HC Deb 19 June 1963 vol 679 cc557-602

Order for Second Reading read.

8.27 p.m.

The Under-Secretary of State for Commonwealth Relations (Mr. John Tilney)

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

The Bill will, I believe, be welcomed on both sides of the House, especially after what has been said so many times in the past, about the need to expand the territory in which the present Colonial Development Corporation operates.

What the Bill does to amend the Overseas Resources Development Act, 1959, and the Colonial Development and Welfare Act, 1959, is well set out in the Explanatory and Financial Memorandum, and if any right hon. or hon. Gentleman is not sure on any point, my hon. Friend the Under-Secretary of State for the Colonies will be able to answer any question when he winds up the debate.

The House will remember that the C.D.C. was set up under the Overseas Resources Development Act, 1948. Its operations were confined to Colonial Territories not possessing responsible self-government and to British Protectorates. There have been various amending and validating Acts since then, but it was felt until recently that the Corporation would need all its resources for its work in dependent territories, for which Britain has a special responsibility.

Thus, when the first country to become independent since the Overseas Resources Development Act, 1948, Ghana, shed colonial status, the C.D.C. was precluded by the Ghana Independence Act from operating there, without prejudice to the continuance of any operations begun before the date of independence. It was thought at that time that private funds should be the main contributor to development in the independent Commonwealth.

Private enterprise has undoubtedly done a fine job in many Commonwealth territories. In the last few years, approximately £100 million per annum have been invested privately in these areas of the developing Commonwealth which in future will be covered also by the C.D.C. But the policy of relying on private enterprise solely was changed in the Commonwealth Trade and Economic Conference in Montreal in 1958. Thenceforth, Commonwealth assistance loans were to be available, but even so, because formerly dependent countries are now so quickly becoming independent and because so many of them are poor and under-developed, there is a strong argument for not confining to Colonies the operations of the C.D.C. which is so well adapted to meet the needs of countries which have recently become independent.

Therefore, this Bill puts back into the sphere of activity of the Colonial Development Corporation, now rightly to be renamed the Commonwealth Development Corporation, all Commonwealth territories which were in it in 1948 when it was set up. The Bill includes Southern Rhodesia, which is already within the ambit of C.D. and W., and the New Hebrides, but not British Somaliland, which has become part of a foreign country and in which the C.D.C. never had any interest. The ex-British South Cameroons have also become a foreign country—and I know that this part of the world is of considerable interest to my hon. Friend the Member for Liverpool Kirkdale (Mr. N. Pannell)—but there the C.D.C. can continue in co-operation with its associate, the Cameroons Development Corporation, the development approved while the Cameroons was still a trust territory.

It is, however, as well to take note that in accordance with the powers conferred under the Bill my right hon. Friend the Secretary of State intends to instruct the Corporation to seek his prior approval before starting operations in an independent country, and will give that approval only if the agreement of the Government of the independent country concerned is given.

There is no intention of raising the amount which the C.D.C. can borrow from the Treasury above the limit of £130 million. The net advances outstanding amount to £92 million, and borrowings in the last ten years have averaged under £10 million per annum, and, of course, the C.D.C. can always also borrow from the banks or use its share of its now fairly substantial profits.

I should tell the House that the C.D.C. welcomes the policy embodied in this Bill, and I should like to pay my tribute to the work of the Corporation. The recently published Report for last year shows that the operating surplus has risen from £1,869,000 in 1959 to £4,361,000 in 1962, and the profit last year was £1.6 million, of which the Treasury, under the 1959 Financial Settlement, will receive £690,000.

Paragraph 4(5) of the Report says that in 1959 approximately £12 million had been lost out of the then investment of £21 million, but since 1952 only £250,000 has been lost. In 1951, a staff of 325 at head office looked after an investment of £21 million. Now the staff at head office amounts to only 157, looking after an investment five times greater; so much has been achieved during the last twelve years which have coincided with a Conservative Government.

The Corporation's objective is to assist in the development of the country in which it operates, yet the money with which the Corporation works is received on the strictest possible terms. However, in 1962, the Corporation's investment in manufacturing and processing enterprises alone was associated with a turnover at the rate of £38 million, of which goods worth £23 million were exported from the territories concerned, and British exports generated by those activities amounted last year to over £7 million.

The Report goes on to say: When a project has been successfully established the Corporation is ready to dispose of its investment, provided the price is satisfactory,"— and this is a point of which I think private enterprise might well take note— particularly to buyers resident in the country where the project is situated. When a sale is complete the money is available for use for the development of some other project. I turn now to the colonial development and welfare part of the Bill. This is the sixth time that Parliament has been asked to provide funds since the first Act was passed in 1940 at the height of the German victories in France. The funds have always been dealt with on a cumulative basis, and each Act has simply extended the period in which funds are provided and has increased the aggregate amount.

The Colonial Development and Welfare Act, 1959, which was a consolidating Measure, provides assistance of two kinds. First, money for schemes for development and welfare in the Colonies, and this is mostly in the form of free grants. Secondly, Exchequer loans for colonial development programmes. The sums provided under both these heads are cumulative. Exchequer loans have proved invaluable because, despite the success of Barbados last year, the House will know that there have been many occasions when Colonial Governments have been unable to borrow money in the City.

British aid to the Colonies this year is likely to be nearly £90 million, of which assistance under the C.D. and W. Act may account for about £35 million. Private investment is approximately £15 million, but more than half the territories rely almost entirely on C.D. and W. assistance for their development. Much of it is in the form of grant so that it can be used to cover local expenditure, though where this aid goes to finance imports, colonial territories are, naturally, expected to buy British. C.D. and W. money is intended primarily for basic Government social and economic services and not for projects in the commercial sector.

The Bill extends the period in which C.D. and W. schemes may be made and Exchequer loans approved from 31st March, 1964, to 31st March, 1966. There will, therefore, be the customary overlap with the existing Act, thus enabling Colonial Governments to be informed well in advance of the aid they can expect. They can therefore plan ahead.

The effective period of the Bill is three rather than five years because in these days of rapid constitutional and political change it is difficult to foresee more than three years ahead what the requirements are likely to be. It is, however, realised that the need will continue after that.

The Bill increases from £315 million to £340 million the amount of money that may be spent on schemes under Section 1 of the C.D. and W. Act. At 31st March, 1963, about £43½ million remained unspent of the £315 million, so that about £68½ million will be available for expenditure in the three years, 1963–66. The provision for Exchequer loans is increased from the figure of £100 million, made available by the 1959 Act, to £105 million. Issues of loans amounted to £64 million at 31st March this year, so that the Bill will permit further issues of £41 million.

In deciding how much money should be provided under the Bill we could not overlook the probability that some territories now covered by it will become independent before 1966. If any territory enters independence with an unspent C.D. and W. provision, that amount will be "frozen", that is, set aside and not spent. This does not mean that we automatically stop development assistance to such a territory, but we cannot give it under this Act.

We can, if necessary, give it in other ways, as we have done in the independence settlements relating to Tanganyika, Uganda, Jamaica and other territories. Conversely, if it is found that we have under-provided in our assumptions for the needs of such a territory, its continuing need could be met possibly by releasing to it some frozen balances from somewhere else. There is thus an element of swings and roundabouts in this arrangement.

Although the Bill reintroduces a ceiling on expenditure for C. D. and W. schemes this is a purely precautionary measure, because of the substantial increase in our total overseas aid, particularly since 1959. In fact, it has approximately doubled since 1957. The scale of assistance provided by the Bill is considerably greater than that provided by the 1959 Act. The increase, taking grants and loans together, is 28 per cent., and the proportion of grant to loan is greater.

The House will bear in mind the fact that previously for research and technical assistance for the Colonies funds have been found under the C. D. and W. Acts, but this expenditure is now financed by the Department for Technical Cooperation. This change, however, does not imply any decrease in the amount of research done for the benefit of colonial territories.

This is a hybrid Bill, dealing with two distinct types of development aid for the less developed members of the Commonwealth, both dependent and independent. It will, however, I believe, commend itself to the House.

8.41 p.m.

Mr. John Strachey (Dundee, West)

Just now the Under-Secretary of State said that the Bill would be welcomed, and he is quite right. We welcome it very much. But in doing so, we say, "At last", because, as he truly pointed out, we have said on very many occasions that we wanted this Bill. We think that it has been introduced very late in the day indeed. We pestered the Secretary of State on the matter. I have personally pestered him for a long time now, and as long as a year ago we received assurances that it was coming. It has been a very long time being born, but it is certainly better late than never.

On the other hand, we are critical of the Bill now that it has appeared, because it does not appear to us to be adequate. The obvious inadequacy that first strikes one is that it does not cover the whole of the Commonwealth. When we introduced this great change—and I am talking entirely about the C.D.C. now—making it possible for the Corporation to initiate new schemes outside the dependent and colonial territories, we surely ought to have gone the whole way and made the Corporation able to take action in the whole of the Commonwealth.

Why should we restrict it to the territories which were dependent when the 1948 Act was passed, setting up the Corporation? I was one of the two Ministers who piloted the Measure through the House, and I have naturally been keenly interested in the Corporation ever since. Now that it is becoming a Commonwealth Corporation—quite rightly—why do we not include the whole Commonwealth in the scope of its activities? At present, three exceedingly important parts of the world—South-East Asia as a whole, India and Ceylon, and Pakistan—are excluded. This is a nonsense.

I do not say that India is a very suitable territory for the C.D.C. It has reached a state of development where it does its own planning and a great deal of its own technical assistance. The scale of the Indian economy is so large that it rather dwarfs the Corporation. The Corporation has been the instrument of some territories which are not particularly small—it is very active in Nigeria, which is a big country—but India is on an altogether different scale. But even in India I can imagine that there might be opportunities for suitable schemes, and I cannot see why it should be excluded. It might be that the Corporation would never operate there. But why exclude it?

In the two other territories, Ceylon and Pakistan, there might well be very suitable opportunities. Ceylon might well benefit from C.D.C. activities. My hon. Friend and myself have recently visited Pakistan and we were struck particularly by the fact that there would appear to be suitable opportunities for the Corporation in Pakistan. It is noticeable that the Pakistani Government have established two very similar Corporations of their own, one in East Pakistan and one in West Pakistan, which act internally in a similar sort of way.

Rightly, I think, on balance, the C.D.C. now acts indirectly. It invests in what are, as it were, local corporations and acts as a banker or, in a sense as a finance house. But I should have thought it might discover useful opportunities to act with the Pakistan corporations in a manner similar to its operations in East Africa. It seems to us a great mistake and a great pity that there should be this exclusion and we propose to move Amendments during the Committee stage to try to rectify this limitation.

It may be that the Corporation might feel that this is too big a thing too take on. But it would be purely permissive, because no one would wish to force the Corporation into great schemes in South-East Asia if it did not wish to undertake them. But it seems to me a great mistake that the Corporation should be stopped from initiating anything in that part of the world should it desire to do so.

To be frank, this is, I suppose, another example of Treasury caution. The Treasury has understandable reasons for entertaining certain suspicions about the C.D.C. and for not being keen on a wider extension of its activities. This, of course, brings me to the fact that was well brought out by the Under-Secretary, that the C.D.C. is now a success story. There is no question about that. But I was amazed when the hon. Gentleman said that this was coincidental with the arrival of the Conservative Government. I consider that "coincidental" is just the right word and no more. After all, what happened was that the C.D.C. had severe teething troubles and this was just about what could have been expected.

Mr. Peter Walker (Worcester)

It had lots of them.

Mr. Strachey

Yes, it had lots of them. I do not believe that a Conservative Government would ever have set up the Corporation. But had they done so, I do not think that the teething troubles could have been avoided.

The C.D.C. had to find out how to do its job, and that it has done. I am perfectly willing to give credit to the present Government for allowing the Corporation to discover its scope. But I cannot accept that this Government should take credit for the Corporation having overcome its teething troubles. Anyway, the C.D.C. would have been gradually throttled but for the new Measure, and it has been enabled to undertake new schemes in independent Commonwealth countries.

The Under-Secretary has given the figures of its present-day results, and they are striking. The Corporation is not a philanthropic or an eleemosynary undertaking, but one which is of mutual benefit to this country and to the countries in which it operates. I think that the Treasury and the Government would be unwise to limit its activities on balance of payments grounds.

I thought one of the most striking parts of the Report, which the Under-secretary did not quote and to which I should like to call the attention of the House, is the end of paragraph 6, where an attempt is made to show the effect of C.D.C. activities on the balance of payments. Those are very interesting figures. This is what the Corporation claims. It claims that last year—this is the Report for 1962—it drew £4.7 million from the Treasury, but of that it either kept in this country or remitted the larger part to this country, £3.7 million, leaving, at first sight, a burden on the balance of payments of only £1 million, almost a trivial amount when we think of the size of the figures involved.

As against that it sets, interestingly enough—and it is an interesting economic point—the £7 million of British exports which it says the activities of the Cor- poration as a whole, I take it, of the £100 million invested, had generated.

Mr. Tilney

For the sake of the record, although I think that the right hon. Member said paragraph 6, he meant paragraph 4(7).

Mr. Strachey

I beg pardon. That is correct, paragraph 4(7).

Seven million pounds of exports are generated and, therefore, there is a failure on the balance of payments of £6 million. I should not like offhand to pin my faith on that exact calculation—I think it a difficult one to make—and to compare the exports generated and how they have been paid for. But it is a good claim of the Corporation and I think that one could say that it is fairly clear from those figures that the activities of the Corporation today are imposing at the most strain on the balance of payments at all. If the C.D.C. did not exist, our balance of payments certainly would be no more favourable and might be a little less favourable than it is today.

The Treasury, rightly, of course, and inevitably—we should not complain of that—must be thinking always of balance of payments and always have this in mind, but it should take a wider and more favourable view of the C.D.C.'s activities. It is an impressive instrument today. In these smaller territories, some still Colonies and some High Commission Territories, where development, for obvious political reasons, is extremely important today, in those African and Asian territories, the C.D.C. is an incomparably flexible and effective instrument.

I was particularly struck—and this refers to paragraph 6, which I mentioned, paragraph 6(2)—by the variety of agencies and partnerships by which the Corporation extends its activities, with Courtaulds, in Swaziland, the Dutch company, in Tanganyika, the International Bank, in Kenya, with the Kenya Government, with the Northern and Eastern Nigerian Governments, and with the West German Government, in Tanganyika. It is an extraordinary range of partnerships and, of course, there are many others in different parts of the world. A very attractive and impressive technique has been worked out there. I am sure that every hon. Member who is present this evening who knows the Commonwealth will agree that the Corporation appears to be welcome wherever it operates.

That is a remarkable thing, because the aid itself has not always been welcome and has sometimes created friction, but the Corporation seems to have been extremely successful in generating good will. It is becoming increasingly self-financing and is able to turn over its enterprises more and more to local entrepreneurs or local governments. I make no point about whichever it should be. It is excellent to do it to both. This frees funds for new enterprises. I think that its extension to the Commonwealth as a whole, long overdue, is a great step forward.

Having said that, I look at the Report and study the figures, and I am impressed by the fact that, compared with the scale of international needs and of the international aid which goes on in the world, and even compared with the general amount of aid and investment which this country is undertaking in the world, mainly in the Commonwealth, the Corporation is not a very large element or a very significant factor, and we should delude ourselves if we thought that it was.

The Government say that we are investing or giving in aid to the world as a whole, on both public and private account, about 1.7 per cent. of the gross national product, which means between £200 million and £300 million a year. The Corporation was doing only £4.7 million last year and as an annual contribution to aid this is very modest. Even public aid, I suppose, is about £150 million a year.

The Corporation, on its present scale of initiating new operation, is a pretty small part of general aid and investment. I suggest that this very wide extension—we hope that before we have finished with the Bill it will be wider still—marks the Government's intention widely to extend the scope of the Corporation's activities. That cannot be done all at once. Because of the burdens put on the Corporation, it cannot be done suddenly, but a policy of steady expansion on the very sound basis which exists would surely be well received today. That would mean raising the ceilings. The Corporation has not come near the £130 million yet, as the Minister said, but it would probably mean raising the ceilings in the end.

It would also mean—and the Corporation has views about this—a change in the method of financing in the sense that the Government would become an equity holder rather than having a fixed charge on the Corporation. But, mainly and essentially, it would mean an intention to make the Corporation's activities over a period of years a substantial part of our general aid and investment programme, which we cannot say that it is at present.

I am leaving to my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson), who knows more about it than I do, the part of the Bill which deals with colonial development and welfare and the welcome extension which the Bill makes there. Whether it is adequate or not is another matter. I put it very strongly to the Government that in the C.D.C. we have a body which is a success story, but on a limited scale. We should not be frightened; there is no reason to suppose that it would impose any hurden on our balance of payments if we steadily expanded its activities so that it was brought into a rather different scale in the end form what it is on today.

It represents an almost ideal method of investment and assistance to the developing world. It combines financial aid and technical aid in a way nothing else does. It brings together British financial resources and British technical and administrative resources for the aid of the developing Commonwealth and does it in a way which has been proved to be welcome in every part of the Commonwealth.

Therefore, we regard the Bill as no more than a beginning in the development of the Corporation and it will be the intention of a Labour Government to build on a very considerable scale on these foundations.

9.1 p.m.

Mr. Norman Pannell (Liverpool, Kirkdale)

In common with the right hon. Member for Dundee, West (Mr. Strachey) I welcome the Bill as a natural consequence of the transition of the Empire to a Commonwealth. It would be churlish to emphasise too much the delay which has occurred in presenting the Bill. Rather we should express our gratitude for the action now it has been taken. I agree with the right hon. Gentleman that it seems an anomaly that countries like India and Pakistan should be excluded. Those of us who have urged the extension of the C.D.C.'s operations to the Commonwealth had in mind those countries that have become independent since 1948. We were disappointed that as soon as they became independent any new projects in those territories immediately had to cease. It is fair comment to say that when the Overseas Resources Development Bill was introduced by the Labour Government in 1949 they specifically excluded the independent members of the Commonwealth such as India and Pakistan.

Mr. Strachey

It was then a Colonial Development Corporation and a Colonial Bill.

Mr. Pannell

I know, but this could still have been done. At that time it could have been made a Commonwealth Development Bill and India and Pakistan could have been included. Those countries were deliberately excluded from the operation of the Act.

I want to take the opportunity of referring to one project of the Colonial Development Corporation which comes outside the scope even of this Bill. My hon. Friend the Under-Secretary of State for Commonwealth Relations referred to it in his speech. I want to make special reference to it. I refer to the project known as Camdev, or the Cameroons Development Corporation, which operates in a foreign country in a Federal Republic of Cameroon. Its activities are centred in what is now known as the Western Cameroons section of that Republic, a territory which was formerly a British mandated territory and which in 1961 decided not to join Nigeria but to become a member of the Federal Republic of Cameroon.

This project had been in existence by the C.D.C. in that territory for some years, and it continued after the territory became part of a foreign country. The arrangement was that any profit that might arise should be paid over to the Federal Republic. The extent of the C.D.C. investment in this project is not quite clear from the accounts I have. All we know from the report received this morning is that £1 million has been lent by the C.D.C. to this project. It is undoubtedly a very important enterprise indeed, vital to the economy of this part of the Republic of Cameroon. It is engaged in the production of a large number of commodities—rubber, tea, bananas—and I think that the most important of them in point of value is bananas. When this section of the Republic became an independent country outside the Commonwealth in 1961, the Government decided to continue the Commonwealth preference, despite the fact that: the territory was no longer within the Commonwealth. It was in the first place extended until September, 1962, and later until September this year.

That preference is particularly important in regard to bananas which are such an important part of the economy of the country. The C.D.C. itself in the Cameroons Development Corporation produces 30,000 tons of bananas a year of the value at point of export of about£1 million, and nearly twice that amount on arrival in this country to which most of the bananas are exported. This production of 30,000 tons is out of a total production in that area in the Western Cameroons of some 70,000 tons. Ten thousand tons, or perhaps 8,000 tons, are produced by a British company. Elders and Fife, and the balance of 30,000 to 40,000 tons is produced by local African enterprise.

The preference is £7 10s. 0d. a ton. It has been said that this is not very important, that it does not matter much whether this preference is continued after September this year or not, that it is only ¾d. per lb. and the bananas fetch prices of anything up to 1s. 6d. per lb. in the shops, and that therefore the industry can bear the burden of a £7 10s. 0d. per ton. tax. I do not think this is proved by the facts that we have before us. I do not want to go into any tedious argument as to the high retail profit that is necessarily obtained on bananas and that the price to be taken into consideration is not the retail price but the wholesale price. I am looking merely at the accounts of the Commonwealth Development Corporation where, under the heading of Federal Republic of Cameroon, the figures for the Cameroons Development Corporation are given. Last year, there was unfortunately no profit to pay over to the Federal Government. There was a profit in 1961 of £47,000 and in 1962 there was a loss of no less than £316,000. It was said that this was largely because the banana market prices were the worst in the Cameroons Development Corporation's history.

It will be observed that the exports that year of bananas were 32,000 tons, and £7 10s. a ton duty would represent about £250,000. If that sum were added to the loss of £316,000, it will be seen that this enterprise, which seems to depend on a low capital of £1 million only, would be involved in a loss of over £½ million in one year's operation. That is the prospect before the company next year if the preference is not continued. It surely cannot be imagined that any enterprise with such a meagre capital could possibly continue operations on the basis of over £½ million loss per year.

There is another aspect—that if the industry were to fail, the shipping which is a most important factor in the economy would also cease from that country, and there are no fewer than 60 shipments of bananas every year to the United Kingdom. I am not pleading a constituency case, but more than half of these shipments come to the port of Garston in Liverpool.

It has been asked why this industry does not benefit from the E.E.C. arrangements, because it is in part of a country which is an associated territory of E.E.C. The fact is that there is a special arrangement with France for the purchase of bananas from the Cameroons and it is confined to bananas from the Eastern Cameroons, which is a former French part of the territory. It is, therefore, assumed that a quota will be imposed by France on bananas from Africa at 125,000 tons a year, of which only 50,000 tons will come from the Republic of Cameroon, and since over 50,000 tons already come from the former French part of the Republic there is obviously no place for the 70,000 tons of bananas produced in the Western Cameroons.

The industry in the Western Cameroons has faced this problem and ever since danger of the removal of Commonwealth preference appeared it has made strenuous efforts to improve its position. It has introduced a new variety of bananas known as "Poyo", as distinct from the strain grown up to now which is known as "Gros Michel". This variety is more productive and less susceptible to disease. It is believed that in time production could be so much improved that the industry would stand the burden of the £7 10s. duty which would be imposed if Commonwealth preference were to disappear. This, however, must take time. Great progress has been made, but not enough, and it is estimated that it will take a further three years before this new variety is in full production and the industry will have the opportunity of standing up to full world competition without the advantage of Commonwealth preference.

It is argued that it is anomalous for a non-Commonwealth country to benefit from Commonwealth preference. The other Commonwealth interests have urged their own cases against the Cameroons. The West Indies—Barbados, the Windward Islands and Jamaica—export large quantities of bananas and they feel that if the Commonwealth preference were withdrawn from the Cameroons they would benefit, but that is a shortsighted view. It would not be possible for the deficit in the short term to be made up from other Commonwealth sources. This would mean that the market in this country would have to have recourse to other foreign sources of cheaper bananas which would lower the whole market to the long-term detriment of the West Indies. I ask my hon. Friend the Under-secretary of State for the Colonies to make some mention of this in his closing speech. It is urgent that a decision should be taken in the matter.

The interests involved are great. A great many Europeans, mostly Britishers, are employed there and there is a labour force of 17,000 Africans. All these are in jeopardy. I ask my hon. Friend to consider some tapering off of Commonwealth preference over a period of three years so that it should continue for another year at £7 10s., reducing the next year to £5 and in the third year to £2 10s., and then disappearing altogether. This would give an opportunity to the industry to adjust itself to the new situation by the development of this higher yielding variety of banana and perhaps in that way would save the country from disaster. There is also a serious political content in all of this, in that if this industry were to fail there is always the prospect that these countries would turn to the Iron Curtain countries, an event which we should take into serious consideration and seek to avoid.

9.15 p.m.

Mr. Jeremy Thorpe (Devon, North)

Having crossed swords violently in previous Commonwealth debates with the hon. Gentleman the Member for Liverpool, Kirkdale (Mr. N. Pannell), it is a change and a pleasure to follow him and to find myself in substantial agreement with everything that he said.

I had not intended to refer to the Cameroons, but the hon. Gentleman's speech has prompted me to do so, for any of us who were present here in the Palace of Westminster when the first meeting was held of the Anglo-Cameroonian Society which has now been formed will appreciate the value which the people of the West Cameroons attach to their previous relationship with this country and their anxiety that those ties of friendship shall be perpetuated.

I would underline the request the hon. Gentleman has made to the Government that they should consider the possibility of tapering off Imperial Preference rather than suddenly turning it off at an arbitrary date. I think that there is great force in the argument he has put forward on that ground.

I, also, warmly welcome the Bill. It is a Bill which could mark a new phase in Commonwealth relations. I suppose that there is always a tendency in this House for hon. Members who are particularly interested in any matter which is the subject of debate to regret that other hon. Members do not show an equal interest in the subject, but though, perhaps, it is slightly churlish I find it regrettable that on a subject of such vital importance as this to the Commonwealth as a whole, and when we are considering a Measure for the development of the assistance which this country is able to give to the Commonwealth, there is not a larger attendance of hon. Members. This is a Bill for which hon. Members on both sides of the House have pressed for a very long period of time, and I believe that one of the most cogent observations in that regard was made by the late Hugh Gaitskell during a Commonwealth debate. I well remember his pointing out the brutal fact of independence for a Colony was that it was suddenly deprived of any further, fresh assistance from C.D.C., and not merely the tapering off of the completion of existing schemes.

Therefore, I think that this is of enormous significance. First, I think that the change in name is of importance. The word "Colonial", to some, had a connotation which was opprobrious. I think that psychologically this is an important change. It is enormously exciting to feel that nine or ten countries, such as Nigeria, Ghana, Malaya, Sierra Leone, Tanganyika, Uganda, Cyprus, Jamaica, can all now benefit from the provisions of the Bill.

I think it right to say that, in addition to the pressure of right hon. and hon. Members of the House, there was pressure from some of those territories upon the Government in the United Kingdom to introduce this Bill. Perhaps I have not travelled as much as other hon. Members who have taken part, or will be taking part in this debate, but when one goes to East Africa or West Africa, or, indeed, the Caribbean, one thing which one learns is that the Governments of all those countries are crying out for bigger investment to provide employment for their people, technical knowledge and "know-how".

I agreed with the right hon. Gentleman the Member for Dundee, West (Mr. Strachey) when he regretted that the Asian members of the Commonwealth would not be included within the purview of the Bill. They can, of course—I am subject to correction—ask for advice and for managerial assistance from the C.D.C.; they can make that request, but will have to pay for it.

I think that this is something which must be looked into, to see whether it is possible to extend the formula. I envisage that, within the present limited formula, the provisions of the Bill would be of very great assistance in, for instance, Pakistan and India in agricultural schemes. There are great possibilities there.

This brings me to the first point which I wish to press upon the Under-Secretary of State, that the scope for association with other organisations and other financial interests is tremendous. The right hon. Gentleman drew attention to paragraph 6(2) of the 1962 Report of the Colonial Development Corporation which refers to various private organisations and public companies and banks with which it had co-operated. I should have thought that, particularly in the Far East, there might well be opportunities for the technical and managerial "know-how" of the Corporation being married to the financial resources of the World Bank.

I should like to see Commonwealth investment, that is, one member country of the Commonwealth investing in another. As far as I know, this has happened only under the Colombo Plan. I have always wished that the wealthier countries of the Commonwealth—Canada, Australia and New Zealand—could be encouraged to play a part in providing technical assistance and capital in the developing parts of the Commonwealth. It would be out of order to discuss the ideas which have been canvassed for a service to provide doctors and technicians on a Commonwealth basis, but, dealing only with finance, I hope that it may be possible to interest various countries of the Commonwealth in investing in this way.

Mr. Tam Dalyell (West Lothian)

Is the hon. Gentleman aware of the work which New Zealand does in providing education on a rotary basis to the Pacific Islands? I agree with what he says, but I hope that he recognises the work which is already being done.

Mr. Thorpe

Certainly. I wholeheartedly recognise and commend the investment which Canada is making in Jamaica and various parts of the Cameroons and what New Zealand is doing, as the hon. Gentleman says, in parts of the Pacific. But, as far as I know, there has been no actual investment made for the purpose of Commonwealth development along the lines of the Commonwealth Development Corporation. I should like to see it not only Commonwealth in scope, but Commonwealth in investment. I believe that there are enormous possibilities there.

A great advantage of the Corporation is that its capital is not tied. If a country lends capital for a scheme, the Corporation is not bound to buy its raw material and machinery from the lending country; it can go into the world market and buy in the best market. I know that there have been whispers that this is a state of affairs which the Treasury and the Government would, perhaps, like to alter, but I hope they will set their face against any such change. In my view, this is one of the reasons why the Corporation has been able to buy in the cheapest market and has been able to economise in many respects when purchasing capital equipment. It would be retrogressive if that system were to go.

The Corporation's record has been one of superb stewardship. Of course, there were teething troubles at the beginning. It was a totally new conception. But every penny borrowed is being repaid. The Corporation has proved a boon to many countries which have been able to build up their basic services in a way which would have taken them years on their own. Although one is usually very cautious about giving to a public corporation increased powers, there is no corporation which has proved itself more capable and which more richly deserves to have its powers increased than the C.D.C.

Now, a word about colonial development and welfare. The powers here, particularly the financial powers, are to be increased. In a Question on 4th February, the hon. and gallant Member for Arundel and Shoreham (Captain Kerby) asked the Secretary of State for the Colonies what was to be the period for repayment of the loan made under Section 2 of the Colonial Development and Welfare Act, in round figures £200,000, to the Kenya Government with reference to certain farm lands in the Nandi Salient, with which, perhaps, the Under-secretary of State is familiar.

This is a case which C.D. and W. will be considering in the very near future and in which this country has a very strong moral obligation. I hope that C.D. and W. and, indeed, the right hon. Gentleman will be very generous in it. The right hon. Member for Woodford (Sir W. Churchill); when he was Under-secretary of State for the Colonies in 1907, and when he was an ornament of the then Liberal Administration, declared that that plot of land belonged in perpetuity to this particular tribe.

Since then, beginning in 1912 and later in 1919 and subsequently over the years, that property has been wrongfully alienated and wrongfully taken away from this tribe and leased to various European farmers by the Crown. It was leased with aid which the Kenya Government sponsored European Agricultural Settlement Board gave to these farmers who went out to settle there.

In 1950, the British Government realised that they had an obligation to hand back this land to this tribe and they bought 10 farms of 11½ thousand acres for which they paid £120,000 in compensation to the European farmers on those farms. That was to be compensation for their crops, movables, legal cattle and for a disturbance allowance. At the time the British Government said that, in their view, that was the end of the claim of this tribe, but recently the Government have realised that they are under a moral obligation to see that the remaining part of this territory is handed back voluntarily to this tribe.

We are, therefore, faced with the fact that there are 20 farms which will be bought out and the money for buying them out will come from a C.D. and W. loan. The European farmers on those farms have accepted that they must sell their farms and move elsewhere. For the most part, they are anxious to remain in Kenya and to reinvest in other parts of the Colony—I think that it is still technically a Colony—but, because the money is coming in the shape of a loan and because the land will be given back free, there has been cheeseparing in the valuation on those territories. Although the right hon. Gentleman originally said that a loan of £200,000 would be made, that has now been whittled down to £150,000 and the basis of compensation is that there will be no disturbance allowance paid at all to those farmers.

This is not similar to the voluntary 1 million acre scheme which is going on at the moment in Kenya. This is a very special state of affairs in which farmers were induced to take leases on property in respect of which the Crown held itself out as having a title which, in fact, it does not have, and, through no fault of their own, the farmers are having to give up their farms and are being compensated at a figure which does not take into account a disturbance allowance.

They have accepted this valuation from the Kenya Government on the understanding that this will be reviewed by the Secretary of State with the possibility of a disturbance allowance being subsequently paid. Therefore, since we are discussing colonial development and welfare, I hope that a proper market price will be paid to these farmers, to whom we have a strong moral obligation.

All I should like to say, in conclusion, is to add my word of congratulation to an extremely efficient board which has varied interests and wide experience. The board of directors of the Corporation and the staff are few in number in relation to their turnover, but, collectively, they have achieved a fine result. I believe that this could help to raise the living standards of many parts of the Commonwealth. I hope that we shall be able to widen its scope and to interest other members of the Commonwealth to invest generously in it.

9.31 p.m.

Mr. John Farr (Harborough)

I will not follow too closely the avenue along which my hon. Friend the Member for Liverpool, Kirkdale (Mr. N. Pannell) led us a little earlier in connection with bananas. He is obviously an expert on that subject, which I am not. Similarly, I will not attempt to follow too closely the remarks of the hon. Member for Devon, North (Mr. Thorpe), who gave us an exposition at some short length, and of necessity slightly woolly, on the Liberal ideas of Commonwealth cohesion. I will leave the hon. Member with the machinations which he put before the House.

I should, however, like to express some accord with the right hon. Member for Dundee, West (Mr. Strachey). I share to some extent his remarks about the desirability of expanding the work of the Colonial Development Corporation, as it used to be called, or the Commonwealth Development Corporation, as it will henceforth be known as a result of the Bill. I do not, however, go all the way with the right hon. Gentleman, who tended, perhaps, to fall into an old custom of his of encouraging grandiose schemes in different continents of the world.

This time, the right hon. Gentleman was talking of vast schemes in Asia. A few years ago, he was concerned with vast schemes in Africa, and on the last occasion the British taxpayer had to foot the bill for the errors which arose there from. Therefore, I would not go all the way with the right hon. Gentleman in his vast expansion of the C.D.C. I would rather see a fairly steady annual and regular expansion of the moneys which are put into C.D.C. and a sensible and annual expansion of the work through C.D.C.

I welcome, first, the commonsense change in the description of the Corporation. It was foreshadowed in the Gracious Speech from the Throne at the beginning of the Session and it puts matters in their proper perspective. I similarly welcome Clause 1 of the Bill, which provides a sensible enlargement of the sphere of operations of the new C.D.C. Perhaps I should say that instead of providing a sensible enlargement, it prevents a curtailment of the sphere of operations of the Corporation. This would have naturally followed had one Commonwealth country after another achieved independence and the Corporation no longer been allowed to operate therein.

I believe that I am right in saying that both sides of the House are agreed with the two sensible measures which have been urged upon the Government Front Bench from both sides for a number of years. What has turned what could have been a major Commonwealth unifying initiative into a somewhat petty little Bill, however, has been the entire failure to expand the total sum of money—£130 million—which can be advanced from the Consolidated Fund to the C.D.C.

In the last debate on this subject, on 7th July, 1960, hon. Members on both sides of the House referred to the ham-stringing of the C.D.C. by the lack of money available to it from the Consolidated Fund. The then limit was also £130 million from the Exchequer. This Bill will considerably increase the activities of the Corporation but apparently it will still maintain the same limit of money available from the Consolidated Fund.

The then Secretary of State for the Colonies in 1960 said that the capital which the Corporation then had should be made to revolve. But however much one revolves 6d. it will never appear to be 1s., and of necessity many of the projects of the Corporation require not permanent but certainly long-term involvement of its funds.

On two grounds alone I am extremely puzzled to understand the reasons for refusing to extend the money available. First, it is doing pioneer work in many undeveloped territories—all of which, except for the Cameroons, are in the Commonwealth. I have seen the work it is doing in Bechuanaland in comparatively virgin territory, putting in a great deal of hard work and money into a fine project. Secondly—and an even stronger factor—thesre is the fine financial performance of the Corporation since we debated it in July, 1960.

Then it was shown that its profits were steadily increasing. Since then, there has been a further marked improvement in its financial position. For instance, in 1959, it showed an operating surplus, after overseas tax and before interest to the Government and provision against capital loss, of £1,800,000, and in 1962 this increased to £4,361,000. That is an excellent result, reflecting great credit on the management of the Corporation and all who work for it.

In addition to this steady and welcome increase in profits, as my hon. Friend the Under-Secretary of State said there has been a really marked improvement in the office figures in London. The office staff has been halved while the capital involved has multiplied from £20 million to over £100 million. In view of the considerable benefits which flow to us from the C.D.C.—the development of backward nations and areas, which hon. Members often call for, the need to maintain some form of our national connection with those areas, and, not least, because it is a pretty secure investment—I suggest that the sum of money which is the maximum that can be advanced from the Consolidated Fund to C.D.C. should be raised to £250 million.

Finally, why are we being asked in Clause 2 to approve a reduction in the annual rate of C.D. and W. loans in 1964 and 1965? The annual average of loans at the moment is a maximum of £25 million. My right hon. Friend may be envisaging that with the continual development of our Colonial Territories into Commonwealth nations C.D. and W. funds will not be required for the development of these territories to the same extent as in the past, but the work is still there to be done.

There is much to be done in many colonial territories which, for as far as one can see into the future, will not be independent or connected with independent Commonwealth territories. I could name many of them, such as British Guiana, the Mauritius, the Seychelles, or even the High Commission Territories. Why is the ceiling of money available annually to be reduced from £25 million to £20 million? Can my hon. Friend tell me what has been the loan demand on the sum available in the past three years and what proportion of that demand has the sum available met?

If we are to channel from C.D. and W. work a sum of £5 million a year, cannot the money we save in that way be used to enlarge the total limit of sums which may be made available to the C.D.C? I believe that the C.D.C is a winner. I am not concerned with whether it is a Government body. It has done wonderful work for the Commonwealth, and on those grounds alone it should be continually fostered and expanded.

9.43 p.m.

Mr. Tam Dalyell (West Lothian)

I want to focus attention on one narrow topic which I believe to be of crucial importance—the provision of paper, writing paper and textbooks, to developing areas. Most of us have travelled widely and have experience of West Africa and other developing countries and know the need, but I was reminded of it only last week when entertaining a representative of the Sierra Leone Red Cross.

He said that he was one of a family of 20—his father had four wives. Of his brothers and sisters, he said, 17 would have done well in some sort of higher education, but only he and one brother had achieved it. Basically, that was because schools in Sierra Leone, as in other developing countries, demand fees which are relatively high, and they are high because of the cost of books and education materials of all kinds rather than because of the cost of teaching, and school buildings.

From the particular to the general and to the Report of the Second Commonwealth Education Conference which took place in New Delhi. On page 57, paragraphs 33 and 34 say: We are unaware of any precise estimates of the need for books in Commonwealth countries; but our discussions made it clear that there is a growing unsatisfied demand for reading matter of all kinds, ranging from primers aid simple readers for children and new literates to literature and reference material for general readers and specialists. It is clear that, unless urgent steps are taken to enlarge the existing supply of suitable books and to improve the facilities for their production and distribution, education will continue to suffer. This can be met by the C.D.C. setting up the sort of printing and paper making apparatus which is needed or, alternatively, and in the very near future, by using the under-utilised resources in Britain to help the developing countries. Surely this is an instance in which the paper mills which are working, or were throughout the winter, four days a week can be brought into operation on behalf of this priority aid which should be given to the territories? This applies not only to the paper mills which produce school jotter paper, but to the manufacture of text books which is carried on in many of the areas which are hardest hit by unemployment. I refer, in particular, to the firm of Nelsons, which has done so much pioneering work for text books adapted to Africa.

Perhaps for a moment I might come back to the description given by my Sierre Leone Red Cross friend to the situation in Sierre Leone—the way in which, for instance, only one maths jotter of 24 pages of inferior paper is allowed each term. The fact is that one cannot learn mathematics if one has only a slate and is allowed no more than one jotter per term, and this kind of example can be multiplied in other territories.

I say no more not because there is a great deal to say, but because I wish crisply to confine myself to this one topic with the hope that I shall have an interview with one of the Departmental officials, if not with the Minister himself within the next few days, and perhaps he will give this point his consideration.

9.47 p.m.

Mr. Peter Walker (Worcester)

Lest the praise of the right hon. Member for Dundee, West (Mr. Strachey) and that of the hon. Member for Devon, North (Mr. Thorpe) make my hon. Friend the Under-secretary feel that there is every reason to be contented with this piece of legislation, I should like to raise one voice in opposition to the Bill, which, I consider, is disappointing and dreary. It will not measure up to the challenge of potential investment in the Commonwealth. Having waited for the Bill for some time, I find that in total it is a disappointing document.

The failure lies in the fact that there still tends to be an attitude, when talking in terms of investment and welfare aid to the Commonwealth, to think in terms of what can be done out of what is left over after we have examined our balance of payments problem. This results in a relatively small sum being devoted each year to this problem, certainly small compared with other major items of Government expenditure when the return and the reward in moral or in economic terms could be enormous.

One of the reasons for this failure is that there is virtually no background information on the total potentiality of investment in the Commonwealth to try to get a general impression of what is required in terms of investment and what would be the result of that investment were it available. This is something which has not been examined in detail and is not readily available to hon. Members.

The few facts that one can glean from the trend of Commonwealth trade, or from the trend of investment in the Commonwealth, indicate that there is enormous economic potentiality in substantially increasing our investment in certain Commonwealth countries. I think that the results of the work of the Colonial Development Corporation, now to be the Commonwealth Development Corporation, up to date show the rewarding investments that can be made in African territories.

If one studies the trend of trade with our African territories in the Commonwealth, one finds, for example, that in the years 1950 to 1960 our exports to African, Asian, and West Indian territories increased by £257 million. Yet our investment during that period was relatively small. Indeed, direct economic aid in 1960 amounted only to £36 million in all, plus certain loans. Last year, we exported to African territories alone, leaving out the Republic of South Africa, nearly £300 million worth of goods. Yet our aid to African territories in that year—aid of all types, such as loans, financial grants, and supply of equipment and technical assistance—amounted to £78 million.

It would, therefore, seem, as has been proposed by certain distinguished experts working in this sphere in the United Nations, that any increase in investment brings with it a substantial increase in the importing potentiality of the country concerned, and, therefore, a substantial increase in opportunities for British trade.

I regret that more has not been done by Her Majesty's Government to produce reliable information as to the relationship, first, between investment and exports, and, secondly, investment and general economic growth. I must also express my disappointment at the fact that a proposal in which I know my hon. Friend the Under-Secretary of State for Commonwealth Relations has taken a great personal interest over the years was not in some way included in the provisions of the Bill.

I refer to a scheme to provide some form of insurance cover to private firms investing in under-developed and Commonwealth territories. A Commonwealth Capital Development Department could well have been incorporated in the terms of the Bill. This is an operation in which the advice of the technical staff of the C.D.C. would be invaluable, because it has constantly had to make commercial decisions and has constantly had to assess the risk involved in investments in particular Commonwealth countries.

It therefore has the "know-how" which could provide the ratings and mechanism required to embark upon a scheme and which would give substantial guarantees, and interest private investors in going into these countries. Yet there is no such provision in the Bill. Indeed, all that the Bill does is to provide certain rather limited increases in the amount of expenditure over the next few years. It does very little to increase the general activities either of the C.D.C. or those made possible by the various welfare Acts.

I hope that the time will come when my hon. Friends will recognise that we have here a great economic potential—something of great moral importance and something which, in terms of the overall strategy of the West, vis-à-vis the struggle against Communism, has continued to be neglected.

9.53 p.m.

Mr. Cledwyn Hughes (Anglesey)

I want to intervene briefly to seek an assurance from the Under-Secretary of State that the smaller territories of the Commonwealth will be no worse off under the Bill than they are at present. I wish to make a special plea for some small territories which are rather neglected by the Government. They tend to be forgotten because they are small and remote, and because they have apparently no great problems to be solved.

It is not unnatural that the Government should be preoccupied with the obvious problems of the large African territories, but the fact remains that these small territories have their own very real problems to contend with. I have in mind particularly the island of St. Helena, which is over 4,500 miles from these shores and has a population of less than 5,000.

There is for example the problem of unemployment. The people depend for work mainly on the flax industry which has a history of instability. The other source of employment is the Government service and there is also a certain amount of farming on a small scale. There is sporadic unemployment and few opportunities for emigration to this country. There is also the problem presented by the lack of amenities. Housing generally on the island is of a very poor standard.

Shortly the British Government will be left with only these small territories to care for—only such places as St. Helena, Tristan da Cunha, Mauritius and the Seychelles. The large territories are rapidly gaining their independence. I should have thought it would be not only our moral duty but also in our own interests to see that, so far as is possible, these small territories are made econo- mically viable. I hope, therefore, that additional funds will be made available to assist them to attain this objective under the provisions in this Bill. It would be an excellent thing if the new Corporation could send out a representative to St. Helena to inquire into the potentials of the island and the possibility of establishing a small industry there.

The provision of an airfield would make an enormous difference to St. Helena. In order to get to St. Helena at present one must travel by sea. Ships call there infrequently and the journey takes from 14 to 16 days. Were the island more easily accessible, it would undoubtedly be a popular tourist centre, because it is a delightful place with an admirable climate. I believe that these potentialities, the possibility of providing new industry and an airfield, should be investigated. I hope that this will be possible. I hope that the Under-Secretary will deal specifically with the position of the small territories and reassure the House that more and not less assistance will be available to them under this Bill. If he can give that assurance, I shall be glad to welcome this Measure.

9.59 p.m.

Mr. G. M. Thomson (Dundee, East)

Like all hon. Members who have taken part in this debate, I wish to extend a welcome to the Bill. I could hardly do otherwise because, as hon. Members opposite who have taken part in the successive debates on this subject will know, we on this side have been pressing the main change proposed in the Bill for a very long time.

We should have welcomed the Bill more warmly had it come a bit earlier, because it is quite a long time since this uncontroversial proposal was originally conceded by the Minister. In fact it was in July of last year, almost exactly 12 months ago. It was mentioned in the Gracious Speech and the Bill has taken a considerable time to arrive before us, at the tail end of the Parliamentary year. To hon. Members on this side of the House this seems to provide further evidence of the lack of success of the experiment of having one Secretary of State in charge of the Colonial Office and the Commonwealth Relations Office. Perhaps the time will come when it would be a good idea. But the evidence of the last 12 months has proved that it has meant considerable delay.

It being Ten o'clock, the debate stood adjourned.

Proceedings on the Commonwealth Development Bill exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. Hughes-Young.]

Question again proposed. That the Bill be now read a Second time.

Mr. Thomson

This position has meant a very considerable delay in business coming before the House. This is why we have had to wait so long for this Bill.

There is, I am afraid, a long history of delay in the Government's dealings with the Colonial Development Corporation. The Under-Secretary, who opened the debate, said that it was a remarkable coincidence that the Corporation should have done so well during a period of Conservative Government. I think perhaps that the reason is that the Conservative Government have paid so little attention to it and it has been able to get on with its business without the Government expressing much concern.

I well recollect those of us, including the Minister who opened the debate, who were concerned about the financial disabilities of the Corporation in earlier years being very glad when the Sinclair Committee was set up to investigate the financial structure of the Corporation. That Committee performed its duty with remarkable expedition. It produced its Report in three months, in July, 1959, but it was not until July, 1960, that we were able to have the Report discussed in the House. That was when the present Leader of the House was Colonial Secretary. Not until the year after did the present Leader of the House manage to get round to doing anything about the Report. What he did in the end was remarkably timid and cautious.

Now we have had a further year's delay over this proposal. I think I can recollect 12 Conservative Ministers one after the other standing at the Dispatch Box giving powerful and irrefutable reasons from their own point of view why it was quite inconceivable that the Colonial Development Corporation should be converted into a Commonwealth Development Corporation. This is a delayed conversion, but we welcome it nonetheless because of that fact.

It seems remarkable that, despite these delays in Government decision-making in relation to the work of the Corporation, the Corporation should have gone ahead with its morale seemingly unimpaired and recorded the achievements which are in its Annual Report published a day or two ago. Despite the fact that we welcome the main proposal in the Bill, it seems to me that the Bill itself is rather messy and not sufficiently imaginative. It used to be an argument from the Government side against turning the Colonial Development Corporation into a Commonwealth Development Corporation and allowing it to initiate new projects in independent countries of the Commonwealth that it might cause offence among the newly independent Commonwealth countries if they were to be linked with what basically was a colonial corporation. I do not think that this was a well-founded argument, but it was one frequntly put forward by the Government.

It therefore seems strange that when the Government have finally decided to take the risk and make this change it should have put it into a Bill which is also mixed up with the extension of colonial development and welfare grants. If we had two separate Secretaries of State we probably would have had two Bills to deal with these matters, and we might have had both of them a little earlier. To put the question of the Commonwealth Corporation in the same Bill as proposals for expanding C.D. and W. grants seems to me to be a typical example of the muddle which the Government have allowed to grow up in the general area of aid-giving to Commonwealth countries.

I give an example. The C.D.C. itself has come under the Colonial Office. Is is now to be under both the Colonial Office and the C.R.O.? To whom are we to put questions about the operations of the C.D.C. in future? In any case, the C.D.C. will be between these two Departments. Capital aid to the Commonwealth is in the hands of the Treasury. Technical assistance to the Commonwealth is in the hands of the Department for Technical Co-operation, C.D. and W. grants, the other part of the Bill, are in the hands of three Departments—the D.T.C., the Colonial Office and now the Central Africa Office.

Everyone will agree that there are immense possibilities for inter-Departmental chaos, warfare and hold-ups. When this change was being made in the scope of the C.D.C., I think that there was a case for transferring it to the authority of the Department for Technical Co-operation. Apart from the fact that it is a capital-consuming Corporation, it seems in some ways to fit much more closely into the functions of that Department of the Government than any other.

It is impossible for hon. Members on this side of the House, with the knowledge available to us, to say what exactly would be the best pattern of Governmental organisation for economic assistance to Commonwealth countries, but it is beyond doubt that the increased importance of this subject over recent years has meant that there ought to be an inquiry into this matter and some streamlining of the Governmental organisation.

I think—and I speak personally here—that there is probably some case, for instance, for the Commonwealth Development Corporation, as it will be, to act as an agency in some of the expenditures incurred under the Colonial Development and Welfare Act. A number of hon. Members have said that a unique feature of this Corporation is that it combines the possession of capital aid with special "know-how" in terms of development in under-developed countries, as well as having a resident team of people in the various areas of the Commonwealth. In the light of some difficulties which the Colonial Office has had with the expenditure of C.D. and W. money at certain times, it is, I think, worth exploring whether the C.D.C. might play some part in using these moneys in Colonial Territories.

Equally, we on this side of the House would like to see the scope of the C.D.C. very much extended in the newly independent countries of the Commonwealth, and we should also like to see an extension in the character of the operations which it undertakes. It is a pity that the Government originally watered down so much the recommendation of the Sinclair Committee which would have encouraged the Corporation to undertake much more risky developments in the new countries. To have had an equity type of financial arrangement, would have been more suitable. There is a great need for this kind of development to be undertaken by the C.D.C.

Some hon. Members opposite chided my right hon. Friend a little for the fact that as one of the initiators of this Corporation he encouraged it in new ventures, some of which in the end were not successful. It was inevitable at that stage. There were bound to be great difficulties. But it is unfortunate that the C.D.C. now plays so financially safe. I do not think that it is the Corporation's fault. I think that it is the Government's responsibility to give it the kind of financial framework which will allow it to do this kind of thing.

The hon. Member for Harborough (Mr. Farr) rebuked my right hon. Friend for having grandiose ideas about what the C.D.C. should go on to do. The hon. Gentleman said he was very much afraid of this happening. Then the hon. Gentleman himself went on to urge on the Government that they should raise the capital authority of the Corporation from £130 million to £250 million. My right hon. Friend would never dream of being as grandiose as that. What my right hon. Friend was suggesting was something very much more modest and more cautious. I am sure that with the increased geographical scope of the Corporation under the Bill it is important that it should have an opportunity to increase gradually its financial resources to undertake that sort of work.

I should like to endorse very strongly the case made by my right hon. Friend that the Corporation should be enabled to operate, if asked to do so, in India, Pakistan and Ceylon. I thought that the arguments advanced by the hon. Member for Liverpool, Kirkdale (Mr. N. Pannell) about the situation in the Federal Republic of Cameroon, apart from their own force in relation to that situation there, underlined the case made by my right hon. Friend. It will surely be a rather anomalous situation that the Commonwealth Development Corporation will be enabled, as I believe it should be enabled, to give assistance in this development in the Cameroons, now a foreign country, although it will be prevented by Statute from doing it inside a Commonwealth country. I hope that when we seek to bring this matter forward in Committee the Government by that time will have had time to consider the matter and will look at this proposal sympathetically.

My right hon. Friend said that one of the remarkable features of the C.D.C.'s operations was the amount of good will it engendered wherever it worked. I can confirm that this is true in what is now West Cameroon. It seemed to me that the work of the Cameroon Development Corporation under the auspices of the C.D.C. was perhaps the most important single thing that this country has done in that part of Africa.

I think that there would be very wide support for the plea made by the hon. Member for Kirkdale that any adjustments which finally have to be made in the preference on bananas should take place sufficiently gradually to safeguard the welfare of the people of that part of the Cameroons, with whom we have been very closely associated over a very long time.

Another suggestion I want to put to the Government in connection with the extended operations of the C.D.C. is this. The Government should look to the staffing of our High Commissions in the Commonwealth countries in which the C.D.C. will now be able to begin new projects. Not only in relation to the C.D.C, but in relation to our aid policies generally, there is a good deal to be said for having on the staff of a High Commission in a developing country someone whom I suppose might be called a technical assistance attaché. It is important to have someone on the staff who is particularly qualified in the problems of economic and technical assistance and who can ensure that, as far as possible, expert consideration is given to the needs of the developing countries and that there is expert representation of those needs back here in London.

The hon. Member for Devon, North (Mr. Thorpe) made a plea for a bigger allocation of Commonwealth investment in the developing countries. I remind him that Canada has engaged in very substantial investment in the Warsak Dam in Pakistan. I very much agree with his point, but I think one should pay fair tribute to what has been done by some of the other more developed Commonwealth countries.

I want to say a few words about the C.D. and W. proposals in the Bill. I was glad to hear from the Under-Secretary of State for Commonwealth Relations that the fact that the Bill leaves out research funds in the amendments it makes does not mean that money will not go on being spent on research in the colonial territories. This is now to be undertaken by the D.T.C. presumably under its votes and without need for statutory provision.

I am puzzled about the general provisions of C.D. and W. in the Bill. The Under-Secretary said that what was being proposed was a three-year extension of C.D. and W. According to my calculations, what is being proposed is only a two-year extension, and instead of ending in 1964 it will end in 1966.

Mr. Tilney

I thought that I explained that there was an overlap so that the territories could plan ahead.

Mr. Thomson

I understood that, but the practical effect of the Bill is to put forward a two-year extension in the operation of the C.D. and W. arrangements. This is the first time, certainly for many years, that such a limited extension has been proposed. Normally the extensions have been for five years, and I think that we need a more adequate explanation than we have had from the Government why it is for only two years in this case instead of for the normal four- or five-year period ahead. The Minister assured us, so I gathered, that there is no intention of bringing these funds to a close. I think that we need some indication why the Government have suddenly chosen to do this on a shorter term basis than on the longer term basis which has been the usual thing.

I would remind the Minister that one of the reasons for doing this on a five-year basis under previous Acts was that the colonial territories were supposed to operate development plans on a five-year basis. What are they going to do now when in fact they can only look to March, 1966?

Like the hon. Member for Harborough, I want to find out why the annual loan sanction is being reduced from £25 million to £20 million. Is this because it is assumed that there will now be fewer territories entitled to these loans and therefore we can drop the annual ceiling? It looks to me from the figures that for the extra two years there will be only an extra £5 million in total loan sanction as against £40 million which has been the normal annual increase allowable. This seems a very substantial drop, even allowing for the fact that the number of colonial territories during these two years is likely to be less than it is at present. The needs of these territories are particularly great because so many of them are grant-aided territories. My hon. Friend the Member for West Lothian (Mr. Dalyell) emphasised the educational needs. These are only one of many needs that affect these territories.

The grant-aided territories are in a specially difficult and complex position in relation to C.D. and W. grants. As I understand it, in the past the Treasury have been very unwilling to give consent to C.D. and W. grants which would not be self-financing by the end of the normal five-year period because at that point it would mean an increase in the grant in aid. I gather that the Colonial Office in its ingenuity has got round this in the past by giving the Colonial Territories an assurance that they will in fact go on under C.D. and W. getting the necessary financial assistance required to meet deficits on current expenditure. What will happen about this if we have now only a two-year period ahead of us?

I think that another thing that we ought to do is to take rather a fresh look at the whole operation of C.D. and W. grants and loans in relation to the changed nature and much smaller number of Colonial Territories.

I hope that the Government will say that the shorter period will be used to take a fresh look at this method of giving economic assistance. As the Under-Secretary of State for the Colonies knows, I am as much in favour of assistance being on as generous a scale as possible as anybody else, and I am wholly against a reduction in the number of Colonial Territories meaning a commensurate reduction in the financial help given. Looking at the financial help given to Colonial Territories over recent years and comparing one with the other, one finds some very odd figures. If we look at the amount of help per head of the population given to different Colonial Territories we find that British Guiana, for some reason, has been receiving tree times as much per head as other Caribbean territories. British Guiana is as under-developed a colonial territory as one could find, but it is no more under-developed than Dominica or one or two other West Indian Islands.

Malta receives four times as much per head of the population as the British West Indies as a whole. As the Under-secretary knows, the West Indians at the moment are feeling rather aggrieved that Malta seems to be receiving special concessions in connection with Commonwealth immigration which are not given to West Indian territories. If they began to look more closely at these figures they might be even more disturbed.

The Malta figures are extremely interesting. Nobody grudges economic help to Malta, but in the years before Nigeria became independent Malta was receiving 150 times more aid per head of the population than that great West African country. The odd thing is that Malta, with a population of 300,000 was receiving more total aid in those years than Nigeria was receiving altogether.

I am as guilty as anyone in the House of pressing for help for particular territories, and I am not arguing that there are not in some cases good reasons for the distribution of aid having substantial variations, but over the years a pattern has been established gradually which is not necessarily relevant to changing circumstances. All I argue is that the Government should begin to give some attention to the way in which the pattern of Colonial assistance falls in the remaining dependent territories.

I am sure that my hon. Friend the Member for Anglesey (Mr. C. Hughes) is absolutely right that as the number of dependent territories shrinks it is tremendously important that some of the smaller territories, very often forgotten and overshadowed by events in other parts of the Commonwealth, should begin to receive more attention and concern from the House of Commons than they have received in the past. My hon. Friend the Member for Anglesey could well be called the hon. Member for St. Helena. That small island has good reason to be grateful to him for the continued concern which he has shown in the House for its needs since he visited it a number of years ago.

We on this side of the House welcome the main features of the Bill. The Under-secretary of State for Commonwealth Relations called it a hybrid Bill. I am inclined to call it in some ways a hotchpotch Bill. While we like the main proposal in it we do not believe that the proposals relating to C.D. and W. are any substitute for a fresh and radical look at the level of our economic assistance to countries of the Commonwealth, both independent and dependent.

10.24 p.m.

The Under-Secretary of State for the Colonies (Mr. Nigel Fisher)

I know that most hon. Members present would agree with me that this is perhaps the most important piece of Commonwealth legislation, certainly for the Colonies, that we shall consider here during the next two or three years, because upon it depends the financial aid, apart from grant-in-aid of administration, for the economic development of these territories for the next three years. Some of the colonial territories depend absolutely upon this Bill for any aid which they will receive and they do not get aid from any other source. It is, therefore, an immensely important piece of legislation for those territories for many years ahead.

I could have wished, like the hon. Member for Dundee, East (Mr. G. M. Thomson) that the total for which the Bill provides could have been double or treble the figure which I have now to recommend to the House, but I think that we must recognise the difficulties of Treasury Ministers, and also the difficulties of the British taxpayer who has to pay these bills in the end. We are all very much inclined to ask for more and more money for the things in which we are interested, and tonight we here are all interested in the Commonwealth, and feel deeply and sincerely about it. But there are other people who are interested in roads, housing, hospitals, and so on, and we cannot go on asking for everything and, at the same time, hope for lower taxation. So I think that I must repeat that argument in fairness to the Treasury.

I should also like to say how grateful I am to my right hon. Friend the Leader of the House who, in this very crowded period of the Session, has found time for this Bill—even a little late in the evening—because it is important, quite apart from the C.D.C. aspect, which is mostly what we have been considering tonight. I was very anxious to take the Bill in this Session so as to give the Colonial Territories the advance authority which they must have to be able to plan their development programmes ahead. That is, as my hon. Friend explained, the reason for the overlap between the Bill and the end of the 1959 to 1964 C.D. and W. legislation.

I was very glad of the welcome given to the new C.D.C. part of the Bill, and I would say to the right hon. Gentleman the Member for Dundee, West (Mr. Strachey) that some of us, including my hon. Friend the Under-Secretary of State for Commonwealth Relations and myself, pressed very hard for this, too, when we were on the back benches. We are very glad that we have been here to see the fruition of the project. I am very grateful to the right hon. Gentleman for his tribute to the C.D.C. I noted his criticism and that of my hon. Friend the Member for Harborough (Mr. Farr) that the C.D.C. does not have enough money.

I do not really agree with my hon. Friend's economics when he says that if we revolve a 6d. and make it do its work over and over again it remains only a 6d. in the effect it produces. I do not think that this can be right. That is one of my arguments, in fact, that a steadily increasing part of the C.D.C. investment nowadays is financed by its own funds. We still have a good margin. I think that my hon. Friend mentioned it in opening the debate. At the end of 1962 the total outstanding Treasury advances amounted to £92 million. So there is a good margin for new borrowings at present, and the C.D.C. Report does bring out this trend, to which I referred, of greater self-sufficiency in financing.

Mr. Strachey

It is for that reason that I proposed no raising of the ceiling. I should have thought it unnecessary yet—till we come to it.

Mr. Fisher

I must have got that wrong. It must have been my hon. Friend the Member for Harborough. I am sorry if I associated the right hon. Gentleman with that point.

I do not take all the credit to which the right hon. Gentleman referred when speaking of the Government's excellent record over the C.D.C, but it is the Government who appointed the men who run it so well, and I think that we must have a little credit for that. It is a trend started under Lord Reith's chairmanship and developed under his successor, Lord Howick. We must congratulate the Corporation because over the last three years it has produced investment sums of £5 million a year from sources other than the Exchequer, and there is every reason to suppose that that level will be maintained or even increased in the future.

The right hon. Gentleman—and, I think that the hon. Member for Devon, North (Mr. Thorpe) made the same point—spoke of the C.D.C's partners in the territories. It does not finance every project unaided, and that means that its money goes further than it would if it had to find everything for every scheme. As my hon. Friend the Under-Secretary of State said, when a project is operating successfully and does not need any further help, it is often possible to sell it.

We have had many examples of this in Nigeria, with a fishing company in Tristan da Cunha, and with a fruit company in British Honduras. There has been a very recent example in Malaya, where the Malaya Borneo Building Society has operated so efficiently that the C.D.C., in response to local demand, is now able to market locally no less than £600,000 worth of its shares in the society. This, of course, makes the proceeds available for re-investment in another project. It is a very good trend, and it is making more money available from sources other than the Exchequer all the time.

The right hon. Gentleman drew attention to the fact that the C.D.C. does not operate throughout the whole Commonwealth, and he mentioned particularly the under-developed countries not covered by the Bill, India, Pakistan and Ceylon. This is an interesting point which has not been mentioned before. We felt it best to restore to the Corporation the power to invest in the countries where it originally had operated, and this was the sort of scheme on which we worked. In itself, it will, I think, give the Corporation a very big new task and large new fields in which to operate.

I do not know whether it would wish to take on, in addition, such a large field as the whole of the Indian sub-continent. It may already act as managing agent and perform this kind of advisory function in any independent Commonwealth country, including India and Pakistan, so that its specialised experience and advice is available to all those countries. I can have a word with the chairman on this matter, but it has not, I believe, been seriously considered hitherto that we should do more than extend its operations to the countries where the Corporation operated originally in 1948 when the first Act was introduced.

The hon. Member for Devon, North spoke of the desirability of other great Commonwealth countries helping us in this excellent work. I am very keen on this and I should be delighted if some of the great Commonwealth countries would join more fully with us at the giving end. Many of them do a great deal, but I hope that some of them will read what the hon. Gentleman said.

The hon. Member referred also to the question of the tying of grants. Colonial development and welfare is, of course, tied to a certain extent nowadays, and I think that that is probably right. Most aid-providing countries do tie their loans and grants, and this in itself handicaps British suppliers. I think it only fair to give our exporters some help in our own Commonwealth, and also, of course, there is the balance of payments aspect which we cannot overlook.

Mr. Thorpe

May I correct what is, perhaps, a misunderstanding? I was not really complaining about C.D. and W. I was merely praising the C.D.C. system under which there is no tying of capital and saying that I hoped that this would be allowed to continue.

Mr. Fisher

I am grateful for that correction.

I should be glad if no country tied any of its aid at all. That is an objective towards which we should like to move. But, in the interests of both our own producers and the balance of payments, I think that, while other countries tie, we have to do a certain amount of it. Even in colonial development and welfare—I realise that the hon. Gentleman did not raise this point—we only tie the imported element. All local services are, naturally, left to the territory.

I know about the Nandi Salient, but, if I may, I would rather not say anything about it tonight. Perhaps I may be allowed to write to the hon. Gentleman, or speak to him about it very soon. I am not quite ready to say anything now, if he will forgive me.

My hon. Friend the Member for Liverpool, Kirkdale (Mr. N. Pannell) spoke about bananas in the Cameroons. I am rather worried about this. I thought that I had covered every point before I came into the Chamber, but I had not thought of this one. As my hon. Friend knows, no decision has yet been taken. The question of Commonwealth Preference does not properly arise under the Bill. I am sorry that I cannot say more about this tonight. I have carefully noted what my hon. Friend has said, but it is not a subject upon which I am well briefed. I know less about it than does my hon. Friend and for that reason I prefer not to make a fool of myself in front of him.

My hon. Friend the Member for Harborough and the hon. Member for Dundee, East both referred to the amount of colonial development and welfare money. My hon. Friend answered it, I thought, in anticipation of the debate when he opened. Since the date of the last Act in 1959, nine territories have become independent, three more will do so in August, when Malaysia comes into existence, and others—like Kenya, Zanzibar, Malta and, perhaps, British Guiana and the Little Seven in the Eastern Caribbean—are likely to become independent during the life of this Act.

There is also the fact that research and technical assistance are now provided by the Department of Technical Co-operation and, therefore, are financed through other sources on the Vote of that Department. There is the further consideration, which was referred to in another context, that the Bill is to operate for three years instead of five years. When these three factors are taken together, it is true to say that we are providing a good deal more money than we did under the 1959 Act. Not only is the proportion of grant to loan higher, which is important for the smaller territories, but the total represents an increase of 28 per cent. That is not at all bad. I am not ashamed of it and I hope that hon. Members will accept that this is a large increase for the territories.

The hon. Member for West Lothian (Mr. Dalyell) spoke about books for schools. I am advised that quite a lot is being done under the cheap books scheme and under technical assistance schemes, both, of which are the concern of the Department of Technical Co-operation. I will certainly draw the hon. Member's remarks to the attention of my hon. Friend the Secretary for Technical Co-operation. I have no doubt that the C.D.C. will also note what he has said, but under its terms of reference the Corporation cannot give assistance direct to educational institutions. I will, however, draw attention to the hon. Member's comments about investing in schemes for the production of paper.

Mr. Dalyell

Surely, the production could be encouraged of, say, jotter paper and writing paper for schools.

Mr. Fisher

I am not familiar with that, but I will see that the point is raised.

My hon. Friend the Member for Worcester (Mr. Walker), with whom I have great sympathy because I remember advocating it myself, referred to the multilateral scheme of insurance in the Commonwealth. That is now being considered by the Organisation for Economic Co-operation and Development. Therefore, it cannot yet, I am glad to say, be classified among the list of lost causes.

My hon. Friend also complained of the total of British Government aid overseas. I was not sure about some of his figures. The latest estimates which I have for 1962–63 give a total of £160 million of Government aid alone. We had expected the figure to be a good deal more, and if all the commitments which we had undertaken bad been drawn upon by overseas Governments, it would have been more. It frequently happens that they spend more slowly than they expect and, therefore, they draw less aid in a year than we have provided for them.

It is difficult to say what will be the precise figure for 1963–64, for the same reason that what we are committed to provide and what we shall be called upon to provide may in the result be different. It seems safe to say, however, that during the next three years the total of Government aid will probably range between £180 million and £220 million a year.

It is quite a big figure. My right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) when Chancellor of the Exchequer, put a ceiling of £180 million on overseas aid in July, 1962, and we have actually been below that amount up to now. But I hope we shall spend more—considerably more—in the next three years. That is a trend which I am sure, subject to the balance of payments, we all want to see encouraged.

The hon. Member for Anglesey (Mr. C. Hughes) mentioned the smaller territories. I am glad that he did so, because he takes so much interest in them. He also knows my own keen interest in them. I think that they will do quite well under the Bill. I have done my best for them. We have had long arguments about allocations to the smaller territories and I have been a very keen advocate of what he has said.

I hope that St. Helena, in particular, will not get a smaller territorial allocation, but it has not done too badly for a tiny island. It has had £635,000 in C.D. and W. assistance since the war, which is not bad in that context, as the hon. Member knows. But I am conscious that a great deal remains to be done and I promise him that I shall not forget St. Helena—not that he will allow me to do so.

The hon. Member for Dundee, East seemed to think that the administration of these funds was too scattered. He suggested that we should in some way integrate C.D.C. and C.D. and W. funds into a more co-ordinated pattern. But they are two quite separate sources of finance, administered quite differently and intended for quite different purposes. The C.D.C. is purely for commercial purposes and is supposed to earn a return and break even. C.D. and W. is quite different. It is designed for social and not commercial purposes.

Mr. G. M. Thomson

I was not arguing that they should be integrated. I suggested that it would be worth looking at the possibility of C.D.C. being allowed to act as agent for the use of some of the C.D. and W. funds.

Mr. Fisher

I do no know whether it would be suitable to do that but I will ask about it. I am sorry that I misunderstood the point. The purposes of the two are so different that I am not sure this could be done, but perhaps they could well be combined financially. That has often been done. It does reduce the rate of interest if one has combined a C.D.C. and a C.D. and W. scheme for the same project.

The hon. Member also made what has become a stock criticism from the Opposition Front Bench, about one man doing two jobs, and he criticised if not my right hon. Friend the Secretary of State then, by implication, the Prime Minister for having combined these two posts. It is not for me to comment on that, but the hon. Member complained of the great delays which he claims this combination of jobs under one Secretary of State has caused.

There has been absolutely no delay in the case of the C.D.C. In fact, the extension of C.D.C. was the very first announcement my right hon. Friend made in July last year after he was given both posts. It was an instant decision that he took.

Mr. G. M. Thomson

It is twelve months since then.

Mr. Fisher

No. We have had a lot of difficulty in working out the right figures in the Bill and the delay in bringing the Bill to the House has not prejudiced anyone, certainly not the Colonies.

Perhaps I might send Dr. Jagan a copy of the hon. Member's remarks on per capita aid to British Guiana. I should like Dr. Jagan to know how well the hon. Member thinks we have done. I would also like to send the hon. Member's remarks to Dr. Olivier, in Malta. We have our special obligations to Malta, due to the defence rundown there, and I do not apologise for doing so well for Malta.

I have mentioned, if not completely answered, most of the important questions raised in the debate, and I ask the House, with confidence, to give a Second Reading to this quite uncontroversial but really most important Bill.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr, I, Fraser.]

Committee Tomorrow.