OVERSEAS RESOURCES DEVELOPMENT BILL

HC Deb 28 January 1958 vol 581 cc223-78

Order for Second Reading read.

4.10 p.m.

The Secretary of State for the Colonies (Mr. Alan Lennox-Boyd)

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

Our colonial debates have for many years past been enriched by the wisdom, the imagination and the wit, of Walter Elliot and here, I think, as much as in any of the fields he adorned we shall miss him a very great deal. I am very conscious of this in introducing today a Bill designed to aid Commonwealth development.

I suppose that for those of us who knew him well for many years the most dramatic moment in Walter Elliot's brave and chivalrous life came during the attack on the Houses of Parliament during the night of 10th May, 1941. Battering down the great doors of Westminster Hall with—as he said— a combination of conceit and destruction which provided a certain insight into the ecstacy of the iconoclasts, he, more than anyone else, saved Westminster Hall.

It was very fitting that it should be so, for in many parts of the Commonwealth, perhaps most of all in East and West Africa, he stood in the eyes of a great number of people as the embodiment of the traditions and standards which, after seven centuries of Westminster, we are striving to preserve and to transmit.

It is just a year ago since Walter Elliot used words which can surely be applied to him. He was speaking "of a way", as he said: we have in Scotland to express our emotion—the way of music which is all its own; it is called a lament. A lament is not a mourning, it is a summing up of life; it is our way to pay our debt to a great figure, to recall him, both in success and in failure, to remember that light and shade cannot be split from each other in the life of man. But in that music there is strength and comfort—the comfort that comes from a life bravely entered upon and bravely carried through. In a long experience of colleagues of both sides of the House I know of no hon. Member to whom those words more fittingly apply.

The purpose of this Bill is to give effect to the policy of the Colonial Development Corporation which was explained in the White Paper of July, 1957, on the United Kingdom's Rôle in Commonwealth Development. Hon. Members who have that White Paper before them will find this set out in some detail in paragraphs 31 to 34. The general purpose of this Bill is, first, to define the extent to which the C.D.C. may operate in Colonial Territories after they become independent and in independent Commonwealth countries generally and, secondly—on this I think there is more agreement—to increase the amount of capital available to the C.D.C.

The general policy we should follow for the Development Corporation in Colonial Territories after independence has been a matter of much discussion and controversy. Many hon. Members, on both sides of the House and in both Houses, have argued that the Government themselves should do a great deal more. It is not unusual for this argument to be most strenuously advanced by those very Members who cheer most loudly the sentiment that one of the causes of our national ills comes from trying to do too much at the same time.

The view of the Government has been that the C.D.C. should be able to continue with existing projects, but should not start new ones after independence. We first put that view into legislation in the Ghana Independence Act. As a result of the discussion over that Act we agreed to make a comprehensive review of the rôle of the United Kingdom in Commonwealth development and our conclusions were set out in the White Paper.

This Bill is concerned only with one section of the broad field covered by that White Paper, but I think it valuable for us to remember, in a time of financial stringency and when we are considering again economic development of the Commonwealth, something of the massive contribution which the United Kingdom has made and is making to Commonwealth economic development. As the White Paper pointed out, the average investment, public and private, for the whole Commonwealth over the years 1953 to 1956, added to the special assistance to Colonial Territories, was nearly £200 million a year. As the White Paper said: Set against the average of our gross national product in that period this represents some 1¼ per cent. —a figure which should be borne in mind by hon. Members who sometimes suggest that our contribution has been less than that and, given a chance to control our affairs, would raise to a level of 1 per cent. It is now 1¼ per cent. Put in another way it represents between 7 and 8 per cent. of our gross fixed investment at home. In the ten years between 1946 and 1955, it is safe to say that 70 per cent. of the external capital investment in the sterling Commonwealth has come from the United Kingdom, 15 per cent. from the United States of America, 10 per cent. from the International Bank for Reconstruction and Development, and 5 per cent. from other sources.

In response to the request from many hon. Members, we had our review and approached it with an open mind and with no preconceived convictions, but the result of the review was to confirm our belief that our policy for the Colonial Development Corporation is the right one. I may perhaps tell the House briefly why we arrived again at that conclusion. In the first place, we have always recognised the special responsibility for the Colonies. This is the justification for the policy of making Exchequer funds available for development in Colonial Territories. We are all citizens of the United Kingdom and the Colonies.

The Colonies have not got independent representation at the Geneva Conference on the General Agreement on Tariffs and Trade. They look to us to defend them in that field and in every other field. By and large, they provide for revenue purposes free entry for British goods. Throughout their history and association with us they have behaved in a way which makes them entitled to be regarded as just as much our responsibility as the counties of England, Scotland, Wales and Northern Ireland, but our resources are limited and were we to try to spread them over too wide a field the inescapable consequence would be that we would be bound to slip up in our duties to the Colonial Territories.

Our second consideration is that although we retain the closest relations with the Colonies after they have achieved independence, when they have achieved independence our responsibility to them as Colonial Territories comes to an end. We do not regard Government to Government loans as the normal means of assisting such territories. We believe their interests can best be served if they build up their own credits and are able to use the facilities for raising money on the London money market and elsewhere.

Our third consideration is that it is through the investment of privately-owned funds that the United Kingdom has made its most valuable contribution to other Commonwealth countries. We believe that this is primarily the medium through which further help should come. But we were very impressed by the arguments from both sides of the House, and in another place during the debates on the Ghana Independence Bill, that the experience of the Colonial Development Corporation should be made available in a management capacity to independent countries, and Clause 1 (3) of the Bill provides for that.

May I detain the House a short while on one or two of the more important points in the Clauses. Clause 1 (1) of the Bill excludes from the scope of the C.D.C. Colonial Territories which become independent. Subsection (2) enables the Corporation to continue to exercise its powers in such territories for purposes that were approved before independence subject to the approval of the Secretary of State, and also enables it under these circumstances to provide, subject to the approval of the Secretary of State, further capital for such purposes.

There is also a proviso permitting modifications or extensions of C.D.C. schemes originally approved before independence. This is for the practical and, I think, obvious reason, that very few schemes, as experience shows, can be carried out exactly as originally planned. In pilot schemes, modifications and extensions must be catered for if the schemes are to come to fruition.

As I said a moment or two ago, many hon. Members argued with strength and sense on the Ghana Independence Bill that the C.D.C. has acquired considerable experience and expertise in dealing with the problems of commercial-type economic development in underdeveloped countries. Hon. Members argued that it was a pity to deprive emergent territories, or even the older Dominions, of this help should they wish to enjoy it. As we stated in the White Paper, we should be happy to see the Corporation's managerial experience made available to any newly developed Commonwealth country, or, indeed, to any Commonwealth country that might desire it.

Subsection (3) enables the Colonial Development Corporation to act as managing agents or to perform advisory functions in independent Commonwealth countries which want its services. In subsection (5) there is a sentence that reflects the different nature of the relationship between the United Kingdom and the independent Commonwealth countries on the one hand and the United Kingdom and dependent Colonies on the other.

It is most unlikely that we should ever have to take advantage of this proviso, but it is important to provide that, if a situation should arise in which the managerial or advisory activites of the C.D.C. in an independent territory were embarrassing the general political relations of the United Kingdom with that Commonwealth country, the United Kingdom Government should be able to direct the C.D.C. in any way which is consistent with the wider interests of the United Kingdom's relations with the Commonwealth country concerned.

I do not think for a moment that the situation for which this provides would ever arise, but I think it is prudent to provide in case it should.

Mr. George Chetwynd (Stockton-on-Tees)

What are the right hon. Gentleman's views on subsection (6), which refers to the consent of the Treasury being necessary before any such undertaking can be gone into.

Mr. Lennox-Boyd

I accept that, but, no doubt it has not escaped notice that references to Treasury consent are thinner in this Bill than they were last week, although I ask the hon. Gentleman and other hon. Members not to draw any particular conclusion from that fact.

Clause 2 deals with the increase in the C.D.C.'s capital. Under the Overseas Resources Development Act, 1948, the C.D.C. was empowered to borrow up to £100 million at any one time and have advances of up to £100 million from the Exchequer outstanding at any one time. Actually, the total capital expenditure sanctioned up to January of this year is £87 million. Further schemes awaiting formal approval total £4 million. Total Colonial Development Corporation commitments are thus getting in sight of the £100 million limit. Of course, actual expenditure lags behind capital sanction, and actual advances outstanding from the Exchequer are only £56 million. There is no question of our having allowed the C.D.C. to run short of cash.

It is desirable to plan ahead. Clause 2 increases the amount which the C.D.C. may borrow and have outstanding at any one time from £100 million to £150 million, and the amount which may be advanced to the Corporation from the Exchequer is increased from £100 million to £130 million outstanding at any one time. The difference between the £130 million and £150 million, which I will expain in greater detail, if need be, in Committee, will be found in paragraph 33 of the White Paper.

The purpose is to give the C.D.C. scope to borrow from sources other than the Exchequer. My hon. Friend the Under-Secretary of State, when he winds up, or myself in Committee, will answer any questions that hon. Members may raise on this important matter.

The C.D.C. has been kept in close touch with us throughout the preparation of the Bill. Given the White Paper policy, the Bill has its full support, although it would have preferred it to cover a number of other financial matters about which, I suspect, I may hear something in the debate, for instance, the special losses account. These matters are being studied afresh, but I am not in a position to say more about them at this stage.

Mr. James Callaghan (Cardiff, South-East)

Will the Minister be able to say something about them during the progress of the Bill?

Mr. Lennox-Boyd

I think it is unlikely, but as soon as I have anything profitable I will inform the House.

We have been in close touch with the Commonwealth countries—in particular, Ghana and Malaya, two countries that previously enjoyed C.D.C. assistance and do so in the case of continuing schemes—and there have been no comments or criticisms from any of them.

I know that certain hon. Members have from time to time expressed the hope that the name of the Colonial Development Corporation might be changed to Commonwealth Development Corporation, or a name like that. I am not enamoured of that idea. Its present name most appropriately describes the main function of the C.D.C., namely, to assist Colonial Territories in their development. Any alteration in title would be misleading. It is open to the C.D.C. to conduct its operations in a particular territory or country through a subsidiary company under whatever name it considers appropriate.

I commend the Bill to the House as one designed to help the C.D.C. with its primary function while, at the same time, ensuring, on an agency basis, that the considerable experience and skill it has built up with such devotion over the last few years shall be also made available to independent Commonwealth countries.

4.28 p.m.

Mr. James Callaghan (Cardiff, South-East)

Before I speak about the Bill, Mr. Speaker, I trust that you will allow me to say with what regret we on this side of the House heard of the death of Walter Elliot. We are very glad that the Minister took the opportunity today of expressing the sentiments of all of us about his passing. It seems strange to think that we shall not see him sitting in the third bench below the Gangway. On Friday there is to be a debate in the House about procedure, with particular reference, I am sure, to Privy Councillors—a debate in which, I imagine, he would have had a number of observations to make. It is very sad to see the way in which the waters roll over hon. Members and they are gone. We all feel a sense of personal loss about his sudden death.

I heard of Walter Elliot many times in the 1930s, when he was a most distinguished Minister, occupying many posts. To me, he was a name in the newspapers when I was fighting my battle in the local wards. When, to my surprise, I found myself here in 1945, I discovered that he had been defeated, but shortly afterwards I met him because he was returned at a by-election.

After he had been introduced and walked up to Mr. Speaker, as everyone does, I walked out of the Chamber and was on my way to the Library. He stopped me and said, "Good afternoon. I should like to introduce myself. My name is Walter Elliot." Every back bench Member holds every Privy Councillor in awe, and when one has been here for only about three months one holds Privy Councillors in particular awe. That simplicity and modesty on the part of Walter Elliot was something which I have never forgotten, and I think it summed up his whole life.

After that, we got to know each other very well. We travelled together on various missions, mostly employed by the B.B.C. We did television shows together, we did "Any Questions?" together, we argued and talked long into the night after the programmes had ended. I never ceased to marvel at his well-stocked memory, his fund of anecdotes, his apt remark and analogy for whatever we were discussing. He was a man who enriched life whenever one met him.

I should like to say to Mrs. Elliot that we trust very much that the years which lie ahead of her will continue to be full of joy and of the public service in which she has herself played a very notable part. I think that the manner of his death was probably as he would have wished. The words of John Donne are particularly appropriate to Walter Elliot: Neither death whensoever it shall come may seem terrible, nor life tedious how long so ever it shall last. Death was certainly not terrible to Walter Elliot and life could never be tedious to those of us who knew him.

We welcome the Bill in so far as it increases the amount which is allocated to overseas resources development. I had hoped that the Secretary of State for the Colonies, with his well-known affection for public enterprise, would have reminded us of the success story of the Colonial Development Corporation. We know from his record that he would have been proud to say, "Here is a public Corporation which is succeeding and which last year made a profit of £572,800." It would perhaps have been too much to expect him to say that had it not been for the extortionate rates of interest which are the result of the Government's credit policy the profit would have been much higher and might well have been £700,000. Nevertheless, I am sorry that we did not hear him say it.

The very success of the Colonial Development Corporation is of such a character that it shows up in marked relief the folly of the Government's present economic and financial policy. It is true that the advances to the Colonial Development Corporation are financed by the Treasury—that is, by the people of the country—from below-the-line surpluses, and the shape of the Budget therefore determines very much the amount of the investment which can be undertaken in the Colonial Development Corporation. It is, therefore, not surprising that when the former Chancellor of the Exchequer decided to relieve Surtax payers of many millions of pounds of taxation, as he did last year, the amount available for investment in the Colonial Development Corporation became much less than it would otherwise have been.

I very much agree with sentiments often expressed by hon. Members opposite that an outflow of capital from these islands can be very dangerous if it is not matched by savings within the island. It can lead to one of two consequences—either to stagnation in home industry and unemployment, as we had in the 1930s because we failed to bring our own industries up to date when there was a large outflow of capital abroad, or to inflation, which is the situation from which we have suffered in all the years since the end of the war.

While we welcome this extension of another £50 million of capital, I am bound to tell the right hon. Gentleman that this tiny amount—and it is a tiny amount—is smaller than it need otherwise have been because of the budgetary policy which the Government have pursued. After all, in 1948, within three years of the end of the war, the Government were committing us to the expenditure of £100 million on colonial investment. Now, nearly thirteen years after the end of the war, all we can find is £50 million, which in terms of 1948 prices is no more than about £30 million. The Colonial Secretary has not much cause to boast about the extension of the sum in this way. A tiny sum is now being put aside for colonial investment and we should recognise it as such. I do not know whether it is because he is setting aside this relatively tiny sum that he is limiting the C.D.C. activities in the way that he described or whether ideological considerations led him to limit the Corporation's activities in this way. Whatever the reason, we object to it.

As far as I can see, the reasons which have been advanced either by the right hon. Gentleman or by others in another place are threefold. The argument used by the Secretary of State for Commonwealth Relations in another place was that these emerging territories must not rely upon the British taxpayer. As reported in column 1304 of 17th July of the OFFICIAL REPORT of another place, he said: I think it is really no contribution to the independence and status of those emerging countries to give them the impression that they can rely endlessly on the British taxpayer."—[OFFICIAL REPORT, House of Lords, 17th July, 1957; Vol. 204, c. 1304.] The second reason which has been advanced is that the emerging territories might be affronted if they were offered this activity by the C.D.C. The third reason which has been advanced is that there is plenty of work to be done in the Colonies which remain to us.

I think that the argument used by the Secretary of State for Commonwealth Relations has no validity at all. It certainly is not the policy adopted by other countries. The United States does not adopt this policy in connection with Mutual Aid; it does not say that other countries must not rely upon the American taxpayer. The United States has invested overseas under Mutual Aid and other equivalent programmes about 3,000 million dollars in the Colombo Plan alone. Nor does the U.S.S.R. take this line. Indeed, we ourselves do not take it. In the Colombo Plan alone Britain has invested about £90 million, the Canadian Government £70 million, and the Australian Government £22 million.

The plain truth is that we all recognise that this is not a form of aid. It is an investment which not only raises the standard of life and diversifies the economies of those countries but also is of material benefit to us. To put it in terms of relying endlessly on the British taxpayers seems to me to reduce it well below the level which is justified.

It is said that other channels are available to these emerging territories, and the right hon. Gentleman relied on the Commonwealth Development Finance Company in his defence of the argument that the C.D.C. should not be allowed to expand. I noticed that the Colonial Secretary did not advance that as a reason and he was right not to do so; because with whatever hopes the Commonwealth Development Finance Company started out, not even with the best will in the world can they be said to have been justified.

The Commonwealth Development Finance Company is a finance house. The capital issued, so far as I can find, is £ 1½ million. It has been able to invest in a dozen projects in different Commonwealth countries. That is the limit of its activities since it has been set up. It is quite clear that it has neither the funds nor the expertese, the knowledge or the technical skill to do the job in the emerging territories that the Colonial Development Corporation has been doing so far.

The Colonial Secretary should recognise and admit that in cutting off the Colonial Development Corporation from the emerging territories, and in cutting off the emerging territories from the Colonial Development Corporation on the very day that they achieve their independence, in the matter of supplying finance for purposes of development over there, he is creating a vacuum which is not filled by the Commonwealth Development Finance Company, or, indeed, by any other institution. This is a great weakness in the Bill which the right hon. Gentleman has not faced. It is one reason why we shall have to move Amendments at a later stage to try to include these developing emerging territories in the purview of the Bill.

I do not understand the logic of the Colonial Secretary's argument when he says that the Government were impressed by the arguments that were put forward that the Colonial Development Corporation should have the opportunity and the right, subject to the right hon. Gentleman's control and agreement, to manage concerns in these emerging territories but should not be free to invest in them. He did not give an answer this afternoon to show why, if somebody is allowed to manage someone else's concern, he should not be allowed to have a financial stake in it. It seems to me to be quite illogical and, what is more, not justified on the basis of the facts that we know, namely, that a gap is being left when these territories become independent. I should have thought that it was in the interests of all of us that this gap should be filled.

The major weakness lies in the Government's conception of the Colonial Development Corporation. They have tried to separate its commercial activities from its social purpose, but the two things are always bound to be intertwined. I imagine that in a general discussion there would probably be agreement among us that commercial and policy aims are usually intertwined in what one is doing. In all their references throughout the Bill, however, the Government act as though the only test to be applied is whether a proposition makes a profit, and, what is more, makes a profit at 7 per cent.

Of course, I agree that these propositions that the Colonial Development Corporation undertakes should be operated economically, but the Corporation has a wider purpose than the mere making of a profit at 7 per cent. in order to pay its interest to the Government.

Mr. Norman Pannell (Liverpool, Kirkdale)

indicated dissent.

Mr. Callaghan

The hon. Member shakes his head. I should like to explain why the Corporation has a wider purpose and I draw my basic reason from what was said in the original Act.

The 1948 Act said, in Section 7, that the policy of the Colonial Development Corporation must have particular regard for the interests of the inhabitants of the territory. In other words, this is not merely a simple company set up with a view to seeing whether it can make a profit. It is not something that can be separated from policy. The two ends—social and commercial—were intertwined. The major weakness of the Government is that they have all the time been attempting to separate these two ends. The Government's restrictions throughout the Bill are all aimed to make profit the only test.

That is a very narrow view to take of Britain's Commonwealth responsibilities. It reduces the vision of the Commonwealth to the width of entries in a countinghouse ledger. The Colonial Development Corporation was not set up with that narrow object in mind and it is because the Government seem constantly to be squeezing it into a position in which it is no more than another commercial enterprise that we on this side consider that they are failing to carry out the original purposes of the Act.

In the Bill, the Government are proposing to give to the Colonial Development Corporation permission to borrow money—presumably privately, as distinct from the advances that are to be made by the Government. I hope that when the Under-Secretary of State for Commonwealth Relations winds up the debate he will tell us a little more about these borrowing powers. What are to be the conditions under which the C.D.C. will be able to borrow privately? I take it that the Corporation will not be able to raise equity capital. Indeed, having discussed the matter with some of my hon. Friends, I think it would be quite wrong that the Corporation should be able to do so, although I know that this is one of Lord Reith's strong desires.

Will the Colonial Development Corporation be able, for example, to give as security for its borrowings a charge on its existing assets? I should have thought that it was reasonable that it should be allowed so to do, but as this has not yet been made clear I should very much like an answer.

What will be the rôle of the Treasury? Will the Treasury be able and be willing, and will it be its policy, to guarantee such loans or will the Corporation stand on its own without any Treasury backing? These things are obviously of considerable moment to the Colonial Development Corporation, and the House would like to know what are the Government's intentions in this direction.

I have said that I disagreed with Lord Reith's view, as I understand it, that there should be some equity capital. I know the reason why he advances this view, namely, that every commercial company should have a buffer of equity capital to take the loss on its pilot schemes and to take the loss on its investigations before a return can be expected to come in. Lord Reith's view is that if he has to pay 7 per cent. on every penny, from first to last, without any buffer of equity capital, he is being asked commercially to do something that no other commercial concern is being asked to do.

I think that Lord Reith has a complaint here, even though the remedy he suggests is wrong. Will the Under-Secretary for Commonwealth Relations tell us the views of the Government about this? The hon. Gentleman will get a great deal of instruction from the pamphlet, which I see he is reading, on the Labour Party's policy for the Colonies, but he will not find the anwer there; at least, he will find it only partially.

Do the Government consider that Lord Reith and the Colonial Development Corporation do not have a complaint? I think that the Corporation does have a complaint. After all, a number of its ventures have failed and from some of them the Corporation or its private enterprise companions have withdrawn because they have found that the cost of providing the social furniture as well as putting up the money to make the commercial venture pay has been too high. We all know that when a company goes to set up its operations, the building of houses and roads and the provision of all the necessary things that we have in this country do not exist in many of the overseas territories.

One possibility which the Labour Party pamphlet does canvass—perhaps that was what the Under-Secretary was looking for—is that the Colonial Development Corporation might have a colonial development and welfare float of its own: in other words, that in the same way as the Government provide colonial development and welfare advances precisely for the purpose of building houses and roads and the making of communications and the rest, so the Colonial Development Corporation should be able to take advantage of that, subject, of course, to the consent of the Government, to get its commercial ventures going.

I advance this as a reason only because the Government are insisting so heavily upon the commercial nature of the Colonial Development Corporation. If they insist upon that as its primary purpose, it is reasonable to ask what the Government will do to help the Corporation in this particular respect. I have made the point, and perhaps we might be told the Government's views about it.

We resist that conception of the Colonial Development Corporation and its reasons for existence. The basic fact, the starting point, in all these territories—as must be borne in upon all of us—is their poverty. It is that which we seek to relieve through the many agencies which we have. I am not an economist, but, as I understand, it is the shortage of domestic capital which prevents economic investment. One can have economic investment only when there are savings, and if countries are living on a margin above subsistence which prevents any saving there cannot be investment, and, it follows, there cannot be economic development.

The whole purpose, as I see it, of the Colonial Development Corporation and other activities of this sort is to inject the foreign capital necessary to save them from trying to hoist themselves by their own boot-straps. This is the aid—aid only in that sense—which is given to them. If the Colonial Development Corporation were conceived by the Government as being a body designed to fulfil that purpose, a number of the very restrictions contained here would disappear. We must bring the territories out of the vicious circle in which they are today.

I view the future of the Colonial Territories with some alarm. At the very moment when the Chancellor of the Exchequer is claiming credit, in his usual modest way—I mean that—for the improvement in the balance of payments in this country, what he is saying, in effect, is that the balance of payments of Ghana, Malaya and Rhodesia have deteriorated and shown a turn for the worse, for an improvement in our balance of payments is a deterioration in theirs. This is incontrovertible.

What has happened in all these territories is that the prices they are obtaining for their primary products, whether minerals or crops, are falling to a level which is, in some cases, little better than catastrophic. To take one illustration, the fall in the price of copper in the Rhodesias from £465 a ton to £165 a ton, a fall of £300, must have catastrophic effects upon the revenues of those territories; and there are territories not nearly so wealthy as the Rhodesias which will suffer in precisely the same way. I believe that we may well be at the beginning of a world depression, unless the United States of America, the major factor in this connection, is ready to take the essential steps to prevent the depression which will, first of all, hit these territories.

I welcome the Bill in the sense that it sets aside another £50 million. I do not think that it is anything like enough for the purposes which we have just been talking about, and it will really be but a drop in the bucket if the fall in the price of primary products and commodities which has so far taken place is not shortly reversed. The Colonial Development Corporation, as an organisation, could never begin to reverse that worldwide trend. Nevertheless, it is one of the organs which can assist in maintaining a stable level of prices. It is certainly one of the organs which should be used to help the Colonies out of the difficulties in which they find themselves through their own basic, inherent poverty.

We therefore welcome the introduction of the Bill. We believe that it is not adequate, though we shall not vote against it because, if we were to do so, we should be voting against another £50 million being devoted to this purpose. The Colonial Secretary will not, however, be surprised to hear that, during the Committee stage, we shall have a number of Amendments to put down, upon which we shall have to test the Government.

4.55 p.m.

Mr. J. Grimond (Orkney and Shetland)

I hope, Mr. Deputy-Speaker, that you and the House will allow me to say a word or two in memory of Walter Elliot. I should like to join in what has already been said by the Secretary of State and by the hon. Member for Cardiff, South-East (Mr. Callaghan).

I did not, of course, know Walter Elliot for very long, as many hon. Members did, nor can I speak of his official career, but I did know him as a friend both here and at his home on the borders of Scotland. I believe that it may be as a friend and as a philosopher in the strict sense that he will be ultimately remembered. He was, of course, an eager and, indeed, passionate politician, but his life was a standing protest against the managerial view of politics. His politics arose from his interest in life, people and ideas—never being allowed to dominate his thinking or his actions. Walter Elliot was a humanist, a lover of literature, of history and of science, a man all too rare, I fear, in politics today. I believe that we shall miss him more than we miss, perhaps, many more apparently successful men. But, however much we miss him, his widow and his relations must miss him far more, and I should like to join in sending our sympathy to them.

I wish to say but a few words about the Bill. I feel that we are missing an opportunity to catch the imaginative possibilities which the Commonwealth offers. Incidentally, I believe also that we are inclined to take too many bites at the cherry. In 1956 we had the Overseas Resources Development Act, and this year we have the Overseas Resources Development Bill and the Overseas Services Bill; but in none of them do we meet the real, long-term need. We shall have to repeat the process in a year or two. We are only putting off the day when we must face the question of the long-term structure of the Commonwealth.

The quite obvious difficulty is that the Commonwealth requires a great deal of capital and we have not an adequate surplus to invest in it. On the other hand, there are the colonial balances in this country, the withdrawal of which for investment would create a very disturbing situation for us. I suggest that this points the need for some further development of Commonwealth economic institutions and some decision as to what is to be our long-term plan for the financing not only of the Colonies but of the emergent Colonies as they reach self-government.

First of all, we must face the need to make a much bigger effort at home in order to earn and save the surplus necessary. Unless we do that, no amount of help to the Colonial Development Corporation or other institutions will be really effective. Secondly, we shall probably have to enlist outside aid. Putting it quite plainly, we should get together with Canada, and the U.S.A., for instance, to see what they are prepared to do. There is also the possibility of tapping other international sources of money. I would much rather that money from these outside sources were canalised through a development authority of the type we are now discussing than in any other suggested way, because I regard the development authority as an interesting development in the sort of mixed economy which is growing up in the Commonwealth.

I wish that the Secretary of State could have said a little more—perhaps whoever is to wind up will do so—about the Government's view on the tapping of sources outside this country, having regard particularly to what I call cross-fertilisation within the Commonwealth. We are, I think, guilty of not doing what we can to ensure that the Dominions and Colonies themselves take an interest in other parts of the Commonwealth. I have in mind Canada interesting herself in the West Indies. She is, I know, very interested on the private level. I feel that there are problems in the Commonwealth which, in many ways, can be more easily dealt with by other Commonwealth countries than by ourselves.

With those few words I, too, welcome the Bill as far as it goes. While I realise the difficulty of drafting Bills which give effect to the sort of ideas that I have no doubt the Secretary of State would like to give effect to, I believe that, in the long run, we have to face rather altered conceptions of Commonwealth planning than are embodied in this Measure.

5.0 p.m.

Mr. John Tilney (Wavertree)

It is always a pleasure to listen to the hon. Member for Orkney and Shetland (Mr. Grimond), and this time I find myself in full agreement with him. I find myself in much less agreement with the economic and, in some ways, ultimate social argument of the hon. Member for Cardiff, South-East (Mr. Callaghan). He compared this country's effort with that of the United States of America, particularly under the Colombo Plan. It is unfair to do that. The United States of America is the world's richest creditor, whereas we are the world's greatest debtor—

Mr. Callaghan

Obviously, the hon. Gentleman did not understand what I said.

Mr. Tilney

Nor could I understand his argument denying the rôle of a finance house to the C.D.C. I see nothing wrong in the C.D.C. being a finance house. In fact, I should like to see the money of the Colonial Development Corporation invested only when more money than is put in by it is invested by either companies or individuals who know how to run an industry in the territories concerned. I find it very difficult to believe that one can run a multitude of different industries from London—

Mr. Callaghan

As there will probably be many more people who will read the hon. Member's speech than will read mine, perhaps I might interpose to say that I cid not say either of those two things.

Mr. Tilney

At least the hon. Gentleman will agree that he said that £100 million, I think, had been allocated in 1948, and that he thought that the C.D.C. had proved a success. I find it very hard to believe that an organisation which has lost over £8 million—admittedly under a pre-1951 régime—is a great success. I cannot believe that it is sensible to invest very hard-won capital so badly that a loss is incurred rather than a profit made. In the end, that is not a good thing for the social services for which the economic development must ultimately pay.

I welcome this Bill in its limited form. It prohibits the C.D.C. from starting new projects in emergent territories, it allows it to undertake managing agency business, and it increases its long-term and medium-term borrowing, but I regret that it does not, at the same time, deal with the capital structure. I think that some part of that capital should be in equity form. Otherwise, I do not see how pilot projects can be paid for, and the C.D.C. is unnecessarily saddled with interest on capital that has been spent either on checking, by means of a pilot project, or by a general investigation of some project that cannot, of its very nature, be expected to make a profit.

It would be much better, therefore, if not only could the C.D.C. have equity in its capital, but could also be able to write off its past losses. Incidentally, those losses are very much more than the £8 million mentioned, because no account has yet been taken of the interest unpaid in the last six years. This is hardly the success story the hon. Member for Cardiff, South-East pretends. On the other hand, the Colonial Development Corporation has been acting in difficult circumstances. One of them is that the rate of interest is not known to a certainty at the start of any project. It should surely be possible, when planning an investment in industry, to know exactly what rate of interest will have to be paid on the money borrowed, and I think that the sooner that is put right the better.

This Measure, however, really only touches on the main problem in the ideological cold war, that of investment in the under-developed territories. In the late autumn, I had the privilege of going to West Africa for five weeks. Both in Ghana and in Nigeria I met many friends of the late Walter Elliot, who admired him immensely for his work there, especially in education. The premiers whom I met, both in Ghana and Nigeria, all want British help to continue.

It was quite remarkable to me how popular British technical and other advice is, but I do not see how we can possibly get all the money that is required for such projects as the Bornu Railway extension, the Escravos Bar and, in Ghana, the Volta River scheme. We just have not got the money in this country. We have to do as suggested by the hon. Member for Orkney and Shetland—bring in the United States, and also the creditor countries in Europe.

I should like to see the C.D.F.C. do more than it has done, although I think that the implication of the hon. Member for Cardiff, South-East that all it has invested is its £1½ million of capital is a little unfair. It has borrowed a substantial amount of money and has reinvested it overseas.

Mr. Callaghan

Under £3 million.

Mr. Tilney

I have not the figures with me, but I think that the figure is now over £10 million.

Mr. Callaghan

As I understand it, it is authorised to borrow only twice as much as its authorised capital.

Mr. Tilney

I have not the Report with me, but I think that if the hon. Gentleman will look at the figure he will find that it is bigger than he thinks.

I am a believer in private enterprise, and I welcomed what my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) did when, in the last Finance Bill, he created overseas trade corporations. I should here declare an interest as being a director of a company that trades throughout West Africa and has recently put more money into West Africa. On the other hand, there are many in private enterprise who look at what has happened in Egypt—and particularly at what has happened in Indonesia—and who say that they would prefer not to invest in under-developed lands.

Could not the C.D.C. consider this major political problem and, possibly, create some form of insurance, not putting up any money itself, but guaranteeing the investment of private enterprise against political sequestration or nationalisation? If it did that, I believe that a large sum of money might well be invested in different territories of the Commonwealth without the Government themselves putting up any money. These political risks are, I believe, less than many directors of private companies—and public companies—think, and I hope that those who are now running the C.D.C. very much more efficiently than it was run in the years gone by will consider that problem.

When the Government come to consider the new capital structure of the Colonial Development Corporation, I hope they will not be beguiled by the words of the hon. Gentleman opposite, but will take their lesson from the heavy losses that have occurred and will make sure that well-won capital and wealth is sensibly invested.

5.10 p.m.

Mr. George Chetwynd (Stockton-on-Tees)

The speech of the hon. Member for Wavertree (Mr. Tilney) reveals the dilemma which faces the House in trying to work out the best policy for our Colonial Territories.

On the one hand, the hon. Gentleman seemed to welcome this Bill because of the limitations it imposes. He is all in favour of a very strict financial and commercial approach, and yet, in the next part of his speech, he wanted something to be done urgently for political reasons in the under-developed parts of the world. Surely, he cannot have it both ways. If we are to aid the under-developed parts of the world, which is our objective, we cannot do it on a strict accountancy basis. There are a good many imponderables, political, social and economic, which cannot be weighed up in that kind of way, and that is precisely why this set-up of the C.D.C. itself is an example of the remarkable dilemma of just how to reconcile its objective of developing the Colonies in the interests of their inhabitants and, at the same time, taking one year with another, breaking even. It is difficult enough to do that in the developed areas with all the necessary capital resources at our disposal, but how much more difficult it is in countries where there are no basic facilities whatever is only just being realised.

The objects of the Corporation, as I understand them from its Report for 1955, are, first of all, to show that it is its duty to help the economic development of British dependent territories, and, in the process, to have special regard to the interests of their inhabitants, irrespective of race, colour, confession or anything else. That is the prime object, and anyone who has visited any of our territories overseas knows how great is the need for that. Secondly, it makes it quite clear that the C.D.C. itself is not responsible for comprehensive planning and social services, and that, whatever it does, its commercial profitability must be an essential factor of its operations. I find it extremely hard to see how it can work under those conditions.

On the one hand, we have the colonial development and welfare funds doing one job with the colonial Governments and the C.D.C. doing another, and I must say that I am moving towards some amalgamation of the two, either into a single body or a very close integration to make sure that we can do both these jobs satisfactorily.

I want to say a few words about the work that has been done and still needs to be done by the Development Corporation. First of all, I wish that the Corporation did not produce its Report written in such shorthand as it seems to do, and that it would give us some story and put some flesh and blood on the bones of the Report. If so, it would greatly help us to dispel some misconceptions about the work which it is doing. I should like to see a much fuller Report written in decent English, and not just in shorthand notes, which I find very difficult to follow.

In any case, I want to refer to the possibility of extending its work now that it will have more resources at its disposal in certain parts of the West Indies. I am not referring to the major islands there, though they have difficulties and are much better placed to deal with them than the smaller islands, which have no mineral resources and have had no great tourist attraction so far. In particular, I hope it will be possible for an extra effort to be made in Antigua, St. Lucia and Grenada. I think the poverty there is more striking than in the other islands, and I believe that there is a fundamental task facing the Government there, because they are solely dependant, more or less, on agriculture and the raising of food crops.

It is not easy in this area, where there are very few services, where there are certainly very good main roads, but where the roads leading to the hinterland are poor and inadequate, where the services that are necessary for getting the people to and from the islands are still not good enough, and where housing, education, hospital services and so on are still very much under-developed. I do not see how, when we are trying to develop on a commercial basis, we can possibly do it where the basic services are so inadequate.

It is like the situation in some of our Development Areas in this country, which were the distressed areas before the war, and where it became perfectly apparent in tackling the problem that not only had there to be commercial development but we had to spend much more money in getting the basic services going—roads, gas, electricity and so on—and the same thing applies in the islands in the West Indies.

I was particularly struck out there by the wide gap which exists between the best and the worst. There are some things which are very good indeed, and if only the average could be brought up to something approaching their standard, we could make real progress. I should like the Secretary of State to pay particular attention to the situation in St. Lucia, which has this problem, and is probably the most difficult of the islands into which to get capital. There is a particular problem at Fort Vieux because of the de-re-activation of the U.S.A. base. [HON. MEMBERS: "Shame."] It is a base which was de-activated, then re-activated, and has now been de-re-activated. Whatever the word is, it is now not in use, and that has left the whole area round Fort Vieux in a very depressed condition indeed.

I should have thought that there, where we have a good area of land, with the services necessary to supply the United States base, it would be possible for the C.D.C. to set up some project which would absorb the labour now unemployed, and I should rate that as amongst the highest priorities in that part of the world.

Nevertheless, there is much basic work to be done in all these territories, and in particular in providing roads to help agriculturists in the interior to get their bananas to the distribution point. There is a terrific lot of work to be done in the development of livestock and the improvement of fisheries in all these areas, in which, perhaps, fish could help very much along with locally produced meat to improve the diet standards of the in habitants. I believe that there is an opportunity, and I know from its Report that the C.D.C. is assisting this in the drive in tourism and in the building of hotels and so on.

I am not sure that this is all that wise in some of these areas. It is a detraction from the fundamental economy of the islands, and although it may be necessary to cash in on the current vogue for visiting the West Indies from America, I should not like to see too much emphasis placed on tourism in certain of these islands as a permanent remedy for their economic ills. I do not think it is. Our main purpose is to concentrate on agriculture and food production, and we should only use tourism as an expedient at the moment to get much-needed dollars.

In all these areas where the removal of poverty is such a crying need and where the demand for capital is so great, we can see that little is able to be done by the people in the islands themselves. We have to look to every possible source to induce fresh capital, because so many jobs have to be done. Perhaps one of the great advantages which will flow from federation in the West Indies is that it will make much more regional planning possible and enable more to be done for the benefit of the area as a whole and not just for one of the individual territories.

Then, of course, a tremendous link is growing up between the West Indies and Canada which is being and should be greatly encouraged. The C.D.C. itself obviously has been able to prime the pump of economic development in certain areas, but it is only able to provide a fraction of the things that are necessary. Whatever money we get in from Canada or anywhere else, there is still a heavy burden to fall on the different Colonies themselves, and one of the major obstacles they are facing in trying to get economic and social development is the effect of the present high Bank Rate here and the capacity for borrowing.

I met that complaint wherever I went. It will be extremely difficult to expand and to go in for housing projects and the like because of the difficulty caused by the high Bank Rate. Capital is being encouraged to flow in and I should prefer as much of it as possible to be British. It would be wrong if we lost that link between us and the colonial dependencies. The most important fact that we have to bear in mind is that the more backward a country is the more difficult it is to import capital into it. That is precisely why I welcome the establishment of the C.D.C. which ought to be able, under its original instructions, to take a less financial approach to these things, to take more risks and to be more dynamic.

One of the reasons why there is this economic difficulty is that private enterprise has not found it profitable to go there and do these jobs; and we cannot expect a Government agency to operate on the same level. Surely it must have more latitude and discretion in the projects it undertakes. It is learning rapidly from experience. Management has improved and the Corporation has made a fairly substantial working profit this year. But if we are to expect basic things such as roads and hospitals to be made available at the same time, if that is part of the cost of development, it ought not to be borne by the C.D.C. It ought to be borne by the colonial development and welfare funds in co-operation with the C.D.C., and by special loans from Government to Government.

Nevertheless, the work which has been done will be useful. It is bringing about economic development and, in some of the larger areas, the industrial development that is necessary. Therefore, although I disagree with the Government's views on the Bill, and with the restrictions which they place on the future development of emergent territories, I feel that we have to be grateful for the expansion that is being provided so far and have to hope that very soon the Corporation will come again and ask for larger sums.

Another point which I do not think has been dealt with so far in the debate is the question of special losses. I believe that we have now reached a stage at which we cannot expect the C.D.C. to bear these any longer. Losses on the pre-1951 commitments which were abandoned amounted to about £8 million. The interest has been waived on nearly £6 million of it. I should have thought that even if the Government cannot go the whole way and write off all the losses they could at least waive the interest on the full amount and relieve the C.D.C. of the obligation to pay that interest on the special losses capital.

Another point which has been mentioned is the bad influence of constantly changing rates of interest and the higher rates of interest which the Corporation has to pay. The Corporation states in its latest Report that jobs have had to be completed with money which sometimes cost double the original budget. I do not see how the Corporation can plan intelligently on that basis. It is a fact now, of course, that high interest rates are slowing down colonial developments throughout the colonial dependencies, and the effect is worse in these islands where the need is greatest.

Another feature which runs through the Government's whole policy, in their approach to Remploy and the development areas at home and now in their approach to colonial development, is that what starts off as a more or less joint venture between social service and economic development has shed its social content in the past few years and now relies solely on profitability. I do not think that we can work on that basis in the Colonies, and I do not think that we should expect the Corporation to run its affairs on those lines. In Committee on the Bill I hope that we shall be able to make some improvement in these matters.

5.24 p.m.

Mr. Norman Pannell (Liverpool, Kirkdale)

I should like to preface my remarks by adding my modest tribute to those already voiced to the memory of Walter Elliot. As one who was actively associated with West Africa for many years, I am aware of his deep and abiding interest in the territories there and how much his wise counsel was appreciated in the difficult days of transition from colonial to independent status. He will be sorely missed.

I hope I shall be excused if I do not follow too closely the remarks made by the hon. Member for Stockton-on-Tees (Mr. Chetwynd), because I wish to develop one special point in connection with the Bill. One of the main purposes of the Bill is to increase the advances from the Colonial Office to the Colonial Development Corporation from £100 million to £130 million outstanding at any one time. It is pertinent for us to examine what the Colonial Development Corporation has done with the money it has already drawn. According to the last accounts available at 31st December, 1956, that money amounted to something over £51 million, and of that £51 million the sum of £40 million had been drawn in long-term advances and the balance mostly in medium-term advances.

According to the arrangement between the Colonial Office and the C.D.C., these long-term advances are repayable over thirty-three years to commence within seven years from the next 31st March after the advances have been made. Interest, however, commences to run from the date of the advance, and at the rates moving at the time of the advance. Some of these capital repayments have now become due, but it is not possible to gather from the Corporation's Report and Accounts how much had fallen due by 31st December, 1956. In support of what was said by the hon. Member for Stockton-on-Tees, I would say that the Report is extremely cryptic and even staccato in its presentation, but we find that there is provision in the accounts for interest of £29,000 accrued at 31st December, 1956, on annual payments noted by the Colonial Office as due on 31st March, 1957. We also find that at that date there was outstanding accrued interest of £6,800,000. The hon. Member for Cardiff, South-East (Mr. Callaghan) referred to the profit which the Corporation had made in 1956. I hope to demonstrate that the Corporation, in fact, made a very substantial loss.

Let us look at the accounts. In the profit and loss account of 31st December, 1956, there is brought forward a debit balance of £1,900,000. The profit for the year, as the hon. Member for Cardiff, South-East stated, was £572,000. Therefore, the net loss carried to the balance-sheet is reduced to £1,382,000. To that we must add the special losses appertaining to the unfortunate adventures embarked on prior to 1951 amounting to over £8 million. Furthermore, we must add the interest accrued up to 31st December, 1956, of £6,800,000. If we add those three figures together, a loss of over £16 million is disclosed from the commencement of operations of the Corporation ten years ago.

Is it making a profit today? I maintain that the profit is entirely fictitious. The £51 million of the Colonial Development Corporation is invested as to £32 million in mortgage advances, loans and shares. That £32 million gave a return in 1956 of just over £1 million or 3 per cent. That is certainly much lower than the rate at which the C.D.C. is borrowing money today. The balance of the £51 million is presumably invested in what are called direct projects, and they gave a return of £350,000. So there is a gross profit of £1,350,000, which is reduced to the £572,000 mentioned by the hon. Member for Cardiff, South-East.

What is the interest accruing each year? There is no mention of that in the accounts. We know that there was an amount outstanding of £6,800,000 at December, 1956, but it is clear that on the £40 million of long-term advances the interest cannot be less than 4 per cent. on average, or £1,600,000 a year. So we have the position that the Corporation claims a profit of £572,000 despite the fact that it has not included in its accounts any mention of the interest charge of over £1½ million which accrued during that year.

It is evident that the Corporation is still working at a substantial loss, and will continue to do so unless there is a dramatic improvement in the profitability of the concerns in which it has invested. With interest rates now running higher than ever before—I believe the current rate is 6 per cent.—the prospects of a profit in the future would appear to be distinctly unpromising.

I admit freely that a great improvement has occurred in recent years in the operations of the Corporation. I agree that the grandiose schemes originally embarked upon are things of the past. I also concede that the investments which the Corporation is making are of great assistance to many under-developed countries in the Commonwealth. For that reason I support the Bill, but I ask the House not to delude itself into believing that the Corporation is working at a profit or that it is likely to do so next year or in the measurable future. The interest charges which would normally accrue at the rate of between £1½ and £2 million a year, preclude that possibility.

The accounts for 1957 will be presented later this year. If my right hon. Friend has any influence in this matter, I ask him to exert it on the C.D.C. to induce it to produce accounts on a commercially approved scale, showing all the losses that have been incurred and all the expenses that have arisen during the year in regard to interest and other charges. If that picture is shown clearly, we shall be able to face squarely the situation that the Corporation has already lost £16 million and is likely to lose a great deal more in the future in present circumstances. At the same time, if that clear picture is produced, the House may be encouraged to reassess the basis on which the C.D.C. is working, and to ensure that it either becomes a profitable enterprise or that reasonable annual losses are written off as a contribution by this country to colonial and Commonwealth development.

5.35 p.m.

Mr. Hector Hughes (Aberdeen, North)

I congratulate the hon. Gentleman the Member for Liverpool, Kirkdale (Mr. N. Pannell) on the line he has taken, but I wish to consider this Bill from a point of view different from those which have been mentioned already. With reservations, I welcome the Bill as another step along the road which was opened in 1948. That was a narrow road, and it has widened but very little in the years which have since passed. Now it is proposed to widen it a little further, but, in my submission, not enough.

This series of Statutes, which began in 1948, was designed to help Colonies, but not other British territories, and its potentialities were at that time narrow but have grown a little wider. They have not grown wide enough and they are not suited to the age in which we live, for reasons which I hope to give. The fact that the road is not wide enough creates grave dangers for the Commonwealth. The Bill fails to envisage the dangers in not helping all kinds of British overseas territories and in not helping them sufficiently according to their needs. I shall mention some of these dangers under four heads.

One lies in the peculiar characteristics of this age of power politics. The need today is greater than ever it was before to preserve the solidarity of the Empire and of the Commonwealth, and the Bill fails to envisage the financial help which is available to British territories from foreign countries. Therein lies the temptation to all British territories, whether they are still Colonies, whether they are Colonies on their way to self-government, whether they have self-government, whether they are on the way from self-government to independence, or whether they have actually achieved independence.

All these five kinds of territories are under a strong temptation to accept outside capital, foreign capital, and thereby undermine their connection with, and perhaps unhappily their loyalty to, the Empire or to the Commonwealth as the case may be. Such foreign capital has been offered—as we all know—but it is seldom offered without strings. If Britain will not fully endow her own territories, fully and completely, foreign nations will do so, with strings. Therein lies great danger.

I ask the Government to consider the Bill in the wide context of the solidarity of the Empire and the Commonwealth. It should take into account the envious eyes which from East and West are cast on the solidarity of the Empire and Commonwealth. Foreign nations view it in political and military terms as a world Power. Foreign capitalists view it as a field for exploitation and have exposed its constituent parts to divided interests, divided loyalties and the danger of Empire and Commonwealth disintegration.

It should be the intention in this age and generation, which is very different from 1948 when the first Measure was introduced, to minimise and negative those dangers by supplying the constituent parts of the Empire and the Commonwealth with all the capital they require in the fullest measure. The Bill does not do so, and although it is called a Colonial Resources Bill it is not coupled with all the resources which ought to be available from Britain and which ought to be available to the constituent nations of the Commonwealth.

I know that we live in a time when money is scarce. I know that we live in a time when there has been a quarrel between the Chancellor of the Exchequer and his Prime Minister. I know that we live in a time when it may be said that we cannot find more money for various causes, but no cause can be more important than this, the solidarity of the Empire and of the Commonwealth.

The limitations of the Bill are clear. Its purpose is to amend the law under which the Colonial Development Corporation acts. Its purpose is further to extend areas in which the Corporation may operate and to increase the sums available. Clause 1 (1) excludes Colonial Territories which have become independent. Clause 1 (2) enables the Corporation to continue to exercise its powers in such territories for purposes approved before independence and gives the Secretary of State power to approve modifications and extensions of such purposes after independence, while Clause 1 (3) enables the Corporation to act as managing agents or to perform advisory functions in any Commonwealth country which is not a Colonial Territory.

In my submission, those extensions are net enough, having regard to the great variety of territorial status within the Empire and Commonwealth and to the great unfulfilled needs of those territories and the large sums of money which are necessary to fulfil those needs and, above all, to the dangers of infiltration by foreign capital and foreign Powers and, with possible dire consequences, foreign bases for military purposes within the Commonwealth.

For many generations, dedicated and able administrators in Britain and her Colonies have tried and, to some extent, succeeded in applying sound colonial doctrines, but they have been frustrated by a shortage of personnel—which is not relevant in this connection—and also by a shortage of finance. The Bill is ostensibly designed to supply them with finance to make good that neglect, but it does not do so sufficiently.

The Bill is an opportunity to rectify past defects, but it does not do so. It merely tinkers with the problem. The dedicated and the devoted men in the Empire and Commonwealth to whom I have referred have tried to develop Dependencies and to lead them towards higher constitutional status, to make those nations ready and willing and fit for self-government. In many former Colonies, including Nigeria and Ghana, problems which should have been solved by the imperial Government have been neglected or left over for the new and independent Government. Such imperial failures are open to grave criticisms on many grounds.

Such grounds include the ethical wrong of leaving obligations unfulfilled in a nation which is on its way to independence and leaving those obligations for the new nation to discharge. Another ground is the unsound economics of leaving rich colonial potentialities undeveloped. A third is the international danger of leaving aid to foreign sources with or without strings. The last is the emotional alienation of realms which should be and could be sources of strength to the Empire and Commonwealth.

I need not set out the problems which have been neglected in the Commonwealth and Empire. They include education, slum clearance, town planning, building, road making, transport, industrialisation, social services, inter-colonial trade, industry, commerce and many others. I recently had the opportunity to be in West Africa and I saw the neglect there and compared that with what benefits could have accrued to the Empire and Commonwealth if that potentially rich area had been properly developed. It has not been properly developed and sufficient money has not been spent.

This little Bill is designed to provide money for purposes such as that, but it does not provide enough. My plea to the House is that these matters should no longer be neglected and that in Committee we should make the Bill fit for its purpose.

It is obvious that if Commonwealth nations will not, either jointly or separately, help each other and each new and potential entrant to the Commonwealth, then foreign nations will, with or without strings. In our expanding Commonwealth, West Africa presents many examples of these dangers. Already, various countries are infiltrating commercially and industrially into Nigeria, Ghana and elsewhere. Such countries are Japan, Holland, Italy, West Germany, Spain, the United States of America and Russia. They are formidable rivals of Britain in these potentially rich areas. The Bill should be framed on more generous lines to meet the needs with which it is designed to deal. I welcome it.

5.48 p.m.

Mr. Nigel Fisher (Surbiton)

I hope that it will not be thought too presumptuous if, from the back benches, I add my small tribute to those already paid to Walter Elliot. My excuse for doing so is that he was to many of us a great back bencher. Many of us came to the House after his Ministerial career was over and we think of him in his place below the Gangway. He was very kind—and I was glad that the hon. Member for Cardiff, South-East (Mr. Callaghan) said this—to newly joined and younger Members. He was full of heart, and kindness, and warmth, and wisdom and humour; we all admired him and felt great affection for him and we shall miss him very much.

I hope that he would have approved of this limited but useful Bill. I certainly do not intend to take up more than a few minutes in supporting it. Because of my great interest in the West Indies, I want fully to endorse what the hon. Member for Stockton-on-Tees (Mr. Chetwynd) said about the need for capital there. He mentioned St. Lucia, which is one of the smallest and poorest of the islands and which certainly needs all the help which the C.D.C. can give it.

I have two questions to put to my hon. Friend. The first concerns Clause 2 and the gap of £20 million between the £130 million to be advanced by the Colonial Office and the £150 million which the Corporation is authorised to borrow. My right hon. Friend said that the purpose of the Bill was to enable the Corporation to borrow from sources other than the Exchequer, but I should like to know exactly what is in the Government's mind in legislating for this gap of £20 million.

The hon. Member for Cardiff, South-East (Mr. Callaghan) inquired whether the Corporation would be entitled to pledge any of its existing assets in respect of the £20 million. I may be quite wrong about it, but I understand that all the assets of the Corporation are, in effect, already pledged to the Government, and I do not understand upon what security the Corporation would be able to borrow in the market, unless there is to be some form of Treasury guarantee in respect of the £20 million. Perhaps my hon. Friend can be a little more specific about this proposal, and can say why it is included in the Bill.

The second question that I want to ask concerns the financing of pilot schemes. This point has already been referred to by my hon. Friend the Member for Wavertree (Mr. Tilney). In page 6 of the Corporation's Report for the year ended 31st December, 1956, the Corporation points out that C.D.C. support for a full scale job may be conditional on a small scale pilot scheme being first mounted. Incidentally, unlike other hon. Members, I rather like the somewhat cryptic style of the Report. I think that it makes easy and refreshing reading. As Lord Reith says in this connection: Such procedures"— that is, pilot schemes— take time and cost money. But they result in sound decisions and minimise failures which hurt the territories as well as C.D.C. I can well understand—and I fully agree with the Report in this matter—that before large cash advances are made it must often be desirable, indeed, necessary, to run these pilot schemes. How are they being financed at present? They cannot very well be financed out of the main project itself, because in some cases the pilot scheme will not be a success and, therefore, the main project will never, in fact, be undertaken; yet the pilot scheme itself is presumably not revenue-producing. I suppose, therefore, that pilot schemes are financed out of the profits of other projects, some of which are, no doubt, fairly quick revenue producers.

That is all very well, but as the Report says at the top of page 7, in another context: The load cannot be borne by other jobs which probably cannot do much more than service their own capital… I should have thought that that was fair comment. I do not know whether the method suggested by my hon. Friend the Member for Wavertree for equity capital is appropriate and right, but it seems to me that a capital sum should be allocated for pilot schemes of this sort, on which there is no obligation to pay an annual interest charge.

I do not know how much would be required—it might be £1 million, or something like that—but whatever may be the appropriate sum, I think that it should be made available as a special and specific grant for the purpose of financing these pilot schemes. Subject to these questions, I fully support the Bill, and hope that it will facilitate the excellent work which, under Lord Reith, the Corporation is now doing.

I should like to make a brief comment arising out of my right hon. Friend's remarks about the name of the Corporation. I very much hope that the name will not be changed. I was glad to hear that my right hon. Friend is not in favour of a change. I understand that in these days some people think that there is something a little difficult about the connotation of the word "colonial", but it does not bother me a hit. It would be quite inappropriate to change the name to "Commonwealth Development Corporation", because that would conflict with the purpose of Clause 1 of this Bill. The work of the Corporation is for the Colonies and in the Colonies, and not for the self-governing Commonwealth. It could be called the "Overseas Development Corporation", I suppose, but I do not see why it should be changed at all.

If we change the name we may give the impression that we are ashamed of our colonial record. I am very proud of it. I do not think that any other country has a better colonial record than we have. We have brought good government and progress, and sound, honest administration—very often out of chaos. We have improved the living standards of many millions of people; we have tried to educate them and improve their health, and build up their economies; we have led them towards self-government and we have granted them self-government as soon as they could cope with it. No Secretary of State has been more enlightened or progressive in this field than my right hon. Friend.

I think that it was Lord Elton who said, in his fine book "Imperial Commonwealth": The British Empire has survived because it has produced not only so many men with a natural genius for ruling backward races, but, also, so many men who did not wish to see backward races being ruled. There is a good deal of truth in that statement. We have nothing to be ashamed of in our colonial record, and nothing to be ashamed of in the name of this Corporation.

5.56 p.m.

Mr. James Johnson (Rugby)

I have no intention of making a long speech, but I want to add my humble meed of praise—and almost of fondness—in memory of the late Walter Elliot. He was my leader as well as the leader of the Under-Secretary of State in the East African delegation some years ago, and we could not have had a finer man to lead us.

The hon. Member for Surbiton (Mr. Fisher) wound up his speech with a wonderful peroration about the glories of the Empire. His quotation was a little superfluous at this late stage in the Empire's development. I would merely say, as I said last week, that due to the accident of history we had to have empires; but that instead of using all of these wonderful words about them, some of which are deserved, I admit, we should remember that if we want to make comparative analyses of different empires, at least with the Belgian Congo and in Portuguese Mozambique, there are people called the assimilados and the evolues who enjoy a higher level of social assimilation than exists in many of our dependent territories overseas.

I want to take up points made by two hon. Members—one on each side of the House. I want to join issue with the hon. Member for Wavertree (Mr. Tilney) and my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd). These Colonial Development Corporation debates have taken a queer shift since 1952. As always, the Conservative Party has used this Corporation as a political shuttlecock. In the bad old days they could not say a good word for it, but since 1952 there has been a complete shift. It is amazing to see how, now that they have got into power, they have continued something which they inwardly knew was for the good of the Empire and Commonwealth and, indeed, for ate good of themselves as a Government.

We have convinced them, not against their better judgment but perhaps against their worst judgment, and they accept this weapon for lifting up these dependent peoples overseas. If they are now going to say, "This is what we did", or "This is what we could have done". I would remind them that the Corporation has incurred losses since the party opposite came into power. During this period, however, we have behaved ourselves over such matters as the Lobatsi abattoir in Bechuanaland, whereas we could have flogged that issue as they flogged the Gambia eggs scheme. Having come to power, they are learning the facts of life.

Hon. Members opposite accuse us of sentimental optimism about the possibilities of this instrument for advancing overseas people, but we say that they are too often guilty of unconstructive economy in these matters. While it is an excellent thing to step up by these tens of millions the power of expanding the Corporation's activities, we say that the matter is being treated negligently.

I wish to pick up what was said by the hon. Member for Wavertree, who began almost to wage an ideological economic war in Africa. It is quite correct that Africa is calling out for investment and we cannot satisfy the demand. While we may spend £20 million perhaps in opening up the Tchad Territory, or developing the railway in Nigeria, we could equally well spend £120 million in other parts, including £20 million on a South Tanganyika railway, and in the development of the coalfields in that territory. It would be possible to make a list of the jobs to be done and the money which could be spent, if we had it to spend.

The challenge is quite simple. Many Africans are leaving the bush for the city lights and we have to find jobs for them. Otherwise, we shall see what I fear we are going to witness in Kenya, where 20,000 have left the detention camps and are wondering about in Kiambu and Nairobi. We cannot find them jobs, there is no unemployment insurance, so they become mischievous. It is our task to find jobs for these people and also to increase the wealth of the Colony by financing the badly needed social services, including health, housing and education.

How far does this Bill go in that direction? Hon. Members have mentioned the handicaps from which the Corporation suffers. There is the question of whether it is allowed to operate only with money it gets on loan. Hon. Members on both sides of the House have pleaded for equity capital, and I agree with everything which has been said. The Corporation suffers in that respect compared with private enterprise, which can, of course, have equity capital and operate in a much easier way than can this public Corporation. The point was made about the £8 million or more which we have lost in past activities. That is a millstone round its neck, and the Corporation has to "go canny" and to think carefully how it spends what money it has. In the view of many people this debt should be scaled down to give the Corporation a chance to get on with the job that it is called upon by this House to do.

The Bill is good so far as it goes, but I want to go a lot further in this matter. I wish to pick up what was said by my hon. Friend the Member for Stockton-on-Tees, who shocked me by suggesting that we combine the C.D.C. with colonial development and welfare. I have heard hon. Members opposite say that on other occasions, particularly the hon. Member for Essex, South-East (Mr. Braine), but I do not agree. In fact, the colonial development and welfare fund is completely unfitted for the work which the C.D.C. has to do.

I do not suppose that in his many hours of silent study the Minister has ever bothered to read the Unilever magazine Progress. In the autumn, 1957, issue there is a thoughtful article by Sir Sydney Caine, who discusses the balance sheet of development and welfare so far. In a thoughtful analysis he questions whether much of the work which has been done by C.D. and W. could not have been done by the Governments on the spot with their own money in their own territories. If that may be said about C.D. and W., what about the C.D.C.?

For example, Sir Sydney Caine says, about C.D. and W., …that the scale needs to be largely increased and the scope of aid widened to include non-colonial territories. He says: To some extent the system has come to be a rather complex method of general supplementation of colonial revenues. He also says that the difficulty, when we examine these projects, is in detecting whether any of them are very constructive in the way of path breaking development. In my view, Sir Sydney Caine is one of the people best qualified to speak about these matters, and if he is able to say that about development and welfare how much less is one entitled to speak about the C.D.C. in the same way? Surely the function of the C.D.C. is to tackle these things "of path breaking development." Development and welfare cannot attempt them, nor would the financiers in the City, because it is a dangerous matter and a marginal risk. It will not yield the 10 per cent. or 12 per cent. profit which the capitalist wishes to secure. This provides a field of operations for the C.D.C. which must be kept quite separate from the normal humdrum services of a Colony.

However, one can go beyond this, if one is really speaking about giving aid to dependent territories. A few weeks ago, at the United Nations, the Economic and Social Council decided—or rather it will decide after the resolution has been agreed—to have an economic commission for Africa on the lines of the E.C.E. and the E.C.A.F.E. in South-East Asia, and the E.C.L.A. in South America. It is perhaps a little late in the day, but we are also to widen our work in Africa to supplement the C.C.T.T.A. technical commissions south of the Sahara by what will develop from the F.A.M.A. Conference in Accra next month.

But all this mutual assistance should have been provided years ago. What we really need is a Colombo Plan for Africa. A concerted attack should be made by the colonial Powers in Africa; British, Belgian, French, including the Portuguese, who may come in despite the fact that they are not in the so-called democratic comity of Western Europe.

As was said by the hon. Member for Wavertree, America also must assist. I cannot think of any place other than the North African continent where we may obtain the needed massive injections of capital. We are worrying about whether we can get a million pounds or so for a Colony like Kenya. What about the Volta Dam project, which seems to have gone temporarily into oblivion? We are worried about small doses of capital for these various schemes; but I would take the matter beyond that, and beyond the discussions of technicians or civil servants, and say to the Minister that in the same way as we have a Council of Europe we should have a Council of Africa. We should call in the politicians of the different Governments to discuss these matters fully in an Assembly. It is all very well for the technicians and those skilled in fighting malaria and combating the tsetse to meet in their committees, but it needs a bigger, more important and concerted attack on this question of—I was about to say assimilating the people of the bush into a higher and advanced way of living along with the Western peoples.

While we welcome this Bill, and say that it is a fine thing to spend a few more millions, we maintain that it is only biting at the cherry. What we need is not only more bites at the cherry, but more cherries to be bitten. We give a qualified welcome to this Bill, but we hope that progress will be made in tackling the bigger question of doing something for these dependent peoples for whom so much needs to be done.

6.10 p.m.

Sir Roland Robinson (Blackpool, South)

Like other hon. Members who have spoken, I would pay my own warm personal tribute to the memory of the late Walter Elliot. He had been with us for so long and played such a large part in our deliberations and in our Parliamentary life that he had in a way become part of each and every one of us. I am sure that in the months to come we shall all feel a sense of great personal loss as we realise more and more that he is not with us.

Like others, I welcome the Bill, in the belief that it meets immediate requirements, but in common with other hon. Members I hope that it is only part of a much wider and much more comprehensive policy for the development of our British Commonwealth. I am one of those who feel that we have a very real responsibility to the emerging territories. My right hon. Friend the Secretary of State said that our responsibility to them as Colonial Territories came to an end when they achieved their independence. I presume he meant the responsibility of the Colonial Office. I feel we should go beyond that, because as a nation we must have a very real sense of responsibility towards the new territories which are now becoming full members of the British Commonwealth.

It is therefore important that we should find some vehicle for the great task of helping those countries with their problem of development. It is possible that the Colonial Development Corporation is such a vehicle. With that idea in mind, it would be wise at this early stage for us to change the name from Colonial Development Corporation to Commonwealth Development Corporation or British Overseas Development Corporation. It is not a new idea. The Bill is called the Overseas Resources Development Bill and not the Colonial Development Bill.

Next week we shall be discussing a Bill to change the title of the Imperial Institute by adding the word "Commonwealth". It is a sign of the changing times. We can all be proud of the work that we have done in colonial development and I see no stigma in the use of the words "colony" and "colonial". They are a part of our history which is outstanding and which will always bring credit to our country. On the other hand, the terms have come into a certain amount of disrepute in some parts of the Commonwealth and of the Colonial Territories, so let the terms go. The problems are so great that we should not lose time arguing about names and words. Achievements matter, and not names.

I am interested in Clause 1 (3) of the Bill under which the Colonial Development Corporation will have power to become managing agents in the new self-governing territories. This is one of the most unrealistic Clauses ever written into a Bill. I cannot see the new self-governing territories asking the Colonial Development Corporation, "Please manage some of our business affairs for us". Certainly this will not happen while the word "colonial" is used, but there is one other consideration. In normal business practice it is not enough to ask somebody to manage our business. There is usually the further requirement that the manager should have some financial stake in the business. We should accept in the development of the British Commonwealth the every-day business principle that management and money go hand in hand. We should not expect to manage these projects in self-governing territories unless we make a financial contribution to them as well.

I join with hon. Members who have drawn attention to the problems of the capital structure of the Colonial Development Corporation. Of course it has lost money, and of course at some time or another we must face the fact that we shall have to write off these losses. Why not do it now in the Bill, and get it off our chests, so that the Corporation can start on its great task with a clean sheet? If it has to set aside sums of money out of its profits to pay off losses on unsuccessful development efforts undertaken in the past it will never do a good job.

There is a suggestion that we create a development fund, which the Corporation can use without being asked to make a profit on it. It could cover development work. Whether we like it or not, a great part of the work of the C.D.C. is purely development. One of the outstanding examples was the discovery of the Tanganyika coal field. A large sum of money was spent, and evidence was produced of the existence of millions of tons of workable coal. It proved to be purely development work, because there was no immediate possibility of getting the coal out until large sums of money had been spent on building a railway. We ought to give credit to a Corporation for doing a good job in revealing resources which can be developed at some future time only when further money is put up to develop communications.

At this stage I shall not go into further details. I have recently returned from a visit to the Commonwealth Parliamentary Association Conference in New Delhi, where it was my very great privilege to play a part in a two-day discussion of Commonwealth development. I should be remiss if I did not say that no subject discussed during the conference, which lasted nearly ten days, attracted such deep-seated interest among representatives from all parts of the British Commonwealth as did this question of Commonwealth development. I came away from the conference with a firm conviction that it really is time for this country to give a lead, not with small Parliamentary Bills, but in a broad, comprehensive policy to capture the imagination not only of this House and this country but of all members of the Commonwealth.

The time is ripe. We should broaden our conceptions. We should invite the great self-governing territories to share our responsibility for developing the Commonwealth. Many of the territories are doing it now under the auspices of the Colombo Plan. We should go farther. It should not be done by the United Kingdom alone. The Commonwealth should be invited to come in, and when I say "Commonwealth" I mean all. Upon achieving independence the emerging territories should be invited to join in, too. We know that they cannot afford much money, but we should ask them to give a token contribution so that they may feel that, as self-governing territories, they are sharing the great task with us. Only in that way can we achieve the true concept of Commonwealth.

This is a small Bill, but we welcome it. We should be failing in our duty, however, if we did not impress upon the Government that Commonwealth development is a very great challenge. We have a very great chance of increasing the wealth of the Commonwealth, and raising the standard of living of millions of its people. We should tackle it with vigour and imagination. I hope that within the next month or two we shall have an example from the Government of real leadership which will inspire the whole Commonwealth.

6.20 p.m.

Mr. F. H. Hayman (Falmouth and Camborne)

I want to intervene only for a few moments in this debate. First, I should like to endorse almost everything the hon. Member for Blackpool, South (Sir R. Robinson) has said. I think that the Colonial Development Corporation does a job that ought to be done, one we shall always regard with pride, and that the Government ought not to hamper its work in any way.

Some hon. Members have said they are very proud of what has been done already in the Colonial Empire. Yes, we are very proud of much that has been done, but we are also ashamed of some of the things that have happened. It is useless for us in this day and generation to blind ourselves to facts of that kind. The Colonial Development Corporation has done much to wipe out the stains of the past. I am not blaming those of the past; they were growing up in the world of that time. We have had the advantage of their experience.

We must not regard this matter in a niggardly way. I agree with the hon. Member who suggested that we should wipe out the debt. On Thursday, we shall be asked to wipe out a debt on our agricultural account of between £60 million and £70 million. Let us be big in this matter. The amount outstanding for this work is comparatively small, but the work itself is imaginative and big. I plead that we should not cut off territories which have achieved Dominion status immediately they reach it. We can recall how hard up this country was in 1945 when, suddenly, we were told by President Truman that Lend-Lease was at an end. Let us help these territories. After all, they have contributed in wealth to the development of Britain. I am sure that the Corporation is doing a good job, and we can trust it to go on doing that job provided we give it the money to do so.

6.22 p.m.

Mr. Coldrick (Bristol, North-East)

I did not intend to intervene in this debate, but I think it essential that we should be clear about one or two things. I, also, welcome the Bill, but I think that a measure of caution is needed.

If I remember aright, when the Colonial Development Corporation was established it was specifically for the purpose of assisting in forms of development which otherwise would not take place; in other words, undertaking them would not prove profitable, but assistance was given then so that they should be successful. Very substantial sums of money were sunk in enterprises of one description and another and in this House I have heard very considerable criticism of the lack of business acumen on the part of the Corporation in some enterprises which it undertook.

Consequently, we revised the rules of the Corporation and restricted its activities. Therefore, while I fully approve of the purpose of which the hon. Member for Blackpool, South (Sir R. Robinson) was speaking, of developing the Commonwealth and Colonies, I am not enamoured of the idea that we should sink money in everything that is unprofitable and leave the profitable subjects to private enterprise. For that reason, in matters of this nature I do not altogether see the wisdom of exploring in Tanganyika or other places for resources which afterwards will prove exceedingly prosperous to people who have sufficient private capital to put into them.

If my memory serves aright, I saw a vast cement works in Northern Rhodesia which would not have been developed but for assistance granted by the Corporation. The Corporation was working harmoniously with private enterprise and making a success of that project. If we are to sink capital and an enterprise is to be profitable, a part of those profits should flow back to the funds of the Corporation to assist other enterprises, which may be necessary but not so profitable.

I agree with sentiments which have been expressed by various colleagues. Although I often disagree with colleagues on this matter, I recognise that throughout the whole of the Colonies our prime task is to develop the economic resources, because I am confident that we shall not get rid of ignorance, poverty and disease until throughout the Colonies we can produce sufficient wealth to maintain services which will accomplish those purposes.

So, while I welcome these things, I hope that we shall keep a sense of proportion and recognise when dealing in public money that we should do so in such a way that where, in consequence, forms of development prove profitable we may share in them in order to assist in the development of other areas and not allow the most remunerative to remain in the hands of private enterprise whilst taking on responsibility for financing those which are not profitable.

From that point of view, it would be hard to win the confidence of outsiders who want to invest their money. If we want to create the impression throughout the Colonies that we are not, once again, merely concerned with exploitation of the people, but with their general development and with increasing their prosperity, only on the lines I have indicated shall we win their co-operation.

6.26 p.m.

The Under-Secretary of State for Commonwealth Relations (Mr. C. J. M. Alport)

My right hon. Friend has asked me to present his apologies to the House for having to absent himself from the final stages of this debate. I think the House is aware of the invariable courtesy with which he treats it. Hon. Members will, therefore, be assured that it is only a most pressing engagement which prevents him from being here at this time.

I hope that I may be allowed to associate myself with the many tributes which have been paid to the late Walter Elliot. If I do so only formally, that is not because of any lack of affection I feel for him and for his memory, but because all that should be said has already been said by others far better than I should be able to say it.

The hon. Member for Cardiff, South-East (Mr. Callaghan) opened this debate on behalf of the Opposition by making a claim that the Colonial Development Corporation had operated during the last year of its accounts at a reasonably substantial profit. That statement was analysed later by my hon. Friends the Members for Kirkdale (Mr. N. Pannell) and for Wavertree (Mr. Tilney). I think they showed that the claims made by the hon. Member for Cardiff, South-East were exaggerated, to say the least. I think that on the whole, however great may be the differences of view between the two sides of the House—differences about the use of Government instruments and State corporations for Colonial and Commonwealth development—it does no service to the C.D.C. to claim more for its success than is justified and it does not detract in any way from the excellent work which Lord Reith and his colleagues have done during these last years by pointing out that up to the present, apart from the successes which stand to its credit, there have also been certain failures.

To the best of my ability I have tried to understand the Labour Party's view of colonial economic aid. I was hoping that the speech of the hon. Member for Cardiff, South-East today would elucidate for me some of the points contained in the document which was issued. I should have said that the difference of approach to this problem between the two sides of the House is that we on our side believe that in the independent Commonwealth, and to a large extent in the dependent territories, the most effective way of providing for the varied development which is required is through the instrument of private investment and private enterprise.

The hon. Member for Cardiff, South-East said that all we can find is £50 million for colonial investment. The inference which he apparently wished the House to draw from that was that the Government were being unduly niggardly in extending these additional resources to the C.D.C. because, as I understood him, that was the main source for the development of Colonial Territories. Of course, that is not true. As the House knows, in the development of dependent territories there is the vitally important work done through the Colonial Development and Welfare moneys. There are the grants in aid which have been made from time to time, as needed, to Colonies all over the world. There are the loans available which have been raised for colonial development on the London money market, and there are large amounts of private investment which have been made in Colonial Territories during the last few years.

We recognise that it is difficult—and this is one of the reasons why we on this side have accepted such instruments as the C.D.C.—to ensure that money is channelled to those objectives which would not normally of themselves attract investment. We believe that the main purpose of the C.D.C. is to channel a certain portion of public investment into Colonial Territories, and the need for that investment, as I think is accepted on both sides, continues to be very great.

What I find difficult to understand in the point of view put forward by the Opposition is that they should be anxious to divert the resources of the C.D.C. from the Colonies to the Commonwealth—a proposition which in certain cases is not particularly attractive to ordinary investment; into areas in, for instance, Australia and South Africa, which are normally very attractive to investment. The object of restricting the C.D.C. investment is to ensure that the money which is made available is retained in its entirety for those territories for which we have a special responsibility and which in many cases would not normally attract investment from other sources.

Mr. J. Johnson

Is the hon. Gentleman able to quote any hon. Member who said in this debate or in any other debate that we should take money normally given to dependent Colonial Territories and invest it in Australia or South Africa? Can he quote any document which says that? It is completely new to this side.

Mr. Alport

I recognise that hon. Gentlemen opposite seldom follow through the logical consequences of the policies they put forward. What I have suggested is the logical consequence of the policy which hon. Gentlemen opposite have put forward in wishing to extend the operations of the C.D.C. to the independent Commonwealth. In our view, as far as the independent Commonwealth is concerned, whether it be a great country like India or Australia, the best instrument for investment remains private investment.

At the end of 1955, United Kingdom private investment in India amounted to nearly £300 million compared with the United States investment of just over £30 million. In Australia, the total United Kingdom investment between 1947 and 1956 was £A390 million. In other words, 64½ per cent. of the private investment in Australia during those ten years came from the United Kingdom. That compares with just over 27 per cent. from the United States and Canada. In those circumstances nobody can say that private investment as an instrument for the development of the independent Commonwealth has not been successful, and that it has not played its part in making the resources of these great territories beneficial not only to the people of those Commonwealth countries but also to the world. It is for that reason that we believe that private investment should still remain a main instrument for meeting the needs of the underdeveloped territories from such resources as can be made available from the United Kingdom.

Our main responsibility, which, I think, is agreed by at least some hon. Gentlemen opposite, is to continue to ensure that the strength of sterling is maintained and that our sterling balance liabilities are properly and punctually fulfilled. It is clear, in spite of what the hon. Member for Falmouth and Camborne (Mr. Hayman) said, that there will always be in the present position of economic stringency in which we find ourselves substantial limitations on the resources available for investment in the Commonwealth and overseas. At the same time it is essential that we should do the best we can, and I think that the substantial addition which has been made by this Bill to the amount of resources available to the C.D.C. is a token of the intention of the Government that the United Kingdom will continue to play a full part in bringing about the development of the resources of the Commonwealth.

Many of the questions put to me were directed to certain matters which, as the Secretary of State said, are not included in the Bill—for instance the capital reconstruction of the Colonial Development Corporation. The hon. Member for Cardiff, South-East asked me questions about this aspect of the future of the C.D.C. First, he said, "Tell us about the borrowing powers. Will the C.D.C. be able to pledge its assets?" The answer to that has already been given by one of my hon. Friends. The truth is that the assets of the C.D.C. are already pledged to the Treasury in respect of the moneys which have been advanced by the Treasury to the C.D.C. Therefore, if they were to use those assets as security for any loans raised it would simply amount to the Treasury's undertaking responsibility for guaranteeing those loans.

The hon. Member asked what the rôle of the Treasury would be. Could it guarantee the money raised? Under the original Act the Treasury has power to guarantee money raised by the C.D.C., and that would be done where appropriate, subject to any conditions which the Treasury might feel it right to apply to the proposition which was put to it. As I understand it, the method whereby the money would be secured would primarily be by means of Treasury guarantee. Other means would be open to the C.D.C., but Treasury approval would be required in all cases.

Mr. Callaghan

Perhaps we should follow this up in Committee, when perhaps the Under-Secretary will give a fuller answer, but what are the conditions in which a Treasury guarantee will not be forthcoming? May we take it that in the generality of cases there will be a Treasury guarantee for the loan?

Mr. Alport

Of course not. That is a matter for the Treasury, and I cannot give any indication at present. The hon. Member knows perfectly well that at present I can give no indication of the conditions which the Treasury would exact on those occasions. That is all I can say in answer to his question, and it is a very full answer. In the case of the C.D.C. raising money under the additional £20 million which it is entitled to raise in accordance with the Bill, where the conditions were acceptable to the Treasury the money would be open for a guarantee by the Treasury.

Mr. Callaghan

It is no use the hon. Member trying to ride off like that. What are the conditions and in what circumstances will the Treasury give its guarantee? What will prevent it from giving a guarantee? It is no use the hon. Member saying that he cannot answer this matter for the Treasury. He is speaking for the Government, and before the House gives the Bill a Second Reading it is entitled to know what are the conditions which will be in the Treasury's mind before it gives its guarantee.

Mr. Alport

Certainly not. The House would not expect and the hon. Member has no right to expect me to be able to give that information at this stage.

Mr. Callaghan

rose—

Mr. Alport

I have given way frequently and I cannot give way to the hon. Member again.

Mr. Callaghan

But this is absurd.

Mr. Alport

It is not absurd in any way. As I have said, it is perfectly clear that the conditions will depend upon the proposition put to the Treasury by the C.D.C., and it is therefore impossible for me at present to outline the sort of conditions and the sort of propositions which the C.D.C. may put to the Treasury when these propositions mature.

Let me turn to another question raised by the hon. Member—whether any cushion of equity capital would be given to the C.D.C. in recognition of the fact that it undertakes certain risk-bearing activity. The hon. Member said he did not agree with this, but he asked me to give an answer on the subject because, as I understood it, the matter had been put to him by the C.D.C., as stated in the Labour Party's booklet, "Labour's Colonial Policy." I am doing my best to assist him and to answer the questions which he has put to me. I always try to do so.

I will put the question in my own words, if he will forgive me. He asked whether there would be any cushion of an equity element in the C.D.C. capital in recognition of the fact that the C.D.C. has to undertake certain risk investment. The C.D.C. claims that it is at a disadvantage in comparison with private enterprise, which is able to obtain equity capital in order to meet just those problems which are created by the element of risk in any enterprise.

On this matter, and on the question about obtaining, at the initial stage, one rate of interest for capital required for an enterprise, rather than its being subject to varying rates of interest during the development of the enterprise, all I can say is that those two subjects and all those matters which are connected with the reconstruction of the C.D.C.'s capital structure which are not dealt with in the Bill are known to my right hon. Friend and are a matter for investigation and consideration at present. My right hon. Friend has made it clear that he is not in a position to give any answers at the moment. Had he been in such a position, no doubt those matters would have been dealt with in this legislation. These are very complicated and difficult matters of policy, but in due course my right hon. Friend will be in a position to make decisions on these various subjects. He is as well aware as any other hon. Member of the difficulties which the Board of the C.D.C. has been facing and is as sympathetic about those difficulties as any other hon. Member.

I should like to correct the statement made by the hon. Member for Cardiff, South-East about the Commonwealth Development Finance Corporation. He appeared to indicate that the resources of that body were very small and limited. The fact is that the capital of the C.D.F.C. is £15 million, and it has power to borrow up to twice that figure. In other words, the resources which could be available to the C.D.F.C. are about £45 million. Moreover, £14½ million is already committed. It is wrong to suppose that this body has been a disappointment in its operations to those who started it—it is a private enterprise body—or that it has failed to make a substantial contribution to Commonwealth development generally since its formation.

Mr. Callaghan

Is the hon. Member telling the House and in particular his hon. Friend the Member for Blackpool, South (Sir R. Robinson) that a sum even as large as £14 million invested in the whole of the Commonwealth begins to match the needs? It is a ridiculous, infinitesimal and stupid little sum.

Mr. Alport

The hon. Member is extraordinary in his approach to this matter. I have already given him figures of hundreds of millions of pounds invested in Australia and India, and the same comment applies to other Commonwealth countries. The amount which is represented by the C.D.F.C. contribution may appear to be small in comparison with those major figures, but it is only one facet of the many means of bringing the financial resources of this country to meet the needs of the developing Commonwealth. It is wrong to take it out of its context and to pretend, as the hon. Member did with his reference to the £50 million in the Bill, that it is the only thing which is being done.

It is impossible for me, and the House would neither expect nor permit it, to elaborate the various other means whereby investment has been made, for example the 400 firms in the United Kingdom which are investing in Australia. That is a token of what is being done, and the hon. Member and his colleagues are living under a complete misconception if they believe that the only thing which has been done in the last ten years for the development of the Commonwealth results from the Overseas Resources Development Acts. That is only a very small proportion of the great effort which has been made by the United Kingdom over the last ten years.

Mr. Callaghan

I assure the hon. Member that I follow that, but I ask him to try to understand the argument. The whole point is that whether it is £14 million or £4 million, it is supposed to represent the investment which will take the place of the C.D.C. in the emerging territories. This is the system on which, the Government tell us, they rely. The right hon. Gentleman in an intervention said he relied on this to take the place of the C.D.C. That is the argument I am putting, and I am beginning to think that I can supply the hon. Member with the words but I cannot supply him with the understanding.

Mr. Alport

The hon. Gentleman again is wrong. My noble Friend, in another place, was drawing attention to the potentialities of investment of the type represented by the C.D.F.C., in its turn representing the efforts of private investment in development in the independent Commonwealth.

The contribution which the C.D.F.C. has made in the independent Commonwealth is an important one, not merely in terms of the money which it has been able to contribute from its own resources but also in its function as a guide to others interested in the development of the Commonwealth as to the type of investment which is valuable not only to this country but to the Commonwealth countries concerned. The hon. Gentleman must not underestimate the importance of the rôle which the C.D.F.C. has played during these last years.

The hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) asked whether the Government did not think that there was a strong case for what he called the cross-fertilisation of the Commonwealth, by which I took him to mean to ask, were we in favour of using the financial resources of all parts of the Commonwealth in the general task of developing the Commonwealth as a whole? I assure him that there is nothing that the Government would not support—this is made clear in the White Paper—in trying to associate in every way we can other Commonwealth countries with our own.

Quite recently, I had the opportunity of seeing one example of the contribution which Canada is making in Pakistan, in the great hydroelectric dam which is being erected on the Kabul river. I assure the hon. Member for Orkney and Shetland that not only are we in favour of it but, both through the Colombo Plan and other means, a great deal of progress in this form of co-operation—perhaps inadequately publicised—has taken place and is taking place at the present time.

Mr. Grimond

Since the hon. Gentleman has been kind enough to reply to me, will he say something about the matter, mentioned by both the hon. Member for Liverpool, Wavertree (Mr. Tilney) and me, of funds from outside, for instance, from the United States? I am not quite sure how far the Commonwealth Development Corporation can attempt to tap those resources.

Mr. Alport

I was asked that question by the hon. Member for Orkney and Shetland and by other hon. Members. I had intended to answer it later, but I will do so now. The additional £20 million which the Bill will, subject to Treasury agreement, enable the C.D.C. to raise, may be raised from a number of different sources. It might be raised, I suppose, on the London money market. It might be done through the International Bank. It might be raised—I hope it will be—in Commonwealth countries; and we hope that it may be raised from other sources available to the Corporation.

The hon. Gentleman can be assured that this is a means, or, we hope, it may turn out to be a means, of associating other forms of investment with the effort of the C.D.C. It is not possible for me to give an exact estimate of what those sources may be, but hon. Members can be assured that, within the limitations I explained earlier, the C.D.C. will be encouraged to seek investment from other parts of the Commonwealth and, indeed, on occasion, no doubt, from outside.

To the hon. Member for Stockton-on-Tees (Mr. Chetwynd) I can answer for my right hon. Friend the Secretary of State for the Colonies in expressing great sympathy with the points the hon. Gentleman made about the West Indies As was shown in a recent debate on three groups of islands in the West Indies, there is great sympathy and understanding for the problems of that part of the British Commonwealth. I would merely add that those matters will, no doubt, be noted by my right hon. Friend. I am grateful for the hon. Gentleman's contribution and I am grateful—as, I am sure, are his friends in the West Indies—for the fact that he has acted as their spokesman in this matter. The hon. Gentleman would not, however, be right to give the impression that the C.D.C. will in future be given, under any Government, unlimited resources for use in an unlimited way.

The principle that the C.D.C. must break even over the years was a principle laid down by hon. Gentlemen opposite when in Government, and it is a principle which would be continued, no doubt, by them if they were to come into office again. The truth of the matter is that we do the C.D.C. harm if we give the impression, as the hon. Member for Stockton-on-Tees seemed to tend to do, that it can do more than it is really able to do.

The debate has, quite properly, probed the background of the policies against which the Bill has been framed. We accept that hon. Members on both sides of the House are anxious that greater progress should be made. We accept that there is a sense of urgency and enthusiasm about the whole problem of Commonwealth development and an anxiety to ensure that the United Kingdom shall continue to play its full part.

At a time when the financial resources of this country are limited, it is, as I said earlier, a token of the Government's intention that this should be done that we are bringing the Bill for Second Reading today. We are adding 50 per cent. to the total capital to be available to the C.D.C., and that, in itself, is an indication of the importance which we attach to the work which can be done by the C.D.C. and to the whole matter of Commonwealth development.

I am grateful to my hon. Friends for the various points they have made, and I am grateful to the House for the welcome it has given to the Bill. There may be matters requiring to be dealt with in Committee, and the hon. Member for Cardiff, South-East has informed us that he intends to move certain Amendments. We can consider those matters when the Committee stage is reached. In the meantime, the House will, I hope, give the Bill a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Bryan.]

Committee Tomorrow.