OVERSEAS RESOURCES DEVELOPMENT BILL

HC Deb 24 April 1969 vol 782 cc742-94

Order for Second Reading read.

7.30 p.m.

The Minister of Overseas Development (Mr. Reg Prentice)

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

The Bill has two main purposes. The first is to raise the borrowing limits imposed on the Commonwealth Development Corporation by previous legislation—that is, both the overall borrowing limit and the limit of Government borrowing—so that the Corporation can continue to take on new commitments that otherwise would become impossible some time in the early part of next year at its present rate of operation. The second purpose is to remove the existing limitations on countries in which the C.D.C. can operate so that with the consent of the Minister of Overseas Development it can operate in new countries whether they are in the Commonwealth or not.

To put the Bill in the context of the aid programme as a whole, I should make clear that it does not provide any extra resources for development. The money lent by the Government to the C.D.C. within the terms of Clause 1 must, of course, be found within the total sums voted for the aid programme in each year. In 1969–70 we expect to provide £10 million for the C.D.C. out of the total aid programme of £227 million. I point out in passing that the total aid programme is not yet reaching the 1 per cent. target to which we pledged ourselves at New Delhi last year, and neither Britain nor most other aid donors are reaching that target or are likely, on the specific demands yet made, to reach it in the next year or two. This is a subject on which I think none of us feels any complacency. I repeat, as I have said on many occasions, that I do not think that either this country or any other leading Western nation is yet playing its full part in co-operating with developing countries in their struggle to raise the living standards of their people.

Also in passing I take the opportunity to welcome the fact that on today's Order Paper there is a Motion in the name of my right hon. Friend the Leader of the House to establish a Select Committee on these matters. It would not be in order to pursue that at length, but this is a good development for the Department and for the aid programme, and I extend best wishes to all hon. Members who have agreed to serve on that Select Committee.

The Commonwealth Development Corporation is widely recognised as a very successful and very efficient part of the development effort. This view, which has been expressed many times, was put on record by the Select Committee on Estimates when it reported to the House on 23rd October, 1968. I shall quote from the conclusions of the Committee as printed on page 25 of the report. The Committee quoted the late Sir Andrew Cohen as having given evidence in which he said that the C.D.C. was probably as efficient a form of aid as exists in this country or anywhere in the world", a view which I know the World Bank also holds. The Committee said: This is high praise indeed, but your Committee believe it to be well-founded. The Committee went on to develop reasons why it thought the C.D.C.'s operations are as successful as they are, and said: Your Committee are convinced that the expansion of the work of the Commonwealth Development Corporation should be one of the chief priorities of the future aid programme. I accept that view. I think the C.D.C.'s operations should expand, and certainly it is my intention that they should do so within the limits imposed by the overall aid programme.

In 1967–68 Government advances to the C.D.C. amounted to £9.2 million. In the current year it is aimed that they should be £10 million, and I hope that next year the amount will go up to £11 million. These are modest but worth while increases within a programme which is not expanding overall, and this illustrates the priority that we attach to this work. I am glad also to be able to tell the House that in this financial year we are planning to make some extension of the percentage of the money loaned to the C.D.C. subject to the seven-year waiver of interest. In the financial year which has just finished, 1968–69, this waiver of interest applied to £5 million of the total of £10 million, and in the year 1969–70 it will be £6.5 million of the £10 million.

The Corporation was set up under the Overseas Resources Development Act, 1948. Originally it was the Colonial Development Corporation operating exclusively in the colonies. Later its rôle was enlarged to become the Commonwealth Development Corporation with power to operate in countries that had become independent from 1948 onwards. Its purpose has always been recognised as to assist economic development in the countries in which it operates. It is a corporation which does not have share capital. It depends mainly on loans from the Government, but also to some extent on market borrowing, and it has the duty to pay its way taking one year with another. In other words, it has the task of combining a real understanding of development needs in that it must identify projects of the greatest development value with the need to have a degree of business expertise and organisational efficiency so as not merely to make the best of development potential involved but also to carry out its other duty of balancing its accounts one year with another. I think that all those who have examined its operations over the years will agree that it has succeeded in this important task.

The techniques which the Corporation has used have varied considerably; sometimes it has been by way of lending money; sometimes by taking ordinary shares in an enterprise in a developing country; very often by carrying out its own projects or projects in partnerships with organisations and overseas companies; and sometimes with the World Bank and subsidiaries of British banks; and in one case even with a district council in Kenya.

The scope of the work can be divided as follows: about half the activities are in the field of public utilities such as water supplies and power supplies, and included in that category are a number of important housing projects. About half of the remainder is in agriculture and half in industry with particular emphasis on basic industries such as mining, the fertiliser industry, the cement industry and industries of that sort; and there has been growth in the hotel industry and other aspects of tourism.

One of the great values of the Corporation's work is that it has particularly favoured projects in which it can work in association with the people of the country concerned. We have seen examples in which C.D.C. capital has been employed alongside local capital and C.D.C. managers have been working alongside local managers and local entrepreneurs. This has had a multiplying effect and has given scope to employment of local capital and local sources of ability in management and specialised skills which might not have been able to operate separately. I pay tribute to the C.D.C's activity especially in management and the very important work it has done in training local personnel in all kinds of jobs, including management at various levels.

Quite apart from the success of the enterprises themselves, they are helping to fill a serious gap in the development programmes of many of the countries concerned. All of us who have studied these problems recognise the chronic difficulties of training and education in vocational subjects in so many developing countries. In order to tackle those problems a number of different techniques must be used. It is relatively easy to bring people away to attend courses in colleges, universities and so on. It is not too difficult sometimes to bring them from developing countries and attach them to firms and organisations in this country or in other developed countries, although this is not being done as extensively as one would like. But the most valuable form of training is on the job in their own country, in their own environment, gaining experience that they can use as time goes on.

This kind of training is available through the C.D.C.'s operations. For example, the two major mortgage companies that it formed in Malaysia are now staffed entirely by local people. The very successful hotel it started in Nigeria is also now almost entirely staffed by local people. There are a number of examples in Africa and elsewhere of enterprises now entirely managed by local people. The typical C.D.C. success story is one in which the management has passed by stages to people in the country concerned, and where very often the ownership of assets has also been transferred by stages.

One very good example is the Lobatsi abattoir in Botswana, built and opened by the C.D.C. in 1954. It took steps to help develop markets in this country and other European countries for the export of carcases from what was then Bechuanaland. It later associated the Bechuanaland Government with the enterprise, and also associated with it a trust representing local cattle farmers. In February, 1966, after reaching a new record level of the export of 150,000 carcases in one year, it handed the enterprise over to a new State corporation in Botswana, although it left the C.D.C. money there for the time being as a loan, and agreed to provide a manager for a further three years. This is an example not merely of a successful enterprise but of local people being associated from the beginning and gradually taking over more and more the ownership and control of the enterprise.

I could take a long time quoting success stories. I shall refrain from doing so because many hon. Members want to speak. But I should like to quote one example from the Corporation's activities in housing, because not many development agencies are yet operating in housing at all. But housing is a very important part of development, and the work that has been done by the C.D.C. is of particular value here. As one example, in Jamaica it went into partnership with an insurance company to form the Caribbean Housing Finance Corporation and provided finance for home ownership, which I am told has now extended to 4,300 families in and around Kingston, living in three major housing estates and several smaller ones built by local building firms with the encouragement and co-operation of the C.D.C.

Anyone who knows Kingston and its grave housing problem will realise what an important contribution this is. I understand that the houses have been built at a cost which brings them within the reach of the manual workers, which is very important. I am advised by the C.D.C. that it hopes to extend this kind of operation to many of the smaller countries of the Eastern Caribbean. This will be a most important development when it takes place.

I only wish that success stories of this kind could be better known. One of the most depressing aspects of this whole subject—and I speak not merely of C.D.C. development but of development generally—is that the full spotlight of publicity is applied only to the occasional failure and that success stories are not sufficiently well known in countries like ours. The world Press could find that in these activities there are stories to be told of great human interest in terms of their impact on people's lives as well as in terms of the success of those who have managed and organised them.

The Bill is short, simple and straightforward it has two main purposes. Clause 1 raises the limits within which the C.D.C. can borrow. There are, and will continue to be, two relevant limits. First, there is the limit to what can be borrowed from the Government. The figure I am giving here is the sum outstanding. In other words, it is the figure arrived at by taking the total borrowed, less the total repaid. That limit, which now stands at £130 million, is raised under Clause 1 to £205 million, and the Clause also contains the power for this to be raised by statutory order to £240 million. The order would require an affirmative resolution of the House.

There there is a higher total limit, which represents the total sum that it can have outstanding. That is the amount it has borrowed from the Government plus any medium or long-term borrowing on the market. The present sum is £150 million, which is to be raised to £225 million, with the power to extend it by order to £260 million. Without these extensions the Corporation would probably reach its existing limits quite early next year. With the extensions, it will have sufficient cover for its likely operations for up to seven years without using the power to make an order, and probably about 10 years if one takes the higher figures that could be brought about by using the statutory instrument power.

Clause 2 removes the existing geographical limits on the operations of the C.D.C. In 1948 the Overseas Resources Development Act confined its operations to the colonies. The 1959 Act empowered it to operate in an independent territory but only where the approval of the Secretary of State had been given for a specific project while the territory was still a colony. This was a very limited power to continue operations after independence.

A larger change was made in 1963, when the title was changed to the Commonwealth Development Corporation. The Corporation was empowered to operate in Commonwealth countries that had become independent since 1948. This still excluded large parts of the Commonwealth, particularly India, Pakistan and Ceylon, and it also excluded developing countries outside the Commonwealth.

It is absolutely right that we should be making this change at this time. This country's rôle in assisting development is not confined to the Commonwealth. Part of our bilateral and part of our multilateral aid goes to non-Commonwealth countries. Although most of our programme remains in the Commonwealth for perfectly sound reasons, our aid programme generally is part of a world-wide effort, part of the relationship between the developed and developing countries. Therefore, it is logical that the C.D.C., as one of the most important instruments of that programme, should be able to operate in non-Commonwealth countries.

The Clause empowers the Minister of Overseas Development to direct the C.D.C. to seek his approval for any new country in which it wishes to operate, and it also empowers him to attach conditions to any such approval. I intend to activate that power if and when Parliament sees fit to pass this legislation, but it will be the same power as already exists and operates for independent Commonwealth countries. It is no different from that and will operate in a similar way.

I wish to make it clear that, as I see the future, the C.D.C. will remain very much Commonwealth-orientated for a long time. Most of its activities for the foreseeable future will be in the Commonwealth; any activities outside the Commonwealth will form only a small proportion of the whole. For that reason I see no reason whatever to change the name of the Commonwealth Development Corporation. Any change of name would be regretted by those who have admired it over the years, and it would be a pity to think in terms of making any change of name.

What could well happen is extension of its activities to non-Commonwealth countries which geographically are close to Commonwealth countries in which the Corporation already operates and in which its regional staff already has relevant experience. The regional staff of the C.D.C. is one of the sources of its strength. It has decentralised a good deal of its responsibility to regional offices, which work very effectively.

The chairman of the C.D.C., Lord Howick, when giving evidence to the Estimates Committee on 30th April, gave some examples of the way in which this extension may take effect. He said that it might be appropriate to work in the Sudan, or Ethiopia, where conditions would be in some respects similar to East African countries where the C.D.C. already operates or, similarly, it might be worth while to work in Thailand, which has certain similarities with Malaysia where the C.D.C. already operates.

The Estimates Committee suggested that the C.D.C. should play a part in the Indian sub-continent. The Clause would remove any legal barriers to this, but I think it unlikely that this will be practicable in the future. There would be formidable problems in terms of finance and manpower if the C.D.C. were to make a significant contribution in countries such as India and Pakistan. There would be many problems involved before it would be able to contemplate that.

Mr. Eldon Griffiths (Bury St. Edmunds)

Could the Minister make it clear that the reason for extending the functions beyond Commonwealth countries, presumably to adjacent or similar territories, is primarily that that aid is necessary as a consequence of activities taking place in the Commonwealth countries? I am anxious that he should meet the criticism that money is being denied to certain members of the Commonwealth while being provided to nonmembers of the Commonwealth.

Mr. Prentice

There would be circumstances in which activities in Commonwealth countries were also activities in non-Commonwealth countries. For example, there might be a communications system in a region which overlapped a number of countries. Then this idea would certainly apply. I do not, however, wish to give the impression that operators in certain non-Commonwealth countries would be confined to that kind of example. There might be good reasons within the normal criteria of the C.D.C. for operating in non-Commonwealth countries in order to help a development there, and because its experience and resources were suited to a particular need. It could then seek the Minister's leave to operate in another country. This would be a feasible proposition.

It runs in parallel with the fact that our Government aid programme is no longer confined to the Commonwealth. We give aid to non-Commonwealth countries, just as other European countries provide aid to Commonwealth countries. This is a proper development.

Subsections (3) and (4) of Clause 2 are consequential on the two main purposes which I have mentioned. Therefore I do not propose to take up the time of the House on Second Reading in discussing them. Any points can be raised at future stages of the Bill.

I commend the Bill to the House. It will enable the C.D.C. to continue the very good work to which I have referred and to which so many tributes have been paid. The success stories which I and others have quoted as they affect C.D.C. over the years have been made possible only by the people involved. All concerned in these matters would pay tribute to those who have served on the board and to the staff of the C.D.C. at all levels for the work which they have been doing and are continuing to do in this remarkable organisation.

One of the remarkable features of the organisation is that ever since 1950 the C.D.C. has had only two Chairmen, Lord Reith from 1950 to 1959 and Lord Howick from then until the present. The organisation itself, the developing world and we in this country owe a great deal to the devoted work of those two remarkable men. The House will want to see C.D.C. go on to further success in the future. I believe that this Bill when it becomes law will help it to do so.

7.56 p.m.

Mr. Bernard Braine (Essex, South-East)

Before I address myself to the Bill, I hope the House will permit me to join with the right hon. Gentleman in welcoming the setting up of the new Select Committee on Aid and Development. I am sure that it will prove a most effective instrument in spreading understanding of what aid and development are all about, while acting as a spur to the Minister and his advisers. I look forward eagerly to the work of this new body.

I am sure the whole House will be grateful to the Minister for his clear explanation of the Bill and of the activities of the Corporation. We on this side of the House give our support to the Bill and we should like to join in the tribute with which the Minister ended his remarks to the chairman, the members of the board and to the staff of what he truly described as a remarkable organisation.

I have watched the C.D.C. almost from its inception. Over the years I have been more fortunate than most in this House to see it actually in operation in many different parts of the world. Indeed, on looking through the Corporation's last annual report I was amazed at the number of projects which it began, or in which it had a share, that I have actually managed to see at first hand. These included the abattoirs and cattle ranches in Botswanaland; a cement works in Zambia; the famous copper mine at Kelenbe and the cement works at Tororo, which I confess I have been round twice; housing schemes financed through building societies in Kenya, Malaya, Borneo and Jamaica; and the splendid forestry project, which owes so much to the work of Lord Howick himself when Resident Commissioner in Swaziland, which laid the foundation of a successful pulp industry in that country, and also irrigation and railway developments there too.

I am glad to be reminded—I say this in all modesty—that when I was an Under-Secretary at the Commonwealth Relations Office I had a hand in authorising the building of the Swaziland railway, which is opening up for that country massive mineral exports. I have seen many more projects which have been successfully sold off to private enterprise and are now flourishing in the hands of the people of the countries concerned.

I agree entirely with the Estimates Committee when they concluded last year that this great public corporation had fully justified the trust placed in it. I agree with them and with the remarks attributed to the late Sir Andrew Cohen, whose death was such a great loss to the work of overseas development, that the C.D.C. provides as efficient an instrument of aid to developing countries as any in the world. I am sure that is absolutely true.

It had its early difficulties when it was known as the Colonial Development Corporation and it had to learn from experience. But the point is that it did learn from experience. I agree, therefore, in accordance with the principle that it is always wise to build upon success, that we should make it possible for the Corporation to expand its activities and to bring its very remarkable fund of expertise to more countries. There are a number of reasons for saying this. I do not believe that aid should be regarded purely as a philanthropic exercise. If it is to be effective it must be designed to help the developing countries help themselves so that at the end of the day they stand on their own feet.

As the Estimates Committee remarked, there are four aspects of the Corporation's work which are particularly valuable. First it decentralises its work so that the full responsibility for aid management is given to the man in the field. One cannot conduct overseas development by remote control. No two developing countries are alike. This is why increasingly private companies operating overseas have switched from the branch type of organisation, which at the turn of the century was the general rule, to the locally-registered company with local participation.

Mr. John Tilney (Liverpool, Wavertree)

No thanks to the Chancellor.

Mr. Braine

I was seeking to avoid making any partisan observation of that kind, but as my hon. Friend said it seems an unfortunate fact that British overseas enterprise, as it moves towards this twentieth century conception of partnership is penalised by the Chancellor for doing so. Perhaps my hon. Friend will raise that later if he can keep within the rules of order.

The success of the C.D.C. owes a great deal to the flexibility of its organisation. The second reason why its work is so valuable is that it attaches much importance to the training of local people foi management. I was delighted to hear the hon. Gentleman laying great emphasis on training. This is a valuable contribution to development. What is more it is appreciated by the developing countries. A quotation from Mr. Tom Mboya, known to many of us, was given in evidence to the Estimates Committee. He said: The vital thing you,"— that is the C.D.C.— do for us to is to train our young men actually on the job, so they become practical managers. I do not know where else we could get that. Thirdly, there is the essential link provided by the Corporation between public and private investment, and fourthly, because of its non-political status, it seems to find it easier to deal with the authorities in developing countries than Her Majesty's Government.

What is particularly attractive to my hon. Friends and myself is that the Corporation, at a time when aid management is under much fire and there is some evidence of wastefulness, is required to act on a businesslike basis. It spreads its investments over a wide range of projects essential to developing countries, such as water supplies, transportation, housing finance; it provides capital for the development of agriculture, ranching, mining and the introduction of basic manufacturing.

I turn now to the provisions of the Bill. I have no comment to make on the extension of the Corporation's borrowing powers. What is proposed seems eminently sensible. The provision should be adequate for the next five to seven years, and it is always open to the Corporation to ask for more capital if it can justify the need. But we should consider, Land I have a feeling that hon. Members on both sides may wish to do this, the relationship between the C.D.C. and OUT total aid effort. It is astonishing but true that this type of development aid not only has no adverse effect on our balance of payments—an argument often used here and in other donor countries for limiting aid—but the very reverse.

It is worth reminding the House of the facts. In comparing its performance with other forms of British overseas investment, the Corporation says in paragraph 11 of the Reports and Accounts for 1967 that … the C.D.C.'s revenue from its projects and investment was of the order of 6¼ per cent. on a total investment of £114 million without making any allowance for the quite considerable part of that investment which was represented by projects in the development stage and thus not as yet revenue earners. Remittances back to the U.K. in respect of revenue profits and capital realisations again more than balanced new overseas investment from U.K. On top of this U.K. exports were stimulated by an estimated £13.7 million. It goes on to say that the activities of the C.D.C. were responsible for stimulating an additional £45 million worth of overseas exports, without taking account of the large import saving attributable to local industries that C.D.C. investment is supporting.

This really is development, and it is development which is highly profitable to the British economy. I doubt whether a different story will be told for 1968. Since it is clear that every penny we invest in C.D.C. is well invested, it begs the question whether a higher proportion of our total aid effort ought not to be directed into this particular channel, profitable as it is to Britain and immensely valuable as it is to the developing countries.

Here, I think, it would be appropriate to mention that the Overseas Development Institute, a body all of us interested in aid have come to respect very much, has made a serious criticism.

In a statement issued on Monday the O.D.I. says that: The feature about the C.D.C. most open to criticism is the manner of its financing in relation to the ceiling on aid expenditure. Advances to the Corporation count as part of the aid ceiling but repayments to the Treasury are not deducted. This is the case with all aid loans but there is an important difference between normal aid loans and advances to the C.D.C. Nearly all normal aid loans are given on soft terms and the value of repayments is therefore lower than the value of the original loan. In the case of C.D.C. however … the Treasury gets back all of its money together with a full commercial rate of interest. The rate of interest is in fact the rate at which the Government is able to borrow the money plus a small margin. No loss therefore falls upon Her Majesty's Government and it therefore seems so wrong to count the out-payments as aid without making allowance for the receipt of repayments. Only the difference between these two constitute genuine expenditure. The effect of the present procedure is to exaggerate Britain's aid expenditure. This effect will be increased as the C.D.C. operations expand as recommended by the Estimates Committee and approved by the Minister. This is a justifiable criticism of our aid statistics. I cannot help feeling that we need to look again at the way in which we present the actual outlay of money for the purposes of development, including the indispensable contribution made to development by private investment. It does not make much sense to count a grant for an overseas Government to buy, say, buses in this country as aid yet to exclude the investment a private company may make in building a factory overseas in partnership with local interests or the local government to make the buses there.

The second investment may be of far greater value, a more effective way of helping a developing country than the first; yet the first is included in the aid statistics, as I understand it, and the second is not. As the O.D.I. says, the picture presented is confused and confusing. I hope that the Minister will consider this; perhaps the Parliamentary Secretary can say something about it tonight. I hope that the Minister will consider how the picture can be improved. We on this side are not solely concerned with how good the figures look and what proportion they represent of the gross national product. What the C.D.C. does with so little strain on the balance of payments may be vastly more valuable to a developing country than grants of money, or even the provision of technical assistance as such which is wasted because of poor aid management in the field. It is not the money that matters, it is the results achieved.

One can at least say of the C.D.C. nowadays that it operates successful ventures or that it is operating new ones which will acquire their own momentum, training local people in the difficult but indispensable art of management, creating a demand for local components and services. In the process, as the figures I have quoted show, it is stimulating demand for more British exports.

In January I had the good fortune to meet Monsieur André Philip, the distinguished Frenchman who heads the Development Centre of O.E.C.D. in Paris. He told me that in his view the most pressing need in most developing countries now, especially where there has already been considerable investment in infrastructure, was investment in a large number of small enterprises; that this was the way to broaden the base of the economy, stimulate real growth and get wider participation in it by the people of the developing countries.

I was most interested to hear what the right hon. Gentleman had to say about participation. I agree with his approach to this problem, but people should be enabled in the developing countries themselves to participate. This can be done only by investment in a large number of relatively small concerns. I am delighted to see that C.D.C. investment has been recently increasingly directed to projects which involve association with and the support of people collectively and individually in the countries where it operates; projects such as smallholder schemes of agriculture grouped round a commercially-run organisation, the kind of thing many of us have seen run so successfully in Israel; development companies which give investment help to the small local entrepreneur. This is the right approach.

I turn to the second provision in the Bill, the extension of the Corporation's operations to the whole of the Commonwealth and also to foreign countries. I welcome this, but with some reservations. The extent to which we are increasing the Corporation's borrowing powers does not indicate to me that it will be able to branch out in a great many directions all at once. On the contrary, if the Corporation follows the path it has trod so successfully thus far it will be cautious in venturing into too many new territories. It is right for the Corporation to be given an opportunity to operate for the first time in India, Pakistan and Ceylon if it so wishes and if circumstances are favourable. I understand some of the difficulties here, but after all, it is only by an historic accident that these three countries acquired Dominion status before the Colonial Development Corporation, as it was then, came into being.

If we pass the Bill the Corporation will be able to operate in any part of the Commonwealth, though I believe the spirit of Parliament's intention is and must continue to be that it operates only in those countries which are at an early stage of their economic development and where this is also in line with essential British interests. As perhaps the right hon. Gentleman will have sensed by what was said by hon. Gentlemen behind me, there is so much development to do inside the Commonwealth, to which most of us still give conscious preference in our minds, that there is really no need to operate outside it. I support the right hon. Gentleman however, for there is, I think, a case for empowering the Corporation to operate in territories which were formerly part of the British Empire, places like Sudan and the Cameroons which as a result of the chance of history are now outside the Commonwealth.

I believe too that there is a case for operating in a country like Ethiopia, because of its close proximity to Kenya, Uganda and Tanzania where the Corporation is already well established. This, perhaps, is the answer I would give to my hon. Friend. Although such an investment may not be directly related to an enterprise of a similar character in neighbouring Kenya or Uganda, nevertheless the whole East African region is moving towards a natural economic grouping_ Moreover, Ethiopia is a country that I know as well as any in Africa, and it has enormous potential. It would like very much to attract British investment. I believe, therefore, that it would be a good thing if the C.D.C. were to seek to take a modest hand in development there. Having said that, however, I was glad to hear the right hon. Gentleman say, in effect, that there would be no wild rush into foreign ventures while there are needs in the Commonwealth remaining unsatisfied.

Mr. Eldon Griffiths

There are so many things requiring action in the Commonwealth that preference ought to remain. As the hon. Gentleman has rightly said, where there is a regional complexion in relation to Commonwealth countries that is right; but that is not what Parliament is being asked to say. We are being asked to say the Corporation can go anywhere under the sun, and I should have thought it was reasonable that where it goes entirely outside of former or present British interests the Corporation should come back to the House and ask for permission.

Mr. Braine

I have two comments to make on that. First, I added a very important qualification, that the test should be the advancement of British interests; that is to say, that as our resources are scarce we should apply them where they are most effective to the needs of developing countries but at the same time should have regard to our own long-term commercial interests. I believe that this is certainly what our constituents expect of us. The other comment I would make is that the Bill gives the Minister power to give a direction to the Corporation should it have a sudden rush of blood to the head and desire to move into a foreign country in which it has not operated before. The Minister can give the Corporation a direction requiring it to obtain his approval before operation in any country other than a colonial territory; and he may attach conditions to that approval.

The Minister is an eminently reasonable man and the Corporation hitherto has shown great judgment and caution on the one hand and a suitable sense of adventure on the others. I do not believe that this is anything we need to worry over, for there is a safeguard. What is the new Select Committee to do but to subject matters of this kind to far closer scrutiny than has been the case before?

It occurs to me, finally—and I agree entirely with the right hon. Gentleman here—that there is no need to change the name of the Commonwealth Development Corporation. It is a good name. It is a name which has an aura of success around it. But there might be some difficulty if the Corporation were to operate under this name in certain countries. It may well he that I am exaggerating the danger but, as we all know, nationalisms—some of which are not very far away from us—are very sensitive nowadays. Presumably, if the danger ever arose a formula could be found whereby the Corporation could operate, if necessary, through an appropriately named subsidiary. Perhaps the Parliamentary Secretary will make some comment on that when he comes to make his reply.

Let me once again say that we on this side warmly welcome the Bill. We acknowledge the splendid work that the chairman, board and staff of this Corporation have done up to now. We hope that with the increased funds now made available they will be able to continue the good work of helping developing countries in the Commonwealth, and now perhaps a few outside it, to overcome the problems of poverty and to speed growth of their economies. I, too, commend the Bill to the House.

8.20 p.m.

Mr. Frank Judd (Portsmouth, West)

Not for the first time, it is a great pleasure to follow the hon. Member for Essex, South-East (Mr. Braine), who has an extremely constructive approach to the subjects which we discuss during these debates. We have noted that the hon. Gentleman is to be a member of the new Select Committee, and I think that the tone of his remarks augurs well for the constructive way in which the Committee will go about its very important task.

I, too, should like to start by congratulating the Commonwealth Development Corporation on its outstanding record, and the way in which it has combined first-class commercial principles with a high sense of social responsibility and has not been hesitant about experimenting in new forms of development. Some would claim that the fact that the World Bank has at last become interested in supporting agricultural products is a result of the example of the C.D.C.

What has always impressed me from the limited amount of the Corporation's work that I have been able to see at first hand is the high standard that it sets in all aspects of its projects. Not many months ago I was able to see some of its work in Swaziland. I was able to visit one of the sugar estates there under the control of the Corporation. This combination of high standards was to be seen in the new techniques being pioneered, the exemplary conditions within the mill itself, and, perhaps as important as any of the technical activities in the project, the high standard of housing for the employees in the scheme, and the excellent recreational amenities, setting a good example to others in the same sphere of work.

While in Swaziland I was able to visit the Vuvulane irrigated farms, and I saw how the Corporation, in trying to avoid the danger of over-emphasis on capital-intensive operations about which some of us have certain reservations, had gone in for labour-intensive rural development by setting up these farms, both 16 and 8 acre smallholdings for Swazi farmers based on sugar cane growing, and also five rather larger farms, of 60-acre size, for Swazi farmers. Both in this project of rural development and in the sugar estate itself the calibre of the Corporation's staff was impressive, and that cannot be over-emphasised.

As my right hon. Friend has emphasised, the Bill foresees potential expansion in the work and sphere of operations of the Corporation. I believe that this makes good sense, because integrated regional economic development is essential for progress in most developing countries. Where this can be achieved by going beyond the formal boundaries of the Commonwealth as such, this will obviously be in the interests of the Commonwealth countries within which the C.D.C. may already be operating.

We note with some relief, however, that there is to be an element of political control over new areas of activity, and that the Minister is to be able to exercise his guidance. I think that we would all want to put on record our concern that wider political considerations should not be forgotten.

There are attractive elements in regional development in Southern Africa, but I am sure that we would want to see the Minister restraining—I am not suggesting that it would be forthcoming—any tendency by the Corporation to go for economically attractive projects in areas with which we cannot have much political sympathy. For example, we would not at this juncture want to see C.D.C. schemes operating in Portuguese territories of Southern Africa.

On the other hand, while still looking at Southern Africa, it is worth noting that Botswana is a country to which we would like to see the C.D.C. give urgent attention in order to increase its activities. Recent mineral surveys in Botswana have revealed great potential wealth, and I think that there is an excellent opportunity for the Corporation, amongst others, to provide the sort of co-operation which will enable that country to develop its economy and its potential wealth without becoming more dependent on the Republic of South Africa than it already is—to an alarming degree.

We know that the C.D.C. is expected to produce a respectable return on capital, but there are certain limited spheres in which a waiver is exercised. I should like the Minister to comment on that area of possible work which must sometimes fall between a reasonable rate of return on capital and a complete waiver and whether there is any chance of exercising more discretion and more flexibility about projects of that kind.

I shall also be interested to hear what the Minister has to say about any initiatives which may have been taken by the C.D.C., or by himself, to persuade other developed Commonwealth countries to become involved in providing capital for the C.D.C., because, if we are talking about Commonwealth co-operation and development, this is something that deserves attention, and one would like to see some of the other more fortunate and well placed Commonwealth countries looking at the possibility of action of that kind.

I propose to refer now to the background against which we must judge the success of the C.D.C. From debates on the aid programme we know that there was a cut in January, 1967, from £225 million to £205 million, a cut of approximately 10 per cent. There was the fact that the Minister was removed from his rightful place, as some see it, in the Cabinet. There was the impact of devaluation on the aid programme. More recently, there were statements by the Chancellor of the Exchequer and the Secretary of State for Economic Affairs which indicated that we cannot see any move forward in the size of the aid programme in the next few years. Against that it is argued that, despite public pressure, the Government resisted the temptation to cut the aid programme still further after the impact of devaluation.

But in connection with the C.D.C.—and here I echo some of the things said by the hon. Member for Essex, South-East—I think we have to recognise that perhaps it has been misleading that the Government, and indeed their predecessors, have so frequently presented the aid and development programmes in gross terms. The fact is that since 1960 the G.N.P. in Britain has risen by 60 per cent., or about £15,000 million, but during the same period there has been a decrease in our net aid programme from about £151 million in 1961 to what I calculate to be about £148 million in 1968. Against that background, it was interesting that the Estimates Committee said last year that Legislation should be introduced to extend the sphere of operations of the Commonwealth Development Corporation to India, Pakistan and Ceylon, and thereafter the proportion of the aid programme provided by way of loans to the Commonwealth Development Corporation should be considerably increased. It is understandable that in his observations the Minister should later have said: The Minister notes the Committee's view that it is desirable that the proportion of the aid programme provided by way of loans to the C.D.C. should be increased. This is already in hand. The funds which are being made available to C.D.C. in 1968–69 are greater than in 1967–68 and it is the Minister's intention if circumstances permit to make a further increase in 1970–71". What are the facts? The Corporation is in reality self-financing. In spite of this, the Government like to count the advances which they make to the Corporation as part of an aid programme with no deduction for repayment and interests. Is it right that their payments should count as aid, with all that that means to the general public, in the popularly accepted sense, when they come back with full interest? In 1967, the Corporation drew £7.8 million from the Government but repaid £8.3 million—£2.8 million capital and £5.5 million interest. In 1966, it drew £7.2 million and repaid £9.9 million—£5.6 million capital and £4.3 million interest. In 1965, the two flows were approximately equivalent.

This is a very different sort of operation from the welcome new trend in the Government's general approach to overseas aid and development whereby it emphasises the importance of interest-free loans if there is to be genuine assistance as part of an aid and development programme. The Corporation had something to say about this in its 1965 Report and Accounts: Whether the C.D.C.'s activities are regarded as part of overseas aid or as overseas investment with some flavour of aid as C.D.C. itself would maintain, clearly they have to be justified more than ever in present circumstances in relation to their impact on the U.K. and sterling area balance of payments. That was written in 1966 at the time of reconsideration of the refinancing of the Corporation. Until 1965 there had been no formal aid ceiling and, therefore, no restriction on the amount of money which the Corporation could draw from the Government within the overall limit each year. At that time, advances were not voted annually by Parliament.

In view of the new situation, why should we not, when we are considering this Bill, ponder the possibility of making the Corporation a revolving fund? It could use its return on investments for further investment without money passing through the Government's hands. The Government could, if need arose, increase the resources of the Corporation with extra funds as they increase, if they wish, contributions to, for example, the International Development Association. Such contributions would not, strictly speaking, be grants, for if the recipient organisation were wound up the money would be repayable.

I know that when one puts forward this sort of suggestion, the response comes—if not from the Minister, then from other Government Departments of which we can think—that it is contrary to the principles of British financial policy. This is absolutely no answer to my suggestion, which would result in more realistic figures of the British aid programme being quoted to the public and the world.

I conclude by again congratulating the Commonwealth Development Corporation on its outstanding achievements to date, but at the same time begging the Government no longer to claim the work of the Corporation as part of an aid programme, with all that that means in the public eye. Why not regard it as a perfectly reasonable form of enlightened overseas investment with mutual benefits to all?

8.34 p.m.

Sir George Sinclair (Dorking)

I have followed the hon. Member for Portsmouth, West (Mr. Judd) before in debates on this subject, and I find myself very much in tune with the plea he has made that another look should be taken at the classification of the operations of the C.D.C.

I join in the general welcome which has been given from this side of the House to the new provisions, which follow swiftly on the recommendations of the Select Committee on Estimates. The Explanatory and Financial Memorandum contains this note of caution; it says that the Bill is not expected to lead to a significant acceleration in the rate of investment in the near future". I am sure that this is right, at least for a year or two. The success of the Corporation, as I see it, in recent years has been achieved by building steadily on its range of experience in different areas. If after the Bill becomes law it is invited to operate in countries in which it has no previous experience, it will no doubt wish to begin with some caution. As the Corporation gains experience in the new areas of operation, I hope that the Government of the day will welcome a sharpened increase in the pace of the Corporation's new investment where this could be useful and profitable.

I come to the subject of the classification of the Corporation's operations as aid. I have some doubts whether money advanced to the Corporation should be classified by the Government as part of their aid programme and, therefore, be subjected to the overall aid ceiling. In this I share some of the doubts expressed in the recent note by the Overseas Development Institute. In support of this I quote two passages from a rather more recent document of the Corporation than that used by my old-fashioned friend from Portsmouth, West. This is the current edition of a pamphlet called "Partners in Development". The first passage, under "Terms of reference", says: In general, C.D.C's task is to work as a commercial organisation, investing its funds in development schemes for the promotion or expansion of economic projects that will not only help to increase the wealth of the territories but will also yield a reasonable return on the money invested. Again, speaking of its investment methods the Corporation says: The Corporation does not offer aid: it offers investment in the development of resources. It could not be clearer.

I doubt, then, whether it is appropriate to classify C.D.C. overseas investment as aid. After all, the Corporation has to raise its money at commercial rates. The Minister said that over new investment, at any rate for the time being, there has been a part waiver of interest. Is it a matter of principle to waive some of the interest rate, or is it a device to help the Corporation over a time of extremely high interest? I hope that the Parliamentary Secretary will clear up that point, because otherwise there is a departure from principle.

The Corporation is obliged under its Charter to operate on a commercial basis. Yet its annual returns on investment, as the hon. Member for Portsmouth, West said, have not hitherto been shown in the Government's tables as an offset against the annual investment. The C.D.C. claims to supply finance and management at the invitation of Governments of developing countries, and to be partners in management and to be partners in development. This is not aid. I doubt whether such investment should be included in our aid figures. What I have no doubt about is that such investment by the C.D.C. is one of the most valuable forms of practical help which flow from Britain to developing countries. There are great advantages in this to Britain as well as to the receiving countries. It is a transaction of common interest and this is not a bad relationship between two countries, one of which may be developed and the other developing. It is a good and natural relationship of common advantage.

Perhaps I should run again quickly over some of the advantages to the receiving countries of the C.D.C.'s operations. First, the projects are taken only at the express invitation of developing countries. I disagree with some of the phrases used in this debate about "deciding" to invest. It really amounts to considering requests from countries to invest in them. That is the rôle of the C.D.C. Second, there is joint planning between the C.D.C. and the receiving countries. This is very important because the two sides are associated right from the beginning in the working out of the project. Third, there is training in management and, often, help with technical training. Finally, the C.D.C. works as often as possible in partnership with local organisations.

But to me one of the most important parts of the work of the C.D.C. is that it is bringing modern methods of production and marketing into the rural areas and has been particularly successful in its smallholder schemes. Above all, the major contribution of the C.D.C. is that its projects have been by and large overwhelmingly successful and have helped to create new wealth in the countries which have welcomed the C.D.C.

For Britain, the C.D.C. has achieved a reasonable return on investment. As my hon. Friend the Member for Essex, South-East (Mr. Braine) said, the investment has stimulated our exports and especially our exports of equipment. This applies very greatly to the financing of the infrastructure works in the developing countries. It may not be aid but it is certainly a civilised exchange of benefit to the common advantage. In my view, it represents a really good mature relationship.

I welcome the provisions in the Bill to extend the area of operations of the C.D.C. even beyond the Commonwealth. I am glad that the right hon. Gentleman has given an assurance, however, that the extension beyond the Commonwealth will be only marginal. The needs and opportunities for this sort of investment within the Commonwealth are so enormous that I doubt whether the C.D.C. has the capacity to expand rapidly yet into other areas. I do not think that in future we should continue the C.D.C. entirely as a Commonwealth operation because there will be areas in the world where there will be opportunities for good investment with good returns to the receiving country and good returns to our country which will strengthen our economy and thereby our ability to help our own Commonwealth. We should not neglect opportunities where the C.D.C. form of investment is particularly attractive to the receiving countries and also gives a good return to us. It does not deprive us; it helps us. But I hope that the efforts will be overwhelmingly confined to Commonwealth countries, where the C.D.C. has a steadily growing record of successes.

In Africa there is still a wide opportunity for investment. There are opportunities for useful and profitable operations in countries so far untouched by C.D.C., countries in Africa to which C.D.C. has not hitherto been allowed to go; for example, in the former French territories, where C.D.C. experience in neighbouring territories of the Commonwealth countries may be highly relevant. Such an initiative, if sought by the Governments of those countries, would follow the recent pattern of French investment in former British territories. I am thinking of the French construction of the new international airport in Ghana. If the Government of Cameroon sought new investments from C.D.C., the Corporation would now be free to build on its past successes in a country part of which was administered by us as a Trust territory.

The Caribbean area, as was shown by the debate on Anguilla, is crying out for further development, and here I hope that the C.D.C. will be able to expand fairly rapidly, because its experience is already fully tried out and has proved to be relevant and profitable both to us and to the receiving islands.

There are other areas where C.D.C. has been remarkably successful—for example, in Malaysia and Singapore—and it may well be that there are friendly countries—I think Thailand has been mentioned—where investment opportunities would be open to us and where C.D.C. would be welcome. It would help to improve the prosperity of an area in which we have a major interest. The prosperity and tranquility of the area is of interest to us and all our partners in the area, and if we can make a contribution through C.D.C. we should do so.

In addition to this, the Bill, following the recommendation of the Select Committee, would add India, Pakistan and Ceylon, from which C.D.C. has formerly been excluded. We should not take fright at the immense needs of India and Pakistan. The opportunity there for new investment is vast, but in many sectors of the economy they want money only. They are already capable of providing their own management throughout a great range of their economy. Perhaps these two Governments of India and Pakistan, faced with the urgent and immense task of increasing still faster the productivity of their rural areas, might wish to discuss with C.D.C. the new techniques that C.D.C. has developed for assisting local groups, especially groups of smallholders, to modernise their production and marketing. This is where in most developing countries economic advance is most urgent and important.

We have heard something of the recent spectacular advances made in the production of food in Pakistan and India, especially in the larger farms in irrigated areas, advances which have been made possible by better seed, more fertilisers, better cultivation and better irrigation. It would be strange if C.D.C.'s successful experience elsewhere in helping farmers at the peasant level to increase their production could not be modified to local conditions and help to speed the process of production in rural India and Pakistan. If the C.D.C. were to be invited by one or both of those Governments to consider the possibilities, I am sure it would require time for the very careful preliminary surveys of the social and other factors in those areas in which it might be asked to operate.

Finally, I want to join in the tribute paid from all sides of the House to the leadership and the staff of the C.D.C. I would couple with them however, their partners and associates in the territories in which they are operating, because they are partners in development.

8.55 p.m.

Mr. A. H. Macdonald (Chislehurst)

So far, we have listened to four panegyrics in favour of the C.D.C., and certainly I have no wish to be behindhand, because I am sure that those tributes are fully deserved.

I hope that I shall not strike too discordant a note if I venture to offer one or two criticisms of the Bill, though I hope that I shall be no more than a devil's advocate, because, at bottom, I wish the Bill well.

In some ways, I regret that it comes before us today. It might have been more convenient and helpful if it had come before us in a month's time or possibly two months' time. As many hon. Members have said, the C.D.C. is a commercial enterprise operating on commercial principles. When we consider its affairs, it is highly relevant to have before us the latest possible statement of its balance sheet and accounts.

All that I have been able to find is the Report for 1967, which I see was made available in May, 1968. If this discussion had taken place a month hence, it may be that we would have had available the up-to-date balance sheet and accounts, which would have made our discussion more realistic.

Operating on the latest figures available, the first point to which I want to call attention is that, in paragraph 9 of the 1967 Report, the C.D.C. remarks that there was at that time £28 million of undistributed commitments; in other words, transactions which it had entered into and presumably signed contracts for but in respect of which no disbursements had been made. In the context of the figures which we are discussing, £28 million seems to be a fairly substantial sum. However, the C.D.C. says that it does not regard it as large, and I am glad to see the measure of confidence that it displays. If we had the 1968 figures before us, no doubt we would see a similar figure outstanding at present.

To draw a parallel, when I served on the housing advances panel of a local authority, I remember that we used to have undistributed commitments at the end of any financial year, which is quite normal to any financial organisation. But we found it very difficult to handle those undistributed commitments when we were operating on the basis of getting annual loans from the Public Works Loan Board.

The C.D.C. also used to operate on this annual loan basis But if I understand the position correctly, it has now moved away from the old concept of an annual basis. Indeed, in paragraph 9 of its report it refers to what I understand to be more of a four-year rolling programme. Therefore, it is possible that the Explanatory Memorandum may be a wee bit misleading in that it continues the concept of annual loans.

The important point arising out of this has been referred to by other hon. Members, namely, that the loans to the C.D.C. come within the overall ceiling of the total aid programme. My right hon. Friend made it clear, to my great regret, that there is to be no overall increase in the total aid programme. Assuming that this form of finance is aid—I recognise that some hon. Members dispute that—this increase presumably will mean some reduction in the other forms of aid that we make available. In particular, if this £28 million of undistributed commitments is called upon in large part rather sooner than might be expected, I fear that the reduction in other forms of aid will be appreciably greater than we might have supposed.

Hon. Members have offered thoughts to the House on whether advances to the C.D.C. should be considered as aid. I have nothing to add to the arguments that they have advanced. The Government evidently consider them as aid. I distinctly regret that this improvement in the position of C.D.C. means a reduction elsewhere. Subject to that, I welcome Clause 1 proposing an increase in the limit of the borrowing powers under which C.D.C. operates.

I like to think that part of the money that we make available to developing countries—I will not again venture into the argument whether it is aid—takes the form of hard money, because I think that this helps to stimulate efficiency. If they can cope efficiently with hard money, it shows that they are soundly based and can efficiently use any soft money that is made available.

I am less enthusiastic about Clause 2. I cannot help feeling that we are seeing too much of a good thing here. It was not clear to me from my right hon. Friend's opening remarks why we are embarking on this extension. I share the view of hon. Members who, in interventions and speeches, have remarked that there is still plenty to do within the Commonwealth, the sphere in which C.D.C. currently operates.

I suppose that this extension is based upon the recommendation put forward recently by the Estimates Committee. I regard its report in almost every respect as thoroughly admirable, and it made interesting and useful reading; but I thought that this particular recommendation was something of a blemish on what I otherwise highly praised.

The Estimates Committee went to India and Pakistan. On its return it recommended that there should be an increase in aid, or money, to India and Pakistan. I cannot help feeling that there was an element of special pleading in it. I wonder what the Estimates Committee would have said if it had gone to Nigeria, Mauritius or even Anguilla. I wonder whether it would have come back with a slightly different conclusion.

Mr. Braine

I think that the hon. Gentleman is being a little unfair to the Estimates Committee, because if I remember rightly, it came back from India with some trenchant criticisms of the way in which aid had been used for particular projects and it was against that background that the Committee recommended that the C.D.C., with its wealth of expertness, might be encouraged to move into that field.

Mr. Macdonald

I am coming to the question of expertise, but if I have been unfair to the Estimates Committee, I am grateful to the hon. Gentleman for correcting me. Even supposing that its recommendation is correct, the Bill goes a great deal further because it permits the C.D.C. to make investments in the whole world. Restrictions in the Bill will operate only if the Minister thinks that they should, and although the present Minister has said that they will, we might have expected restraint the other way around, with the C.D.C. unable to invest in these other places unless the Minister says so. At the moment, it may invest unless he refuses and that is unfortunate.

The C.D.C., which was created in 1948, has built up a magnificent body of expertise by its slow and patient development and I hope that I am not pessimistic in feeling that there may be a danger of its being dissipated, if it is spread too widely.

One of the great merits of the C.D.C. is that it trains local people to assist in the management of its enterprises, but I am also advised that, although it does a lot in training, its enterprises lose many of those trained people, because, as Mr. Mboya has said, there is no other way of training them. When C.D.C.-sponsored organisations train these managers, they later move on. There needs to be continuous training, with some ex-patriates taking part.

Paragraph 8 of the 1967 Report mentions certain difficulties for expatriates in Commonwealth territories but I hope that the success of C.D.C. shows that these difficulties can be largely overcome, because, in those territories, the Corporation is known and the circumstances of those expatriates are understood. If they go in large numbers to other territories where they are not known, these difficulties may increase. I welcome Clause 1, but I should have liked the increase in the finance, without the large extension in the area under Clause 2. There is plenty to do in the exisiting Commonwealth.

I hope that I am not out of order in assuming that this debate is an opportunity to review the work of the C.D.C., to which I pay tribute.

In its Report for 1967 it refers particularly to the affairs of the Central Africa Power Corporation where money was made available but, because of the difficulties in Rhodesia, only half was repaid. Half was guaranteed by the Government of Zambia and that was paid, but the other half was guaranteed by Rhodesia and has not been paid. As the two Governments had given cross guarantees, the C.D.C. called on the Zambian authorities to make good the total repayment. In doing so it was acting in accordance with its brief as it is a commercial organisation. I have no criticism to make of that, but here we are setting up a commercial organisation which in some senses was apparently cutting across the political policy of the Government.

I wonder if I detected in the increasing waiver of interest which my hon. Friend rather proudly announced a departure from commercial principles hitherto laid down. I wonder whether the opportunity should have been taken to deal with these circumstances in this Bill. I thought it a little unfortunate that the C.D.C., operating on a commercial basis, came down on the Government of Zambia for the full amount of the money. Although it was in no sense the fault of that Government, it had to make good the full amount. I would have expected that some opportunity would have been taken in this Bill to introduce safeguards against that kind of thing. Subject to that, I welcome the proposals of the Bill.

9.7 p.m.

Mr. John Tilney (Liverpool, Wavertree)

I had some sympathy with the words of the hon. Member for Chislehurst (Mr. Macdonald) when he said that he thought the money might be spread too widely. He spent a certain amount of time on the £28 million of undistributed commitments. I have always felt that because the C.D.C. takes risks the capital should be equity capital. It has always struck me as wrong to rely on loan capital when one is taking risks all the time.

Although my hon. Friend the Member for Dorking (Sir G. Sinclair) said that the C.D.C. had been overwhelmingly successful, I remember the time when under the first chairman success was very far away from the C.D.C. and vast sums of money were lost by not so good management. Risks have to be taken either in agriculture or in industry.

I was much interested to hear what was said by the hon. Member for Portsmouth, West (Mr. Judd). He and I not long ago were discussing the problems of Africa with various American congressmen and senators and, inter alia, the subject of aid to that great continent. I was interested in what the hon. Member said about the effect which C.D.C. projects in agriculture have had on World Bank thinking. I have no doubt that some developing countries in the past have not given enough attention to agriculture. India certainly was one of those in its first development programme, whereas Taiwan, before it started its industrial burgeoning, saw that its agriculture was in order. This is a matter of great importance to such countries.

The hon. Member for Portsmouth, West thought that we might call on other Commonwealth countries for some capital for the C.D.C. This would bring the Commonwealth together more, and anything we can do to bring it together and establish the Commonwealth idea much more widely throughout the world is good. That is why I regret that to a slight extent the Bill is going away from the Commonwealth, and why I should like to see some form of Commonwealth aid scheme under the Secretary-General.

But I very much welcome the raising of the limit. I agree that the C.D.C. is a great success story and that it helps our balance of payments. There is a strong argument that this should be regarded, just as private investments should, as a form of aid overseas but as being in quite a different position from Government grants. It is nonsense to lump them together as aid, because we benefit. Our balance of payments gains from the C.D.C. to a considerable extent, as my hon. Friend the Member for Essex, South-East (Mr. Braine) pointed out.

I believe in private enterprise, in risk-taking and in partnership, and that aid should not be purely a philanthropic enterprise. It is a good thing if they are mixed up as much as possible. I pay my tribute to the management of Lord Reith and Lord Howick and the present managing director, because they have done a first-class job.

It is sensible to have a partnership. My hon. Friend the Member for Essex, South-East referred to partnership and the importance of companies registered in the developing country rather than having a branch. I do not want to make a party point, but it is very unfortunate that our present fiscal policy is in favour of branches and against public companies sharing in partnership with local capitalists overseas. Unfortunately it now pays to have branches rather than a partnership company, either with British capitalists or local capitalists, whether they are pension funds or local tycoons. I believe such partnership is a very good thing. I happen to believe in the capitalist system. What one wants to see is the local company quoted on the local stock exchange in Lagos, Accra or wherever it may be. That is the sort of development we want to support.

I strongly recommend a small brochure produced by the West Africa Committee in the City of London, entitled, "Foreign Investment—its rôle in the development of Commonwealth West Africa", because of the four precepts for investment it lays down—investment capital, technical skills, enterprise and natural resources. It speaks of: Investment Capital—available from savings on a scale sufficient to leave a surplus after maintenance requirements in the private and public sector. One of the problems of developing countries is that there is very little left over once what is already there has been maintained both in the public and private sector. The brochure next mentions: Technical Skills—to apply investment capital with economy and effectiveness, conserving it conscientiously. That is all the more reason why bodies like the C.D.C. should bring people to this country for training, or, preferably, in their own enterprise build up the local technicians in knowledge of worldwide techniques.

The brochure also speaks of: Enterprise—the intellectual force which provides the will, flexibility and inventiveness to adapt the best systems and experience of the world to local problems and situations. That is self-explanatory. Finally the document mentions Natural Resources—which are valueless until extracted and processed. Natural resources, either mineral or agricultural, cannot be tapped without capital, expertise and hard work.

I have a suspicion that some hon. Members opposite always imagine that one must have an infrastructure and that automatically private enterprise will follow it. This is not really so. Some private enterprise has come about—with the exception of power, which one must have—before roads have been built—but the opposite is often the case. One remembers the big roads which were built by the French in Dahomey, but Dahomey remains one of the poorest countries in Africa. There private enterprise has not followed the infrastructure.

Mr. Eldon Griffiths

Is not the point that infrastructure does not mean to underdeveloped countries what it means to us? The word "infrastructure" ought to mean different things in different countries.

Mr. Tilney

I agree. So often many developing countries want to enjoy the infrastructure which we have. They are not prepared to put up with something which is not quite alpha-plus. There are good beta-plus organisations in existence, and there comes a time when they have to accept the good rather than the best.

I believe that equity investment is better for many countries than Government loans which have to be repaid. Private enterprise investment does not have to be repaid year by year. It receives a return only if it makes a profit. The risk is taken, preferably in partnership with the local people.

I regret to some extent that the Minister has seen fit in this Bill to go beyond the Commonwealth. I accept that the Sudan was a condominium largely run by this country, I accept that we have great friends in Ethiopia, and in Thailand, but I am frightened that some other Government, for political rather than economic reasons, may say to the C.D.C. "We should like to start in such and such a country." This is a dangerous argument if one goes beyond the purely economic reasons for investment. Capital is in short supply thoroughout the world. Only £10 million is available, which is not much for the Commonwealth, and once one goes outside it, I fear that the investment will be thinly spread.

One understands that aid will be going wider than the Commonwealth. The Minister said that, for the time being, he will not consider India, Pakistan and Ceylon, although in fact they may be eligible. I urge him to listen carefully to the suggestion made by my hon. Friend the Member for Essex, South-East, that one should not use the Commonwealth Development Corporation in a foreign country since it would demote its title. I wish to support the Commonwealth as much as possible, but if it becomes accepted as the title of a body which may operate in any country, then the whole concept of Commonwealth is denigrated to some extent. If the C.D.C. is expected to operate in Thailand, in the Sudan, or elewhere outside the Commonwealth, I urge the the Minister to consider the use of a subsidiary company.

I welcome the Bill. It is a small part of the aid programme. I would like it to be bigger, as I would like the private enterprise share to be bigger, even though we have to reduce government-to-government loans. Along with all other hon. Members I commend the Bill.

9.20 p.m.

Mr. Evan Luard (Oxford)

I am sorry to have to add to the discordant notes mentioned by my hon. Friend the Member for Chislehurst (Mr. Macdonald). I understand the reasons why this Bill has been so wildely welcomed, and it is not my intention to vote against it. I have considerable reservations about it, not so much for what it is in itself, but because of some of the trends which it represents within the aid programme. One point which I do welcome, that which has been mainly regretted in the debate so far, is the provision in Clause 2 that it is no longer relevant or meaningful to make a distinction between a former colonial territory of this country and other territories.

I welcome the abandonment of that distinction for two reasons. From a purely economic point of view, it is often a total nonsense to draw a rigid boundary just where the previous boundary of our colonial empire happened to run. In many cases it is much better to think of projects in a sub-regional context, for example to think of the whole area in West Africa regardless of where the former colonial territories had their boundaries, or in South-East Asia, and many other parts of the world.

I also welcome this because at the moment there can sometimes be quite artificial imbalances between the amount of aid available to a particular territory, according to whether it is a member of a former colonial empire. It is increasingly important that we consider the aid programme as far as possible in a global context when considering the distribution of aid in the world as a whole, and in a regional or sub-regional context in considering the economic environment of a particular aid programme.

I come now to my points of reservation. I do not want anything I say to be considered as being criticism of the Commonwealth Development Corporation, because I echo the words of appreciation and praise for the technical expertise with which it does its work, which is so important in considering the aid projects generally. I have three points to make. Three years ago in the admirable White Paper on aid which the Government produced an undertaking was given that we would increasingly concentrate on aid on soft terms.

In doing this we give a lead, to some extent, to the world as a whole, which has recently been re-echoed in many quarters. The United Nations has passed a Resolution on this, U.N.C.T.A.D. has done so and the World Bank has laid increasing stress on aid on soft terms. The aid given through the C.D.C., in so far as it can be called aid, is not aid on soft terms. Unlike other speakers, I regret the recommendations made by the Sub-Committee of the Estimates Committee and the Committee as a whole that we should lay increasing emphasis on aid through the C.D.C. in our future aid programme for this reason, although, again, I recognise the very good reasons it gave in favour of this, and that is because of the type of aid it represented, and because of the very efficient way it is managed.

It is impossible to consider in a rational way a particular proposal for an increase in one kind of aid without knowing what proportion it is of our aid programme as a whole and what proportion it will represent in future of our total aid programme.

I am very much afraid, and I would welcome comments on this by my hon. Friend in replying tonight, that this represents part of the trend within our aid programme not to give as much emphasis to soft loans as was suggested in the White Paper three years ago. That White Paper emphasised in particular not merely soft loans but interest-free loans. This is an essential element in our aid programme, something to which, no doubt because of our difficult balance of payments system, we have not been able to give sufficient attention in our aid programmes in the last few years.

The second reservation I wish to make is that another trend within aid of programmes as a whole which has been increasingly commended by international organisations has been the trend towards a greater volume of multilateral aid. Our own proportion, although it has been slightly increased recently, is still not much more than one-eighth of our total aid programme. This is very small compared with that of many other countries. Many have undertaken to give a very large proportion of their aid in future in multilaterial forms. Several countries, including the United States and the Scandinavian countries, give a large proportion in this form and other countries of Western Europe are proposing to give a large proportion of aid in multilateral form so long as they can receive sufficient assurance that there will be adequate management and control in the way aid is used. I entirely accept that this is an essential condition.

I am afraid, however, that this Bill, if extended to other legislation in the future, may portend that we are continuing to give a very large proportion of our aid in bilateral form, or at any rate not through multilateral agencies as a whole. I agree with my hon. Friend the Member for Chislehurst that the terms of a Bill of this kind make it difficult for the House as a whole to have any control over the proportion of aid which goes in any particular form. It gives an authorisation which will enable the Corporation in future to extend its activities in a particular way; but it gives no indication of how much this extension will be in any particular year and what proportion the extension will be of the aid programme as a whole in any particular year. Again, I regard this as a dangerous trend within the programme.

The final point I wish to make concerns the question of repayments. It is already true that a considerable proportion of the value of our aid programme is lost so far as the developing countries are concerned because of the volume of repayment they have to make. The volume of repayments on this particular form of aid is very high. Such aid is given in purely commercial terms at very high interest rates, which means that over future years it will add very considerably to the repayments by the countries we are attempting to assist. Already some countries are paying in repayments almost as much as they are receiving in aid; and we are adding to this burden in future by proposing now to give a substantial—though not a very large—proportion of our aid programme in this form. I do not say that for these reasons we should not approve the Bill. I very much appreciate the skill with which the C.D.C. undertakes its activities. But it would be wrong to fail to consider a particular measure of this kind in the context of our aid programme as a whole and its implications for that programme. I believe that it is with these considerations in mind that the House will consider this Bill.

9.28 p.m.

Mr. Eldon Griffiths (Bury St. Edmunds)

I, too, welcome this Bill, which can be described as a slightly bigger drop in a somewhat wider bucket. One of the most difficult tasks of government is deciding between competing, often conflicting, claims on public expenditure. Certainly there is no more difficult field than having to decide on the relative merits of spending at home and spending abroad. Equally, as Members of this House, there is no more difficult task than representing, as is one's duty, the views of one's constituents and at the same time seeking to make a judgment on what is best for the country. Very often there is great difficulty in both these judgments, and I think that this Bill pre-eminently illustrates both.

In welcoming the Bill, I wish to represent the view of my constituents, and I believe the views of constituents of most hon. Members. I want to put it very plainly, because it is a nettle which needs to be grasped. In this Bill we are extending the Corporation's borrowing powers from £150 million to £250 million. Yet simultaneously in my constituency it is necessary for the Government to cut down the borrowing powers of local councils. We are asked in this Bill to provide the means of improving roads, hotels, wells and many other things in a whole range of foreign countries—and clearly this is right. But at the same time our constituents have to face the fact that expenditure on some of their roads, schools and wells has to be cut down.

I put this plainly to the House so as to illustrate the fact—and it is a fact—that at the moment foreign aid is unpopular. Most hon. Members will have had the experience over the last year or so of going to constituency after constituency and finding puzzled and sometimes bewildered people, who ask how it is that we are able to spend money abroad whilst apparently bankrupting ourselves at home. This is the paradox, and it is a difficult one for ordinary people to understand.

In my constituency—and I am bound to represent this in the House—people inevitably draw a contrast between increasing the proportion of foreign aid on which no interest will be charged for seven years, while at the same time in Bury St. Edmunds, Newmarket, and many other places, interest rates, far from being waived, are actually being pushed up. I sympathise with the Minister, because in these circumstances I realise how difficult it must have been for him to get the Bill through the Cabinet or through whatever other process of government he has to go, before bringing it before the House. I congratulate the right hon. Gentleman on his achievement.

A few months ago when I was part of a Parliamentary delegation to the United Nations, I remember speaking to Lord Caradon. He told me how proud he had been to tell many of the underdeveloped members of the United Nations that at a time when the British people were being forced to reduce their standard of living and to go without many things we were able still to increase the proportion of money that we were to spend on foreign aid. I congratulate the Minister on that achievement. It is something of which our country can and ought to be proud.

Mr. John Cordle (Bournemouth, East and Christchurch)

I want to get this clear in my own mind. I thought the Minister made it clear, and indeed that our Front Bench did, too, that this was not a question of straight aid but a sophisticated method of lending money overseas through a private enterprise body.

Mr. Griffiths

I am sure my hon. Friend will agree that the net effect is the same. It is to allot more of the financial resources of this country for expenditure on development in other places.

Mr. Braine

My hon. Friend's general remarks about aid are correct. We are discussing a Bill to increase the borrowing powers of an organisation, which I am sure the Minister will agree is a good sound investment for this country in that it yields a net return of 6¼ per cent. on the money invested and induces a large volume of British exports. His strictures do not apply to this form of economic activity.

Mr. Griffiths

My hon. Friend need not worry; I shall in the end come down on the side of the Bill. I feel, for all that, that it is necessary to illustrate that we have here what the public is bound to conclude is an increase in help for others at the expense of themselves. My hon. Friend with his great wisdom, may say that that is not so, but we are politicians and we must face the fact that in our constituencies people are not as well informed as he and the Minister. My point stands. We need to explain it to our constituents. If we wish to increase foreign aid, as I do, we must sell it to the people, which is not easy at this time.

There are many ways of improving the assistance which we give abroad. For example, it would be very much better if we could stabilise commodity prices. During the 1950s the under-developed parts of the world lost more in the drop of commodity prices than they gained out of all the aid they obtained from the advanced world. Another improvement would be to reduce world interest rates. We would all like to do that. They hit hardest of all at the under-developed nations we seek to help. We could also improve the character of our aid if less of it were tied and if more of it were multilateral. It would help even more if we could contain inflation in the Western world.

I wish to ask the Minister a question. The net effect of the Bill is to increase the amount of money directly available on Treasury account to the Commonwealth Development Corporation from £10 million to £11 million a year, an increase of 10 per cent. In the last 18 months we have had a devaluation of 15 per cent. I hope that the Minister who is to reply will be able to tell me that there is an increase in real terms. Does the £11 million referred to in the Bill represent an increase in real terms to the receiving countries? If it does not, we are involved, not in an increase, but in a marginal decrease.

I come now to the details of the Bill. Like the hon. Member for Chislehurst (Mr. Macdonald), I regret that we have before us the Report and Accounts of the Commonwealth Development Corporation only for 1967. That is not good enough. We should have the Report and Accounts for 1968 before we pass the Bill. Probably the reason is that normally these accounts are printed in May and we are now only in April. But I do not see why the Minister could not have persuaded the Corporation to give the House the last available accounts before he brought in the Bill.

I support Clause I wholeheartedly because it provides more money. That is what I want. I am less sure about Clause 2, because having marginally increased the size of the drop, we are apparently greatly increasing the size and width of the bucket. The question of the dilution of aid over a wider area is very difficult. I recognise the Minister's point. It would be foolish to refuse to the Corporation power to expend money in those countries which are immediately adjacent to, or which are regionally or organically part of, those Commonwealth countries to which we are contributing. It would be absurd for example to separate from one another countries in the Horn of Africa on the ground that one was Commonwealth and the other not.

Nevertheless, I think that the Parliamentary Secretary should say a little more about the terms of reference which the Corporation will be given. Clause 2(2) empowers the Minister to give directions to the Corporation requiring it to obtain his approval … before performing functions in or in relation to any country or territory to which the principal Act applies.…". Can we be told that the Minister will be very sparing in his agreement to Corporation proposals that go greatly beyond the old and the new Commonwealth?

In the case of Anguilla, no longer—technically at least—Her Majesty's territory, there could be no question but that it would be appropriate for the Corporation to help. If, however, the Corporation were to propose help to Rumania, that would be a case where the Minister should in no circumstances give his approval. What we need from th Treasury Bench is a rather more clearly defined general direction as to how Ministers see the problem of extending the responsibilities of C.D.C.

I agree with my hon. Friend the Member for Liverpool, Wavertree (Mr. Tilney) that the old Commonweath conception has value. It has value in the world. Above all, it has value to the people of Britain. It is much easier for anyone who is in the business of selling our constituents on the need for aid if they believe that the aid is going to the Commonwealth with which they identify themselves—at least, some of them do—rather than going to a miscellaneous collection of foreign countries whose need may be great but with which the British people have very little historical affinity.

If the jam is thin, the Corporation in the past has spread it very well. I only hope that it will not have to spread it so thin that it ceases to taste so sweet.

I make these further suggestions which I hope will be considered in Committee. First, I hope that, as the Minister said, there will be much more training on the ground in recipient countries. I should like to feel that the Corporation will encourage more young people from Britain to go out and perform that training, because not only is that good for the recipients, it is even better for those who give.

Secondly, I hope that we can achieve a somewhat better co-ordination between the activities of the Corporation and those of other countries' aid giving bodies. At the moment the world is strewn with Governmental aid givers. This is a good thing, but frequently they overlap, and sometimes there is waste because of duplication. All of us have seen examples of this.

I am most impressed by a suggestion which was made by Miss Barbara Ward to the effect that a great deal of information—on techniques of improving food production and in helping under-developed countries—is available in Washington, in London, and in Paris, but is not known in all three places. It is necessary for new techniques that have been learned by one country, for example, in improving fishing or silviculture, to be made known among all the giving nations. This is a field where the computer can be of considerable value in information retrieval among the various aid programmes so that some of the overlap can be avoided.

Thirdly, I hope that in his general power to give directions the Minister will consider one or two areas which are of special importance to Britain. I am sure that we have a special responsibility for the Caribbean, as my hon. Friend the Member for Dorking (Sir G. Sinclair) so eloquently said. I was recently in the Cocos Islands. Water there is 1s. a gallon. We should be able to get that price down and I hope the C.D.C. will consider this. In the Cayman Islands too there is real need for additional help.

I end with the thought that if foreign aid or Commonwealth aid through the C.D.C. or anything else is to succeed, it will succeed because the British people, our constituents, have been persuaded that it is in the best interests of this country. We have a selling job to do. I believe that job can partly be done on the basis of our balance of payments but very much better done on a wider frame.

The problem of my generation has been the threat of aggressive war, first, from Hitler's Germany and then from Stalin's Russia. It may be, thanks to the thermo-nuclear bomb, that the threat of aggressive war is now disappearing. I pray that this is so. But I believe that the nuclear threat is being replaced by another—the rise of the barefoot people, already some 2,000 million strong. Having thrown off the old empires of Europe, they find themselves still subject to the even older tyrannies of poverty, ignorance and disease yet they are reaching for their place in the sun. They find that they have achieved independence but are still not free. They are more subject, if anything, to the old tyrannies than they were before.

This is the line of argument to strike a chord in the British people. Particularly can it strike a chord among the young. In supporting the Bill while criticising it in part, I hope that the right hon. Gentleman, the Government and all right hon. and hon. Members will try to sell the idea of foreign aid to our people not solely in terms of the balance of payments or as something into which we are chivvied by the United Nations or even by our Methodist clergy. I hope that they will do it on the wider frame that the problem of tomorrow is to bridge the gap between the poor and the rich and to see that this gap is not widened by the fact of race and colour. If we sell it in this larger frame, I believe that the British people will respond.

9.48 p.m.

Mr. John Cordle (Bournemouth, East and Christchurch)

The eloquent speech of my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) has covered a great deal of ground, and the House will be grateful to him for drawing attention to the difficulty of selling overseas aid to one's own constituents. It is right to say that one could approach the problem by making it clear to one's constituents that, although the C.D.C. has its finances from the Government, it is nothing more nor less than a commercial undertaking which is using those funds to the benefit of the country.

Perhaps a clearer definition could be made of how the C.D.C. functions, and greater publicity given to it throughout the country in more simple terms. I have no reservations about the Bill. It should be welcomed and acted upon and given every possible help and scope. I hope that no difficulties will stand in the way.

I have the rather old-fashioned idea of believing that the more we give overseas the greater will be the return. … for whatsoever a man soweth, that shall he also reap. We sow overseas additional funds by foreign investment. We shall get our returns in due course—and they are profitable returns. It has been said that aid helps our balance of payments, and during these difficult days I think that it can maintain a stability for our overseas investment and future well being.

This evening we have heard the success story of the C.D.C., and about the amazing achievement that has taken place in a short time, and we have heard, too, of its failures. We now know that it has proved itself worthy and has won its spurs. This country and the countries in which it operates have a great deal of confidence in it.

Many excellent suggestions have been made and I should like to make one or two. In the old days trade followed the flag, but nowadays trade follows sensible investment and the application of commercial "know-how". Wherever C.D.C. gets a footing it is showing that it can run its affairs efficiently and profitably.

Several times in the last six months I have visited Nigera. I have stayed in hotels run by the C.D.C., and I have seen what has been done for agriculture, the industrial bank and the housing programme, both in the North and in the South. All these are splendid developments. The C.D.C., as I say, is the spearhead of business in Nigeria. We have heard of the developments that have taken place in Botswana, Lesotho and Swaziland, and of those that are taking place in Malawi.

I ask the Minister to consider a wider scope of activity for C.D.C. As a businessman I have seen the success of C.D.C., and I wonder whether a service could be rendered to businessmen. They no longer sit at their desks expecting business to come to them but must go out to seek business overseas. Such a service would be of great benefit. The businessman cannot always fall back on trade missions and the commissions which are set up; he wants information from people who are thoroughly experienced and who know the territory. The C.D.C. has a special advantage here in its experience in the initial stages of getting a project off the ground, and advice in these matters to a businessman overseas would be invaluable.

The Ford Foundation, with its vast financial resources, recently set up a conference to look into the development and reconstruction of Nigeria after the war. This suggests to me that money would be well spent if such conferences could be sponsored and undertaken by C.D.C. in countries in which it is operating.

The Board of Trade has sponsored many successful exhibitions in various parts of the world. The recent exhibition in Beirut of hospital installations and equipment paid off extremely well, and resulted in much business in the Near East. Such exhibitions sponsored by C.D.C. in Commonwealth countries would provide an extra outlet for exports and so help our balance of payments. I fear that I may be wandering away from the Bill, but to secure the best results from the C.D.C. a sound long-term appraisal of potential markets will be needed if it is to continue its highly profitable life. This is one way in which it can further its cause as it grows. We all hope that it will.

In the context of taking reasonable commercial advantage of the opportunities provided by our aid to developing countries, it should be noted that the equipment and consumer goods which we are able to provide possibly contribute as much to the development of their economies as straightforward capital investment. Therefore, we shall not only do ourselves a service by expanding more and helping the balance of payments, but we shall make a valuable contribution to the countries concerned.

Those of us who travel to the underdeveloped countries realise that they want a short cut to the standard of living which we in the West take for granted. The markets are wide open for development both in the provision of goods such as the more sophisticated household luxuries, motor cars, electrical appliances and equipment and for establishing manufacturing plant with the required construction and machinery. Again, all this will not be bread thrown upon the waters not to return.

No one is more delighted than I am that the C.D.C. is doing so much in partnership with the developing countries. As I have said, in Nigeria it leads the way with the best hotels. In joint enterprise with Dorman Long, it has substantial interests in Nigerian housing, in both the north and the south. It provides support for the Industrial Development Bank and other major commercial interests.

I welcome the Bill, but I would remind hon. Members that we must show more initiative and energy in capitalising on the goodwill and expanding economies resulting from our aid overseas.

9.58 p.m.

The Parliamentary Secretary to the Ministry of Overseas Development (Mr. Albert Oram)

We have had a short but most useful debate on what is a short and most useful Bill. I will try to make my reply short and useful as well. If I were to attempt to reply to all the points which have been raised, I am afraid that I would detain the House longer than it would wish.

Hon. Members on both sides have been almost unanimous in their praise of the C.D.C. My hon. Friend the Member for Chislehurst (Mr. Macdonald) and my lion. Friend the Member for Oxford (Mr. Luard) sounded some critical notes, but did so only in the context of speeches which in general were welcoming the Bill. There was unanimous support for its two main proposals.

The praise which has come is the more important and valuable since in many cases hon. Members have spoken from first-hand experience of C.D.C. projects overseas. I am sure that their experience is most valuable to the House in assessing whether or not we ought to extend the powers in the way that the Bill proposes.

I want first to deal with one or two of the points made about Clause 1, which contains the main financial proposals. The hon. Member for Essex, South-East (Mr. Braine) said that the money provided through the C.D.C. gets good value in development terms. He said that it was good value not only in the overseas country where the money is invested but for Britain as well in terms of aid to overseas countries which is not costly from the balance of payments point of view. The hon. Gentleman quoted a very useful passage from the 1967 Report of the Board in illustration of that fact. I had in mind to quote it myself, but it is not now necessary. It is true, as has been illustrated—

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

Ordered, That the Proceedings on the Overseas Resources Development Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Charles Grey.]

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

Mr. Oram

I was agreeing with the hon. Member for Essex, South-East that C.D.C. operations are good value for the overseas Government and in terms of our balance of payments as well. This raised a query in a number of the speeches to which we listened, namely, whether, because there was an advantage to the British balance of payments situation, it was appropriate to include C.D.C. finance in aid statistics.

I am sure that hon. Members will not wish me to go into the many sophistications about statistics on aid which were raised. However, I should make one or two points in this connection as the hon. Member for Essex, South-East raised the example of vehicles being sent overseas being included in aid, whereas private investment overseas for the construction of vehicles would not be included in aid. I accept his point, but, with respect, it was a little confusing, because we might have in mind two sets of aid statistics. The British aid statistics which my Department publishes cover the amount contributed from Budgetary sources. That is quite right. It does not include private investment for the construction of vehicles overseas, but it is included in U.N.C.T.A.D. and D.A.C. statistics. That is why the hon. Gentleman's illustration, though homely and interesting, did not add to the clarity of the discussion.

The hon. Gentleman referred to return flows not being taken account of in aid statistics. In the statistics published by my Department, though we count as aid all that goes out from Budgetary sources, we also publish in a separate table the return flows, so that it is easy to do the arithmetic, even though it may be disputed whether we are right in claiming all outgoing funds as true aid.

The introductory point of the hon. Member for Liverpool, Wavertree (Mr. Tilney) concerned the financial proposals. He raised the point, which used to be raised often in debates about the C.D.C., whether it ought to have the benefit of equity capital rather than loans, I recognise his point, but I hope that he will recognise, as the Board does, that to some extent this problem has been overcome by the operation of the waiver of interest. If the hon. Gentleman looks at paragraph 10 of the 1967 Report, he will find the Board's expression of view on this subject. It does not accept that it meets the whole equity problem, but it recognises that it goes some way towards meeting the problem that the hon. Gentleman, and earlier the Board, had in mind.

Secondly, I should like to deal with some of the points raised about the second main proposal of the Bill to extend the territorial scope of the C.D.C.'s operations.

A number of hon. Members queried whether it was not unwise to take the whole world into the scope of the C.D.C. and they saw a danger of a loss to the Commonwealth countries. It is not the intention of the Corporation or of my right hon. Friend that these new powers will alter radically the fundamental commonwealth orientation of the Corporation or that there should be a sudden and rapid expansion into a great number of foreign countries. The approach will necessarily be cautious and any extension will need the Minister's approval.

My hon. Friend the Member for Chislehurst got this a little wrong. He thought that it was the other way round and that the Corporation could operate in these other countries unless the Minister refused his approval. In fact, he will need to give his approval positively.

One smaller point, which was raised by the hon. Member for Essex, South-East and the hon. Member for Liverpool, Wavertree was about the use of the word "Commonwealth" in foreign countries. This point is well recognised, and their suggestion of operating through a subsidiary with another name is already in the minds of those who will have to operate these powers.

The hon. Member for Dorking (Sir G. Sinclair) asked whether the waiver of interest was a matter of principle or simply an expedient to help the Corporation through a period of particularly high interest charges. Both are true. There is the principle that we wish to enable the Corporation to undertake projects which it could not otherwise do on ordinary commercial terms, but this does not exclude the fact that it is also to provide some relief during a period when the burden of interest rates is particularly high. So I do not agree with him that it was one or the other.

Some general aid matters were raised, outside the strict scope of the Bill, but which are relevant to its background. My hon. Friend the Member for Portsmouth, West (Mr. Judd) vigorously raised the question of the volume of aid and of whether or not it was advancing in absolute terms or in proportion to the growth of the national income. He also mentioned statistics, with which I have already dealt. My hon. Friend's name is among those who will serve, if the House agrees, on the Select Committee to deal with my Ministry's affairs and I shall be very surprised if he does not raise this matter. Indeed, I shall be a little disappointed and I shall certainly not discourage him from at least raising it, although some of the answers that he gets may seem at times a little discouraging.

My hon. Friend the Member for Oxford also raised a number of general aid matters which he will not expect me to answer in detail. I assure him that the Bill does not imply a reversal of policy in respect of soft terms of aid which our Ministry brought in some years ago and has operated since. Nor is there any reversal of our policy in respect of multilateral aid. The proportion of our aid programme which is dispersed through multilateral agencies has increased over the last five years from 8 per cent. to 15 per cent. That is something which I am sure he welcomes and which I am sure hon. Members opposite welcome. I assure him that his fears are groundless.

The hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) made me a little nervous when he opened his speech by putting forward the views of his constituents. I was very glad that, in the kindest of ways, he dissociated himself from the views of his constituents. This is not the only matter on which his constituents are mistaken.

Mr. Eldon Griffiths

I do not think the hon. Member can get away with that. Far be it from any hon. Member to dissociate himself from the views of his constituents. Let us say that I take them into account.

Mr. Oram

The hon. Member took them into account, but he went on to give us a speech which we all greatly admired. He put his finger on a very important problem that all of us who favour aid worry about. That is how to get the need for aid across to our constituents. I am sure that if his constituents, my constituents, and other hon. Members' constituents read his speech they will learn a great deal about the need for aid and how their disappointment in domestic terms, say about road programmes or school programmes, which, although advancing are not advancing as fast as we would wish, is as nothing to disappointments in the vast problem of poverty with which we, the Commonwealth Development Corporation and all aid givers are attempting to wrestle.

The hon. Member tried to set me a poser by asking me to do the mental arithmetic of setting £11 million or £10 million against the effect of devaluation. I shall not attempt it here because I assure the hon. Member that the C.D.C. operates in a great variety of countries, some of which have devalued and some have not. Devaluation is 18 months behind us and an even greater statistical effort would have to be made than the one which I tried to avoid earlier in my speech.

The hon. Member for Wavertree, when talking in general aid terms, made a point about private enterprise and infrastructure. He suggested that hon. Members on this side of the House put too much faith in infrastructure as a means of attracting private enterprise to developing countries. If the infrastructure is right it is essential and it is a means of attracting private enterprise into developing countries. I agree with the hon. Gentleman that mistakes can be made, and that it is not inevitably the case that infrastructure development produces the right kind of results in terms of private enterprise. But I think that he was posing the problem in too stark a way.

I should like to conclude with one or more general observations about the work of the Commonwealth Development Corporation. To me, one of the most interesting and valuable aspects of its work is the way in which it acts in partnership with other operators in development. It is flexibile in the methods of investment it employs. In some cases it has projects which it wholly owns on its own account, but it goes into business with a great variety of other aid and development operators in the way my right hon. Friend described in opening.

I particularly welcome, as I am sure does the hon. Member for Dorking, who referred to the need for agricultural development, the fact that in a number of interesting cases the C.D.C. acts as a partner with the International Development Association. The lending terms that I.D.A. can offer, combined with the easier terms that the C.D.C. can offer as a result of the policies that our Ministry operates, mean that they can go into projects, particularly agricultural projects, that they might not otherwise be able to enter. I shall quote the Kenya Tea Development Authority.

Perhaps even more important than that fact, that it has an interesting variety of partners as investors, is the fact that it enters into partnership with the people and Governments of the countries where it operates. Here I would give just two brief quotations from the Report of the Kenya Tea Development Authority to illustrate this. It says in paragraph 1 on page 64: An important feature of the Kenya Tea Development Authority's Board membership is the election of growers' representatives through a three-tier structure of divisional district committees and provincial tea boards. Later it says: Six factories started up by the Authority are now each owned by a public company to enable the smallholders to subscribe for shares and so participate in the ownership of the factory which processes their leaf. I am sure that this kind of drawing in of the peasants, the smallholders who are helped by the nucleus estates that the C.D.C. operates, is a most valuable feature of its work.

One could quote a similar example in Swaziland, where the C.D.C. does the central operations, the irrigation, the crop research, and running the sugar factory, which enables the smallholders surrounding that nucleus to improve their standards of agriculture and their standards of living. The C.D.C. has gone further, and is helping to set up co-operatives on both the purchasing and marketing side, and I am sure that this draws the peasants into a most helpful operation.

These, then, are some of the aspects of the work of the C.D.C. which appeal particularly to me. Other hon. Members have welcomed other aspects of the work of the Corporation. That is why I am sure that we shall all be very happy in readily giving assent to the Bill and providing the wherewithal and the powers to enable the work of the C.D.C. to be extended.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills.)