread, and let the dogs eat the crumbs that fall from the master's table. We may be fond of a few crumbs and there may be a crumb of comfort here, but it is not very much. This is the end of what was a great vision. This is the end of something that started as an epoch-making event in world history.

If the right hon. Gentleman—and if he is not right hon., I am sure that he soon will be—will, before the Committee stage, take Harrod's life of Keynes and read that graphic and moving description of the joy at Bretton Woods when international agreement was secured for the International Monetary Fund and the International Bank, he will read of the late Lord Keynes almost singing to them and receiving an ovation. Two men were the pioneers of this scheme and saw the vision—John Maynard Keynes and Harry Dexter White. They really thought, when they got complete international agreement on this, when the Russians had agreed to increase their contribution, that they had made a great advance on the road to international understanding, international tolerance and, though I hate the phrase, a global outlook on world affairs.

John Maynard Keynes died prematurely the following year, when only 62. He was a loss not only to economics, but a loss to the cause of international understanding. Harry Dexter White died of a heart attack after being cross-examined by the Un-American Activities Committee. It is fair that we should say in deference to him that the International Bank has not indulged in any un-American activities. I agree with my hon. Friend the Member for Ashfield (Mr. Warbey) that America has a greater contribution to make to international understanding than any other country.

I have no thought of being anti-American. In many of these affairs the Americans have acted with great generosity and great statesmanship. Their record in international affairs over the last few years can compare favourably in many respects with the record of any other country. The attitude of most members of the United Nations organisation compares favourably with our own. But the record of the Americans on the question of the International Bank is a miserable record, and I imagine that that is because the Bank is run by the politicians and financial experts instead of the international experts.

What happened? It started, as Keynes said, on the wretched argument as to where the Bank was to operate. As Keynes said, one cannot run an international organisation from one of the larger countries in the organisation without running the risk of it being dominated by that country. Of course one cannot. That was the reason why the League of Nations went to Geneva, and why we said, "Let us go to a small and highly respected country which cannot dominate the thing, so that all nations can feel that they have a share in the operation."

I do not know whether the Economic Secretary remembers the rather miserable compromise. We did not agree to the Bank going to America—I think I am right in my recollection—but finally we had to compromise, as the vicar compromised with his wife when they chose the colour of a room which was to be redecorated. She wanted blue, he wanted pink, and they compromised on blue, as I usually compromise in my own home. We said, "We will have it in the country which pays the biggest contribution." That is how, I believe, it is laid down today.

Everyone knew who would make the biggest contribution, but we did not actually physically agree to Washington. However, it has been operated from there. If the Economic Secretary examines the details, he will see that this Bank, which was going to revolutionise investment throughout the world, has made a loan of 250 million dollars to France. I am speaking from memory and I do not guarantee the figures. I never guarantee my figures when I speak from notes. because I can never read my writing.

The Bank made a loan of 250 million dollars to France, one of 100 million dollars to Denmark, and one of 40 million dollars to Finland. Apart from South Africa, I think that I am right when I say that the first 600 million or 700 million dollars went to Australia, Western Europe and South America. Every cent of that was in dollars.

That was to enable people to buy American goods. It is quite true, in fairness to the Americans, to say that, of course, people were applying for loans to buy American goods. They had to. They were all short of dollars, because of the American economic policy of selling more than they buy and of having tariffs on imports and forcing the world into an unbalance which, in the years to come. could easily be one of the causes of future international misunderstanding. We have no right to complain; we did it in our years of prosperity.

The world ought to have learned the lesson by now. As long as a country sells more goods than it buys and exports without correspondingly importing, of course it is exploiting the rest of the world and forcing the other countries to submit—whether through the International Bank or not makes no difference at all. If a country owes 100 million dollars to the International Bank it is in the same state as if it owes that money to Wall Street. The loans were not made on terms that were so generous. They were made on terms of about 3⅞ per cent. interest and 1 per cent. commission—near the 5 per cent. mark. I think that I am quoting the figure of the last loan to Yugoslavia. I think that the last two or three loans were made on about those rates.

Of the 1,500 million dollars that have been lent, the overwhelming part has not gone to the underdeveloped areas, but to countries who are regarded as being among the most prosperous nations on the earth. I agree that some has gone to India and Burma, but that was in comparatively small sums. I think that I am right when I say that when we had a loan to Northern Rhodesia that was in dollars. For all practical purposes, as the Economic Secretary knows, those dollars are blocked. If the Bank is pouring out dollars, it is adding to the unbalance and destroying the possibility of rectifying it by normal means. It puts on the other nations the burden of buying in America.

That is a melancholy record. British Governments have been to blame in this. I think that the Americans like to be criticised. They are a forthright people, an experienced people. There is much that they can teach us and much that they can learn. They are a very great people, but I resent the attitude that, if America says something, we have to agree to it. I do not think that we win their respect by doing that.

The next thing that happened in the history of the International Bank, and a very important thing, was that the Colonial Development Corporation, applied for a loan. This is rather remarkable, but it did, and the negotiations broke down. Lord Trefgarne, who was then the noble Lord in charge of the Colonial Development Corporation, said that it was because the Bank insisted on conditions with which he could not comply. My recollection is that my sympathies were rather with the International Bank than with the Corporation, because the conditions on which the Bank insisted were very full and detailed reports, among other things, and it might have been well to have had full and detailed reports on some of the ventures for which the Corporation was at that time responsible.

But it was a blow when we found, by what I think was probably a misunderstanding on both sides, that the one thing that we thought the International Bank would do was not to be done. We suddenly found that it could not do it, and there has been no colonial investment by the Bank as such on the lines that my hon. Friend the Member for Rugby (Mr. J. Johnson) suggested—the sort of investment that is of great value to the Colonial Territories. There never has been any. I will come to the question of Northern Rhodesia in a moment.

That is a tragedy. It is a tragedy, in the light of events, to look at what we are doing. With all respect to the Economic Secretary, he has not really explained the position to the House. Vaguely he says that the existing agreement does not permit the investment in equities and, although this will not be an investment in equities, it will be an investment through Governments to private enterprise and needs some new procedure. Therefore, we have to set up an organisation which was turned down almost unanimously in 1951. We are to set up this organisation to provide this limited finance for private enterprise development in, said the Economic Secretary, the underdeveloped territories.

It is in the underdeveloped countries that we come to one of the main difficulties. As I understand the Agreement—and I do not know whether anyone fully understands it—it is limited to member countries, and, no doubt, to their colonial possessions, too, in so far as they have not given them such a measure of self-government as to take them out of the operation. We will assume that it is limited to member countries.

These poorer countries which are unable to afford to come in can have no benefit at all under this Agreement. They are not even entitled to come in. They can apply at a later date and possibly have a chance to come in, but, as I understood the Economic Secretary, the policy of Her Majesty's Government at the moment is that they will not admit them. If they do admit them, they will have to come into the whole Fund and into the International Bank itself, with the full levy upon their resources and population before they can participate.

What does that mean? In the terms in which we have been thinking, and in the terms in which the hon. Member for Ashfield made a most courageous and statesmanlike suggestion, and one which I heard with very great joy—I say at once that I have not looked at the details and I do not know whether his figures are correct and whether the revenue would be as much as he said; I could suggest other methods; I would do away with an aircraft carrier or two if necessary—I am perfectly certain that he has the right intention, and that the people of Oldham would willingly make a little sacrifice of the kind he suggested if they thought that it would help to lay the foundations of peace in the world and the foundations of human brotherhood and human prosperity.

I have not had time to look at the figures, but the Economic Secretary will remember the magnitude of the report of the Economic Committee of the United Nations Organisation which was set up to consider this matter. They were talking of 5,000 million dollars a year as the sort of expenditure which could be calculated to raise the standard of life of the depressed areas of the world by 2 per cent. a year over a period of 25 years——

Mr. Warbey

Twelve thousand million dollars.

Mr. Hale

Five thousand million pounds or 12,000 million dollars. It is in the light of these figures that we come here today and talk about an important Measure which is going to raise this 2½d. sum which, so far as our contribution is concerned, represents the cost of one aircraft carrier, or even less than that cost. We are doing nothing for S.U.N.F.E.D. and virtually nothing for the International Children's Fund. In the world today there are 300 million people suffering from malaria who could be cured. They hold up their hands to heaven, and we, even now, are introducing a Bill under which they can get no benefit at all. This is in a world in which millions of people and children are suffering from yaws, who could be cured at the cost of 20 cigarettes.

We are talking now about private enterprise investment. To help whom? There we come to the major problem of our times. It is contained in the report of President Truman's Raw Materials Policy committee which was presented to the President some three or four years ago. The major problem of our times is where the raw materials are to come from to feed the juggernaut of the economic machine which Western Europe and America have constructed.

We know that when experts prophesy they are not always right, but they are not always wrong. There are not enough raw materials being produced in the world to keep the machine going. Unless some conception of humanity is introduced, we shall be forced inevitably along the road of bringing mines into the Colonial Territories to dig out raw materials needed by Western Europe and by the American industrial machine, without regard to whether we are producing the things which the world really needs. We shall be producing, not under the Socialist scheme of production for use, but under the capitalist scheme of production for profit. [Laughter.] Hon. Members opposite may laugh, but the point is that they believe in production for profit. If we are to make developments in the Colonies on industrial lines, we have to make them on the conception of the pioneers, experts and technicians who created the Tennessee Valley Authority.

The Economic Secretary knows precisely what will happen in these countries. He knows what is happening now. We are to lend money to private enterprise to start a mine in Uganda or in Northern Rhodesia or one of the Colonial Territories. That means dormitory labour. Do we retain any right of supervision over the conditions of employment?

Have we any right to make stipulations in regard to wages in countries where there are no trade unions? Have we reserved any power to ourselves to look at the social or political implications of the scheme? Or is it only necessary for someone to come along and say. "The world needs copper and we have an option on some copper. We are going to dig copper and here is our plan. Lend us the money and give us the guarantee of the Government." Hon. Members opposite may laugh at these things, but there has been experience of them in the past. Mr. Oram knew the worth of copper; and King Leopold knew the worth of copper in the Congo.

Mr. William Shepherd (Cheadle)

The hon. Gentleman is annoyed because we laughed. Is he aware that we laughed only because he appeared to be criticising the commercial considerations involved? Would he agree with me that immense damage has been done to the whole conception of colonial development since the war by the unwise developments which have been undertaken without proper commercial considerations? Is not the proper course to get these things on a sound economic foundation?

Mr. Hale

No one has ever attacked the commercial considerations.

I am a company director, but I have never accepted a director's fees for two reasons. First, because I do not believe in them, and, secondly, because I feel that I am unworthy of them. I would agree with the hon. Gentleman that a colonial scheme is better if it is successful than if it is not. I am sure that he would not wish me to discuss the implications and the social effect, although I will make one other comment on them. If the money spent on the Tanganyika groundnut scheme had been spent in Kenya, even if it had not succeeded and there had been left only the shadow of the railway and materials and hospitals and the various amenities that were left in Tanganyika, that might have saved a very great tragedy which proper statesmanship could have avoided. One cannot visualise these things wholly in terms of profit.

We must have regard to the political and social considerations if we are to develop these lands at all. If we put a copper mine in Uganda—I believe that one is being developed now, but I know nothing of it individually—and what I say is not directed as a criticism of that particular mine—we come up against the question of dormitory labour; of taking African workers great distances from their wives and families for long periods. We put them in competition with the economic considerations of the surrounding neighbourhood. The poor fisherman, for example, is in the dilemma of having to give up work in which he has been engaged and which he has enjoyed for years and going off to seek higher wages, or seeing his standard of life diminish.

Then, of course, unless the position is watched, unbalance results, and only consumer goods are provided. I suggest that if there is to be any large-scale scheme, there must be some measure of education going with it; some planning of leisure, and some plan for agricultural, industrial and other development to add to the amenities of the population.

These isolated examples of individual industry are limited in an impressive manner to private enterprise. Private enterprise appears all over these things like spots on a man with measles. The whole object would seem to make clear that the International Bank does not want to touch anything like a world coal board or a European steel corporation, or anything like that, but to apply itself solely to the question of directors' fees.

I know that the Economic Secretary will agree that the present raw material policy is a major consideration of world government. We talk of "automation," this new concept of mechanics, which may be even a greater devouring force of raw materials. But the Report of that Committee to which I have referred, which has never been seriously challenged, is a challenge to the world. It represents a phase of complete unbalance.

It represents even more, and I know that the Economic Secretary will not quarrel with me, because today I am not trying to be controversial. It represents this. If in our world economic policy we are being diverted to a policy of extraction and development and rapid increase of raw materials for the use of industry, we are being diverted from the other main policy of food production. We may not have the resources to develop both together. We may well find, as we spread our industry in certain Colonial Territories, that we are not increasing but reducing the production of food. That is one of the dilemmas which the world must face.

That is why I say that those of us who have devoted a great deal of time and attention to this battle against want. this war against disease and the attempt to root out the economic causes of war as a major contribution to the cause of peace, have been conscious of the magnitude of the difficulties of that task. We have always been conscious that in embarking on that road, we might be embarking on a road which would lead to international understanding and tolerance, and on a course on which one could focus, as on no other course, the idealism of individualism, of Christianity and of Communism, too; because all of them have some basis in the rights of man, and in the respect which should be due to the right of man to a full and abundant life.

That is why today, when we come with this Measure, at the end of the road which I have mentioned; when we come with this small and, oh, so disappointing Measure, when so much could be done, I say to the Economic Secretary in all sincerity, "Listen to what my hon. Friend the Member for Ashfield has said, and think it over." It may be that along those lines we could do something of which any Government could be proud. We could, give light to them that sit in darkness and in the shadow of death. … and we could, guide our feet into the way of peace. That quotation, which, I know, is very much respected, has been used many times before.

In international relations, we could recapture for Great Britain the moral leadership of the world. We could set an example which could inspire the nation. We could do something which would really break the deadlock and take a step in which I am sure the Government would have the full support of the House without party controversy. They would have that support, because, at long last, we should be doing something to show that Britain is a Christian country with the real spirit of fundamental Christian ideals.

2.35 p.m.

Mr. A. Fenner Brockway (Eton and Slough)

I wish to apologise to the Economic Secretary for not being present when he introduced the Bill. I was serving on a deputation to the Secretary of State for the Colonies about a related matter. But I have heard from my hon. Friend the Member for Oldham, West (Mr. Hale) a tribute to the quality and sincerity of the hon. Member's speech, and that makes me regret still more that I was not in my place to hear it.

I think that my hon. Friend the Member for Ashfield (Mr. Warbey) was not exaggerating when he said that the issue which we are discussing today is next in importance to the issue of war and peace. This is a very small Bill and gives very inadequate aid to the underdeveloped countries; but behind it is a principle of profound importance. We are living at a period when two-thirds of the population of the world is emerging to equality; is demanding living equality, social equality, educational equality and political equality.

That emergence is the real revolution of this century. It is the most dynamic change which is taking place. The Bill is almost trivial compared with the needs of that situation, but at least it gives us an opportunity to urge upon Her Majesty's Government that more should be done. The Bill is entirely concentrated upon the encouragement of the investment of more private capital in colonial and underdeveloped territories.

I wish to do two things in the short time in which I shall be speaking. First, I wish to point out to the House some of the dangers of the use of private capital for these purposes. Secondly, I wish to suggest, from practical experience, a constructive alternative.

In December, 1953, a social survey of non-self-governing territories was published by the United Nations. That report included some extraordinarily significant figures. Of them, the report from Northern Rhodesia, showing the effect of the investment of private capital in that territory, provides the greatest warning. It did two things. It gave the per capita income of the African population, which allowed for the value of subsistence production—the food which the African community produces for itself and which does not enter into the cash exchange. It was shown that the per capita income of the African population was £10 6s. a year. It also gave the per capita income of the non-African population, and that was £486 16s. a year.

If we assume that the usual non-African family is composed of three persons, the annual income of that family would be £1,460 8s. a year. If we assume that the usual African family is composed of six persons, its average annual income would be £61 16s. a year. The United Nations report did not analyse the non-African population in greater detail, but it is composed of both Asians and Europeans. The Asians occupy a middle stratum.

I think that one can safely say that in a country where private enterprise is operating so largely and where the African per capita income is only £10 6s. a year, or less than £70 per family a year, the average income of the European family would be nearly £2,000 a year. There, side by side in that country, we have a luxury standard for the European population, which reaches the American level compared with the standard of utter destitution for the African community.

But that is not the worst feature of this report. The feature to which I now propose to refer particularly illustrates the effects of the investment of private capital in the enterprises at which this Bill is aimed. The United Nations report also gives an analysis of the amount of the production in Northern Rhodesia which goes in the payment of dividends, profits and interest to financiers in other countries. It reveals the extraordinary fact that one-third of the total value of the national production of Northern Rhodesia goes by way of profits, interest and dividends to private financiers in Britain and America.

The figures are given for a number of years. In 1946, it was 25 per cent.; in 1947, it was 41 per cent.; in 1948, it was 38.5 per cent., and, in 1945. it was 30.6 per cent. I have tried to get the figures for more recent years, but have been unable to do so. What does that indicate? It indicates that in these underdeveloped areas where the African population is at destitution point and where the non-African population receives fifty times more than the African population, one-third of the total production of the territory is taken in profits, interest and dividends by outside financiers. That illustrates the danger of relying merely upon the investment of private capital in these under-developed territories.

I have no wish to be satisfied with a negative criticism, and I will put forward an alternative which is to be found in what I think is the most inspiring thing that I have seen in Africa. It is the Gezira scheme, in the Sudan. There a million acres of what was arid land has now been converted into the most fertile land. I would say that in that area has taken place the most extraordinary economic revolution ever seen in any part of the world since the beginning of the war.

In 1938, the average income of the peasants in the Gezira was £30 a year. The report of the Gezira Board shows that the average income of these peasants last year was between £600 and £650. There has not only been an amazing economic revolution in the conditions of these African people, but also a social and educational revolution. The sum of £750,000 a year from the scheme has been expended on educational and social development.

I have been there and I have seen the schools and the clinics in the villages and the village halls. There has been a great economic development, the dam on the Nile, the channelled water, which has meant the lifting of the standard of life of all those people. Perhaps the greatest feature of all of that scheme is that it is now entirely the property of the Sudanese people themselves.

It began originally as a tripartite arrangement between the Sudan Government, which on the economic side was then largely British, the peasants living on the land and two British finance companies. Those two companies represented the investment of private capital, which is the sole object of this Bill, but the concessions to them came to an end in 1950. The Labour Government did not renew them, and today this economic enterprise is the property of the Sudanese people who have to pay nothing by way of tribute to external financiers. The debt and the capital investment have been repaid. The Sudan Government is now the Sudanese Government entirely elected by the Sudanese people.

I suggest to the Economic Secretary to the Treasury that as he is looking at the development of African countries, he must look at this development on the model of the Gezira scheme rather than on that of the privately-owned copper mines of Rhodesia.

To those alternatives, I would add the following suggestions. First, I agree with the speech made by my hon. Friend the Member for Rugby (Mr. J. Johnson), in which he urged that the application of assistance to these countries should be directed much more to agricultural development than has been done in the past. I believe that we should be wrong to think alone in terms of mineral development and of capital investment of that kind. The first needs of these countries are hut-door needs, the needs of their immediate life, and I would urge that when we are thinking in terms of the financial contributions to those countries, we should put first the need for the development of good technical farming on a co-operative basis. I believe we shall find that that is going to be the greatest need in the development of these communities.

When private capital is invested in these territories, it should be the duty of Her Majesty's Government to see that certain conditions are applied. The first condition is that the African or other colonial indigenous communities should be trained in skilled tasks in those industries. My hon. Friend the Member for Oldham, West went with me to Toro, in Uganda, where the new copper mines are being developed in the Mountains of the Moon. I acknowledged the fact that valuable and important conditions have been introduced into the development of that mining system. One of those conditions is that a certain percentage of Africans shall be trained in skilled tasks. I very strongly urge that that should be made a condition of any Government assistance which is given to the investment of private capital in any Colonial Territory.

Secondly, it should be laid down that where the African or other member of the Colonial Territory is doing the same work as the European, he should receive the same wage. Thirdly, an opportunity should be given for the development of a trade union movement within those enterprises. Fourthly, there should be a limitation of the period for which capital investment is left in private hands. In the case of the copper mines in Uganda the period has been made ninety-nine years. In my view that is far too long. Long before that period comes to an end an opportunity should be given the people of the territory to obtain possession of the new capital enterprise in respect of which they have become increasingly experienced through being able to undertake trained jobs and move towards management.

The Egyptian Government are inviting private capital investment upon the extraordinary terms that that capital shall be paid back sometimes in twenty-five years and sometimes as quickly as ten years, because the returns upon capital in other parts of Africa—especially in mineral development—are very high. I submit that where capital investment is employed the term of the concession should be much less than ninety-nine years, so that within a reasonable period the territory may have an opportunity of taking over these great enterprises.

I support the appeal made by my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) that Her Majesty's Government should support United Nations' schemes. We were all disappointed when both the British and the American Governments turned down the proposal to set up a world fund for the underdeveloped countries. Both in America and Britain the statement was made that we could not afford to contribute to that fund because of the cost of defence. Last year, we spent £10 on defence for every £1 we spent upon any kind of scheme for world beterinent—including all the schemes of the United Nations and of our Colonial Territories.

Even from the point of view of defence the removal of poverty and destitution in the world is a more fruitful way of meeting the menace of Communist aggression than a concentration upon armaments. This issue will be raised again in the United Nations in the autumn. New discussions are already going on, and new proposals are being made. It is very likely that the American Government, largely because of the pressure brought to bear by the labour movement in America, will change their attitude in the autumn.

In asking us to accept this trifling Bill I hope that the Minister will be pricked by conscience to the extent of urging upon his fellow Ministers the need to support these big and worthwhile schemes, which alone can deal with the problem in a real sense. The Bill is a symbol of some desire to help the underdeveloped territories, but unless it is multiplied a thousandfold it will not begin to deal with the problem for which it is designed.

2.56 p.m.

Lieut.-Colonel Marcus Lipton (Brixton)

In introducing the Bill, the Economic Secretary seemed a little shamefaced about the whole proposition. He must be feeling even more shamefaced about it after the very eloquent and powerful speeches which have been delivered by several of my hon. Friends.

The speeches which have been made indicate quite clearly that this is a puny beginning, with no indication of a real urge on the part of the Government to go on to better things. I hope that the speeches will have made some impact, and that the Economic Secretary will be able to say that the Bill may be regarded as the first very small instalment in a task which the Government of this country—whatever party is in power—will have to tackle to an ever increasing extent.

What our people have not realised is the extent to which their standard of living, for several generations, has been based upon the incredibly low standard of living and poverty of millions of people in other lands. Those days have gone, and they are not going to come back. The sooner we recognise that fact the better. By its proposed contribution of £5.1 million the Bill shows a tiny and miserable recognition of that fact. With this proposed expenditure the Government are rather like Mrs. Partington and the Atlantic. Let us hope that the efforts of the Government and the other countries associated in this and other international organisations will be successful, and will lead them to make even greater efforts.

It is not without significance that no contribution has been made to this debate by any back bench Government supporter. The only speech in support of the Bill was made by the Economic Secretary to the Treasury, who was bound to carry out his instructions as a member of the Administration. It was left to the voluntary effort of his colleagues to put in a good word for the Bill, but none has been forthcoming so far. Perhaps they were given instructions not to take part in the debate. That is the kind of instruct tion which has been given to them on previous occasions by the Government Chief Whip, and it has been observed with a degree of humility which is to be expected from Government supporters in their relations with the Chief Whip.

In one part of his speech, the Economic Secretary was a little more shamefaced than in other parts, when he referred to the Clauses dealing with the immunities and privileges which it is proposed to bestow upon the officers and the staff of the International Finance Corporation. We have spent a good deal of Parliamentary time recently providing diplomatic immunities and privileges of various kinds. When the tale is told it will be that in the last two or three days the Government have made a bigger contribution in the bestowal of diplomatic immunities and privileges than any other Government have done within a comparable period.

The Government asked us on Wednesday to give diplomatic privileges and immunities in respect of the European Steel and Coal Community, the Commission for Technical Co-operation in Africa South of the Sahara, the Intergovernmental Maritime Consultative Organisation, Western European Union, and the World Health Organisation. Now, on a Friday, we are asked to carry the process a little further and to provide privileges and immunities for the International Finance Corporation. If the people realised what the present Government are doing they would be astonished and would wonder why all this found no place in the Conservative Party's manifesto at the General Election. The magnitude of this operation has exceeded everything else that the Government have done since they came to power. There has been no protest, and that will be so as long as this Government are in power. It may be very long before the people of this country have an opportunity of assessing what the Government have done.

Hon. Members on this side of the House will not oppose the Bill. This £5.1 million is better than nothing. but it is a little galling that after four years or so of Conservative Administration our credit in the international sphere is so poor that when we are asked to join an organisation of this kind we are told that Treasury notes are not good enough and "we insist upon gold or United States dollars." Our gold and dollar reserves seem to be still in a precarious situation. That attitude towards us is not only a blow to our pride, but must also be an economic blow to the Government when the time comes for them to produce £5 million in gold or dollars.

We shall make the best of a bad job, because we have to accept the fact that this Government are in power. We shall not oppose the Bill, despite its miserable contribution towards what my hon. Friends have shown is a fundamental task for civilisation, namely, the up-building, by whatever means may be at our disposal, of the standard of living in other countries. In my own constituency we have evidence of the need for the kind of work that we are asking the Government to do. Why are so many Jamaicans and other British subjects in the West Indies coming to this country? Because this kind of plan was not embarked upon a long time ago, with much greater resources than we are now asked in the Bill to provide. This kind of thing has repercussions all over the world, even in my own constituency. Therefore, while I deplore that the start that is being made is so meagre, I hope it will establish a precedent upon which we can build bigger and better things.

3.5 p.m.

Sir E. Boyle

By leave of the House, I will try to reply to some of the things that have been said in the debate, which, I think, has been an excellent one. I am glad that the hon. Member for Oldham, West (Mr. Hale) has been able to make part, at any rate, of the speech he was prevented from making on a private Members' day some time towards the end of the last Parliament.

Mr. Hale

Not gladder than I am.

Sir E. Boyle

Many of the things that have been said concern other Ministers besides me.

The hon. Member for Eton and Slough (Mr. Fenner Brockway) is out of the Chamber for the moment. I should have liked to have said to him that some of the things he said concern the Secretary of State for the Colonies and the Secretary of State for Commonwealth Relations as well as the Treasury, and I will see to it that they are informed of what was said.

I was interested to note that several hon. Members opposite suggested that the people of this country would be willing to accept a slightly lower standard of living for themselves even, perhaps, a small sales tax, to help the backward territories. I shall not argue that proposition today, but, of course, it is a little difficult to reconcile that with the argument made by many Opposition speakers during the General Election. The right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), for example, promised the people increased Government expenditure over five years of about £600 million, and said that could all be paid for by extra production.

Hon. and right hon. Members opposite must get clear among themselves where they stand in this matter. For instance, it is no good the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths) devoting the first part of his Election broadcast to saying we should have a great increase in the social services at home and then devoting the second half to saying that we ought to be thinking not so much of an increase in our own standard of living as of an increase in the standard of living of underdeveloped countries.

Mr. Jay

Would not the hon. Gentleman agree that it is possible to devote some part of additional income to advancing the standard of living of this country and some part of it to investment overseas? Will he take note that, although I agree with much of the speech of my hon. Friend the Member for Ashfield (Mr. Warbey) the idea of a sales tax is not part of the official programme of the Labour Party?

Sir E. Boyle

I was certainly surprised that so pure and unsullied a Left-winger as the hon. Member for Ashfield (Mr. Warbey) should have suggested anything quite so regressive as an overall sales tax.

I will deal straight away with the question of the territories which are included within the Corporation's field of activities. I apologise for not having been able to answer this point sooner. All dependent territories of member countries, for whose foreign relations the member countries are responsible, are automatically included, and independent underdeveloped territories may also join the Corporation if they are already members of the International Bank, as the great majority are. That, I think, is the position that the hon. Member for Oldham. West envisaged.

The hon. Member for Rugby (Mr. J. Johnson), who made, as he usually does, a very good and thoughtful speech, raised the matter of agriculture, which is very important indeed, and I am glad he mentioned it. The International Bank has made several loans to agricultural development banks. It has also made loans for public works such as roads and railways and irrigation, and all this helps agricultural development.

The hon. Member for Oldham, West asked about the proportion of the Bank's loans that have been made in dollars. It is perfectly true that a large proportion have been made in dollars, because the bulk of the Bank's lendable resources have come from the United States of America, but those dollar loans are not tied to expenditure in the United States and have been used to finance purchases in many countries. International Bank loans have been used to finance sterling purchases totalling about £55 million. They are not in any way tied to expenditure in dollar countries.

Mr. Warbey

The service of the loans has to be in the same currency as that in which the loan is made. In other words, when it is made in dollars it has to be serviced in dollars, which means that the recipient country, in the long run. has an outgoing of dollars.

Sir E. Boyle

I understand the hon. Member's point, but I thought it was worth pointing out that although the bulk of the Bank's resources have come from the United States the loans are not tied to expenditure in that country.

A very important point was raised by many hon. Members about Government enterprise. The position is that the Articles of the International Finance Corporation allow the Corporation flexibility in deciding how far a Government interest in an enterprise can be accepted. The International Bank can and does lend in order to finance development schemes run by public and Government enterprises. These enterprises obviously need not fear Government inteference as a result of the Bank's requirement of a Government guarantee of its loans. The restriction on the Bank to fixed interest loans is not so damaging to the Bank's ability to lend to public enterprise as to private enterprise, and it is the Bank's activities in the field of private enterprise, therefore, that need supplementing by the proposed Corporation.

Another point, which was raised by the right hon. Member for Battersea, North (Mr. Jay), was why the Corporation could not sell its investments to public undertakings as opposed to private enterprise. The object of the Corporation is to encourage the growth of private enterprise and it is no part of its purpose that it should serve as a channel through which Governments can purchase shareholdings in private companies. But I give the right hon. Member an assurance that the Corporation will not interfere with the policies of member Governments in this regard. The Corporation is debarred from interfering in the political affairs of its members and it may not finance an undertaking if a member Government objects. That is an important safeguard and I am sure that the point about social standards will be borne in mind all the time by the Corporation when it does its work. The rights of Governments are protected against external interference by the Corporation.

Mr. Jay

May I ask whether Article III of the Agreement, where the buying and selling of securities is mentioned, would prevent an enterprise such as the Gezira scheme, which started by way of private enterprise, from coming finally wholly into the ownership of the Government or people concerned?

Sir E. Boyle

I cannot answer that offhand. I shall study what has been said about the Gezira scheme and I will write to the right hon. Member or any oilier hon. Member who is interested if a specific answer is required on that point. I also said earlier that I would see that the speech of the hon. Member for Eton and Slough would be noted not only by the Treasury but by the other Departments concerned as well.

There are two slightly more general points. The first is the question of private finance. I do not want to dispute the question of the record of private companies in the past or of imperialism. It is a big subject and I do not want to embark upon it now. I assure the hon. Member for Ashfield that I have read Hobson and that I have also read the historian W. L. Langer on the subject of imperialism, and am familiar with both sides of the case.

The hon. Member for Oldham, West referred to Mr. Harrod's interesting life of Lord Keynes. It is right to say that in the later years of the war most planners in the economic field thought that we could manage our affairs by a combination of laissez-faire in external relations and unsound finance. Professor Sir Hubert Henderson, whose writings have just been edited, used to complain time and time again, in his war-time Treasury papers, of this tendency to think in terms of laissez-faire coupled with unsound finance. But since the war there has been some revival of the ideals of sound finance, coupled with greater scepticism about complete laissez-faire in international economic relations.

I think that my hon. Friend the Member for Cheadle (Mr. Shepherd) was quite right when he said recently that sound finance is vital to the maintenance of confidence. Equally, most people would now agree that the conditions for maximising world trade are rather more complicated than was realised during the war.

Mr. Hale

That was the policy of the Conservatives when in opposition.

Sir E. Boyle

I do not think I agree with that. I do not think that that is wholly true.

The last point I should like to make is this. We should like to be able to devote more of our resources to overseas development. At the same time, I think that we in this country must always keep before us the vital importance not only of maintaining an adequate gold and dollar reserve, but of maintaining our balance of payments as well, because only if we have an assured surplus in our balance of payments shall we be able to play our full part in overseas development.

For that reason, I think I would be justified in saying that we must consider our commitments for overseas development against the background both of our heavy defence programme, which we cannot neglect as a member of N.A.T.O., and also of the paramount necessity of paying our way in the markets of the world.

Question put and agreed to.

Bill accordingly read a Second time.

Committed to a Committee of the whole House.—[Mr. R. Allan.]

Committee upon Monday next.