HC Deb 07 December 1982 vol 33 cc770-804

Order for Second Reading read.

7.23 pm
The Minister for Overseas Development (Mr. Neil Marten)

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

Last week, I heard of two politicians in a foreign country who were debating between themselves who should be the next president of that country. One of them suggested a name, and the other said "Oh no, he is such a boring speaker. If he were asked as president to give a fireside chat, even the fire would go out." I fear that chunks of my speech may be in that category, because they are rather technical.

The Bill deals with the borrowing powers of the Commonwealth Development Corporation. It has two main purposes. The first is to replace the temporary borrowing limit of £10 million, which has stood unchanged since the corporation was set up in 1948, with a more flexible provision in line with that now normally employed for statutory corporations.

The second is to raise the corporation's borrowing limits—from both the Government and otherwise—which were last raised by the International Finance, Trade and Aid Act in 1977. The opportunity is also being taken to enable CDC to borrow from the National Loans Fund should this be thought desirable at some time in future.

I should perhaps say that the scope and purpose of the Bill are much simpler than the text itself may at first sight suggest.

Mr. Reg Prentice (Daventry)

Hear, hear.

Mr. Marten

I agree with my hon. Friend that this is a horrible piece of legislation.

The first change to which I have referred, as to the temporary borrowing limit, involves a good deal of essentially technical rearrangement of the relevant sections of the 1978 Act which consolidated the existing legislation relating to the CDC.

I think that all right hon. and hon. Members will agree that over the years the CDC has proved itself to be among the most important and valuable parts of the British aid programme through its role of assisting the developing countries of the world by investing in development projects which not only help to increase their wealth but yield a reasonable return on the money invested.

A distinctive feature of the way the CDC operates is the importance that it attaches to providing and developing management and training. Its ability to provide management from within its own resources—not just brought in from outside—makes a vital contribution to the success of the projects in which it invests. As expatriate management progressively brings on and then hands over to local management, those projects are thereby firmly and soundly based in the systems and societies within which they operate. This on-the-job training is supplemented by the CDC's agricultural management training centre in Swaziland which draws students from all over the world—by no means only from CDC projects.

The Commonwealth Development Corporation has moved with the times. In its early years much of its largest investment was in direct projects or projects in which it held all or the greater part of the equity. Much of this investment—for example, in Malaysia and Swaziland—has now been sold to local interests or to the local government. Today, although the CDC remains eager to take an equity interest in suitable projects, most of its investment is in the form of loans, and it now frequently engages in joint financing with other development agencies, both national and international. It has played a leading role in setting up INTERACT, which brings together all the European development agencies of a similar character to itself.

I have been struck in my travels around the world by the respect—indeed, I would say almost affection—in which the CDC is held. The contribution that it has made over the years to the development of many countries, particularly in the Commonwealth in which it still has some 80 per cent. of its investments, is deeply appreciated by them, not simply as an outside aid agency, but as an integral part of the local environment.

The work that the CDC does is well known to many in the Chamber tonight and, much as I should like to do so, I shall not take up the time of the House by describing it. Members of the Overseas Development Sub-Committee have recently had an opportunity of seeing what the CDC does in Kenya, Tanzania and Malawi. I only wish that they had gone on to Swaziland, where they would have seen a superb example of the CDC's operations.

The Sub-Committee's report was published this morning, and I have not, therefore, yet had time to study it, but I am told that, in general, it endorses the support which the House and successive Governments have given to the work of the corporation. I look forward with great interest to reading it more carefully, and I shall, of course, reply to the report in the normal way in due course. I take this opportunity of thanking the Sub-Committee for an excellent report.

I should like, however, at this stage to say something about the loan that the CDC has been considering for an oil palm project being undertaken by the National Development Corporation of the Philippines and Guthries—now, of course, Malaysian-owned—in Mindanao. I have seen the recent report on the situation in the project area by the Catholic Institute for International Relations and the separate report by Amnesty International on human rights in the Philippines.

I take those reports very seriously and sincerely respect the concern of those who have written to me. I assure the House that I shall give them the most careful consideration in reaching a decision on CDC participation in the project. I take equally seriously the very valuable contribution that I believe the CDC's co-operation can make to really worth while development in the area and the benefits that CDC participation could bring to the poorest group of the inhabitants of Mindanao.

On 30 November I met a group of concerned Members of Parliament—my hon. Friend the Member for Essex, South-East (Sir B. Braine), the right hon. Member for Lewisham, East (Mr. Moyle) and the hon. Members for Harlow (Mr. Newens) and for Lambeth, Central (Mr. Tilley)—together with representatives of voluntary organisations, and the CDC, to discuss the issue. That was a constructive and helpful meeting, at which those who have doubts and criticism of CDC's participation in the project nevertheless expressed appreciation of the openness with which the CDC had discussed the problem with them.

In the light of the very careful consideration that I have given to the representations made to me, I have asked the CDC, if it is to go ahead, to seek to secure adequate safeguards concerning the new security arrangements and the observation of fair employment practices. Concurrently the CDC board has proposed that later stages of the project should include a significant number of outgrowers. That should limit the disturbance to local farmers whilst ensuring that they benefit in their own right from the outlets that it provides for a remunerative new cash crop. Those conditions are now being discussed by the CDC with the National Development Corporation of the Philippines and the other investors. After those discussions, I shall be in a position to reach a decision. I would not wish to go into further details at this stage while the negotiations are taking place.

As I said earlier, I have seen elsewhere in the world—I think of my recent visit to the Low Veld in Swaziland, transformed by the CDC over the last 30 years to the lasting benefit of its inhabitants and the country as a whole—what the CDC can do in a thoroughly practical and realistic way.

The CDC's concern for the interests of the small man is evidenced by the 325,000 smallholders it has enabled to grow their own cash crops and by innumerable uses for their land. In industry and commerce it is shown by CDC's pioneering of development finance companies looking after the smaller projects on the basis of local decision making. The CDC has helped thousands to purchase their own houses.

For many years the CDC has drawn its investment finance largely by way of concessional loans from the aid programme and from its own self-generated funds. Its disbursements to projects totalled £72 million in the calendar year 1981. Advances from the aid programme were £30 million in the financial year 1981–82 and are expected to be £34 million in 1982–83. I have informed the CDC that, subject to parliamentary approval, I hope to he able to increase that to £37 million in 1983–84. Because of the many other claims on the aid programme, however—particularly our multilateral commitments—we cannot provide from the aid programme all that we or the CDC would wish to enable it to sustain the level of investment for which the demand exists.

As I told the House last December, the Government have accordingly agreed that the CDC should be permitted to borrow in foreign currency on approved terms with the Government guarantee up to £15 million in this financial year and in each of the next two financial years. Such borrowing, together with loans from the aid programme and self-generated funds, should enable the CDC to continue to invest at a level broadly comparable in real terms with that which it achieved for most of the 1970s.

I shall now deal with the Bill. Clause 1 amends section 9 of the 1978 Act to enable the CDC to borrow from the National Loans Fund. Similar provision now exists in legislation dealing with other public corporations. It would make available to the corporation an alternative source of funds, should the Government at some future date prefer borrowing to be undertaken from the NLF rather than, as at present, from the private sector. It does not mean that we envisage that the CDC should be required to borrow at market rates from the NLF instead at concessional rates from the aid programme. Perhaps the fire is beginning to go out. Clause 2 brings us to the main purposes of the Bill. Section 9 of the Commonwealth Development Corporation Act 1978 dealt with the borrowing powers of the corporation and set limits on the amounts that it may borrow temporarily and otherwise. The temporary borrowing limit has remained at £10 million since the corporation was established in 1948. The limit in respect of sums borrowed otherwise was set in 1948 at £100 million and was last raised in 1977 to £500 million, extendable by order to £570 million.

The CDC has hitherto needed to make little use of its temporary borrowing powers, because its internal liquidity has largely been sufficient to meet short-term financing needs. The CDC has, however, sought an increase in its temporary borrowing limit, both because the original limit is now much reduced in relation to the scale of its operations and to enable it to alleviate any short-term cash problems. Such an increase should give the CDC greater freedom of manoeuvre in relation to the timing of commercial borrowing, to which I have already referred. While there is not an immediate requirement for an increase in the CDC's temporary borrowing limit, the need for such a step may arise in the near future.

It is therefore proposed to bring the provision for temporary borrowing by the CDC into line with that now commonly used by public sector bodies by amending the Commonwealth Development Corporation Act to enable the Secretary of State, with the consent of the Treasury, to set a limit on temporary borrowing from time to time. That is effected by subsection (3) of the new section 9A.

I propose at the same time to raise the CDC's overall borrowing limits, which were last increased in 1977. With its new power to borrow commercially, as well as under the aid programme, the CDC's estimated total borrowings could approach the £500 million limit within three years or so. Therefore, I propose that the overall borrowing limit—including temporary borrowing and borrowing by subsidiaries, or where the CDC has incurred a contingent liability—should now be raised to £750 million, extendable by order by the Secretary of State, with the consent of the Treasury, up to a maximum of £850 million. That should provide adequate borrowing powers until the end of the 1980s. Those changes are made by subsections (1) and (2) of the new section 9A.

Subsection (4) of the new section 9A is consequent upon the decision, to which I referred earlier, that the CDC should be permitted to borrow commercially, and it provides for the sterling equivalent of such borrowing to be calculated, for the purposes of the overall borrowing limit, in a way to be determined from time to time by the Secretary of State, with the consent of the Treasury.

Subsection (5) of the new section 9A provides that the draft of an order raising the CDC's borrowing limit has to be laid before and approved by the House of Commons, while subsection (6) provides that temporary borrowing includes overdrafts, and it defines "subsidiary".

Clause 3 is consequential upon the proposal to raise the CDC's overall borrowing limit to £750 million—extendable by order to £850 million—and amends the 1978 Act by increasing the limits within which the CDC may borrow from the Secretary of State to £700 million and £800 million, respectively.

The Bill will assist the CDC in continuing the valuable and distinctive contribution that it makes to overseas development in which its chairman, board and staff, to whose conspicuously successful and devoted service I should like to pay tribute, can take justifiable pride.

I commend the Bill to the House.

7.39 pm
Mr. Guy Barnett (Greenwich)

The Minister himself has paid tribute in generous terms to the late Frank McElhone, but I cannot let this moment pass without mentioning his name, knowing how much the Houe, and indeed everyone interested in aid and development will miss his presence at our debates.

I thank the Minister for his explanation of the Bill, and in particular of its technical aspects. In general, the Opposition welcome the Bill. It increases the borrowing limits of the Commonwealth Development Corporation, and this is clearly necessary. Secondly, it provides for greater flexibility between short-term and long-term borrowing.

Second Reading provides an opportunity to pay tribute to the remarkable progress of the CDC during its 30-odd years of existence. Set up by the Attlee Government in 1948, it earned the obloquy and sometimes the ridicule of the Conservative Party. It was a new concept. The CDC and its staff were working in a relatively untried field. There were bound to be failures—one was the Gambia poultry scheme—but the CDC learnt from its own experience and today operates according to a number of priorities which ought to commend themselves to hon. Members. Since 1955, the CDC has earned a surplus in every year of operation.

Like the Minister, I must express my gratitude to the Overseas Development Sub-Committee for the report published this morning. Alas, the timing might have been better handled. If the Government business managers had delayed the Second Reading by a day or two hon. Members would have been able to study the report. However, some of us have studied the minutes of evidence, which in general show the CDC in a very good light, and a quick reading of the report suggests that the Sub-Committee commends highly the corporation's work.

Although the CDC's borrowings are tied to the aid vote, it is not an aid agency. It gets its money back over a long period from projects which take time to mature in poor countries. The CDC has been described as bridging the gap between aid and investment, acting as a catalyst for those prepared to invest in developing countries. Its record in overseas development is impressive for a number of reasons.

First, it concentrates attention on poor countries. Eighty per cent. or more of its work is done in countries eligible for International Development Association assistance. I was somewhat surprised that the interdepartmental review suggested that only half rather than two thirds of its work was devoted to the poorer countries. It is in the poorer countries that its contribution has been so very important.

Secondly, the CDC lays special emphasis on agriculture and operates a special preference in favour of small farmers. Many years ago I visited the headquarters of the Kenya Tea Development Authority, which covers no fewer than 140,000 farmers. The Minister referred to the important concession that the CDC often provides to enable its employees to grow their own food crops.

Thirdly, the CDC recognises the right of local people to buy into the assets which have been established. The tea development authority is a good example of this. The tea growers on the scheme have been able to buy themselves into their own factories.

Fourthly, as the Minister also mentioned, the CDC makes a very important contribution to training in technical and managerial expertise. There has been an increasing recognition of the crucial importance of this element in development. As Mr. Bradford Morse, the administrator of the United Nations Development Programme, said last month: Technical change, increased skills and knowledge, new and more efficient ways of organising and managing organisations and institutions—these go to the heart of what technical co-operation is about.

Fifthly, the 1978 Act contains a provision designed to guarantee the interests of employees. I understand that the CDC, through the Commonwealth Trade Union Council, encourages advice to organised labour. Its aim is to be among the best employers overseas. There is deep concern among the Opposition, and, I hope, elsewhere, about the behaviour of some transnational companies in poor countries. I cannot over-emphasise the importance of this aspect of the CDC's policy and its direct relevance to development. Nor can I emphasise too strongly the importance of codes of conduct in relation to investment policy in general. I believe that the CDC could meet such codes of conduct with little difficulty. Some hon. Members will want to refer to that point in relation to the Philippines. Indeed, I shall do so myself shortly.

The CDC's work in energy resources and water supplies already represented 23 per cent. of its total commitments in 1981. No one could doubt the relevance of that priority in the Third world today.

In short, the CDC prides itself, with some justification, on being a pioneer. A World Bank official readily admitted the CDC's claim that it brought the World Bank into small-scale agricultural development, and the examples set by the CDC have been followed by similar bilateral and multilateral bodies.

I therefore welcome this small Bill. It is the first time that the overall borrowing limit has been raised since 1977. I assume that the need for the increase is due largely to inflation, but I believe that it is also necessitated by new commitments.

Clause 2 does a little tidying up to ensure that the borrowing limits include borrowing by CDC's sub-sidiaries. I take it that that is simply a technical provision to satisfy the Treasury. Perhaps the Minister will confirm that.

In addition, the Bill transfers the fixing of short-term borrowing limits from the House to administrative action. I hope that officials will recognise that the CDC, with its world-wide activities, needs considerable flexibility in this regard. Given that its role is exclusively one of long-term investment, to equate its position with that of a nationalised industry could have serious consequences.

The House is being asked to increase the borrowing powers. We are therefore entitled to express a view about how those powers are to be used.

First, when the Government came to power it appeared from their actions that they harboured some doubt about the CDC. They administered a swingeing cut in the CDC's funding amounting to a decline of 34 per cent. in real terms. The CDC was forced to accept more than its fair share of cuts in an aid budget that should never have been cut at all.

An interdepartmental review was then begun. The experience of the previous review, in 1975, should have taught us that reviews, important though they may be from time to time, tend to cast a shadow of uncertainty over organisations such as the CDC which operate through long-term planning. Therefore, such reviews should not be undertaken lightly. There is a danger that capital development programmes will lose momentum. As the general manager of the CDC put it, development is not a stop-go business.

I am not sure what the 1980 review achieved, except perhaps to reiterate the Government's prejudice that commercial and political considerations should enter into aid priorities. As the Minister knows, the Opposition contest the relevance of such considerations to aid policy. Their appearance in the policy directions given to the CDC certainly seems otiose. Over a five-year period CDC's projects have led to procurement from Britain worth about £100 million. My advice to the Minister, therefore, is: seek ye first the Kingdom of God". The way to ensure more commercial contracts for British industry and jobs for British workers is to fund the CDC better.

The CDC involvement in the palm oil plantation project in Mindanao in the southern Philippines is a vexed issue. The House should recognise that the Minister faces a serious dilemma, as does the CDC.

There is no doubt in my mind that financial backing for investment in the area is needed. The Government of the Philippines are keen to develop a desperately impoverished area. If the Minister decides against investment by the CDC it would put paid to a linked investment from the International Finance Corporation and it would prejudice the chances of any future investment in the area.

It may not be fully appreciated that withdrawal from the Guthrie project, which the Minister has mentioned, will almost certainly prejudice the chance of CDC being permitted by the Government of the Philippines, and the National Development Corporation there, to engage in the much better project in La Paz and Loreto, where it may be possible for the corporation to pursue more enlightened policies than seem to have characterised the project in which Guthrie is involved.

The CDC has told me that it considers itself to have a moral obligation to proceed with the project and, to quote its words, to delay or abandon it would be considerably damaging, not least to the ordinary people in that exceedingly poor area.

Further it attributes much of the present unrest in Mindanao to its extreme poverty. It believes that its participation in sound economic development in the rural areas will help to improve the lot of the poorest section of the community. In its view, the alternative would be chronic penury in that highly depressed area.

Statements of that sort from the CDC—a body which rightly enjoys a high reputation for its project appraisal—are not to be taken lightly, particularly when they follow an on-the-site visit by Sir Peter Meinertzhagen, the general manager, in October this year. Yet the House should be disturbed by reports which have emanated from that area.

The Minister mentioned the Catholic Institute of International Relations pamphlet "British Investment and the use of Paramilitary terrorism in Plantation Agriculture in Agusan del Sur, Philippines". I want to draw the attention of the House to several points in that pamphlet. The Philippine Government back the project. Why do they? Page 5 of the pamphlet suggests the reason: The Government requires considerable flows of foreign currency to shore up its sagging foreign resources and mounting trade deficit. So keen are they that it appears that the foreign partners will be required to pay no export or income taxes and will be free to repatriate profits.

I am afraid that it seems likely that the Philippine Government are not so much keen as desperate for development and are prepared to pay almost any price for it—a position which I am afraid is liable to affect Governments of many Third world countries faced with the impact of world recession. I am not criticising the Philippine Government's motives, but the House should be aware of them.

The Minister will have seen copies of letters written to Lord Kindersley by local workers and farmers, by human rights groups, a statement by the Commission on Social Action, Justice and Peace of the Catholic Bishops' Conference of the Philippines and a petition from Loreto sent by father Ton Zwart. He says: We the 70 to 80 per cent.…do not, we repeat, do not agree to the entry of CDC or any other foreign company into our place. Why do they say that?

Many hon. Members will have read several disturbing reports. The CIIR pamphlet in August drew attention to the destruction of private rights in land without compensation of farmers for the loss of properties. The Presidential Assistance for National Minorities, a Government body in the Philippines, was not consulted as the law of the Philippines apparently requires. Dispossessed landowners have acted as subcontractors of labour and have been permitted to take a share of the labourers' salaries as partial compensation for the loss of their land. Perhaps most disturbing of all are the activities of the so-called Lost Command—a force of ex-soldiers and criminals which is used as hired guards. The use of 12 members of that body is a matter of great concern. There were 30 unexplained murders in 1981 and the CIIR pamphlet suggests that Lost Command may have been responsible for some of them. Murders have continued in 1982 and in July there was a case of rape. Nobody knows for sure who was responsible, but the local tale is that it was that body.

As I mentioned, Sir Peter Meinhertzhagen visited the project. I am glad that he did. I have visited many projects myself, as have many other hon. Members on trips abroad. Frankly, I have often gone away having visited projects not feeling entirely sure that I had got hold of the truth. I want to read one of the accounts from Mindanao and I make no criticism of Sir Peter Meinhertzhagen when I say that this is presumably an account of his visit through a local person's eyes. He arrived and was greeted by the mayor: The mayor explained to the people in attendance that the purpose of the white people was the land of La Paz and Loreto, to be planted with oil palm, and that the CDC from England would provide the finance. Smiling, the mayor said in Bisaya: Aren't you happy that before December we will have light (electricity) here? Aren't you happy that the last 15 kilometres of road from Veruela to Loreto will be completed by the white people who will speed up the work? Applaud!' And the people did indeed applaud. Then the mayor continued in English: 'These are all Barangay Officials and their heads … giving their hands by way of applauding, filled with joy and happiness. They are all accepting you for entering in our place, specially the CDC implementing plantations for the development of our abandoned lands here'. The account goes on: The following day, October 28, an open forum took place and many questions about CDC's entry would have come out. (What will our livelihood be, and that of our children if CDC buys most of the land? Won't diseases multiply because of the chemical sprays plantations use?) But the facilitator declared that these questions were not relevant to the topic under discussion.

A great deal more investigation needs to be undertaken into the views of local people. I agree entirely with the Minister that the CDC should seek to gain undertakings which it clearly has not got at the moment. I have the gravest doubts about this venture.

Normally I would expect the Government not to become involved in the day-to-day decisions of the corporation. The corporation has demonstrated by its own record that in the great majority of cases it is capable of making good decisions, indeed, sometimes better decisions than it might have made had it had the Government breathing down its neck.

However, this is a special situation. At one point the corporation said to me that the undertakings which it has received represent the utmost that it could expect to obtain without interference in the internal affairs of the Philippine Government.

I regard the undertakings which have so far been obtained as unsatisfactory. Therefore, I wonder whether the Government ought to take a greater measure of responsibility for negotiations with the Philippine Government so that a final decision may be made.

I am worried that involvement in the project could do grave damage to the reputation enjoyed by the CDC both in this country and internationally. I said at the start that that reputation stands high because of the emphasis placed by the CDC on the small farmer, its respect for local people and their rights and, above all, its observance of the highest standards of conduct. I know that the hon. Member for Essex, South-East (Sir B. Braine), who cannot be here, shares those views, as do my hon. Friends the Members for Harlow (Mr. Newens) and Lambeth, Central (Mr. Tilley) who met the Minister last Monday week.

It would be a great pity if that reputation were to be tarnished by being involved in a project which has aroused local hostility and has been marred by dubious practices and strong-arm tactics in the past and where there seems to be barely any guarantee that in the end local people will inherit the benefits of the investments—which I believe is the objective of most CDC projects.

The reputation of the CDC in the areas in which it operates stands as high as that of any similar body. I want to see it stay that way. I welcome the Bill because it provides more resources to continue the corporation's excellent work. I want to see the corporation extend its work, mostly in the Commonwealth but also outside, for the real benefit of the poor of the Third world.

8 pm

Mr. Reg Prentice (Daventry)

I believe that the Commonwealth Development Corporation is a great British success story. We should take the opportunity of the Second Reading of such a Bill, of which we do not have as many as some of us would wish, to pay tribute to the achievements of the corporation, its board, staff and those people who work in the field and have been doing so since it was founded 34 years ago.

During that period the corporation initiated hundreds of new enterprises in poor countries. It has made those enterprises pay and trained local people to take them over, and it has handed them over as going concerns. It has provided aid in the best possible way by helping people to help themselves. It has brought new hope and dignity to people in poor countries. The corporation has brought great benefits to this country in terms of extra trade, goodwill and prestige.

Therefore, I support the Bill, as I assume all hon. Members will. However, I want to pose three or four questions to the Minister. The most important is that, given the effectiveness of the CDC, should it not be playing a larger part within our aid programme and should it not be expanded in the years ahead?

I noted what the Minister said about the funds that would be available this year, next year and the following year from the aid programme—it is an expanding amount—and about the other forms of finance available to the corporation. If I heard him aright, he said that they would enable the corporation to pursue activities over those years on approximately the same scale as it did during the 1970s. The principal point that I want to put to the House is that, instead of thinking in terms of activities on an even keel in real terms, we should think of expansion.

This is not the time to go into the general arguments on the aid programme. I put the position of the CDC against the background of the aid programme in this way: when, last Session, the Opposition initiated a Supply debate and attacked the Government for their disproportionate cuts in the aid programme I agreed with the Opposition's case to the extent that I abstained in the vote. I have felt for many years that, under both Labour and Conservative Governments, the country should have given greater priority to overseas aid programmes. The same is true of the other main aid donors in the world. There seem to be overwhelming moral reasons and reasons of self-interest why that should be so.

Even if existing aid programmes were doubled, and they will not be, in the next few years, they still would not measure up to the needs of a world which is hungry for development assistance. The imperative requirement is that every pound, dollar, mark, franc and yen should be used to maximum advantage in development terms. We should look more stringently at the effectiveness of some institutions compared with others.

In 1968, Sir Andrew Cohen, then permanent secretary at the Ministry of Overseas Development, gave evidence to the Estimates Committee as follows: The Ministry of Overseas Development regarded the CDC as 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 hold. When the Committee reported to the House, it said: This is high praise but your Committee believe it to be well founded. That view has been repeated in other reports since then. I quoted that report, because I was Minister for Overseas Development at the time and I certainly share the view expressed by the permanent secretary.

That view has often been repeated and I understand from what has been said that the report just issued by one of our Select Committees also praises highly the CDC's work. However, I have not seen that report myself. Following the Estimates Committee report, the House approved a Bill in 1969 that raised the borrowing limits by £75 million to a new ceiling of £205 million. It was my privilege to introduce it.

The CDC's success story, and the high esteem in which it is held by observers throughout the world compared with other institutions, probably has three main causes. First, it has a high success rate for choosing the right projects. That does not mean that every project has been successful. There will always be failures from time to time, but the high success rate derives partly from the degree of independence from political considerations that it enjoys, and partly from the stringent financial disciplines that it has to live within. That has led it to make sensible choices.

Secondly, the CDC is flexible in its operations. It usually goes into operations in co-operation with others. It co-operates with private enterprise from this country, from other developed countries or from the country in which the development is taking place. It also co-operates with the Government and other public agencies in developing countries. There is usually a mixture of management which varies according to the circumstances.

Over the years, far too much time has been wasted arguing about the relative merits of Government aid, private enterprise and self-help on the part of developing countries. Those countries need all three, and to a much greater extent at present. The CDC's merit ties in its adaptability and flexibility in matching its input, alongside other inputs, to local circumstances. It is indicative of that that it has recently developed a new form of co-operation, to which my right hon. Friend the Minister referred, with similar European institutions.

The third reason for success is the CDC's emphasis on training. Choice of the management of projects has always been made most carefully. Once in operation, the management's main priority is the training of local people as managers, and in other necessary skills. Therefore, it has performed an invaluable training role. If possible, the CDC should expand, even though the aid programme is not expanding as much as many of us would like. I recognise that there are enormous demands on the aid programme. I have had experience as a Minister and I know that the problems surrounding priorities are great. I also know that this country has many development aid obligations that have to be fulfilled. Therefore, the scope for manoeuvre is limited. Given the overriding need to obtain the maximum value for every pound spent, there is a prima facie case to expand the Commonwealth Development Corporation's role within the greater development programme.

The hon. Member for Greenwich (Mr. Barnett) mentioned the priority that the CDC has always given, and still gives, to agriculture. That priority is right. During all the arguments that have taken place over the years about development and the changing fashions in priorities, one lesson has emerged clearly. It is not a new lesson but a very old one—for a developing country to have an industrial revolution, it first must have an agricultural revolution. That is true of the history of Britain and of many countries that have developed in previous centuries as well as in this century. The lesson was ignored in the early development plans of many newly independent countries in the 1950s and 1960s.

A great error was made in going for too rapid industrialisation and too many prestige projects. That error was often encouraged by the mistaken view of the aid donor countries. The lesson has now been learnt and an emphasis on agriculture has been a common feature of the policies of most developing countries, most aid donors and most international institutions in recent years.

I have had the privilege of visiting some CDC projects overseas and the agricultural projects have impressed me most. I am thinking especially of the Lobatsi abbatoir project in Botswana and its revolutionary impact on Botswana cattle farmers. The last visit that I paid to a developing project overseas during my second term as Minister for Overseas Development was to Northern Kenya. An expansion of a sugar refinery took place there as the result of an initiative taken by the CDC in co-operation with other agencies.

There are many other examples. The Minister mentioned the important agricultural training centre in Swaziland. I invite him to give us more details about the proportion of agricultural projects in the current CDC programmes and any information about future CDC intentions on agriculture.

I had the privilege of introducing the Act of 1969 that extended the CDC's powers so that it could operate in non-Commonwealth countries. I know from its annual reports that it has done so in several countries. At the same time, the Commonwealth continues to receive priority and that is right. The CDC's work approximately reflects the aid programme priorities. It is right that the priorities within the British aid programme should be towards the Commonwealth countries where we have the closest ties and historical obligations and where, because of a common language and similar institutions—the fact that people know one another and their methods—our aid can be most effective. We benefit from continuity and from experience.

At the same time, it is right that our aid programme should include other countries just as other donor countries provide assistance to the Commonwealth. We should see the point of view of the developing country. It does not wish to have all its eggs in one basket and to be over-dependent on one donor. There is a correct mix of aid donors in developing countries. The CDC should operate in non-Commonwealth countries, but the Commonwealth should have the first priority. Can my right hon. Friend tell us about the present and future priorities of the Government?

The hon. Member for Greenwich mentioned the proposed development in Mindanao. I have not studied the matter and I shall speak about it tentatively. However, from experience, I have found that one does not improve civil liberties by depriving people of the opportunity of development. More often than not, one can make a bad position worse.

This is a matter of great perplexity. When I was Minister I was perplexed by many such matters. The British Government gave aid to strengthen the economies of countries that had internal policies that were repugnant to us. That has been so in the past and it will happen in future. If an aid donor country says "We shall provide aid only to countries that have a totally clean bill of health on civil rights", they will not provide much aid. We must face the facts of life.

However, one is also faced with the fact that in some extreme cases the withdrawal, or the threat of withdrawal, of economic assistance may be justified by the extremity of events. When I was Minister for the second time, the Government did not provide aid to Uganda when it was governed by Idi Amin. No one believed that we should do so. However, in that position, as in many others, two separate questions are often mixed up. One must consider the civil rights and liberties in the country and the ineptitude of some dictatorships, where the provision of money would simply be money down the drain and would not lead to effective development.

I was perplexed by all those problems. At one stage, I initiated a discussion at ministerial level of the development assistance committee of the OECD. I found that my opposite numbers were equally perplexed by the problems. They were worried about a world in which there were too many infringements of civil rights, too many political prisoners, too many imprisoned without trial, too many people tortured and too many of the horrible atrocities that seem to be growing in this century. We wondered how we could use our leverage to influence those countries. One cannot lay down absolute guidelines. The threat to withdraw economic assistance may occasionally be relevant but, more often than not, it does more harm than good. I was satisfied with what my right hon. Friend said about the assurances that he is seeking. I shall not press the matter further, although all of us will watch the matter carefully.

I support the Bill, but I wish to have answers to some of my points, especially the central question of whether the CDC should become a larger part of our total aid programme.

8.17 pm
Mr. John Tilley (Lambeth, Central)

I shall not follow the broader arguments of the right hon. Member for Daventry (Mr. Prentice), nor shall I follow his party political arguments. However, I shall take up his latter point and return to investment in the Philippines. The central and most controversial issue tonight is whether that proposed investment would put at risk the fine reputation that the CDC has acquired during the years of combining sound investment and valuable development in the Third world.

I, too, reflect the views put forward by various agencies, including the Catholic Institute for International Relations. Investment was suspended after the CIIR drew attention last August to the abuses, symbolised by the presence, as security guards employed by the company, of members of the notorious irregular military force known as the Lost Command.

I accept what the Minister said about the CDC taking the criticisms seriously. I am not as convinced as he appears to be that the CDC has obtained sufficient assurances about the removal of the Lost Command from the plantation site and that the CDC will win the consent of local farmers for the project that it intends to manage by methods that it has used with success elsewhere. Reports from the area show that the ending of the intimidation, racketeering, and so on, is easier said than done and that the removal of the Lost Command from the plantation, even if it happens, is only part of the solution.

The CIIR has made available documents which contain the recent views of people in the area about the project. I do not apologise for relying on the documents because, unlike no more than a handful of hon. Members, I am not an expert on the Philippines. I should like to stress the recent nature of these documents. They reflect the views of local people not only since the CIIR report was released, but since the CDC has been there and begun to receive and negotiate some of the assurances mentioned in the debate.

I have been supplied with a copy of a telegram from the diocesan clergy of Mindanao-Sulu to the chairman of the CDC. It refers to strongly requesting the postponement of your board decision to loan NDC-Guthrie Plantations, Inc. … Farmers' sufferings continue to breed opposition. Please wait for further information from justice and human rights groups. The Mindanao Peasant Board sent a telegram urging you with deep concern to postpone decision to loan NDC-Guthrie Plantations, Inc… heightened militarisation and harassments in the area continue to be felt. Please hold your decision until further data is available.

There is a similar telegram from National Priests and Religious Union-Mindanao. All the telegrams are dated 18 November, only a few weeks ago and therefore since the visit of the high-ranking CDC official.

Perhaps the most telling document is the one dated 21 November—even more recently—signed by 1,000 workers and farmers of the area. They make serious allegations about what appears to be still going on: The company hired a brutal armed group … the Lost Command as its security force adding further to the problems of the populace. Lost Command members as company guards harassed and threatened landowners and forced them to sell or donate their lands to the company. Moreover, they also committed unthinkable abuses like: a. the rape of three women workers; b. the savage or summary execution of several workers; c. the mauling of suspected sympathisers of the NPA or workers because of petty personal differences.

The complaints of the local workers have already received publicity, particularly in an article in The Sunday Times two weeks ago. The final paragraph of that article quotes a CDC official as saying: These are the sort of grievances you get in most places, including Bradford, no more than the ordinary beefs of dissatisfied workers.

I do not consider rape, intimidation and murder to be the small change of industrial relations complaints in Bradford or, indeed, anywhere else in Britain. If the quotation is genuine—I accept that being misquoted in The Sunday Times is not the lowest form of hindsight, but it is fairly low—and is still accepted by the CDC as its policy, it is a disturbing insight into the seriousness with which it views such complaints. I hope that we can be given an assurance that the quotation is not genuine or, if it is, that it does not reflect the CDC's considered view.

The last document to which I shall draw the attention of the House embraces some of the wider questions that arise. It comes, we are told, from 17 priests of the diocese of Butuan. They make perhaps the most important general point that the NGPI is a private enterprise which does not share the development philosophy of CDC"— the very development philosophy that we have been discussing. The document states: This became perhaps at no time clearer than when NGPI decided to go ahead with the project in spite of the lack of consultation at local level"— my hon. Friend the Member for Greenwich (Mr. Barnett) has already referred to that— and in spite of the large number of farmers it was surprised to find in occupancy of the proposed plantation site. NGPI is said to have learned from the wrongs committed in the past. Unlike before, they offer now payments for land that they acquire from the farmers. This is an improvement indeed, but it does not settle the land problem as NGPI seems to assure. The next paragraph reads: NGPI has always denied that the Lost Command played a role in the corporation's land acquisition. Our info oration is different. Up to now elements of the Lost Command act as agents or middle men in contacting the farmers and persuading them to sell. At first only one Lost Command may appear, then two show up then again three or more. The arms they carry along bring out the message very clearly to the farmer. When in the end a deal is made, the Lost Command demand a commission for every agreement signed. That sounds as if it earns it as well. The letter adds: It is important to note that these abuses take place outside the estate, on land still to be acquired by NGPI. For this reason, it is not enough that the Lost Command be replaced as company guards. They ought to be removed from a much wider area than the company premises. That is a demand that I hope the Minister will be passing on to the CDC. The letter declares: There is no escaping the issue: the Lost Command ought to be disarmed and made harmless. At the very least, they should be out of reach of NGPI, i.e. removed from Agusan. Moreover, their replacement on and off the estate should be of a different kind. They must not be another so-called paramilitary force. The priests return to the broader issue and state: The solution of the security problem is only a pre-requisite to the attainment of the avowed development goal of the project. Development does not automatically follow. The basic question for us is: who stands to benefit from the scheme? Will it be the farmers, a good many have been accepted on the plantation? At present, they receive a reasonable wage according to Philippine standards, but Philippine standards are very low and fall short of the basic needs requirements. The priests conclude: Our conclusion must be that the farmer-workers are surety not the primary beneficiaries of the plantation project. Rather, they have come under the effective control of a private enterprise not adhering to the development philosophy of CDC. These seem to be major matters of principle that the Minister should examine.

I accept to a degree two of the arguments advanced by the CDC in responding to the various criticisms. One of them has been repeated by the right hon. Member for Daventry. It is contended that, if there is no development, the problem will get worse and the Lost Command's grip become tighter. That might be true. Equally, if there is development, we want assurances that the Lost Command, or its equivalent, will not carry out similar activities and get richer pickings. My experience of protection rackets—it is all vicarious—is that, when the pickings get richer, the protection rackets do not necessarily fade away. The very opposite is true.

The right hon. Member for Daventry raised a legitimate point. The CDC, like any other agency, cannot confine its activities to those Third world countries with perfect human rights records. If that were the case, it would make virtually no investments. That is not the end of the argument. It has a responsibility to examine the human rights records of the countries in which it operates, especially countries outside the Commonwealth.

I say "especially countries outside the Common-wealth", not because Commonwealth countries are automatically all right, but because there is less awareness in Britain through the press or through parliamentary experience of what is happening in those other countries. Because of that comparative lack of awareness, it is more difficult for public opinion, Members of Parliament and the various agencies to keep an eye on what is happening and to make valid comments on proposed developments.

The CDC has a responsibility to ensure that it is part of the answer, not an addition to it. It has a responsibility to ensure that it is not propping up abhorrent regimes, that it is not condoning land snatching, and that it is not winking at terrorism, even if it is officially sanctioned. I am not yet satisfied that the CDC has met those responsibilities fully or ensured that its proposed investments would fully meet those responsibilities.

I attended the meeting to which the Minister referred. One could not fail to be impressed by the detail into which the CDC went. However, the detail was sometimes more worrying than the broad sweep. I shall take just one example. The CDC said that it was aware that the company involved had begun by taking land without compensation, but that the company had now seen that that was wrong. It is worrying to deal with companies which have to be told that taking land without compensation is wrong. Much remains to be answered.

I should like the Minister to give one assurance. He is to ask the CDC to tighten up the assurances that it is receiving and to ensure that safeguards are more adequate. Before he makes his final decision, will he let those of us to whom he was kind enough to refer as concerned Members and agencies who have taken an interest in the project know the nature of those renewed and renegotiated assurances so that we may make a judgment? By "we" I mean the House and those agencies that are willing to advise us or comment.

It is coincidental that this case has arisen when the Bill is to be given a Second Reading. May we have an assurance that the opportunity of a debate on the issue will not disappear? I hope that the final decision will not be taken on the basis of new assurances and negotiations that have not been reported to the House.

I understand that the Minister cannot engineer a special debate on the Philippines on the day that he receives the renewed assurances. Nevertheless, will he assure those of us who attended the meeting that he held that he will reconvene that meeting to let us know what the new assurances are, thereby giving us a chance to comment on them before he makes his final decision?

8.35 pm
Mr. John Farr (Harborough)

Like all hon. Members who have spoken, I welcome the Bill. It was a pleasure to listen to my right hon. Friend introducing the measure and also to hear the comments of my right hon. Friend the Member for Daventry (Mr. Prentice), who has a great fund of expertise, some of which he was good enough to place before the House. I welcome the project to extend the Government's borrowing limit from £500 million to £850 million as a maximum. In these days of financial stringency, that is a considerable sum. There is no greater supporter of the CDC and all that it stands for than myself. But every hon. Member has a duty to examine as closely as possible the purposes for which this money will be used.

The balance sheet of the CDC at the latest available date shows an amount of £418 million invested, providing a gross income of £44 million or 10.5 per cent. The net surplus before tax was £19.5 million or 4 per cent. Those returns are low. It has been made clear by hon. Members that the CDC does not enter upon projects to make a fast buck. It helps to develop the potential of countries all over the world. That is the right approach for it to adopt. Hon. Members will, I think, understand and accept that the return is not possibly what might have been hoped for.

An increase of 70 per cent. in the availability of public money is a massive one. Parliament has a duty to see that the money is spent in the most beneficial manner, not only for the territories involved but for the British Government who provide it. I should therefore like my right hon. Friend to answer two or three points on his general policy towards the CDC. I should like to know to what extent the Government are promoting British machinery and British capital equipment, when this is needed in projects overseas. Many of the projects take place in underdeveloped countries that have no domestic heavy machinery and certainly no domestic heavy vehicle capacity of their own. Hon. Members should seek to ensure that, wherever possible, United Kingdom equipment is used. There is a whole range of suitable United Kingdom equipment. I should like my right hon. Friend to say that United Kingdom machinery will normally be used.

I also wish to know to what extent use is made of the extensive tropical and related knowledge that exists in Britain on animal breeding, plant breeding, plant diseases and crop control problems. We lead the world in our analysis of many tropical problems. I should like my right hon. Friend to inform the House of the extent to which British know-how, technology and scientific knowledge is used in helping to solve, in collaboration with overseas Governments, local agricultural and crop problems, matters of animal husbandry and development projects on farms, for instance, in central Africa. There exists in Britain an immense fund of experience in tropical agricultural medicine. A great part of the work that the CDC carries out relates to training. One of the things that can be imparted to a partner in a project of the CDC overseas is a knowledge of and training in the fundamental skills that we possess in Britain.

Does my right hon. Friend have any relationship with Voluntary Service Overseas? Voluntary Service Overseas sends many people from Britain for engagements of two or two-and-a-half years. They are skilled people who are generally in their late teens. They have knowledge to impart. They are prepared to enter this deserving project and by working overseas they pass on their skilled trades, be they bricklayers, plumbers, veterinary surgeons or whatever.

To what extent does my right hon. Friend's Department co-operate with VSO? I welcome the CDC report which I have studied with some care. I am in the fortunate position of having my own personal copy sent to me every year. I was a little disappointed this year to see that there is no sign that the CDC will play a role in the Falkland Islands. I think a reason for the invasion of the Falkland Islands by the Argentine Government was that, whatever the potential of the Falkland Islands, it was left untapped and unused for so long—gathering dust on the shelf—by successive British Governments. The first and second Shackleton reports pinpointed several projects relating to fishery and forestry development, the search for minerals and the considerable off-shore wealth which is expected to be available there. I trust that the next CDC report, which I shall receive in 11 months time, will refer to at least one pilot project for the Falkland Islands.

Mr. Frank Hooley (Sheffield, Heeley)

My information is that many years ago the CDC put £250,000 into a project for the Falkland Islands, which the Falkland Islands did not use.

Mr. Farr

The hon. Gentleman's intervention may be relevant, but there has been a dramatic change in the situation in the Falkland Islands since then. In my view, the Argentine junta was attracted into this venture because the potential of the Falkland Islands was allowed to lie undeveloped. The Falkland Islands are part of the British Commonwealth, yet that potential remains undeveloped as far as one can see.

There is great potential there. It is the duty of the CDC to take part of the burden of the recommendations of the Shackleton reports upon its shoulders. Furthermore, considerable help could be given towards the restoration of a meat refrigeration plant which is in certain difficulties, as sheep are the staple commodity there. I hope that by the time we debate the next CDC report and the projects relating to other areas, we shall have at least an analysis produced by the CDC of the potential there. The CDC has a large presence in the Caribbean and a very large presence in the Pacific. It should have an important and leading presence in the South Atlantic as well.

With those few remarks and with congratulations to my right hon. Friend, I welcome the Bill.

8.44 pm
Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

I shall not delay the House with another eulogy on the CDC; suffice it to say that most of us know of its value and its tremendous record of service to development throughout the Commonwealth over many years. We support it and wish to see it prosper and develop. In that respect, I agree very much with the right hon. Member for Daventry (Mr. Prentice) who inquired whether there would be a more constructive role for the CDC in the future.

It is singularly unfortunate that the usual channels have brought this Bill forward on the day when a Committee which has been sitting for more than a year has produced a report to the House. In doing so, they have done the House a grave disservice and have shown great discourtesy to the Overseas Development Sub-Committee of the Foreign Affairs Committee, which has studied the work of the CDC. It would have been to the benefit of the House had hon. Members had a week or two to consider that report before discussing the Bill.

The report goes much wider than the provisions in the Bill, but one aspect is directly affected by the legislation. Indeed, had we had time, the Bill could have been amended to take account of one of the report's most important proposals.

We must consider the Bill in the context of the Government's aid record. I agree with the hon. Member for Greenwich (Mr. Barnett), who referred to the Government's disgraceful record of cutting aid so substantially and, indeed, of cutting support to the CDC. We must also consider the Bill in the light of the sorry fact that tonight not one Conservative Member of the Foreign Affairs Committee is present. Indeed, with the exception of the hon. Member for Hertford and Stevenage (Mr. Wells), no Conservative Member present has served on the Sub-Committee. It is a national disgrace that Conservative representation on the Foreign Affairs Committee and the Sub-Committee on Overseas Development has never exceeded one, and even that one could not bother to be present tonight.

I hope that the Minister will consult the Chief Whip and ensure that Conservative Members appointed to the Foreign Affairs Committee attend all those meetings, the meetings of the Sub-Committee and contribute to our debates on overseas development.

It is against that background of a considerable lack of interest in overseas development that we consider the Bill, which introduces an increase in the borrowing available to the CDC.

Mr. Christopher Murphy (Welwyn and Hatfield)

I am sure that the hon. Gentleman would like to give a true reflection of attendance in the Chamber. Although a number of Conservative Members are present, he is the sole representative of the Social Democratic Party and, indeed, not one of his Liberal colleagues is present.

Mr. Deputy Speaker (Mr. Paul Dean)

Order. I hope that we shall not stray too far from the Bill and into the subject of which hon. Members may or may not be present.

Mr. Brocklebank-Fowler

My point was not how many Conservative or Labour Members are present in the Chamber, but why the people responsible for producing a report for the House that has a direct bearing on the Bill are not even paying the House the courtesy of being present. What is more, none of them made any contribution to the discussion and consideration of important matters directly related to the Bill.

That attitude shows a lamentable lack of interest in overseas development and a lamentable lack of understanding that the world recession about which the Prime Minister complains so often is to a large extent the result of domestic policies followed not only in this country but in the other rich countries of the West. We should be considering, and the Bill is part of that consideration, how countries in the Western world., and particularly those such as Britain which have enjoyed surpluses over the past 18 months, should be playing a part in expanding world trade. We should be expanding not only world trade, but the transfer of aid, private investment and Government investment to Third world countries, to enable them to play their part in sustaining a gradual move towards a major expansion of the world economy.

The debt and liquidity of the Third world are major constraints on our survival, and the Government do not take that seriously. The SDP believes that by combining freer trade, increasing aid and encouraging investment—the Bill provides a small move in that direction—we can begin to return to the prospects of an expanding world economy.

We received today the Sub-Committee report, and I was particularly interested, as I hope the House will be, in recommendation 154 in the report. The Sub-Committee says: We think that there may be more scope for project identification to help UK industry to invest in some of the developmentally important areas of the economies of developing countries, and we suggest that the CDC examine whether it would be possible to put more energy into this type of activity". It then refers the reader back to paragraph 70, which says broadly the same thing at rather greater length. It says: To the extent that the CDC acts as a catalyst in promoting the activities of UK companies interested in investing overseas, we consider that it has a valuable role. We think, however, that there may be more scope for project identification to Yelp UK industry to invest in some of the more developmentally important areas of the economies of developing countries, and we suggest that the CDC examine whether it would be possible to put more energy into this type of activity. With great respect to members of the Sub-Committee who are in the House, the constraint is not that of lack of energy by the CDC. It has plenty of energy, and needs to put not more energy into this activity, but more money. To do so, it has to have more money from Her Majesty's Government.

This ties up with what the right hon. Member for Daventry was saying. He spelt out the role that the CDC might have in encouraging a greater transfer of management, technology, finance and private investment to the developing world. He will probably agree that one of the principal constraints upon the private sector playing as dynamic a part as it could in developing countries is the shortage, even unavailability, in Britain of soft funds for feasibility studies.

I realise, of course, that within his Department the Minister has the aid-trade provision, and I know that as long as one does not call it a feasibility study, or anything like that, a private firm may be lucky in getting financial support from the Department of Trade. However, there is no public body in Britain which will put forward concessionary funds or make grants available to recipient Governments to enable them to fund feasibility studies not only of industrial but agriculture processing projects, which are perhaps more in keeping with what the right hon. Member for Daventry said about the need to expand food production in the developing world. Such projects are very hard to identify in developing countries.

A major lacuna in our aid trade investment armoury is the lack of a public sector source of finance in Britain to enable studies to take place at the instigation and with the encouragement of recipient Governments in the developing world, to enable private firms in Britain and the rest of Europe to help them to develop projects to the stage at which they become attractive to private investors and attract the best concessionary support not only from the CDC in Britain but institutions in Europe, such as the European Investment Bank.

There is a dearth of expertise in the developing world in this respect. I believe that the right way to fill this lacuna is through the CDC. We should make funds available out of our aid programme to the CDC so that it, in conjunction with recipient Governments, can identify broad areas in which the private sector can play a more intensive part in development and thus jack up the transfer of funds from developed to developing countries. That would ensure at the same time that the CDC's high standards of management and technical assistance are carried through in an ever-widening private sector activity in the developing world. I see that the right hon. Gentleman is nodding. I hope that he agrees with me.

Mr. Guy Barnett

Who? The Minister?

Mr. Brocklebank-Fowler

No, the right hon. Member for Daventry.

Mr. Neil Marten

I am nodding off.

Mr. Brocklebank-Fowler

If the Minister is nodding off, he should not be doing so, because this is a very serious point. Much additional wealth could be created in developing countries if this provision were made. I ask the right hon. Gentleman to consider carefully whether there is not an expanded role for the CDC, as the Sub-Committee suggested, in facilitating the transfer of private funds to what it described as "developmentally important areas of the economies" of some of the poorer countries. If he considered that point seriously and thought about giving the CDC additional funds to carry out its job, he would make a significant contribution to improving the efficacy of the private sector in developing countries.

Finally, I want to mention the discussion that we have had about the Philippines and the CDC involvement there. I think that the Minister has taken seriously what has been said by right hon. and hon. Members on both sides. I noted the undertaking that he made in his opening statement that he would seek to ensure that security and fair employment were achieved in this Filipino development. I simply add to those who have spoken of the detail of the projects that we in the SDP are deeply concerned about the risk to the CDC's reputation which, as many have pointed out, is enviable. We think it essential that the Lost Command be removed from the area of the investment. We shall look to the Minister to ensure that the CDC can operate in the Philippines, as elsewhere, with the support of the local people and without threatening behaviour sullying its reputation and jeopardising the project. We look to him to give us assurances in due course that those safeguards will be implemented.

9.1 pm

Mr. Christopher Murphy (Welwyn and Hatfield)

I support the Second Reading of the Bill in the belief that it points towards a constructive example of the value of the Commonwealth. The unique institution of the Commonwealth is something that we should endeavour to build upon, as it contributes to the promotion of in[...]ernational understanding and world peace. No other organisation can bring together in the same way, and voluntarily, over 1,000 million people and approaching 50 independent States, with the British Crown a symbol of that unity of purpose.

Many of the CDC's members in the less developed parts of the world can derive particular benefit from such an association, not least through the support and help of those that are more wealthy. That is equally so for remaining dependent territories of the United Kingdom, with their close links with the Commonwealth. My hon. Friend the Member for Harborough (Mr. Farr) did a great service in reminding us about the need for help in the Falkland Islands.

The CDC has played a substantial role in assisting economic development in dependent territories and independent Commonwealth countries since 1948, and certain other nations in more recent times. However, that leads to one caveat. It is to be hoped that the expansion of activities outside the limitations of the Commonwealth will not weaken connections within the Commonwealth, because those bonds should be strengthened whenever possible.

The essence of the CDC is that it offers not aid as such but investment in the development of resources. To give priority to economic development projects in the poorer developing countries and to schemes for the development of renewable natural resources shows a realistic appraisal of the valuable part that the corporation can play. The CDC engenders greater opportunities for emergent Commonwealth countries to secure for themselves the basic necessities for their people. The CDC disposal of assets programme, which enhances local ownership, should be further encouraged at the earliest possible moment.

The Commonwealth has often been described as a family of nations. The stronger those family ties, the greater the importance that it has. In a world where it becomes increasingly difficult to find democracy and human rights being maintained, the Commonwealth, for the greater part, provides evidence of what can be achieved despite influences to the contrary. If our parliamentary system is to flourish abroad to the benefit of the people whom it seeks to serve, that, too, is more likely to come about via the Commonwealth.

The CDC has proved to be a successful way of putting into practice the theory behind the Commonwealth. The whole House should support the Bill to further the CDC's dedicated work.

9.3 pm

Mr. Frank Hooley (Sheffield, Heeley)

The Commonwealth Development Corporation is an aid success story, as many hon. Members have said. It is probably an unlucky coincidence or an unfortunate accident that the report of the Sub-Committee on the CDC has been published and the Bill is being considered on the same day. It could have been managed better. The report of the Sub-Committee might have provided the basis for some amendments to the Bill. My hon. Friend the Member for Newham, South (Mr. Spearing) talked earlier today about the propriety of today's procedure, by which it is virtually impossible to amend the Bill. However, I shall not go too far into that matter.

The great success of the CDC has been in the prudent and skilful management of public funds. I should point out to Conservative Members that it has been a public corporation from the word go. It has been financed entirely by public money, which has been handled with enormous skill and integrity by men and women who had nothing personally to gain from it. That is a great tribute to the effectiveness of public enterprise.

Mr. Murphy

I am sure that the hon. Member would accept at the same time that the CDC is a corporation which sells its assets.

Mr. Hooley

The CDC is required to turn its money over, but not to impoverish itself. The recycling of its funds is an important aspect of its work. Its assets now are vastly greater than they were when it began its operations.

Not only has the CDC been enormously skilful in its handling of public funds and in its investments, but it has made valuable contributions to both social and economic development. Social projects such as housing have been very important in some countries. The CDC has also stimulated smallholder activity, thereby providing a much more solid social and economic base than would have been provided by large-scale plantations relying on hired labour for their operation. The CDC's smallholder schemes have been not only an economic but a social success.

In the purely economic field, the CDC has invested to a considerable extent in the public utilities essential to the functioning of a modern economy. As well as playing this valuable role in the social and economic sphere, it has, through the provision of management and training expertise, given a great impetus to development. That provision distinguishes it from similar bodies in other countries. The Sub-Committee was fortunate in enjoying the co-operation of members of the Caisse Centrale, whom we visited in Paris. They admitted that they did not put in the management effort that the CDC offers, and the same is true in other countries.

I shall refer to one or two of the Sub-Committee's findings that may interest the House. The Government will no doubt reply to the report in detail in due course, but that usually takes some time.

We were disturbed to find that the CDC had sometimes paid back to the Exchequer rather more money than it had drawn out. In other words, the Treasury was actually making a profit out of the CDC's work. We felt that in the case of a development institution this was wrong. We felt that there should be a positive flow of funds to the CDC year by year and that it should certainly not be giving back more than it received.

We also concluded that it would be valuable if the CDC could be given a three-year rolling programme in terms of the Government finance that it could expect to be available for investment. I think that the Government have gone some way to meet that need by stating how much money will be forthcoming for two years in advance. We hope that that will continue, as it is important that a body involved in mainly long-term investments should have some assurance of the sums available for borrowing not just for the next year but for two or three years to come.

We also suggest that the CDC should not be liable to corporation tax, although that idea will no doubt send shivers down the spine of the Treasury or whomever is responsible there. In the past, the CDC has paid some corporation tax. We do not see why a development body of that kind should be lumbered with that burden. More importantly, we thought that the CDC might enter into investment and taxation agreements in the host country, similar to those which we understand the World Bank enjoys, which would relieve it of some local corporate taxation.

Clearly the CDC would not be in a position to go to the Government of a country such as Tanzania or Kenya and ask to be relieved of local corporate taxation if the United Kingdom Treasury was happily levying corporation tax here. Therefore, the two suggestions go hand in hand. We hope that they will be given serious consideration.

One matter which the Select Committee considered fairly closely was the recycling and redeployment of money made available to the CDC for investment and, in a sense, disinvestment from successful projects. We were anxious that the money provided to the CDC should not be tied up for 10, 15 or 20 years in certain projects, although we entirely accepted that the nature of some of the CDC's investments were such that realising them, and therefore having more money to reinvest and redeploy, was a difficult and tricky business.

For one thing, in many of the countries no money market exists anyway. There is nobody on the spot, except possibly the host Government, who could buy out the investment made by the CDC, and there are similar problems.

Nevertheless, such study as we were able to make of the accounts with the help of a distinguished accountant to guide us through the figures led us to conclude that possibly the recycling and redeployment of money made available to the corporation over the years could be done to a greater extent than in the past. It was a matter on which we felt that there should be closer study and perhaps greater effort.

Another matter that has already been touched on is the range of countries over which the corporation operates. Obviously, as its name suggests, the origin and intention of the corporation many years ago was to operate in Commonwealth countries, and that is still its overwhelming role. The greater percentage of its effort has been, and I imagine still will be, in Commonwealth countries.

In recent years—I think since 1969—the corporation has been empowered to operate outside the Commonwealth. I think that I am right in saying that it currently operates in 14 such countries or territories. Obviously, the Committee has no objection at all to British aid going to countries outside the Commonwealth. We have various means of helping countries all round the world. However, it was felt that, as the corporation's resources are not infinite—they are limited by various acts of Parliament—it might not be permissible to seek to extend them too far outside the Commonwealth which provided the original reason for the corporation's existence.

On the whole, it was thought that there would have to be fairly powerful reasons for the Minister giving consent to investment in yet more non-Commonwealth countries because of the enormous need in countries such as India, Bangladesh, Tanzania and so on, where there is still immense opportunity for the CDC to operate. We were not persuaded that the range of countries should be extended ad infinitum.

The Committee thought that investment should be checked at the present position, with one exception. The Committee deliberately made Mozambique an exception because of the land-locked position of three important Commonwealth countries—Zambia, Zimbabwe and Malawi—for which communications through Mozambique are of considerable importance. It was felt that if the Government of Mozambique requested investment or aid through the CDC, the Minister should give his consent, although the broad general proposition was held to that the list of countries for such operations should not generally be extended.

There is one aspect of the staffing of the CDC that we found a little odd and to which some attention might be given. It was the apparent lack of women in posts either at the top or overseas. There may be some special reason for that, and we do not accuse the CDC of practising any deliberate discrimination against the employment of women. We saw no evidence of that. We found it odd that there are so few women among the fairly large numbers of staff employed by the corporation. There are none at the higher levels. The Committee considers that the corporation should look at its recruitment and career policies to see whether some hindrance had been allowed to remain over the years and which might be removed without too much difficulty.

There was also a lack of representation from among the immigrant peoples in the United Kingdom, although we take the point that there might be problems in recruiting and employing such people overseas. Overseas countries might have views about employing certain people which could create difficulties, but we thought that the corporation should look at that problem to see whether something could be done.

We welcomed the corporation's achievements in training. Reference has already been made to the centre in Swaziland. We felt that there might be opportunities to create a parallel centre in East Africa at some time. We were enormously impressed by the corporation's training activities and we hope that they can be expended.

The corporation's activities have been referred to in the debate. Much of its work in tea, coffee, tourism and public utilities is well known. We felt that more attention might be paid now to the production of food instead of cash crops, and we should like to see more work done on energy resources, especially renewable energy resources, for those countries which have no local hydrocarbon supplies in the form of coal, gas or oil. We were impressed by the harnessing of geothermal power in Kenya. We believe that there are other countries where there could be similar achievements.

In the light of the enormous debts of the poorer countries which arise from their absolute need to import oil or other forms of fuel, we thought that it would be a good idea for the CDC to investigate what could be done to harness such energy resources as might be available in the poorer countries. Likewise, we felt that the corporation might invest from time to time in experimental crops, especially in arid zones.

We are aware that the corporation is not a research institution or an experimental body, but we felt that here and there it might launch small pilot projects for the growing of unusual cash or food crops to meet particular needs. We felt that it might be useful to give powers to experiment in that way to regional controllers whose work we admire.

I shall take up a point that was made, I think, by the hon. Member for Harborough (Mr. Farr). We should emphasis that the CDC is of enormous value to the United Kingdom. It is valuable in terms of our prestige and standing and in terms of goodwill. It is also valuable because of the economic benefits that its work brings to British industry. My hon. Friend the Member for Greenwich (Mr. Barnett) quoted the one figure that was given to the Committee—that over a five-year period, about £100 million of goods and services had been supplied from the United Kingdom for projects operated by the CDC. I have no reason to suppose that the flow has diminished in recent years or that it is less important.

I should be wrong to go further into the Select Committee's findings. In due course we shall no doubt receive from the Government a considered and, I hope, coherent reply to the recommendations. However, our general conclusion was, without qualification, that the CDC is an enormously important and very valuable piece of public enterprise that should be supported, developed and strengthened in the years to come.

9.20 pm
Mr. Bowen Wells (Hertford and Stevenage)

I declare my interest in this subject from a privileged and prejudiced viewpoint. I had the privilege to serve for more than 13 years as an employee of the CDC and also, as a member of the Sub-Committee of the Foreign Affairs Committee, to serve under the distinguished chairmanship of the hon. Member for Sheffield, Heeley (Mr. Hooley), which considered the CDC report. I congratulate my right hon. Friend the Minister on proposing an increase in the CDC's borrowing limits—from £500 million to £750 million, and by order to £850 million—and on the introduction of a flexible, temporary borrowing requirement, as that was greatly needed. It is absolutely in line with the Sub-Committee's thinking.

I shall try to persuade and cajole my right hon. Friend into thinking about changing the structure of the Overseas Development Administration's budget slightly to accommodate more investment in the CDC, thus making use of one of the most successful of our—by common consent—aid weapons for overseas development. It seems sensible to build in a conservative way upon success. No hon. Member has claimed that the CDC is anything other than a success. Therefore, it is reasonable to build upon it. I am only disappointed that my right hon. Friend did not go further. In that, I support my right hon. Friend the Member for Daventry (Mr. Prentice). Those of us who were members of the Sub-Committee or who worked with the CDC have nothing other than the highest regard for its management. I pay a personal and public tribute to Sir Peter Meinertzhagen for his dedication, enthusiasm and meticulous work as the chief executive of the CDC for the past eight or nine years.

Why is the CDC successful? As the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) said, it is successful because in the host country, on the ground, it identifies the projects that it wants to invest in. Of course, it consults the Government and gets their approval for what it wants to do, but it is the identification and working up of the projects that ensures that they are of maximum developmental value. In addition, having made the investment, it controls and monitors it locally. Its representatives sit on boards of directors. They liaise with Governments and are sensitive to the social and economic changes that take place in the country while that investment is being brought to fruition. Few other agencies, including the World Bank, have such a degree of involvement in a successful development.

The CDC is not inhibited by the usual problems that confront either multilateral or bilateral aid agencies—that the projects must be selected on a country-by-country basis. The Barbados development division admitted to me that regional moneys were first divided between countries, and then the Governments of those countries were asked where they wished to invest. They were asked "What is your shopping list? We shall select from it." The CDC is not inhibited in such a way. Instead, it goes to the country, sees what developments it can invest in and develops from there. The CDC's investment criterion for a project is whether that project will become viable. If no such projects exist, the CDC will not invest.

As the hon. Member for Heeley said, the Falkland Islands had no viable projects, or rather those that were viable were not used by the Falkland Islanders. Despite the Shackleton report's enthusiasm, I regret that even now there are few projects in the Falkland Islands that would merit a CDC investment. Developmental value and the ability to invest free of restrictions imposed by countries should be important criteria for aid agencies.

We have heard a one-sided story from the Catholic Institute of International Relations about Mindanao in the Philippines and we have not heard the other side of the story, except from the CDC's point of view. The people in that very poor area of the southern Philippines have not had the opportunity to produce a cash crop and thus improve their standard of living and liberate themselves from their military oppressors, or to liberate themselves economically as they become more independent. Those people are underprivileged. By investing and by providing safeguards, the CDC will ensure that that southern island's economy will benefit.

We have heard not just a human rights story but a one-sided political story. I am much against terrorism and violation of human rights wherever they occur, not just in the developing world. Many countries offend against human rights but we must not make human rights a condition of development aid. That is especially true of the CDC.

Another major reason for the CDC's success is its ability to provide management for the projects. That is a distinguished and unique contribution. Management and administration and much-needed resources, are scarce, especially in the poorest countries. I hope that the CDC will take note of the Sub-Committee's recommendation that the regional organisation should be strengthened and that it should be made more flexible by being given money to invest on its own criteria without reference to head office. The monitoring, nursing and caring for projects bring them to profitable fruition.

The CDC has also achieved success because of the discipline that it applies to the profit and loss account. A project must make sense economically before it goes ahead. Only by doing that can we contribute to the income of those who are employed on the projects or the smallholders. We can also help the Government of the country, who tax the profits, and increase their ability to meet social and other needs.

Another major asset of the Commonwealth Development Corporation is the way in which it manages to involve the private sector in Britain and in other countries in projects in the poorest countries. Britain has a proud record of private investment overseas and we vastly increase the amount of money that other countries spend on private investment overseas. However, that money is spent mostly in the middle and higher developing countries and not in the poorest countries. Private investment needs the catalyst offered by the CDC before it will go to the poorest countries. We saw that happen in Malawi where a tobacco packing factory was started with the help of the CDC. The private tobacco company involved admitted that it would not otherwise have invested in that packing factory and, therefore, employment in Malawi would have suffered. That is another reason why the CDC must operate outside the Commonwealth. The Caisse Centrale in France invests in former British Commonwealth countries. The CDC should have the same liberty to act as a catalyst for British private investment in those countries. The CDC knows those countries in a way that private companies do not and it can help them to make the most valuable investment.

If we give the CDC additional support from the budget, the Overseas Development Agency should come in behind the CDC and provide technical assistance. That is already happening and the Sub-Committee saw a good example of it. That is the path ahead. The Overseas Development Agency should provide support in the infrastructure, social facilities, education, health, roads and water supply. We must be able to identify the British investment and my right hon. Friend referred to the admirable CDC programme in Swaziland. The voluntary agencies can join in the effort and make their unique and special contribution.

We were privileged to visit a fine project called the Tanganyika Wattle Company in the Southern Highlands of Tanzania, near Ndola. That is an illustration of the way in which the CDC developed and sustained a project that was slow to mature and to make profits. The project turned barren hills in southern Tanzania into a wattle forest to produce tannin for leather. It has diversified, with the agricultural expertise available on the estate and from the CDC head office, into the production of hybrid seed, maize, wheat and sorghum. It has managed to produce seeds that have more than six times the normal yield of the seeds otherwise used in that area. The benefit has been spread to the rest of Tanzania by the formation of a company called the Tanzanian Seed Company which, if it were run properly and had proper agricultural support, would have made it unnecessary for Tanzania to have to import 250,000 tonnes of wheat in the past two months.

CDC has also trained the people to carry out the hybrid seed production. All those whom we saw producing it were Tanzanian, and very impressive they were. What is more, CDC is now diversifying the project into cattle feed with, as a result, greater production of milk and beef. Locally produced high protein cattle feed does not involve foreign exchange difficulties. This development is leading to improvements in poultry and pig farming.

We met the Member of Parliament for Ndola when we arrived at Dar es Salaam. He welcomed with open arms the presence of CDC in Tanzania. He wanted CDC to expand and to produce a school that could train farmers to undertake the specialised form of agriculture that was being practised at Tanurat. We should put CDC on a financial basis, on which it can expand its training schools, in the same way as the Caisse Centrale in France is doing.

It is also necessary to look after social conditions, such as housing. My right hon. Friend mentioned the contribution of CDC to housing. We saw the Buru Buru estate outside Nairobi, which is otherwise developing as a complete slum. The estate is offering a much higher quality of housing, thus improving the total stock of housing around Nairobi and preventing the creation of the type of slum that we once suffered around our cities during our developing period. CDC, having withdrawn largely from housing, played a role in the setting up of Shelter Afrique. Under the African Development Bank, Shelter Afrique is the agency through which home ownership and housing will be spread throughout the burgeoning cities of the African continent. CDC was the catalyst in bringing that about. An official of CDC will soon be in Nairobi proudly to sign that agreement and to assist with the management of the scheme.

CDC was also involved in a number of other popular economic schemes, which should not be ignored, involving tourism and energy production, including an imaginative scheme to form a company to produce firewood as a substitute for imported paraffin and oil.

I should like to make some suggestions to my right hon. Friend for when he comes to consider the report of the Sub-Committee. CDC should be expanded quickly. It should at least double its investment over the next five years. At the moment, its investment stands at £410 million—net of disinvestments. That figure should be doubled within the next five years. There should then be an upward projection of that figure. If my figures are correct, that will mean an investment of more than £100 million a year, and probably more, to make good the disinvestments in which CDC will be taking part during that period. That will be a major expansion and will enable CDC to cover its overheads more easily as it expands. It will also give some leeway for money to be spent in the poorest countries and allow CDC to undertake more training of management.

This will be a great challenge. One of the things that I hope will come out of the report of the Select Committee is a cross-party belief in the CDC, which will mean that we shall not have investigation after investigation as Government succeed Government. CDC is a successful corporation. Let us expand it quickly.

I believe that to do that the CDC will have to have some additional money from the ODA. The ODA allocates about £34 million in each year but the CDC does not draw that figure down. It draws down the net figure of what it repays to the ODA. I suggest that on 6 April every year the ODA should pay in total what it says that it will pay to the CDC. That would be a departure for the Government, but that is exactly what the French Government do.

I admit that the money will not be drawn down by the CDC and spent on projects immediately. It will be invested by the CDC and the interest that will accrue will pay for the excellent projects such as health and social development to which we have all been paying such tribute, and especially to trade development.

I agree with the hon. Member for Heeley that the CDC must be made tax-free for Britain. I look forward to another CDC Bill being introduced very soon that will do that. We should initiate a rolling programme so that the CDC knows how much money it will receive from the aid programme.

The CDC does not receive a large sum from the ODA budget and I know that my right hon. Friend the Minister for Overseas Development has difficulty in choosing priorities. With a budget that is now over £1,000 million, it is not too much to ask the ODA to consider an investment of about £50 million in fresh money each year in the CDC. That would be a small amount to produce a maximum developmental result. It would draw in private investment and ensure high-quality development in the poorest countries.

The concessional finance that the CDC receives should continue to enable it to undertake investment with poor returns in developing countries. Some of these investments take a considerable time to reach maturity. Sometimes seven or eight years pass before a rubber estate or a cocoa plantation begins to produce. Many more years pass before money starts to come into the CDC to repay it. Therefore, it needs concessional finance from the ODA to enable it to continue.

This is a much welcomed Bill. I am only sorry that it is not possible to double the sum that my right hon. Friend announced. I think that he will have to return to the House very soon if he follows our advice. He will enable the CDC to invest at a much increased rate during the coming years. This is a success story which commends itself to both sides of the House and we should build on the success.

9.43 pm
Mr. Stanley Newens (Harlow)

I did not agree with the remarks of the hon. Member for Hertford and Stevenage (Mr. Wells) about the Philippines project but I agreed with many of his other remarks. Along with the hon. Gentleman, I believe that the Bill's objectives are entirely laudable and worthy of support. Anyone who has the slightest inkling of the developing countries' problems—the need for capital investment and opportunities for establishing new enterprises—must be in favour of raising the borrowing limits of the Commonwealth Development Corporation and the volume of overseas aid generally.

The Minister has outlined the purposes which the CDC exists to fulfil. I am concerned about the Third world and I am deeply sympathetic to the CDC. I agree with my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) that the growth of demand in underdeveloped countries assists in the expansion of demand for the products of developed countries such as the United Kingdom.

I wish to back the Bill's general objectives but I am concerned about the criteria on which decisions to make loans and to support specific problems are made, which are highlighted by the plan for the investment of £6 million in the palm oil plantation at Agusan del Sur in the Philippines, which has already been mentioned.

The Guthrie Corporation, which is co-operating with the Philippine Government agency, has been chosen as the recipient of Government funds despite the fact that the methods employed to secure the land for plantation were based on intimidation, force and the refusal to pay compensation to the previous land owners.

I am aware that the history of the Philippines has been extremely turbulent in the past 40 years and that recently the country has been under martial law. With the constitution suspended, many rights that would be upheld in Britain and Western Europe have been withdrawn and the processes of law have been set aside. I see no reason why the CDC should acquiesce in that to the extent of providing a loan for a company that has acquired lands by means that are utterly repugnant to all decent people.

The information that we have—it has already been referred to by my hon. Friend the Member for Lambeth, Central (Mr. Tilley)—is that the National Development Corporation of the Philippines and the Guthrie Corporation commenced their activities in May 1980 when the people of San Francisco, Roseiro and Agusan del Sur were called to a meeting and promised that in return for giving up their land rights in the area of the projected plantation each would receive a house with an electricity and water supply, free medical treatment, free education for their children and compensation for their lands. They were also promised that there would be security at least for their own lifetime and probably for that of their children.

When the small land owners did not agree, the so-called Lost Command—the special unit of armed forces—was brought in. It employed brutal strong-arm tactics to force the land owners to agree to the terms or to leave.

There is not much doubt that that took place. It is not merely a story that has been related by the CIIR and which has not been confirmed by other sources. It is the sort of thing that is sometimes presented to us in Western films. Smallholders and settlers find that their holdings are suddenly coveted by a large organisation and that, having refused the terms offered to them for leaving, they become victims of a band of desperadoes. In the case of the Philippines, the band of desperadoes was the Lost Command.

According to reports that we have received, many of the land owners have been badly treated. My hon. Friend the Member for Lambeth, Central gave details of that. Against that background, the CDC has arrived on the scene to finance an organisation that is associated with the villainy. Hon. Members must be deeply worried about that.

Mr. Bowen Wells

I am sure that the hon. Gentleman knows that I do not condone the brutal tactics that he has outlined. Does he agree that the matter was agreed before the CDC was ever brought into the project? Moreover, would he confirm that the bishop of the area has supported the CDC's investment?

Mr. Newens

I cannot confirm the hon. Gentleman's information about the bishop. I fully understand that the CDC is not responsible for all that has gone on in the past. I do not wish to give credence to the impression that that is so. That is not what I have said and it is not what I intend to say.

Mr. Guy Barnett

I have seen no statement, written or quoted, from the bishop to that effect. I know that he is said to agree to the project but I still await a public statement that the bishop supports CDC entry into the project.

Mr. Newens

I am grateful to my hon. Friend for making that point. I am in a similar position. If the hon. Member for Hertford and Stevenage could produce evidence that the bishop has endorsed the scheme, I am sure that many hon. Members who have taken an interest in the matter would be delighted to see it.

It is true that the CDC has said that the practice of terrorising the dwellers employed to date must stop. I am not, however, happy that the CDC should choose to assist an organisation with such an unseemly record as a suitable enterprise to support at this stage. In these circumstances, I must say frankly that I hope that the loan will not be granted. If, however, it is granted, there will be need to monitor the performance of the company at all stages. If there is any recurrence of the practices that have undoubtedly been employed in the past to secure control of the land or if any unseemly conduct is shown towards the people involved, further moneys should be cut off forthwith.

I fully accept the need to encourage development in these areas. At the same time, we need to be sure that the development will be in the interests of the indigenous people of the area. The possibility is raised by the example we have been considering in the Philippines that the CDC could provide loans in a number of locations to transnational companies that have no regard for democratic or fundamental rights. Some safeguards must be provided to prevent this from happening not merely in the Philippines but everywhere else.

The invitation by the Minister to a number of lion Members to discuss the matter was very much welcomed. At the very least, I hope that the right hon. Gentleman will put it on record that money will not be provided for schemes that do not insist upon respecting fully the rights of indigenous people. I hope that all possible steps will be taken to ensure that the CDC always makes it a precondition, before entering into any agreement to provide funds for a particular project, that the rights of local people will be fully observed. On this basis, I believe that the CDC will be able to go ahead in improving the lot of desperately poor people. On any other basis, it may only serve to increase the exploitation and the misery that those people who lose their land are obliged to suffer.

The purpose of the Bill should be supported. The issues raised by the proposed investment in Mindanao must not be overlooked or pushed to one side. I accept that it may not be possible, in all parts of the world, to demand an impeccable record on human rights before granting aid. I believe, however, that the state of human rights must always be a consideration before a loan is made.

On those terms, I have great pleasure in supporting the Bill. Along with all hon. Members present, I believe that the measure is necessary not only in the interests of the people of our country but also in the interests of the people of the developing countries in which investments are made.

9.55 pm
Mr. Eric Cockeram (Ludlow)

Like others who have joined in this debate, I lend my support to the principles of the Bill. I agree that the Commonwealth Development Corporation does very good work and should be supported.

That is not the end of the story. The House knows that this is not a subject on which I normally join in a debate, but I returned only a week ago today from the Philippines where I had an opportunity of learning at first hand about this project. In consequence, I thought it proper to speak briefly this evening. The Lost Command, with which this project is undoubtedly associated, has been accused of murder, rape, threats, confiscation of land, intimidation, and operating a retail monopoly from which the local peasantry must purchase goods at inflated prices. It does not matter whether those stories are exaggerated or whether there have been only half the number of murders, rapes, threats and so on of which the Lost Command is accused. The principle is that we are using and are associated with that organisation. This is not an organisation that the United Kingdom should back or in any way be connected with.

There are five reasons why we should withdraw from this project. First, the Philippines is not in the Commonwealth. That is not a reason per se, because the CDC does a lot of work outside the Commonwealth. There are opportunities to assist under-developed peoples in Africa, India, and even the Falkland Islands—I support that proposal—but there is no reason why we should dabble in this project.

Secondly, this is not a British company. It is a Malaysian company. In consequence, the opportunities or the likelihood of spin-off benefits to British industry in orders for machinery and equipment are less likely than would be the case if the company involved was British.

Thirdly, this is not a part of the world with strong British connections. Indeed, the Philippines are very much in the sphere of influence of the United States.

Fourthly, this is not a country with large British trade connections. Finally, the Lost Command is not an organisation with which we should be associated, and if we are, some people may distort and exaggerate that association. It is something from which we should withdraw. If the Minister does intend to proceed, I trust that he will get a firm undertaking from the Government of that country that they will ensure that this organisation plays no part either in the performance of this project or in that area.

Secondly, no substantial investment should be made until there has been specific performance of that assurance. Just to get it is not good enough. It must be seen to be carried out before we proceed. I appreciate it could well be embarrassing to the Minister, to the CDC and to Britain to withdraw from this project at this stage. I accept that it may be said that we should not have gone thus far and then have withdrawn at the eleventh hour. However, it would be even more embarrassing to proceed if we are seen as backing and using this loathsome organisation. I ask the Minister to think very hard before he proceeds with this project.

With that qualification, I support the principles of the Bill.

9.59 pm
Mr. Neil Marten

With the leave of the House, I should like to reply to the debate. A considerable time has elapsed since this House was able to discuss at length the affairs of the Commonwealth Development Corporation. I am glad that many hon. Members have taken part. I congratulate the hon. Member for Greenwich (Mr. Barnett) on his appointment to the Front Bench and hope that he will have many years in that positon, on the Opposition Benches.

I also thank the hon. Gentleman and other hon. Members for their kind remarks about the CDC. He asked about the interdepartmental review and thought that only half the CDC money could go to the poorer countries. That is not so. The phrase is "not less than half', and in 1981—

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

Ordered, That, at this day's sitting, the Commonwealth Development Corporation Bill may be proceeded with, though opposed, until any hour.—[Mr. Thompson.]

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

Mr. Marten

In 1981, 76 per cent. went to the poorer countries. The hon. Member asked about borrowing by subsidiaries. Whether or not they are wholly owned, subsidiaries are under the control of their parent companies and it is therefore appropriate that their borrowing should count against the limit.

The hon. Gentleman sympathised with me in making the decision about the proposed investment in the Philippines. It is a question of keeping a balance between helping the poor on the one hand and the odious actions of the Lost Command on the other. This is nothing new, because it must be done to a greater or lesser extent in considering aid to the developing world.

My right hon. Friend the Member for Daventry (Mr. Prentice) experienced the same problem. One must make a judgment, and I assure the House that I have taken careful note of everything that has been said about the odious Lost Command. The CDC is now trying to negotiate assurances, and I shall consider whether one can rely upon them. However, at some time I must make up my mind, and that I shall do by taking into account everything that has been said.

My right hon. Friend the Member for Daventry argued for an expansion of the CDC and asked whether it was up to the level of the 1970s. In fact, it has gone beyond that level. I have the figures with me, but in view of the time I shall not read them. Instead, I shall write to my right hon. Friend. He was right to state that, if developing countries want an industrial revolution, they should first have an agricultural revolution. I sincerely hope that no other types of revolution will take place, but I believe that a developing country needs agricultural development before it can achieve industrial development.

My right hon. Friend asked what percentage of CDC investment went towards renewable natural resources. On page 16 of the 1981 annual report, he will find the distribution in percentage terms of its various activities.

The hon. Member for Lambeth, Central (Mr. Tilley) said that he was not satisfied with the assurances that I had obtained. Nor was I in the first place, and I am now pressing the CDC to get better and further assurances. The CDC is now negotiating those assurances, and after it returns—whether or not it has succeeded—I shall have to make a judgment.

Mr. Tilley

When the Minister has got those better assurances, will he enable both the House and interested bodies in this country to consider them before he makes his final decision, or will all this happen behind closed doors?

Mr. Marten

I shall give thought to that question. I was given a good idea of what hon. Members and the charitable organisations felt at the meeting last week. I do not think that their views have changed, and I can assess from what I have already heard what will be the right decision. I hope that the hon. Gentleman will agree with it, whatever it is.

My hon. Friend the Member for Harborough (Mr. Farr) raised a number of points. Some of them were about the day-to-day management of the CDC, with which I should not want to interfere. No doubt the members of the CDC board will read his speech with interest, as I hope they will read the whole of the debate, and take note of the many valuable points that he made.

The hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) was critical of the timing of the Bill, but that is not a question for me but for the usual channels. One could equally say that if the Sub[...]Committee report had come out a week earlier we should have had time to read it thoroughly. I do not know who is to blame. The hon. Member also criticised, uncharacteristically, the representation of the Sub-Committee. The Whips were here and heard those remarks, and I understand that there will be new Members of the Sub-Committee.

The hon. Member for Norfolk, North-West asked about the feasibility study. This is one of the recommendations made by the Sub-Committee, and I shall comment on those in due course, after full consideration. If the hon. Member will forgive me, I shall not be drawn on that. The same goes for the speech of the hon. Member for Sheffield, Heeley (Mr. Hooley), which was almost entirely concerned with the Sub-Committee's report.

Mr. Brocklebank-Fowler

Will the right hon. Gentleman be kind enough to undertake carefully to consider what I said both in the light of the Sub-Committee's report and of the undoubted need for the CDC to have greater flexibility to provide finance for the feasibility studies?

Mr. Marten

I shall undertake to consider that in the course of the consideration of the many points raised by the Sub-Committee.

My hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) paid a tribute to the Commonwealth, which I thoroughly enjoyed and entirely support. I seek to nurture the Commonwealth whenever I can because it is a valuable institution, and I am glad that my hon. Friend feels the same way.

The hon. Member for Heeley made many points, but I am afraid that I cannot answer them. They will be studied by the Government and the replies will come in due course. It should not take long, because the points are fairly straightforward.

My hon. Friend the Member for Hertford and Stevenage (Mr. Wells) wants to change the structure of the ODA budget. Perhaps he would like to come to talk to me about how he would like to do that, because I can see difficulties there. He presented a balanced view of the report of the Catholic Institute of International Relations. My job is to judge from those reports, the CDC and the assurances that it gets, as to whether it is to go ahead. I thank my hon. Friend for his speech, because the House knows that he has great experience and listens with interest to what he says on this subject.

The hon. Member for Harlow (Mr. Newens) made much the same speech as his hon. Friend the Member for Heeley, dealing with the same subjects and much of the same evidence. He asked me whether the CDC takes into account the rights of indigenous people in planning its operations. I can assure the hon. Gentleman that it certainly does so. If it did not, I should be as angry as he would be.

Finally, I thank my hon. Friend the Member for Ludlow (Mr. Cockeram) for his speech,. in which he tended to put the other point of view. We have to sort out what the bishop did or did not write, or what the bishop did say. I shall go into the matter.

I am glad that the work of the CDC commands such wide support on all sides. Lord Kindersley, the chairman, Sir Peter Meinertzhagen, the general manager, and their staff are continuing with spirit and devotion the distinguished work of their predecessors at a time and in a situation in which they, like most of the developing countries, are faced with serious and difficult problems. The CDC has made a real, substantial and positive contribution in tackling some of the problems over the years, and I know that it will continue to do so. The Bill will assist the CDC in its work. I commend the Bill to the House, and I thank the House for the support that it has given to this measure.

Question put and agreed to.

Bill accordingly read a Second time.

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

Further proceedings postponed, pursuant to order this day.