HC Deb 23 May 1972 vol 837 cc1361-83

10.26 p.m.

The Minister for Trade (Mr. Michael Noble)

I beg to move Amendment No. 1, in page 2, line 6, at end insert: (6) As soon as may be after 31st March in 1973 and in each subsequent year the Secretary of State shall prepare a report on the discharge of his functions under this section, and shall lay the report before Parliament.

Mr. Speaker

With this Amendment it will be appropriate to discuss Amendment No. 4, in page 2, line 6, at end insert: (6) This section shall expire 12 months from the date of its coming into force unless a resolution of both Houses of Parliament decides that it should be continued for another year and the section may be renewed from year to year by the said resolution.

Mr. Noble

The purpose of the Amendment is to require an annual report on the operation of the Investment Insurance Scheme to be prepared and laid before Parliament. As hon. Members are aware, the Amendment is in fulfilment of an undertaking we gave when the Bill was being debated in Committee. It is an earnest of our intention to be as forthcoming to Parliament as is possible in providing information on the operation of the scheme.

The annual report will include the kind of information which hon. Members proposed in Committee: namely, an analysis of liabilities assumed by countries and by meaningful industrial categories, together with such project information as might usefully be given without breach of commercial confidence. It will also contain such other information and analysis as would be helpful in providing a picture on the operation of the scheme.

I hope hon. Members will find that the Amendment meets their wishes to be provided with appropriate information on the scheme. I know some hon. Members would have liked us to go further in one or two respects. In particular it could be suggested that we should specify in the Bill the sorts of information we should provide in the report—for example, to specify that we should publish the amount of liabilities assumed by industry and publish a list of projects. There would, however, be difficulties about these requirements. The words "by industry" are not sufficiently precise to be satisfactory in a Statute, but it is, as I have mentioned, our intention to give information of this type drawn up in meaningful categories.

In the case of projects, hon. Members may be aware that most of the export credit insurance of the Export Credits Guarantee Department is confidential as between the exporter and the Department, whose involvement is not normally revealed to the buyer. Precisely the same considerations do not apply in the case of investment insurance. Indeed, the ECGD in its own interests will in some cases wish to reveal its involvement; but I believe there may be cases where the investor would wish his identity not to be revealed in a published statement by the ECGD, and I think that the ECGD should be free to respect such a wish. This will not often be the case and, as I have said before, there is or will be no desire on our part to be secretive.

Mrs. Judith Hart (Lanark)

I am delighted to see this Amendment on the Paper. As the Minister has said, it is in fulfilment of an undertaking we were given in Committee. It is fair to say that it was the only concession we were given. We welcome it none the less. As the right hon. Gentleman has explained, it is a little vaguer than we would have hoped. Nevertheless it will give us information every year about countries and industrial categories. I appreciate that the right hon. Gentleman cannot give us detailed information about specific individual companies. To that extent, therefore, it is probably difficult to give information about specific projects. We shall have to see how the first report works out.

10.30 p.m.

I understand from what he said that the Minister intends to give us as much information as he can without breaching confidentiality. What we shall do with that information is another matter. He will present a report to Parliament. It would be open to Parliament to ask for a debate on it.

This is the only concession we have had on the general question of Government accountability to Parliament on the Bill. In Committee we put down several Amendments seeking to make the Bill more specific. We found it in many ways—and certainly in Clause 1—somewhat loosely drawn, giving a good deal too much power to the Executive and to Ministers and too little power to Parliament to question and to challenge what was done in the exercise of the large financial powers given under it. We should have liked what was done under Clause 1 to be subject to an annual review by Parliament under Statutory Instrument, but that we have failed to secure.

In a number of Bills nowadays—perhaps not major Bills, though the European Communities Bill is an example—there is a tendency to delegate to the Executive more and more of the functions which we have hitherto supposed would be exercised by the House. The present Bill is another instance.

I am delighted that the right hon. Gentleman has given us this Amendment, and we shall not press our Amendment No. 4 in the light of his concession. I must, however, register our view that there is still too little parliamentary accountability.

Mr. George Cunningham (Islington, South-West)

I, too, welcome the Amendment, although there are several comments which should be made about it. In drafting terms we are left with a rather messy first Clause, which provides in different ways in two separate subsections, the existing subsection (5) and the new one, for the Minister to report to the House. However, that is a detail which perhaps is not worth bothering much about.

Do I understand that the information which the Minister has undertaken to provide will show the coverage by countries, so that we shall be able to see how much of the cover ise being directed, for instance, to South Africa, Greece and so on?

Mr. Noble indicated assent.

Mr. Cunningham

The right hon. Gentleman confirms that that is so, that the information will be by countries.

Although the Minister is to make a report to the House, there is no provision for the House to do anything with it. Our Amendment No. 4 is designed to ensure that the House will have a chance to express a view, to ensure that at least after the first 12 months of operation of the new scheme, under which the Executive is given untrammelled powers to do more or less what it wants, the House should have an opportunity to see how it has been operated and decide whether it ought to be continued, or at least express its view on the manner of its operation. It is a pity that the Government have decided to oppose all the suggestions for giving the House a built-in opportunity to discuss the operation of the Scheme.

In Committee we tried to persuade the Minister to build into the Bill a provision that the scheme ought not to be used in respect of a project in which racial discrimination was involved. The Minister declined to have that built into the Bill. We pressed him that if he could not do that, at least he should give an indication, when the Bill was further advanced in its progress through the House, of his attitude on this point, as he had in respect of other points, which would be something to quote against him if he ever strayed from the narrow path of rectitude over racial discrimination. We have persisted in seeking to ask the Government to make clear that they have no intention of operating the scheme in respect of any project in which an element of racial discrimination is to he found.

Mr. Laurie Pavitt (Willesden, West)

I wish to intervene very briefly. Naturally the whole House will welcome any Minister who is prepared to let us know what he is doing, because too often with so many Ministers we have no clue about what they are up to. We welcome very much that we shall have the opportunity of looking at the report, but I suppose that of all the activities of Government Departments this is the one in which the time lag is perhaps the most important, because so much of the work we are able to do with the developing countries is long-term in its planning and in execution. It may well be that by the time the House has an opportunity of reading the report it will be too late to make all the very pertinent comments, criticisms and constructive suggestions we might wish to make. I therefore ask the Minister for an assurance that every endeavour will be made to ensure that the report will be received at a time which is pertinent to its contents.

In three years I served under two successive Governments on the Select Committee on Overseas Aid. In view of the Bill and the arrangements now being made, I wonder whether it might not be proper, for the report to be looked at very quickly by a group of hon. Members from both sides who might be able to make constructive suggestions about it rather than wait for the Leader of the House to find time in a very heavy parliamentary programme for a half-day debate on overseas aid.

Obviously, as a result of the Bill the report will be more pertinent. Suppose, however, that we had wanted to debate the whole question of insurance and the Government's attitude at Santiago, where we were the only people to abstain and 77 other nations supported the resolution. I presume that this kind of thing would be germane to a report to the House on the Government's actions. But in the case I have mentioned there would have been delay, and obviously the sooner we discuss the report the better.

Mr. Noble

I am grateful to the right hon. Member for Lanark (Mrs. Hart) for her welcome to the Amendment. We intended to meet as far as we could the points that the right hon. Lady and other hon. Members had made and from what has been said I think that the Amendment goes a fairly considerable way towards doing that.

I recognise the point which other Opposition Members have made tonight about parliamentary accountability. If we produce a report, and I will certainly try to produce it as quickly as possible, this will give an opportunity to hon. Members to debate it. There are various ways in which, if they think things are going wrong, they can debate what we are doing. I am thinking of Questions, Supply Days and so on. Hon. Members can debate the matter in that way. We have no wish whatever for anything we are doing in these matters not to be open to parliamentary debate.

I have given a good deal of thought to the point about discrimination, particularly with regard to restaurants, hotels and so on. I should like to have what I am about to say on the record, so that if there were any question of my doing anything disreputable at least I should be hooked. I do not think it is desirable or technically necessary to insert such a provision in the Bill. However, I am willing to give the general undertaking, which will be observed by the ECGD in its administration of the scheme, that it is not our intention through either the investment insurance or the pre-investment study scheme to encourage investment in restaurants, hotels or other public facilities which would be likely to be run in a racially discriminatory manner.

I hope this may help hon. Members to realise that what I said in Committee was sincere and that the ECGD in its administration will follow that.

Amendment agreed to.

Mrs. Hart

I beg to move Amendment No. 2, in page 2, line 6, at end insert: (6) The Secretary of State shall publish a code of conduct in respect of persons and companies investing in developing countries, and it shall be a condition of cover being provided under this section that the investor adheres to the code of conduct. As in Committee, we are delighted that we have with us the Minister for Overseas Development, who must have returned very recently from far places—I saw that he was in very distant places over the weekend.

The substance of the Amendment is that to which we attached a great deal of importance in Committee. Under the Bill the Government are providing a system of insurance for private investment, primarily but not entirely in developing countries. They are doing so because they believe that private investment is the most important element in overseas aid. We should be clear that that is the Government's belief.

There has been a great difference of view between the two sides in the House on what constitutes aid and what does not. There has been a great difference of view about whether the Government should accept the international target which is related entirely to Government expenditure. We on our side have not succeeded in persuading the Government that they should do so. The Government have been adamant—they were most adamant in Committee—that the target that included private investment was the more important one. They stuck to that view at UNCTAD in Santiago and resisted many of the proposals from the developing countries there, much to the regret of this side of the House.

I know that the Minister for Overseas Development profoundly believes that private investment can provide employment and that that is one of the most urgent needs of the developing countries. He is right to believe that more employment is one of their most urgent needs. What is a matter of dispute is how far the injection of private investment can so provide employment as to assist the growth prospects of a developing country.

There is plenty of evidence of the flow of resources out of the Third World into the rich world, which is the product of private investment. Nevertheless, it is a matter for the developing country concerned to decide. If it wants to attract private investment, that is its right. Even a Socialist country like Tanzania, for example, from time to time seeks to attract private investment where it believes such investment has a job to do. But if the Government really believe that private investment has a development role to play in the Third World, it is surely most important that they should agree with us that private investment therefore has a responsible role to play and should be prepared to accept the responsibility it is right to expect it to undertake when it moves into the Third World.

10.45 p.m.

Most of our large companies which have by habit and practice invested in the Third World know very well what the problems are. We are not worried about them. We are worried about the British firm that perhaps has not done much investment in the developing world and has not the experience of the Third World's relationships, practices and needs but may move, with the encouragement of the Bill and the cover it offers, toward investment in a developing country with a vague feeling that it is thereby escaping from the responsibilities of the sophisticated laws of Britain and from some of the obligations placed upon it here.

We recognise, and the right hon. Gentleman agrees, that of course a firm moving into a developing country should be ready to accept certain obligations and observe a decent code of conduct. The difference between us is that the Govern. ment believe we can leave this to be a matter between the firm and the developing country concerned, whereas we think that if the Government are legislating to assist private investment there is a certain obligation on the Government to ensure that the private firm is indeed observing a decent code of conduct.

I will not spell out our argument again at length because we are not anxious to prolong the discussion unduly, but I will summarise them. A firm which moves into a developing country must be prepared to recognise trade unions. It must be prepared to pay decent wages, not merely because this is a matter of social justice but because the payment of decent wages is a key element in savings and therefore in the growth of a developing country. Otherwise, on the Government's own reckoning, private investment loses its point.

The firm must be prepared to provide decent working conditions and to provide welfare facilities. It must go on to do other things which perhaps would not normally be expected of it in this count-try, or would at least be taken for granted. It must be ready to institute systems of training which will enable the local people eventually to take over the local management and technical control of the industry. It must not resist them. It must not invite the kind of expropriation against which the Bill provides an insurance, and if it seeks not to invite that kind of expropriation it must understand the context in which it has to invest, work and operate—and that context is that the people of the developing country will want at the earliest possible moment to manage their own industries. It must be ready to introduce training schemes and a system of employing management personnel from the developing country.

The second matter which perhaps we would not need to expect from a firm in this country, because we have legislated on matters of town and country planning, concerns some of the dangers to the environment. The developing countries have not reached such a sophisticated stage of legislation. Next month in Stockholm there is to be an international conference on the environment. Part of the code of conduct of any firm moving into a developing country should be that it will observe all conditions necessary to avoid the pollution of the environment. The laws the developing countries have not reached the stage of dealing with this.

What we propose is that if the Government so fervently believe in private investment as an element in the development of the Third World—this is their justification for the Bill, for the whole stance they take on aid and development—it would be totally illogical and unreasonable if they were not prepared to agree that it is part of their responsibility in administering this scheme to make sure that the firms that carry out direct private investment in the Third World adhere to a code of conduct which embodies the kind of things I have suggested, although we do not specify them in the Amendment. Otherwise we will believe that this is really a Bill to help private investment but not to help the Third World.

Mr. Cecil Parkinson (Enfield, West)

I start by welcoming the assurance given earlier by my right hon. Friend that the Bill will not be allowed to encourage enterprises which encouraged discrimination. This will he welcomed on all sides of the House and I would like to thank my right hon. Friend for his remarks. I could not help thinking, as I listened to the right hon. Lady the Member for Lanark (Mrs. Hart) repeating the arguments she put so eloquently and as forcibly in Committee, that we were rehearsing a well-worn argument. I have often wondered why the right hon. Lady does not accept the fact that we cannot just set a target for aid, and agree that it ought to be 1 per cent. of gross national product, without accepting that in a country like ours, because this is the way the majority prefer it, a vast proportion of the nation's resources is in private hands and it is therefore logical to look to that sector to provide a contribution towards what we all accept as a worthwhile national objective, namely, aid for the development of the Third World.

It does not strike me as odd—quite the contrary—that the private sector should play its part and make its contribution towards the development of the Third World and towards meeting the target which we as a Government have accepted and which, I am proud to say, have met. In listening to the right hon. Lady I could not help thinking that perhaps because of her whole background and approach she has little understanding and even less sympathy with the way the private sector works. This perhaps leads her to attribute evil motives to the private sector and the idea that the private sector will go in with the one objective of maximising its return by ignoring all the things she regards as desirable. The right hon. Lady is totally wrong.

I declare my interest. I am chairman of my own group of companies and I employ people, but the way I maximise my profit is not by ignoring their wellbeing and welfare and by seeking to exploit them. The days when anybody sought to maximise profit that way are long gone and the way in which my partners and I and thousands of others in the same position seek to maximise profits is by helping those who work for us, by paying good wages, taking an interest in their welfare and ensuring that their interests are properly looked after.

I listened to a speaker at a seminar at lunchtime today and again tonight to the right hon. Lady the Member for Lanark making the same point that the way to make profit is by exploitation. It would be in her interests and that of the sanity of all of us if, before taking part in these debates, the right hon. Lady tried to find out, not how she thinks it works, but how the private sector really works. Her ideas are 20, 30 or 50 years behind the times.

Mrs. Hart

If the hon. Member reads the OFFICIAL REPORT tomorrow, he will find that I entirely agree with him about most firms which invest in the Third World and that I was talking about a tiny minority. I am sure that the hon. Member's firm is not in that minority.

Mr. Parkinson

I am grateful to the right hon. Lady for that. I have listened for seven or eight weeks and she might believe that she has talked of her understanding of and confidence in the private sector, but that was not the impression she left with us. In spite of her few honeyed words, that was not the impression which came through. I am not convinced that that is how the right hon. Lady thinks of the private sector.

This is a good Bill and it puts responsibility firmly in the hands of the Export Credits Guarantee Department. The ECGD is left to apply commercial considerations. These do not exclude emphasis on welfare, wages and working conditions. I do not think the ECGD would be interested in backing a company which was even considering ignoring them. Therefore, in calling for a code of conduct the right hon. Lady and a number of her hon. Friends are demonstrating their lack of understanding of how the private sector works and their lack of confidence in the ECGD which administers huge sums of money very well.

I hope that my hon. Friends will reject the Amendment. If necessary, I shall have pleasure in supporting them in doing so.

Mr. Frank Judd (Portsmouth, West)

I am happy to have the opportunity to follow the hon. Member for Enfield, West (Mr. Parkinson), because his argument, however sincere, is not supported by the reality of the situation.

We all know of the economic involvement of British commercial and industrial interests in southern Africa, including the Republic of South Africa and to some extent in the Portuguese territories where profits are directly related to the exploitative nature of the country in which the operation is being undertaken.

We are pressing in the Amendment for an assurance that wherever Government and public support goes to a commercial and industrial enterprise operating in a situation like that, the enterprise will be able to set standards.

I often listen with much respect to those on the Government side who take a different attitude from mine about that part of the world and the way in which we approach its political problems, and who say that the way we should approach the problems and achieve change in Portuguese territories of southern Africa is not constantly to castigate them for their wrongs but to become involved and try to change the situation from within.

People who argue like that cannot have it both ways. Those who believe that should' insist that where we in Britain propose to set up new methods of public support for areas like that, the firms and organisations involved there will set standards. That is what the Amendment is about. If the hon. Member for Enfield, West is sincere in what he says—and there is no reason to doubt it—about an approach to business, he will do nothing but welcome the Amendment and urge the Government to accept it.

11.0 p.m.

Mr. Parkinson

I am not seeking any praises, but I do not behave as I do because of the existence of any code of conduct.

Mr. Judd

Precisely. But there is no shortage of people who have the strongest possible reservations about becoming involved economically or industrially in the area we are discussing because they recognise that to become involved will inevitably associate them with the pernicious social policies followed by the Governments of that area. Therefore, if the Government are consistent in the statements and professions of good faith which they never miss an opportunity to make, they should welcome the Amendment.

The Government insisted in Committee that they reject the recommendations set out by the United Nations and others on the degree of public governmental and inter-governmental programmes towards development, and they believe that private investment is the way to achieve development in the developing countries. If they are serious, it is not good enough for them simply to favour successful commercial enterprises which can be justified in normal commercial terms. They must also be concerned with justifying such enterprises which, by definition, will receive public financial support in terms of social progress and the social emancipation of the people in the area.

One of the gravest problems in the developing countries is the chronic and mammoth problem of unemployment. In the major urban areas of developing countries outside China, with about 30 per cent. unemployment, there are 225 million people for whom work will have to be found in the next 10 years. We cannot remove the problem because these people have been born. If we try to justify the Bill in terms of development policy in the Third World, we shall want to see devised in a code of conduct methods which ensure that enterprises which receive public support tackle this problem of large-scale unemployment and will not become unduly capital-intensive when labour-intensive forms of development would be more relevant for the country in which the undertaking is being carried on.

Mr. Harold Soref (Ormskirk)

It was not my intention to intervene in the debate, but having an interest in this matter from day-to-day activities with the under-developed countries, and having heard the political content of the speeches of the right hon. Lady the Member for Lanark (Mrs. Hart) and the hon. Member for Portsmouth, West (Mr. Judd), I believe that we should come back to business realities. We were told by the right hon. Lady and by the hon. Gentleman we should observe a decent code of conduct and certain standards. Manufacturers and confirming houses in this country which have been dealing with these territories have been observing very high standards. The trouble has been that the people they have been dealing with in such countries have not observed such standards. Why the right hon. Lady and the hon. Gentleman should defend the sort of treatment which British manufacturers have received rather than recognise the difficulties of the confirming houses and manufacturers in this country, I do not know.

The job of a manufacturer or confirming house—and it is largely confirming houses involved in ECGD in this country—is to find markets where British goods are saleable. The creditworthiness of the market is the prime matter. We are concerned here with the employment of people in this country and the financial probity of the purchasers of our goods. This cannot be achieved unless we deal with countries and firms that honour their obligations. We have been told that we must concentrate on certain territories in the New World. Only this week Zambia, a developing country in Africa, has cancelled every permit that had been allocated to her importers. Surely, if a country like South Africa can pay for the goods and her credit is good that is where our goods will be sold. That will mean employment for people in this country, which merits consideration by the House.

Those who have invested in the less developed parts of the world have frequently suffered confiscation of their assets and nationalisation, with enormous losses to firms in this country.

Mrs. Hart

On a point of order. I am sorry to interrupt the hon. Member for Ormskirk (Mr. Soref), whose contributions to our debates on aid and the Third World I frequently find interesting, but I fear that he has not read the Bill and is not addressing himself to the Amendment.

Mr. Soref

In reply to the right hon. Lady, I say that there are firms in this country which, because they have generously invested in and provided employment for the Third World, have suffered acutely. One confirming house after another in the City of London has gone bankrupt because it has provided generous facilities over the years building up unstable commercial undertakings in West and East Africa. I suggest that some consideration should be given to the investment of firms in the City of London which have always shown and are continuing to show zeal for the welfare of the people of the Third World and elsewhere.

Mr. Pavitt

I do not want to follow the remarks of the hon. Member for Ormskirk (Mr. Soref), who obviously knows more about commercial practice than he does about the Third World, but I will comment on the points made by my right hon. Friend the Member for Lanark (Mrs. Hart).

Our debate tonight reflects the debates in Committee between the parties on several issues, particularly on the question of what should be Government aid and what should be done by private investment. I support the Amendment. If the Government are claiming that aid is an integral part of our contribution to the problems of the Third World and if that aid is to be underwritten by the Government, the Government must at the same time accept that all investment and all exports should conform to the arrangements made for technical assistance and technical aid.

Over the last 15 years there has been a tremendous development in the safeguards applied to ensure that bilateral and multilateral aid given by ourselves and through specialised agencies shall be used to the maximum benefit of the recipients. That is the whole object of the Bill, and our discussions in Committee rested on that point. The Amendment therefore is an absolute necessity.

The Guardian this morning said that it was about time we dropped the hypocrisy that commercial investment is aid because, if it is, Britain lives on United States aid. I think it is probably true. The investment is for parts of the world which desperately need our support in the next two or three decades. That being so, it is logical that there should be a code of conduct. Had the hon. Member for Ormskirk spent years, as many of us have, in developing countries looking at past exploitation he would know that what has happened there could have been prevented had there been a code of conduct. I am thinking particularly of India where I had the privilege of working with the United Nations for several years and where the result has been to unbalance the work done by Government and agencies which are trying to institute technical assistance and aid. Therefore, both parts should be governed by a code of conduct which will take those matters into consideration.

Mr. John Tilney (Liverpool. Wavertree)

The hon. Member for Willesden, West (Mr. Pavitt) is right to say that this is a basic debate between the two sides of the House. The Opposition side by and large believes in a broad infrastructure. We on this side believe that private enterprise can do more to solve the problems of gross unemployment and underemployment in many cities of Africa and Asia. We believe that by going into partnership with local capital we shall help to solve unemployment problems and will produce added expertise and technological know-how, which is much easier to produce if this can be done by a small local company rather than by a massive government agency.

I have some sympathy with the idea behind the Amendment although I hope the Government will reject it. The proposal can be better achieved by an adjustment of the premium organised by the ECGD. I do not see why a 1 per cent. programme across the board is a sensible arrangement. I hope that once we have learned a few lessons from this admirable Bill, for which many of us have been arguing for 12 years, there will be some knowledge of the risk involved.

Some countries are not as good to invest in as others. Equally some companies are better investments than others. I estimate that those who operate in South Africa will be much more suspect if they operate north of the Zambesi than those who have interests in Africa as a whole. If one goes into partnership with local capital, though this is in short supply, one finds that the company concerned is a safer investment in the African or Asian territory concerned. I am a believer in capitalism and I regard it as a good thing to spread the ownership of capital widely since it makes for a very much safer investment.

I urge my right hon. Friend the Minister when he replies to say that he believes in a flexible programme for the future rather than a statutory code of conduct.

Mr. T. H. H. Skeet (Bedford)

I think I understand what the right hon. Lady the Member for Lanark (Mrs. Hart) has in mind in her Amendment. She envisages a code of practice to which all firms going abroad should conform. The large firms are responsive to good conditions and want to pay good wages, and surely this is all a matter of common sense. My experience of investment abroad is that trading firms which break the rules will find that contracts will not come their way again. The investment will be regarded as bad and they will be let down.

There is no real sense in limiting this to private companies. Legislation is at present going through the House enabling the British Gas Corporation to operate abroad, as at the moment does the British Steel Corporation. Would they not be subject to a code of investment practice? The argument may be that they are responsible bodies. I accept that. Forty or 50 years ago there may have been good reasons why a code should have been laid down, but in these days when firms have social consciences it is superfluous to bring in a provision of this kind. Therefore, I hope that my right hon. Friend is persuaded that this is not a point which it is necessary to include in the proposed legislation.

11.15 p.m.

Mr. Noble

I think that most of us share the objectives of right hon. and hon. Members opposite. Despite that, I am unable to accept their Amendment. In the first place it is totally unnecessary. As hon. Members are aware, the ECGD as a prudent insurer will make it a condition of its cover that the investor obeys all local laws and regulations and that the investment is acceptable to the host country. The right hon. Lady the Member for Lanark (Mrs. Hart) said that the difference between us was that we wanted to leave matters to the firm and the host country. It is more than that. Through the ECGD we shall have considerable control in terms of seeing that firms obey what the countries want and the way in which they want the operations to work.

In addition, the ECGD will not be liable for any loss arising from the provocative behaviour of the investor. If a firm misbehaves itself in relation to local laws and loses its investment, it will get no cover from the ECGD. The ECGD is also seeking ways of limiting cover in the event of extortionately high remittances, and it will avoid projects likely to offend against the mores or sensitivities of the country concerned.

I think that these conditions of insurance cover all the main points which would be contained in a code of conduct. I do not think that a code of conduct would be an improvement since inevitably it would have to be drawn up in general terms, because what is valid for one country is not necessarily valid for another. I take the point that such a code would not comprise conditions in respect of working conditions or labour relations. But right hon. and hon. Members are aware that we think that matters of this sort are a subject more appropriate for the host Government, and it is difficult to see why the investor should be required to go further than obeying the local laws and regulations.

The right hon. Member for Lanark said that firms must not invite expropria- tion. Certainly that is true. As my hon. Friend the Member for Enfield, West (Mr. Parkinson) pointed out, however, the right hon. Lady is a little out of touch with what developing countries are now doing. There has been a considerable change. There is practically no opportunity anywhere in the world for 100 per cent. ownership of businesses. Quite rightly, the movement is towards partnerships.

It would be quite intolerable if this House laid down, as the right hon. Lady half suggested, a code of conduct saying that a firm must not create pollution or that it must work always with trade unions or something else that the host country might not want in the event of a firm being invited to work in cooperation with a country or in co-operation with industries that it was setting up.

In the ways in which I have suggested, I believe that we are meeting all the real points at issue between the two sides of the House. With great respect to any hon. Member opposite who does not know how the ECGD works, it is extremely careful in the way that it——

Sir Geoffrey de Freitas (Kettering)

I know the ECGD.

Mr. Noble

I know that the right hon. Gentleman does.

Mr. Judd

Will the right hon. Gentleman confirm in words of one syllable that what he has just said means that if public money is going to support industrial activity in South Africa under this scheme, any firm operating in the scheme must accept all the social legislation of the South African Government, apartheid and the rest?

Mr. Noble

The hon. Gentleman's point is a fair one. What I have said is that credits will be given only to those companies which are operating in countries which are wanted by the host Governments and which obey the rules and regulations of those countries.

It is just as unrealistic to quote South Africa as it may be to quote a whole host of other countries, such as Russia and China, whose form of political Government we do not approve of. If there is any real meaning in trade, it is that we should trade with people irrespective of their political views.

Mrs. Hart

There is a difference, because in Committee the right hon. Gentleman resisted Amendments which were concerned with precluding investment in South Africa, Greece and Portugal. He cannot argue that this is a Bill to promote British commercial interests and at the same time say that it is a Bill to promote the interests of developing countries. We are concerned with the interests of developing countries.

Mr. Noble

I do not believe that the right hon. Lady is talking any sense at all. The Pearson Committee, which has been quoted before, looked at the whole problem of developing countries

and said that in many cases investment was a most important part of their development. The right hon. Lady can say that she thinks that report is rubbish. She has a perfectly good reason for saying so, but neither the developing countries nor the Pearson Report have ever said that they want no investment. All we are doing is providing it on a sensible and reasonable basis, and I cannot accept the Amendment.

Question put, That the Amendment be made:—

The House divided: Ayes 191, Noes 197.

Division No. 192.] AYES [11.20 p.m.
Allaun, Frank (Salford, E.) Ginsburg, David (Dewsbury) McNamara, J. Kevin
Archer, Peter (Rowley Regis) Golding, John Mahon, Simon (Bootle)
Armstrong, Ernest Gordon Walker, Rt. Hn. P. C. Mallalieu, J. P. W. (Huddersfield, E.)
Ashton, Joe Grant, George (Morpeth) Marquand, David
Atkinson, Norman Grant, John D. (Islington, E.) Marsden, F.
Bagier, Gordon A. T. Griffiths, Eddie (Brightside) Marshall, Dr. Edmund
Barnett, Joel (Heywood and Royton) Griffiths, Will (Exchange) Mason, Rt. Hn. Roy
Benn, Rt. Ho. Anthony Wedgwood Hamling, William Mellish, Rt. Hn. Robert
Bennett, James (Glasgow, Bridgeton) Hannan, William (G'gow, Maryhill) Mendelson, John
Bidwell, Sydney Hardy, Peter Mikardo, Ian
Bishop, E. S. Harper, Joseph Millan, Bruce
Blenkinsop, Arthur Harrison, Walter (Wakefield) Miller, Dr. M. S.
Boardman, H. (Leigh) Hart, Rt. Hn. Judith Milne, Edward
Booth, Albert Hattersley, Roy Mitchell, R. C. (S'hampton, lichen]
Brown, Hugh D. (G'gow, Provan) Healey, Rt. Hn. Denis Molloy, William
Brown, Ronald (Shoreditch & F'bury) Hooson, Emlyn Moraan Elvstan (Cardlaanshire)
Buchan, Norman Horam John Morns, Alfred (Wythenshawe)
Buchanan, Richard (G'gow, Sp'burn) Houghton, Rt. Hn. Douglas Morris, Rt. Hn. John (Aberavon)
Campbell, I. (Dunbartonshire, W.) Howell, Denis (Small Heath) Moyle, Roland
Carmichael, Neil Huckfield, Leslie Mulley Rt. Hn. Frederick
Carter, Ray (Birmingham, Northfield) Hughes, Rt. Hn. Cledwyn (Anglesey) Murray, Ronald King
Castle, Rt. Hn. Barbara Hughes, Mark (Durham) Oakes, Gordon
Clark, David (Colne Valley) Hughes, Roy (Newport) O'Halloran, Michael
Cocks, Michael (Bristol, S.) Hunter, Adam Oswald Thomas
Cohen, Stanley Janner, Greville Paget, R. T.
Concannon, J. D. Jay, Rt. Hn. Douglas Palmer Arthur
Conlan, Bernard Jenkins, Hugh (Putney) Parry Robert (Liverpool Exchange!
Cox, Thomas (Wandsworth, C.)
Craws haw, Richard John, Brynmor Pavitt, Laurie
Dalyell, Tarn Johnson, James (K'ston-on-Hull, W.) Pendry, Tom
Davidson, Arthur Johnson Russell (Inverness) Pentland, Norman
Davis, Clinton (Hackney, C.) Jones, Barry (Flint, E.) Perry, Ernest G.
Davis, Terry (Bromsgrove) Jones, Dan (Burnley) Prentice, Rt. Hn. Reg.
Deakins, Eric Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Prescott, John
de Freitas, Rt. Hn. Sir Geoffrey Jones, Gwynoro Carmarthnen) price, William (Rugby)
Dempsey James Jones, T. Alec (Rhondda, W.) Probert, Arthur
Doig, Peter Kaufman, Gerald Reed, D. (Sedgefield)
Dormand, J. D. Kinnock, Neil Rees, Merlyn (Leeds, S.)
Douglas, Dick (Stirlingshire, E.) Lambie, David Rhodes, Geoffrey
Douglas-Mann, Bruce Lamborn, Harry Rodgers, William (Stockton-on-Tees)
Driberg, Tom Lamond, James Roper, John
Duffy A. E. P Latham, Arthur Rose, Paul B.
Dunn, James A. Lawson, George Ross, Rt. Hn. William (Kilmarnock)
Eadie, Alex Leadbitter, Ted Rowlands, Edward
Ellis, Tom Leonard, Dick Sheldon, Robert (Ashton-under-Lyne)
English, Michael Lestor, Miss Joan Shore, Rt. Hn. Peter (Stepney)
Evans, Fred Lever, Rt. Hn. Harold Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Faulds, Andrew Lipton, Marcus Silkin, Rt. Hn. John (Deptford)
Fernyhough, Rt. Hn. E. Lomas, Kenneth Silkin, Hn. S. C. (Dulwich)
Fisher, Mrs. Doris (B'ham, Ladywood) Lyon, Alexander W. (York) Sillars, James
Fitch, Alan (Wigan) Lyons, Edward (Bradford, E.) Skinner, Dennis
Fletcher, Raymond (llkeston) McBride, Neil Small, William
Fletcher, Ted (Darlington) McCartney, Hugh Spearing, Nigel
Foley, Maurice McElhone, Frank Spriggs, Leslie
Foot, Michael McGuire, Michael Stallard, A. W.
Forrester, John Mackenzie, Gregor Steel, David
Galpern, Sir Myer Maclennan, Robert Stonehouse, Rt. Hn. John
Gilbert, Dr. John McMillan, Tom (Glasgow, C.) Strang, Gavin
Summerskill, Hn. Dr. Shirley Walker, Harold (Doncaster) Wilson, Alexander (Hamilton)
Swain, Thomas Weitzman, David Wilson, William (Coventry, S.)
Thomas, Rt. Hn. George (Cardiff. W.) Wellbeloved, James Woof, Robert
Torney, Tom Wells, William (Walsall, N.)
Tuck, Raphael White, James (Glasgow, Pollok) TELLERS FOR THE AYES:
Urwin, T. W. Whitehead, Phillip Mr. James Hamilton and
Varley, Eric G. Williams, Alan (Swansea, W.) Mr. Donald Coleman.
Wainwright, Edwin Williams, W. T. (Warrington)
NOES
Alison, Michael (Barkston Ash) Haselhurst, Alan Parkinson, Cecil
Allason, James (Hemel Hempstead) Havers, Michael Percival, Ian
Astor, John Hayhoe, Barney Powell, Rt. Hn. J. Enoch
Atkins, Humphrey Heseltine, Michael Proudfoot, Wilfred
Baker, Kenneth (St. Marylebone) Hicks, Robert Pym, Rt. Hn. Francis
Benyon, W. Higgins, Terence L. Raison, Timothy
Biffen, John Hiley, Joseph Ramsden, Rt. Hn. James
Blaker, Peter Hill, James (Southampton, Test) Redmond, Robert
Boscawen, Hn. Robert Holland, Philip Reed, Laurance (Bolton, E.)
Bossom, Sir Clive Holt, Miss Mary Rees, Peter (Dover)
Bray, Ronald Howell, Ralph (Norfolk, N.) Rhys Williams, Sir Brandon
Brinton, Sir Tatton Hunt, John Ridley, Hn. Nicholas
Blocklebank-Fowler, Christopher Hutchison, Michael Clark Roberts, Michael (Cardiff, N.)
Brown, Sir Edward (Bath) Iremonger, T. L. Roberts, Wyn (Conway)
Bruce-Gardyne, J. Irvine, Bryant Godman (Rye) Rossi, Hugh (Hornsey)
Bryan, Paul James, David Rost, Peter
Buchanan-Smith, Alick (Angus, N & M) Jennings, J. C. (Burton) Royle, Anthony
Butler, Adam (Bosworth) Jones, Arthur (Northants, S.) Sandys, Rt. Hn. D.
Carlisle, Mark Kaberry, Sir Donald Shaw, Michael (Sc'b'gh & Whitby)
Channon, Paul Kershaw, Anthony Shelton, William (Clapham)
Chapman, Sydney King, Evelyn (Dorset, S.) Simeons, Charles
Chataway, Rt. Hn. Christopher King, Tom (Bridgwater) Skeet, T. H. H.
Churchill, W. S. Kinsey, J. R. Smith, Dudley (W'wick & L'mington)
Clark, William (Surrey, E.) Knight, Mrs. Jill Soref, Harold
Clarke, Kenneth (Rushcliffe) Knox, David Speed, Keith
Clegg, Walter Lamont, Norman Spence, john
Cockeram, Eric Lane, David Stainton Keith
Coombs, Derek Langford-Holt, Sir John Stanbrook, Ivor
Corfield, Rt. Hn. Frederick Legge-Bourke, Sir Harry Stewart-Smith, Geoffrey (Belper)
Cormack, Patrick Le Marchant, Spencer Stoddart-Scott, Col. Sir M.
Crouch, David Lloyd, Ian (P'tsm'th, Langstone) Stuttaford, Dr. Tom
Crowder, F. P. Loveridge, John Sutcliffe, John
Davies, Rt. Hn. John (Knutsford) Luce, R. N. Tapsell, Peter
d'Avigdor-Goldsmid, Maj.-Gen. James MacArthur Ian Taylor, Edward M. (G'gow, Cathcart)
Dean, Paul McCrindle, R. A. Taylor, Frank (Moss Side)
Deedes, Rt. Hn. W. F. McNair-Wilson, Michael Tebbit, Norman
Digby, Simon Wingfield McNair-Wilson, Patrick (New Forest)
Dodds-Parker, Douglas Maddan Martin Temple, John M.
Drayson, G. B. Mather, Carol Thomas, John Stradling (Monmou
du Cann, Rt. Hn. Edward Mawby, Ray Thomas, Rt. Hn. Peter (Hendon, S)
Elliot, Capt. Walter (Carshalton) Maxwell-Hyslop, R. J. Thompson, Sir Richard (Croydon, S)
Eyre, Reginald Meyer, Sir Anthony Tilney, John
Fenner, Mrs. Peggy Mills, Stratton (Belfast, N.) Trafford, Dr. Anthony
Finsberg, Geoffrey (Hampstead) Miscampbell, Norman Trew, Peter
Fisher, Nigel (Surbiton) Mitchell, Lt.-Col. C. (Aberdeenshire, W) Tugendhat, Christopher
Fletcher-Cooke, Charles Mitchell, David (Basingstoke) Turton, Rt. Hn. Sir Robin
Fortescue, Tim Moate Roger van Straubenzee, W. R
Foster, Sir John Money, Ernle Vickers, Dame Joan
Fowler, Norman Monks, Mrs. Connie Waddington, David
Fox, Marcus Monro, Hector Walker-Smith Rt. Hn. Sir Derek
Gardner, Edward Montgomery, Fergus Wall, patrick
Gibson Watt David More, Jasper walters, Dennis
Gilmour Sir John (Fife E.) Morgan, Geraint (Denbigh) Ward, Dame Irene
Glyn, Dr. Alan Morgon-Giles Rear-Adm. Weatherill, Bernard
Goodhart, Philip Morrison, Charles Wells, john (Maidstone)
Goodhew, Victor Mudd, David White, Roger (Gravesend)
Gower, Raymond Murton, Oscar Wilkinson, John
Grant, Anthony (Harrow, C.) Nabarro, Sir Gerald Winterton, Nicholas
Gray, Hamish Neave, Airey Wolrige-Gordon, Patrick
Green, Alan Nicholls, Sir Harmar Wood, Rt. Hn. Richard
Grylls, Michael Noble, Rt. Hn. Michael Woodnutt, Mark
Gummer, J. Selwyn Normanton, Tom Worsley, Marcus
Gurden, Harold Oppenheim, Mrs. Sally Younger, Hn. George
Hall, John (Wycombe) Osborn, John
Hall-Davis, A. G. F. Owen, Idris (Stockport, N.) TELLERS FOR THE NOES:
Hamilton, Michael (Salisbury) Page, Graham (Crosby) Mr. Paul Hawkins and
Hannam, John (Exeter) Page, John (Harrow, W.) Mr. Michael Jopling.

Question accordingly negatived.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

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