Commonwealth Development Corporation Bill (Hansard, 16 March 1995)

§ The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry)
I beg to move, That the Bill be now read a Second time.
The Commonwealth Development Corporation—CDC—is a statutory corporation which was established in 1948 to assist overseas countries in the development of their economies by investing in financially viable and developmentally sound business enterprises. The corporation provides loans, equity and management services in a wide range of economic sectors, operating on a quasi-commercial basis outside Government channels. It enables us to provide direct assistance to the private sectors in developing countries.
Although now called the Commonwealth Development Corporation, the CDC was established by this Parliament. The members of the corporation are appointed by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, and it is funded by the United Kingdom Government.
At present, the CDC operates in 52 countries, 39 of which are members of the Commonwealth. A Monopolies and Mergers Commission report on the CDC in 1992 concluded that it provided a particularly valuable form of assistance to economies in developing countries.
Last year, the CDC invested around £240 million, a record level. Eighty per cent. of approvals were in the poorest countries, above the target agreed with Ministers. Its total investment portfolio stands at over £1.6 billion.
The corporation's task is to use the disciplines and practices of the private sector in order to promote sustainable development in countries. It invests only when projects are expected to make a positive contribution to national development; participates only when its involvement adds value; and structures its investments according to commercial criteria. The corporation actively seeks to improve the links with British and other private sector overseas investors, so that it can build on its traditional role as a catalyst for mobilising international finance alongside its own investment.
The new focus in developing countries on private sector-led development is opening up new opportunities for the CDC, both in new and traditional areas. It might be helpful if I briefly give some examples of the range and scope of the corporation's activities.
In Zambia, in October last year the CDC took a majority shareholding in Chilanga Cement Limited, the largest cement producer in Zambia and an essential component of the Zambian economy. The corporation has management responsibility for a major programme of rehabilitating and enhancing the productive capacity of that company. Notably, 30 per cent. of the company's shares are to be sold to local private 1042 investors, marking an important stage in the Zambian privatisation programme and the return of an active capital market in Lusaka. It is ironic to note that the CDC first become a majority shareholder in Chilanga in 1949, and has now returned to this position after a long period in which the company has been run by a Zambian state-owned company.
In Uganda, the Development Finance Company of Uganda—DFCU—has the CDC as a leading shareholder. The demand for asset finance in Uganda is high. Many businesses are growing rapidly and require quick access to finance for new plant and equipment. The corporation and DFCU have promoted the Uganda Leasing Company which opened for business in January. The corporation will provide 21 per cent. of the equity and a loan to the new company. The managing director has been seconded from the CDC.
Because of Uganda's history, there is a low level of savings, and many would-be entrepreneurs are frustrated by being unable to raise finance for their projects. The Development Finance Company of Uganda has now set up its own venture capital fund. It has enabled mortgage business for house construction and house purchase to expand, and with it the prospect of respectable profits and regular dividends.
The DFCU has nine investments in parastatal companies made in the 1960s, and has thus been well placed to play an important role in Uganda's privatisation programme. The DFCU was centrally involved in the privatisation of East Africa Distilleries, in which it had a 23 per cent. stake. In 1992, the DFCU and the other minority shareholders persuaded the Ugandan Government to sell its 51 per cent. stake to International Distillers and Vintners, which has taken over the management and turned the company round in a matter of two years.

§ Mr. D. N. Campbell-Savours (Workington)
May I ask the Minister a question? I am not trying to be especially mischievous; I genuinely want to know the answer. He will know that my hon. Friends were deeply opposed to privatisation of the CDC, but why did the Government decide not to privatise it in the end? What were the pressures on the Government not to privatise, and what interests did they have in mind when they made that decision?

§ Mr. Baldry
We considered that it would be far better for the CDC to remain in the public sector. We considered all the options, and that was the conclusion to which we came.

§ Mr. Campbell-Savours
Why?

§ Mr. Baldry
Because we believed that that was in the best interests of the CDC and those whom it seeks to serve.

§ Mr. Campbell-Savours
That is just a general response. In principle, we do not believe that the CDC should be privatised, but there must be reasons why the Government have come to the same conclusion. There must have been some argument in the Department, and the case put against privatisation must have been 1043 overwhelmingly convincing to Ministers. Can the hon. Gentleman tell us something of what the debate in the Department was about?

§ Mr. Baldry
I am not sure whether the hon. Gentleman is being mischievous after all, or whether he is teasing. Unlike the Labour party, which has a dogmatic opposition to the word "privatisation", we are not driven by dogma. The CDC serves a valuable purpose, and it was obviously right that there came a time when we considered whether it should not remain in the public sector. However, having regard to the particular work that the CDC does, we concluded that it would be better for it to remain in the public sector.
Also in Uganda, the CDC and the International Finance Corporation, with other companies, are developing Uganda's first cellular telephone network, covering 15,000 subscribers in Entebbe, Kampala, Jinja and Tororo. Using the most advanced digital cellular technology, the company will provide high-quality digital telecommunications services, including mobile communication and interconnection to the Uganda Post and Telecommunications Corporation fixed-line network and international gateway.
In India, the CDC has made available a £25 million loan to the Housing Development Finance Corporation Ltd. The HDFC was the first housing finance corporation of its kind in India and has been a leader in developing that sector, with currently 387,000 borrowers and 210,000 depositors. Seventy-five per cent. of its business is with individual home buyers and, with the CDC's financial backing, the HDFC is continuing to expand its business as opportunities grow with the liberalisation of the Indian economy.
In Sri Lanka, the CDC has approved a second loan of US$30 million to the National Development bank to finance the expansion of its existing operations in term lending, leasing and other financing for predominantly private sector industrial clients in Sri Lanka. Overall demand for term finance has been growing at an average of 30 per cent., and is expected to continue in that way.
The CDC's first investment in South Africa is scheduled to be made through the establishment of a fund to make equity and quasi-equity investments in franchise operations mainly owned or operated by previously disadvantaged groups. Nedbank investment bank will be contracted to provide management and technical services to the fund management company, and the CDC's involvement will be purely equity of nearly £2 million.
Throughout the world, the CDC is investing and helping developing countries to promote their economies.

§ Mr. Menzies Campbell (Fife, North-East)
The list of projects that the Minister has given is very creditable, and will be welcomed by all hon. Members.
As the Minister knows, the Prime Minister recently returned from a visit to the middle east, where I understand that he visited both Gaza and the west bank. As far as the Minister is aware, is there any reason in 1044 principle why the CDC should not support projects in those areas? If there is no such reason, is he aware of any such proposals?

§ Mr. Baldry
In principle, there is no objection to the CDC's operating in any part of the world. In practice, when it wishes to operate in a new country, it asks the permission of Ministers. As far as I know, it has made no application or proposal in relation to Gaza or the west bank; if it did so, any such application or proposal would be considered on its merits.
The CDC has recently been granted permission to operate in a number of countries. There is nothing ideological about our attitude: we want to ensure that the CDC is put to the best possible use wherever it operates.

§ Mr. Quentin Davies (Stamford and Spalding)
Is my hon. Friend satisfied that, when the CDC makes an equity investment in some enterprise in the developing world, it is every bit as rigorous and aggressive in insisting that that enterprise is run on commercial lines, that opportunities for efficiency gains are taken and that waste and overmanning are eliminated—and in resisting local political pressures to adopt a non-commercial course—as a genuine private sector investor would be when shareholders' money was at stake?

§ Mr. Baldry
Yes. As the Select Committee on Foreign Affairs discovered when it examined the CDC's work, it has an impressive record of ensuring that its money is put to the best possible use, and that the companies and equities in which it invests use that money in the best possible way. I know of no CDC scheme that has been the subject of public criticism, either in the country concerned or in this country.
In the past, the CDC's resources have been found almost entirely through concessional loans from the British Government. The returns made on the proceeds of its investments have been available for further investment. In 1993, my right hon. Friend the Minister for Overseas Development announced that the CDC would no longer receive net new loans from Government, but would no longer be required to pay interest on new and existing loans. As a result of the repayment of outstanding interest and capital on loans and other realisations, an increasing amount of new investment is being made, at decreasing cost to the aid programme.

§ Miss Emma Nicholson (Torridge and Devon, West)
My hon. Friend has been describing a British success story—the story of an organisation which, as I think he will agree, has successfully transformed itself from a colonial supporting organisation to an organisation that is worldwide, or at least which operates in many interesting and important parts of the world.
Will my hon. Friend clear up two points? First, is he confident that the loans straitjacket will be sufficiently loose for the CDC to be able to borrow effectively and support its work without cost to the British taxpayer? Secondly, how can we more effectively promote the CDC's image internationally? This success story—this British-grown international finance corporation—is very little known outside its client base.

§ Mr. Baldry
The answer to the first question is yes. As for the second, in the countries that I visit— 1045 Pakistan, the Dominican Republic and other countries where the CDC operates—its work is widely recognised and appreciated. People realise that it is an instrument with which the British Government are helping to develop and sustain private enterprise in those countries. It has a high standing, which is also to the credit of the United Kingdom.
Although the interest rate was lowered to nominal levels in 1994, a full interest waiver for the CDC requires an amendment to the existing Act, which is proposed in the Bill. The Bill also recognises the CDC's continuing need for external borrowing. Last December, the CDC obtained funds from a source other than the British Government—in this instance, the European investment bank.
It is also exploring the possibility of borrowing from other lenders. Its total level of borrowings is already very close to the existing statutory limit of £850 million, and an increase in that ceiling is essential to ensure the corporation's future financial health.
Counted within the limit is the borrowing of CDC's overseas subsidiaries, which will increase roughly in line with the overall increase in its portfolio. The Bill proposes an increase initially to £1,100 million, and then, following the further agreement of Parliament through an affirmative resolution, to an overall ceiling of £1,500 million. That should be sufficient to provide a firm basis for the CDC's future investment programmes well into the next century.
It is a reflection of the CDC's success that the overwhelming majority of new investments will be financed from the returns on existing investments. In 1993, equity realisations of £27 million were made, allowing an overall level of £48 million to be transferred to reserves. It remains the intention of the CDC to unlock the very substantial level of assets held in some long-standing investments so as to secure resources for further expansion of its work in developing countries.

§ Mr. Tony Worthington (Clydebank and Milngavie)
There is no real controversy about the Bill. Any controversy is about whether it goes far enough. If this is a British success story, why is such a marginal increase being made in the resources which are available? I am confident that those resources will be inadequate in the pretty near future. Why are not the Government backing the success story more fully?

§ Mr. Baldry
With respect, only a member of the Labour party could describe an increase in borrowing limits from £850 million to £1,500 as marginal. It is a substantial increase in the CDC's borrowing powers. Certainly, the CDC is confident that the increase will enable it to operate well into the next century.
The CDC opened a new office in South Africa last year. This year, it plans to open offices in Mozambique and Uganda. The CDC has helped to establish a venture capital fund in Tanzania, which it also manages. It provides risk capital for local businesses, and complements efforts to establish a local equity market.
In South Africa, even with its far more highly developed capital market, development capital funds for small entrepreneurs can still be very difficult to obtain. Following the visit of my right hon. Friend the Prime 1046 Minister last September, the CDC is announcing this month an investment of £9 million in a new development capital fund in Johannesburg. Clause 1 of the Bill increases the statutory limits on the total amount outstanding in respect of sums borrowed or guaranteed by the corporation from £850 million to £1,100 million, with provision for an increase by order for a sum not exceeding £1,500 million.
Clause 2 provides the powers necessary to ensure that the terms of existing aid loans for the CDC should become interest free.
Clause 3 enables the Secretary of State to determine the remuneration of members of the corporation. The Bill makes no change to the Secretary of State's powers to appoint members of the corporation.
Clause 4 gives effect to the repeals set out in the schedule, and clause 5 makes provision for the title and extent of the Bill.
The House last reviewed and agreed new borrowing limits for the CDC well over a decade ago in 1982. Hon. Members on both sides of the House agreed then on the value of the CDC's work for developing countries and for Britain.

§ Mr. Campbell-Savours
Will the Minister give way before he concludes?

§ Mr. Baldry
I am sure that the House will again agree to endorse the work of the CDC, to place it on a sound financial footing to carry it into the 21st century and to enable it to continue its excellent work in promoting the private sector's investment and jobs in developing countries. I commend the Bill to the House.

§ Miss Joan Lestor (Eccles)
I welcome the opportunity to express general support for the work of the Commonwealth Development Corporation and to congratulate the Minister on the [...]ise way in which he went through the clauses. I am afraid that he went through them so quickly that my hon. Friend the Member for Workington (Mr. Campbell-Savours) was unable to intervene. I hope that my hon. Friend will have the opportunity to speak later in the debate.
Not a great deal divides us on the Bill, but I should like to raise one or two important points. As the Minister said, from its inception under a Labour Government to the present day, the CDC has provided much-needed investment in the poorest countries of the world. In 1993, 72.9 per cent. of total investment went to the poorest countries, of which almost 30 per cent. was allocated to sub-Saharan Africa. Nobody could possibly disagree with that.
Initially, that investment was concentrated in former colonial countries, which subsequently became members of the Commonwealth. Last year, when things had to be changed, as the Minister said, permission had to be sought and was granted for CDC involvement to extend to El Salvador and, indeed, to South Africa—countries, as we would all agree, in need of, earning and deserving the support of this country and of the CDC.
In such countries, where inward investment is essential but private investors are often very hesitant, the CDC carries out its vital work: pump-priming local economies, meeting the needs of some of the poorest 1047 people of the world for vital infrastructure, contributing to economic and political stability, and sending out positive signals for the rest of the world to follow, which I hope is especially true in the case of South Africa, Mozambique and others.
As the Minister has said and the reports have told us, the CDC is not only effective but has been very efficient in the years that it has operated. In the past, its investment funding has been largely self-generating, supplemented by long-term, low-interest loans. The Minister mentioned the Chilanga cement project in Zambia. I am pleased to tell the House that I shall be visiting that project next week when I visit Zambia. The CDC offered me the opportunity to see the project, and I look forward to it very much indeed.
In the financial year 1994-95, there was a net flow from the CDC to the Government of £7 million and, at the same time, £1,677 million was invested. Final audited figures, I understand, for 1994 are not yet available, but the 1993 figures show that the net cash injection from the Government represented less than 5 per cent. of the level of new investment and 0.5 per cent. of external aid spending.
This Bill is interesting not so much for what it says as for what some of it fails to say. We can all support the move to raise the CDC's borrowing limits, given its good track record and the enduring needs of developing countries, particularly in sub-Saharan Africa. I am not so sure, however, about the recommendations to remove Treasury controls over salaries, pensions and allowances.
I do not doubt that that will result in substantial gains for some members of the corporation—an outcome synonymous with the privatisation process. Indeed, I am sure that I was not alone in thinking that the CDC was at some point being lined up as a candidate for privatisation, on the grounds that it would give it the commercial freedom that it seemed to be seeking. I therefore welcomed the Foreign Secretary's statement in May ruling out privatisation.
The Minister's answer to my hon. Friend the Member for Workington did not make it terribly clear why privatisation was ruled out. There was a recognition that a privatised CDC would have aims, objectives and a financial structure inconsistent with its development role. From reading the report, that seems why privatisation did not go ahead, and I am very glad that it did not.
In the Minister's winding-up speech, would he tell me why the argument that the CDC could obtain the commercial freedom it sought without privatisation was in contrast to the argument and action over the Crown Agents, which has just been debated in another place, where it was argued that only by the removal of the Crown Agents from the public sector could they have the greater financial freedom that they sought and needed to expand?
I find the argument inconsistent. What was the difference? The Minister, in all fairness, has not explained the reasons. I agree with the Minister and the report that it is inconsistent to deem that privatisation could rule out, hamper or in some way limit the aims 1048 and objectives of the CDC. It would be interesting to know why the Crown Agents were treated rather differently.
Speculation about the future role of the CDC continues to grow. This Bill does not answer all my concerns, which were fuelled by recommendations in the report of the Monopolies and Mergers Commission in 1993, the CDC's own five-yearly review and various odd comments from Ministers. Reference was made in the review to the
wider world in which the CDC now operates". During debates in this House in 1992, before her elevation to another place, the Minister for Overseas Development mentioned
the expanding role which I hope it"— the CDC—
will have in eastern Europe and the former Soviet Union … There is nothing to stop CDC work in eastern Europe provided there is sensible risk".—[Official Report,; Vol. , c..] I hope that any possible involvement in that direction will not be at the expense of our commitment to Commonwealth countries. Will the Minister give us that assurance? It is particularly important, given the Government's endorsement in 1993 of the quinquennial review recommendation to drop the operating target for the proportion of investments in the Commonwealth.
I also ask the Minister to assure the House that any such initiative will be funded separately, and that the poor of South Africa, Mozambique or wherever the CDC intends to operate will not be paying for investment programmes in the former Soviet Union. That is a concern that we all share about the aid programme, and the widening operation of the CDC.
In some ways, this Bill is unfinished business, and we will be looking again at the role of the CDC, especially as it expands. There are many areas of investment in which it is prohibited from action—the provision of schools, hospitals and colleges, for example—and although I am aware that it is not, strictly speaking, an aid organisation, the social spin-off of projects should be one of the guiding factors determining their acceptability. Surely that is not too much to ask.
The Government's track record on aid and development is increasingly tarnished, and typified by scandal and mischief, from the misuse of aid funds for the Pergau dam to the wrecking of the Lomé negotiations and the deterioration in the aid budget. While it does not redress the balance, the sound reputation of the CDC makes a different contribution to aid and development projects. I trust that Ministers will bear that in mind during the coming months.

§ Miss Emma Nicholson (Torridge and Devon, West)
I will not take up more than a few moments of the time of the Minister and the House, because there is such broad unanimity on the Bill. I want to take this opportunity to congratulate the Government and the Commonwealth Development Corporation on this tremendous British success story.
I am particularly interested in the expansion of the CDC from Commonwealth countries into other needy countries worldwide. Of course, it was a lapsus linguae on the part of the Opposition spokesman on aid, the 1049 hon. Member for Eccles (Miss Lestor), to mention Mozambique, which I do not believe is a member of the Commonwealth. I appreciate her view that the poorest of the poor should not suffer with expansion in eastern Europe, the countries of the former Soviet Union and Russia.
The CDC has broadened its remit very dramatically indeed, which is to be welcomed because private investment in countries in difficult economic circumstances cannot be bounded by old colonial boundaries, however attractive that may seem historically. I very much hope that the CDC will investigate China and Russia, and I want it to find ways to help some of the poorer countries in the middle east, such as Yemen. The investment in Johannesburg in the wake of the abolition of apartheid is going to be one of the most wonderful developments, and is very exciting indeed.
This Bill will bring some modern structures into the CDC. I welcome the move, for example, to have the chief executive on the board. Like the hon. Member for Eccles, I welcome the fact that we will look more sensibly at salary levels.
I want to consider enlarging the British Government's publicity machine for the CDC. I have been fortunate to visit a number of CDC projects in operation in India and parts of Africa and, as someone who has been to some of the poorer areas of the world, it has been a great joy for me to see an organisation so deftly picking up investment opportunities, staying with a company while it begins to flourish and then withdrawing.
No commercial organisation could ever carry out that sort of operation. After all, the Commonwealth Development Corporation is asked by the Government only to wash its face, not to make a profit, and any profit is ploughed back into the organisation. It is an altruistic attitude, and it is right and proper for a national Government body to achieve that.
I regard the Commonwealth Development Corporation as the silent partner of the Overseas Development Administration's major humanitarian aid effort, and all I ask the Minister is that we should somehow discard that over-humble attitude. We should stop it being the silent partner and try to get its wonderful developmental work known much more widely among the British people.
After all, its work is sponsored through the taxpayer—or is it? Will the Minister assure us that the borrowing levels will not be inhibited by the Treasury? Internationally, the wider borrowing requirements take a burden off the British taxpayer while assisting people in poorer developing countries who need loans, development and, above all, British expertise, which is carried out superbly as only the CDC seems able to do.
I ask the Minister again: will he please think hard about publicity about the CDC? It is a wonderful organisation. It is the United Kingdom's home-grown international finance corporation. All I ask is that we should shout a little louder on its behalf.

§ Mr. Tony Worthington (Clydebank and Milngavie)
I am glad to see that we are debating this Commonwealth Bill because I thought that this year we would debate a different Commonwealth Bill, which 1050 would rule out the Commonwealth Institute. I am pleased to see that the Government have backed off from the Commonwealth Institute Bill, because they would never have got it through this House or the House of Lords. I congratulate the Government on recognising more than they did in the past the value of the Commonwealth.
This could be a golden age for the Commonwealth, now that we have got rid of some of the problems of the past, like apartheid in South Africa and Baroness Thatcher, and moved on so that some good can come out of Commonwealth initiatives. I know that the CDC covers a wider area than just the Commonwealth, but it is good to see Commonwealth initiatives; I was particularly pleased about the current initiative in Sierra Leone.
The CDC is well thought of and extremely successful. The central problem remains, however, of why more is not done to bring it to the attention of the British public and expand it more fully. My hon. Friend the Member for Workington (Mr. Campbell-Savours) asked a good question, which has not yet been answered. I hope that the Minister will find time later to say why the Foreign and Commonwealth Office seems to be giving the CDC such a modest push. When other small achievements are trumpeted, those of the CDC are not.
May I start by making a couple of quibbles about the CDC? In its annual report, it appears to be a London-based quangocracy of some kind. The board appears to lack balance, and I hope that the Government will take that into account when considering how it is developed. There is an absence of women among senior members of the board. That is a major weakness, given that development in many parts of the world is led by women. Their perspective should be included on the board.
I wonder how the Foreign and Commonwealth Office assembles the board of the CDC. Judging by the annual report, it simply has a whistle down the road to the Overseas Development Institute or Chatham House, and says, "Who have you got here?" or goes around its pals in the banking world. I have nothing against the ODI and Chatham House, as I support both organisations, but the CDC board seems to he stuck in a bit of a rut, as it includes no one from Scotland, Northern Ireland or Wales.
Do those parts of the Commonwealth not get a look in when it comes to appointments to the board? Much of the best development is now done by major British non-governmental organisations operating in the same parts of the world as the CDC, but they are not represented on the CDC's board.
I also wonder about the CDC's right-wing tilt. Not only does the text of its annual report have such a tilt but it is the only annual report I have ever seen in which the pictures of board members are tilted to the right as well.
More seriously, the chairman's report on page 8 is worrying, as it says:
CDC's prospects are aided by the wide-spread acceptance of IMF/World Bank led policy reform". Where is that widespread acceptance? This is one of the consequences when a country does not send its Prime Minister to the social summit, because he and all those associated with him get out of touch. 1051 The summit communiqué, which was agreed at the social summit, says:
Programmes drawn up by institutions like the World Bank and the International Monetary Fund, designed to restructure the economies of developing countries, should take social factors more into account to avoid disruption". I hope that the CDC realises that it is not accurate to say that World bank and IMF programmes are widely accepted. Even the World bank and the IMF admit that they have made major errors in their structural adjustment programmes. I hope that that matter will be brought to the CDC's attention.
That apart, we agree that the CDC is well thought of in the House. It has achieved a great deal and is living proof that good-quality industrial and commercial development can be carried out in the most unpromising circumstances. It is extremely good that the CDC should be attempting initiatives in some countries in Africa where it is currently operating—like Sierra Leone and Sudan. I doubt whether it is operating in some of those countries, as nothing industrial or commercial is likely to be going on in Liberia at present, although the annual report says it is.
The Government do not make enough use of the CDC, and the major question that I wish to raise is whether the Bill goes far enough, in terms not only of its borrowing requirements but of commercial freedom. Will the Minister clear up that matter? Is the CDC allowed to borrow commercially if its wants to? If not, why not?
That is basically the problem with the Post Office. The Labour party believes that some organisations in the public sector could be given more freedom. The CDC is trying to achieve the maximum possible economic and social development, particularly in sub-Saharan Africa, and it would be tragic if such development could not proceed successfully, because the CDC was held up by Treasury rules and Government dogma, which currently prevents the Post Office from being liberated.

§ Mr. Campbell-Savours
Will my hon. Friend press the Minister to reply to that point during the course of his contribution? I am not being mischievous again, but it would help the debate if the Minister would deal with the specific point that my hon. Friend put, which is extremely important and repeatedly raised with us by development organisations.

§ Mr. Worthington
It is the crucial point. Perhaps the Minister will tell us what the CDC says to the Foreign and Commonwealth Office. Does it believe that it has enough commercial freedom? I am willing for the Minister to intervene.
Does the CDC believe that the Bill before us is the one that will enable it to do its job to the best of its capabilities? I am keeping going to give the Minister every opportunity to answer. Does the CDC have the freedom to enable it to do valuable work in the 1052 developing world to the best of its ability, or is it at all hamstrung by Government restrictions? Does the Minister wish to intervene?

§ Mr. Baldry
I will answer later.

§ Mr. Campbell-Savours
No. It would help our debate. This is a debate.

§ Mr. Worthington
My other questions are about zones of operation. Where is the CDC allowed to operate? There is a strange part in the annual report about countries in which the CDC is allowed to operate. That is directly under the Minister's control. What agreements have been reached with the CDC about specific zones of operation?
I was unfortunately called out during part of the Minister's speech, and he may have discussed the matter, but we need complete clarity about central and eastern Europe. Will the CDC be allowed to operate in central and eastern Europe, or will it be restricted? Will we be told whether it has been decided that at present the CDC should not be allowed to operate in central and eastern Europe? I do not oppose it operating there, because I believe that the CDC could do a valuable job, but what decision has been taken on that matter?
As my hon. Friend the Member for Eccles (Ms Lestor) said, we would not want money that would otherwise contribute to economic development in sub-Saharan Africa to go into central and eastern Europe. That is not to say that the CDC does not have a role in that region—I think it does—but I do not think that the Minister mentioned that crucial subject.
Will the Minister also clarify some matters in relation to South Africa? In the most recent annual report accessible to us, we are told that the CDC is not allowed to operate in South Africa. I am sure that that has changed. South Africa has been a Commonwealth country and, since it is the key country in that part of the world—the Minister mentioned it in his speech—the CDC will operate there. On what scale will it operate? I referred, perhaps wrongly, to a marginal increase. It is not a marginal increase, but I do not want the CDC to be hamstrung. To what extent will the CDC be fully encouraged to do the work that it would want to do in South Africa? That is another key question.
Will the Minister specifically say whether the CDC will be allowed to operate in the middle east? The Prime Minister has just returned from Gaza. The greatest need in Gaza and on the west bank is for economic development, so that the people rapidly realise that change is occurring. The skill of the CDC is that it reaches an area before the private sector is fully committed, and Gaza and the west bank are such areas. Once again, I ask the Minister: what is the ruling of the Foreign and Commonwealth Office about whether the CDC will be able to operate in that region?
There are several important questions, one of which was asked by my hon. Friend the Member for Workington. The Minister has not answered it. My hon. Friend mentioned structure and commercial freedom, and asked whether the rules that are laid down now are the right ones for the CDC.
I want assurances from the Minister that the CDC and the Government are aware of the widespread questions about World bank and International Monetary 1053 Fund policies that are regarded as having been deeply flawed. I should not like the CDC to be in a time warp in which it would say that they were fully acceptable.
I should like the Minister to answer the geographical questions but, as he will gather, there is general Opposition support for the CDC.

§ Mr. Menzies Campbell (Fife, North-East)
As everyone knows, the Bill will receive a Second Reading, and I hope that it will pass all its remaining stages this evening. The Second Reading debate gives us the opportunity to mention several general matters concerning the CDC, as well as certain matters with which the Bill is not expressly concerned but which are none the less relevant.
As was said at the outset, it is interesting that the CDC has retained its place in the public sector, on the ground, as I understand it, that to be there is more consistent with its development role. That shows, to the satisfaction of some of us in the House, that at least there are some bounds to the Government's doctrinaire approach to privatisation. In many respects, I have always thought that that was a pretty arid argument, because the issue must surely be the effectiveness of an organisation rather than its place in one sector or the other.
It is important to realise that a large contribution to the new investments made by the CDC arises from surpluses and recycled funds. That puts a large premium on good management and sound decision-making. We can have some confidence in that regard. The Minister has referred to the 1992 Monopolies and Mergers Commission report, to point to its conclusion—that the help provided by the CDC is especially valuable to the economies of developing countries.
In another important element, the report recognised the competence and dedication of the staff of the corporation. It is also worth noticing that the operating costs of the CDC are very low, and bear favourable comparison with other similar organisations.
Like the hon. Member for Clydebank and Milngavie (Mr. Worthington), I am worried about the issue of areas of operation. Indeed, during the period of the hon. Gentleman's enforced absence during the Minister's speech, I drew the Minister's attention to the issue of Gaza and the west bank. It seems to me—I think there is some recognition of that in the policy that attaches to the CDC—that it is thought to be legitimate that the CDC should operate in a region where some element of the interest of the United Kingdom arises.
Having visited Israel shortly before Christmas last year, and having continued since then to try to keep a monitoring eye on events in the middle east, and especially that part of the middle east, I am convinced that the success of the peace process established in the middle east, and especially involving the Palestine Liberation Organisation and the Israeli Government, will largely depend on the extent to which the economic aspirations of many people in Gaza and the west bank can be recognised and fulfilled.
The Prime Minister's visit this week is timely and appropriate. I understand from some of the reports that he took with him many people with commercial interests, one of whom at least, I understand, said on 1054 the aeroplane on the way back that he would find it perfectly possible to work with any sensible Government, including, apparently, a Labour Government. Whether the Prime Minister thinks that the fare of that member of the party was justified is another matter entirely.
As I said, the success of the peace process will depend on the extent to which there is economic development. I cannot conceive of a region in which we have greater political interest at the moment than the middle east.
Having raised that case and indulged in what one might fairly call special pleading in relation to it, I am immediately conscious of the argument by the hon. Member for Clydebank and Milngavie that those with interests in the third world, and especially non-governmental organisations there, have a legitimate anxiety that expansion or possible expansion into eastern Europe will be at the expense of Africa.
Do the additional borrowing powers that the Bill now affords to the CDC suggest an intention that profits from impoverished parts of Africa will be used to finance new investments in eastern and central Europe? If that were to be the case, many hon. Members on both sides of the House would consider that an inappropriate way for the CDC to proceed.
Many hon. Members recognise the CDC's potential role in central and eastern Europe, but as has already been said, surely that should be done through the provision of additional funds—new money. It should not be done at the expense of other areas, particularly Africa, where the CDC has been traditionally active. The Minister properly referred to that when he listed a number of admirable CDC projects.
I have no criticism of clauses 1 and 2, which are perfectly sensible. Clause 3 relates to remuneration, pensions and allowances. I am pleased to note that they are to be determined by the Secretary of State and not by a committee of the Confederation of British Industry.
We will want to know from the Minister what Secretary of State expects to be the outcome of the new flexibility. Does he expect the total cost to go up or down? The word "flexibility" is often used to justify some change in policy. Those of us who have regard to public transport know that "flexibility" almost always means a reduction in service. When one talks about wages or the income of manual workers, "flexibility" almost always means a reduction in those wages or income. When used in the context of executives and board members, "flexibility" almost always means an increase.
Somewhere within the Foreign and Commonwealth Office, someone must have done a calculation of the financial consequences of passing clause 3 into law. I should like to know precisely what estimate the Secretary of State has made of the consequences of doing that.
It is worth reminding ourselves that, by the end of 1993, the corporation was involved in more than 340 businesses, which provided, on a calculation, several hundred thousand jobs. The nature of those projects means that they often extend over 10 or even 20 years. They are therefore long-term investments in the economies in which they are placed. 1055 We must ask ourselves whether some constraints have been placed on the activities of that success story to which it would have perhaps been preferable that the Bill had turned its attention. In particular, can the Minister tell me why the CDC continues to be liable to United Kingdom corporation tax, when the Select Committee on Foreign Affairs endorsed the recommendation of the Monopolies and Mergers Commission that it should no longer be subject to that tax?
The Committee pointed out that, were it not subject to that tax, two things would flow from that. First, additional funds would be available by virtue of the remission of corporation tax. Secondly, and perhaps more significantly, the CDC's ability to negotiate favourable tax status in host countries would be enhanced. That would have a multiplier effect on the investments by the CDC.
The other element of finance that certainly requires consideration and explanation is the application of nil net funding and the least-cost rule. What consequences will they have on the CDC's ability to fulfil its responsibilities? To turn the matter round and put it in a more practical way, what additional amounts could be raised for the activities of that success story if neither nil net funding nor the least-cost rule were to be applied to the corporation?
The Bill is narrow in scope, but it leaves a number of important questions unanswered. I hope that we will have an early chance to return to them, because one thing is certain: as the debate has demonstrated so far, the corporation commands the attention and support of the House. If its success is such as has been justified in the debate, surely it is entitled to a greater freedom and an enhanced role.

§ Ms Glenda Jackson (Hampstead and Highgate)
I should like to concentrate on one specific matter, which I hope that the Minister will be able to address.
The hon. Member for Stamford and Spalding (Mr. Davies)—regretfully, he is not in his place now—intervened on the Minister and asked for categorical assurances that any investment entered into by the CDC would be subject to the most rigorous financial safeguards. In essence, he believed that, when considering an investment, the CDC should act like a private company, which has responsibilities to its shareholders. The Minister gave that categorical assurance.
We all agree that the resources given to the CDC are less than those that, ideally, we would like to give it. The only strictures governing the CDC that seem to matter relate to finance. Why do we not also issue strictures about the gross abuse of human rights that takes place around the world, and particularly in countries that are in desperate need of development and inward investment? There is something illogical in judging the value of the individual nation state exclusively on the lowest possible wages that it is prepared to accept and the longest possible hours that it will demand its workers 1056 to work. That may balance the books according to accountants, but it neglects the greatest resource of any nation state—its people.
Developing nations are increasingly guilty of abusing human rights associated with work and the development of industry. Any kind of democratically based argument against impositions from central Government may preclude the introduction of human rights, but brings in its train human rights abuses. The nation state Government argue that such criticism of their action goes to the basis of the economic development of their country.
The abuse of human rights has meant that trade union leaders have been murdered and abused, many of them women. Newspapers have been closed down, and journalists have disappeared. Writers who speak out against the governing regime are forced into hiding in their own countries, or even flee their own countries to find sanctuary abroad.
One of my constituents has been the victim of the current gross abuse of human rights in a Commonwealth country, Nigeria. I refer to the daughter of Chief Abiola, who, as we know—

§ Mr. Deputy Speaker (Mr. Michael Morris)
Order. I hope that the hon. Lady will relate that example to something to do with the CDC. If not, she is not in order.

§ Ms Jackson
I began my argument by saying that the Government have issued certain strictures which relate exclusively to the funding and financial structure of the CDC.

§ Mr. Deputy Speaker
Order. I have listened most attentively to the hon. Lady, and she was about to refer to an individual case. That case must relate to something to do with the CDC; otherwise, those comments are not in order.

§ Ms Jackson
I am grateful to you, Mr. Deputy Speaker. If I might continue my argument a little further, I believe that it is equally important that implementation of the necessary CDC projects are governed just as much by respect for human rights in the third world as they are by financial considerations. I must admit that I had intended to cite another individual's case—that of Ken Saro Wiwa, another Nigerian who has suffered gross human rights abuses from his Government.

§ Mr. Deputy Speaker
Order. This is not a debate between the Chair and the hon. Lady. There are two Commonwealth debates today, and it would be entirely appropriate for the hon. Lady to raise individual cases affecting the Commonwealth in the second debate. We are on the Second Reading of the Commonwealth Development Corporation Bill. I hope that she will bear that in mind.

§ Ms Jackson
I am grateful, Mr. Deputy Speaker, but rather disappointed that it is impossible for you and me to have a debate on this matter. I shall certainly consider what you have said, and perhaps redraft my arguments.

§ Mr. Campbell-Savours
One of the principal arguments in the development movement over the years is that, before British support is provided, whether 1057 through the CDC or via the Overseas Development Administration directly to overseas countries or corporations, there should be greater consideration of human rights. There is an argument that one should not allocate money to countries in which there are abuses of human rights. In the context of the individual cases about which my hon. Friend obviously wishes to speak, she might care to reflect on whether there should be CDC support for the countries in which those cases have occurred.

§ Ms Jackson
That was to be the main thrust of the argument that I was beginning to develop. We have established that there is limited funding for the CDC and for other development agencies. I do not think that any country can claim to have an absolutely clean slate on abuses of human rights, but it should be a prerequisite that no sizeable funding, and certainly no pump priming, should be provided to countries in which there are such abuses.
In Nigeria, pump priming has led to increased development of the oil industry.

§ Mr. Worthington
My hon. Friend's example of Nigeria is particularly appropriate. I understand that the CDC is no longer putting new investment into Nigeria, because of the human rights abuses of people such as Ken Saro Wiwa and Chief Abiola. Such abuses have convinced the CDC that Nigeria is not an appropriate place in which to invest money. That is to the enormous detriment of the largest black African country, which is being denied CDC resources because of its Government.

§ Ms Jackson
That is the essential point: it is the people in such countries who are suffering most grievously. As my hon. Friend has said, the Nigerian Government have been found repugnant by the CDC and by others, because of the way that they have totally ignored every kind of democratic principle, and have overthrown a duly elected President.
They have imposed a military regime which has been responsible for murder and rape and the illegal imprisonment of intellectuals such as Ken Saro 'Wiwa, who was held without trial from May 1994 until February of this year. He was subjected to torture in prison, and he was manacled and kept in the dark and without food for more than 60 days. The Government of Chief Abiola, who was the democratically elected President of that country, were totally overturned by a general, who was himself overthrown by a military coup.
Before my hon. Friend intervened, I was discussing pump priming. There should be a proviso that pump priming does not lead to the destruction of land, as is happening in Nigeria as a result of oil development. The land of the Ovoni people, whose leader is Ken Saro Wiwa, has been destroyed by what they claim are the grossly anti-environmental practices of Shell Oil in that region.
It is alleged that that is being done at the behest of the central Government, who are desperate for as much foreign revenue as they can suck in. It is also alleged that the money is not being spent in the best interests of that developing nation, but is being used for corrupt practices by an illegal regime.
1058 Human rights should be central to the CDC's considerations when apportioning money to schemes. Such apportionment may begin with the best of intentions, but it gives little or no satisfaction to hon. Members or to the country to see desperately needed funds for developing countries being given to regimes which may occasionally provide bread and clean water and the beginnings of a health service and education, but which are mainly concerned with abusing human rights and human dignity.
I end where I began. Any consideration by the CDC of investment in schemes should not relate exclusively to economic realities and balances.

§ Mr. Hugh Bayley (York)
My hon. Friend makes an important point—that, in deciding investment priorities, the CDC should look not only at whether a sound commercial case has been made for an investment which will work and contribute to a country's development, but also at the wider social circumstances in that country.
Although there has been no investment in Nigeria for the past year, for the reasons which my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) spelled out, some countries with human rights records which give rise to concern have had investments in recent years. One of those is Indonesia, which has occupied, against our Government's wishes, East Timor. I accept that Nigeria is extremely important, but would my hon. Friend like to press the Minister on the wider question of human rights abuses in some of the countries in which the CDC is currently investing?

§ Ms Jackson
I shall certainly put that to the Minister again. I would not expect a categorical assurance at the end of the debate, but in winding up perhaps the Minister will say whether the Government are thinking of taking on board the concerns that are being expressed not only by hon. Members and by non-governmental agencies and organisations but by people all over the world.
We wish to assist in the development of third-world countries and to ensure sustainable development for the world as an entity, and the issue of human rights should be central to funding and even to selecting projects. By pump-priming major schemes, we want to develop individual abilities and enhance human dignity. We do not want simply to make a few people very rich and a very large number even more abjectly poor.

§ Mr. D. N. Campbell-Savours (Workington)
My hon. Friend the Member for Hampstead and Highgate (Ms Jackson) has raised an interesting aspect of the debate. In an intervention, my hon. Friend the Member for York (Mr. Bayley) spoke about Indonesia. Perhaps he is not aware that, according to the annual report of the Commonwealth Development Corporation, the CDC has an office in Indonesia—the country that stands charged before the United Nations with abusing civil rights in many ways.
I am sure that the CDC will want to pursue that issue and perhaps write to those of us who are present for the debate. Perhaps it will explain why it feels that, 1059 in the context of current abuses, which are the subject of repeated representations in the House, it is in order for it to invest some of its money in that country.

§ Mr. Bayley
I should like to make a brief intervention about Indonesia. According to the latest annual report by the CDC, in the most recent year an additional £13 million was invested in three new projects in Indonesia. A further two are due to come on stream in the next financial year. It is not just a question of continued investment in Indonesia: by comparison with many other CDC eligible countries, it is a high level of investment.

§ Mr. Campbell-Savours
The mind boggles as we getfurther into this discussion. One wonders what more would come out if we had time to consider the documents that some of us have received only in the past few moments.
The debate on the Commonwealth Development Corporation (Raising of Limits on Borrowing and Advances) Order 1992 took place on 4 March in the 1st Standing Committee on Statutory Instruments. Baroness Chalker, the then Minister, is now in the other place. I argued that the name of the Commonwealth Development Corporation needed to be changed.
One recommendation in the quinquennial review states:
Further consideration should be given in the context of a possible CDC Bill to the case for and against changing CDC's name". I presume that much discussion had taken place in the Department. I argued that the name should be changed to either the British Development Corporation or to the International Development Corporation.
To some extent, my case is supported by recommendation 11 in the review, which states:
There should not in future be a target for the proportion of investments in the commonwealth". That suggests—I am not arguing against this; there might be sensible reasons for it—that the Government and the Commonwealth Development Corporation foresee playing a lesser role in Commonwealth countries as against other countries that might have equally important calls on resources.
I and many of my hon. Friends have visited countries where the CDC has done excellent work—I think, in particular, of Malaysia. I have visited projects there on two occasions, and I have seen the formidable work that has taken place, and the major contribution that has been made to the local economy. When I visit some countries, however, I sense a slight uneasiness when I mention matters to do with the British Commonwealth, especially in the context of the debate that is taking place on the World Service about the CDC's activities, which seem to promote principles of privatisation.
I am not expressing a reservation about the need to promote arguments about privatisation in certain parts of the world—they might be sensible arguments. The question is whether those arguments should be advanced in the context of an organisation that is referred to as the Commonwealth Development Corporation. It is as if we were exporting our culture through an organisation 1060 that, historically, has bound people in a family of nations. There is almost a patronising intonation when one is promoting such principles of privatisation.
If there is to be a reduced role in the Commonwealth, why do not we change the name? Why does it not become the British or International Development Corporation? Why do we have to hang on to a name that, in some people's minds, relates beyond the Commonwealth to the colonial past? To some extent, we should perhaps withdraw from using terminology that some people might interpret as neo-colonial. I am not suggesting that the Commonwealth is a colonial organisation today, but some people in underdeveloped countries might view it as such.
I understand that some work has been done in Vietnam. Why should the organisation be known as the Commonwealth Development Corporation in Vietnam? The Vietnamese may not want to be reminded of their experience under colonialism by an organisation that was previously named the Colonial Development Corporation. This is only a fine point, and perhaps I am labouring it, but it was sufficiently important for the quinquennial review to suggest that the matter should be discussed in the context of legislation to be brought before the House of Commons.
The review states:
Over the next Quinquennium, at least 70 per cent. of board approvals each financial year should be for poor (IDA eligible) countries". But in the debate, Baroness Chalker said:
In 1987, we further agreed with CDC that at least 60 per cent. of new investment should be made in low-income countries".—[Official Report, First Standing Committee on Statutory Instruments, 4 March 1992; c. 3.] I presume that a commitment was made in the review to increase the proportion of money that is spent in International Development Association, low-income countries. Was that recommendation accepted? Reading the Library brief, one is led to believe that it was. I should like it placed on the record that that principle has been accepted by Ministers.
I understand my hon. Friends' concerns about how precious moneys could be diverted from underdeveloped countries to the former Soviet Union and to eastern and central Europe. However, the CDC has a critically important role to play in that part of world. Not many organisations have the international expertise that it has.
Some years ago, when I had responsibility for these matters on the Labour Front Bench, my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) and I had lunch with the CDC, when the issue was raised of the extent to which we should be involved in eastern and central Europe and the former Soviet Union.
I understand that Ministers have conceded that some developments may occur in that regard. I argue that we should substantially uplift our commitment—through organisations such as the CDC—to invest in eastern and central Europe by taking the route endorsed by my hon. Friend the Member for Eccles (Miss Lestor). She said that we should allow the CDC to borrow more freely from commercial markets, and to be free from constraints. The Minister may correct me, but it may be that Treasury rules are restricting the CDC from deploying its experince.

§ Mr. Jim Lester (Broxtowe)
I apologise to the two Front-Bench spokesmen for not being here earlier. I was with the Foreign Minister from Cambodia. One reason why the Bill is going through is that it will enable the Commonwealth Development Corporation to borrow more money so that it can do its valuable work in Cambodia as well as Vietnam. It seems apposite to welcome the Bill and to say how much one supports it and, in particular, how much one supports the CDC.
Some years ago, the Select Committee on Foreign Affairs carefully considered the CDC. All of us who have travelled and seen the CDC's work in so many countries, especially the most difficult countries, where inward and private investment is hard to attract, know that its achievements are remarkable.
One wants to support everything that anyone has said that is helpful to the CDC. I commend the Bill to the House, and I hope that it will be passed as quickly as possible. With its long experience in so many countries, the CDC brings tremendous benefit back to this country in terms of what we are able to achieve, but more particularly, it benefits the countries in which it operates.

§ Mr. Hugh Bayley (York)
I welcome the Bill. Will the Minister give the House a definition of what the Government mean by "poor"? He said that a proportion of the funding—70 per cent. I believe—will go to "poor" countries. After the Pergau fiasco, the Government decided that aid and trade provision would no longer be given to countries with a per capita GNP of more than $700. Will the same level apply to the CDC loans in future?
Given that the Government will not in future be making contributions to the CDC's loan stock, and that moneys it lends will in future be coming from repayments from developing countries, I would be extremely uneasy if poor developing countries were paying back their loans to create a loan stock for relatively richer countries in eastern Europe.
What assurance can the Minister give the House that, if there is a policy change which allows an expansion of the CDC's operations in eastern Europe—which I broadly welcome—the loans made there will not be financed from repayments made by poorer countries?

§ Mr. Baldry
I shall try to respond to the various points that have been made.
Sometimes, there seemed to be an internal debate about whether people want the CDC to invest in eastern Europe. What has come out of the debate is broad agreement and support for the work that the CDC does. I am proud to trumpet its success, and I am sure that colleagues from both sides of the House will trumpet its successes around the world and in the United Kingdom.
The Government's responsibility under the CDC Acts is to set out a strategic policy framework in which the CDC operates: it is not to second-guess it. Decisions on individual investments are the responsibility of the CDC board. There may well be occasions on which we would request the CDC to delay investments in 1062 countries where aid programme activities have been suspended on human rights grounds. The hon. Member for Clydebank and Milngavie (Mr. Worthington) raised some tension about the fact that one can sometimes withdraw support from a country and make things more difficult.
The hon. Member for Hampstead and Highgate (Ms Jackson) mentioned Nigeria. The hon. Lady may wish to stay for the next debate and make a further contribution. We would all support the comments made today by the Commonwealth Secretary-General. He said that developments in Nigeria
underscore the point that, unless and until the military Government speedily returns the country to democratic rule, Nigeria's current ills, including instability and potential for disastrous conflict, will continue to worsen. I am sure that we all agree with that.
Many hon. Members asked about the coverage of the CDC. It is pretty comprehensive. It is now doing significant business in India and Pakistan, and more recent additions include South Africa and Vietnam.
The CDC asks for the Government's permission if it wishes to operate in a new country. Obviously, we look to the CDC to take a view on where it is best placed to deploy its skills. It is important not to spread financial and management resources too thinly.
In fact, the CDC has not asked for permission to invest in eastern Europe or the former Soviet Union. If it did so, we would have to consider that request carefully, because a number of other bodies, such as the European Bank for Reconstruction and Development, already exist with a remit to promote investment in eastern Europe and the former Soviet Union. We would have to consider carefully whether the CDC had any comparative advantages over other organisations. As I have said, the CDC has not yet made such a request.
The CDC has not made any request about the west bank or Gaza. If it did, again we would give it careful consideration.

§ Mr. Menzies Campbell
Can the Minister say what criteria the Government would take into account if such an application were made?

§ Mr. Baldry
Clearly, as has been evidenced by my comments about eastern Europe and the former Soviet Union, it would depend to a certain extent on what other instruments there were to support those countries, whether we thought that the CDC could make a contribution, and the arguments that the CDC put to us.
For example, the CDC has been given permission to extend its work into central America—Nicaragua, the Dominican Republic and Guatemala—and has done so because that complemented the work it was doing with the Commonwealth Caribbean. That made a lot of sense. However, it has not made a request to extend its work into South America or China. We would consider such requests on their merits.
Some comments were made about the possibility of any changes in clause 3 leading to an expansion in the pay and remuneration of the board of the CDC. It is fair to put on record the fact that the board is currently made up entirely of non-executives. The annual report for 1993 shows that six of those non-executives drew a remuneration of less than £5,000, and only one drew 1063 a remuneration of up to £10,000. It is an incredibly cost-effective organisation in terms of the public service it provides.
There are a number of Scottish connections with the board. For a long time, Lord Reith—

§ Mr. Worthington
He is dead.

§ Mr. Baldry
I know that.
I was saying that Lord Reith was on the board in the 1960s and there is Sir William Ryrie now. There are some vacancies on the board. There is one woman on the board, but I will reflect on the comments made during the debate. It is important that the CDC reflects wide interests, but it is an organisation that needs to make important investment decisions. As hon. Members recognise, it needs to have the expertise necessary to make those decisions.
I do not think that the hon. Member for Hampstead and Highgate meant to be critical of any of the CDC's projects, but I do not think that any project has ever drawn criticism from an overseas Government, from a non-governmental organisation or from anyone in the House. If there has ever been such criticism, I hope that hon. Members will draw attention to it subsequently. The projects that it has carried out have commanded broad support.
As to what the CDC has been called—

§ Ms Glenda Jackson
rose—

§ Mr. Baldry
The hon. Lady will be able to make her points in the next debate if she so wishes.

§ Ms Jackson
I cannot.

§ Mr. Baldry
Allow me to finish my point, and I will give way.
What the CDC has been called has been subject of considerable debate over the years. Clearly, an Act of Parliament started the Commonwealth Development Corporation, and it has been part of our contribution to the Commonwealth. It is now generally accepted that it is called the CDC.
If the hon. Member for Workington (Mr. Campbell-Savours) looks at the annual report, he will find it hard to see the Commonwealth Development Corporation spelt out in full. It is known as the CDC. Bearing in mind what some of my hon. Friends have said about promoting the CDC, I do not think that changing its name again would help. Everyone knows it as the CDC. It is recognised around the world as the CDC, and it does a good job.

§ Ms Jackson
I did not intend any of my contributions to be critical of the CDC, or any of its past projects or projects in which it will engage in the future. I was concerned that, in an increasingly dangerous, highly competitive and ruthless world, it should be given assistance by the Government and this House by being allowed to take on board and, if necessary, having written into its strictures and structures, that an element of consideration for abuses of human rights should be part and parcel of its thinking.

§ Mr. Baldry
As I said, the CDC is already very sensitive to those issues. 1064 One or two technical points have been mentioned. Several hon. Members referred to market rate borrowing. It is a long-standing principle that public sector bodies should not generally borrow on their own credit at a higher cost than that at which the Government can borrow. The matter has been considered thoroughly a number of times, and rejected on value-for-money grounds.
One or two hon. Members asked whether we were confident that the CDC felt it had sufficient powers. It is clear from the examples cited today that the CDC is involved in a wide range of activities throughout the world. I understand that it is considering some further activities, which it is not as yet confident are within its powers. Clearly, we are working closely with the CDC to resolve any problems and avoid any unnecessary constraints on its work.

§ Mr. Worthington
When the Minister reads his comments in the Official Report tomorrow, he will see that they mean nothing to anyone. He said, in effect, that things were being considered and that decisions would be made in the future. As we have asked about constraints on the CDC's work, it would be useful to know precisely to what issues the Minister was referring.

§ Mr. Baldry
There are a number of activities in which the CDC thinks it would like to invest, but it is not entirely confident that its present statutory powers cover them. That is a matter of discussion between us and the CDC.
Clearly, we do not want there to be any unnecessary constraints on its work. It is in the nature of things that, as financial markets change and as the possibilities of involvement in various operations change, the opportunities available to the CDC are increasing all the time. The original legislative framework for the CDC was set up some time ago, but we want to ensure that the CDC can do what it would like to do.
The hon. and learned Member for Fife, North-East (Mr. Campbell) mentioned taxation. He asked whether we would be prepared to treat the CDC differently from other trading corporations in the public sector which are taxed on the same basis as private companies, but I do not think that there are good grounds for doing so. The nature of the CDC's activities is not sufficient reason for special tax treatment, and it would be very difficult to distinguish the CDC from other bodies doing worthwhile work in the developing world.
I can tell the hon. Member for Clydebank and Milngavie (Mr. Worthington) that I should be happy to have a long debate about the World bank and the International Monetary Fund. It would be an interesting subject for a Wednesday morning debate if he cared to bid for one, but, in fairness to the hon. Members who wish to speak in the next debate about the Commonwealth, this is perhaps not an appropriate time to undertake such a debate.

§ Mr. Campbell-Savours
I have spoken to people in various parts of the world about the important issue of the CDC's name. In the event that the CDC developed a role in China, a country of 1,000 million people with immense 1065 tradition, would the Minister think it right for the CDC to go into such a market calling itself the Commonwealth Development Corporation? That is a simple question.

§ Mr. Baldry
In fairness, the hon. Gentleman was not listening. If he reads Hansard, he will see that I said clearly that the CDC is an organisation that is known and promotes itself as the CDC. I have no doubt that if it went into China, it would do so as the CDC.
Last year, 80 per cent. of approvals were in the poorest countries, well above the targets agreed with Ministers. I shall gladly write to the hon. Member for York (Mr. Bayley) about the interesting matter of definitions—what constitutes a "poor" country or one of the "poorest" countries. Different organisations have different definitions, and it may be useful to reach an agreement on what the terms mean. However, there is no doubt that a large proportion of CDC's investments do go and will go to the poorest countries. At the moment, the figure is about 80 per cent.

§ Mr. Bayley
I thank the Minister for his comments. If, at some future date, the CDC starts investing in eastern and central Europe, those countries are likely to be among the remaining 20 per cent., or the "non-poor" countries. Will the Minister guarantee that the bulk of the fund—80 per cent. of CDC's investments—will remain in the poorest countries, however that is defined and whether their GNP is $700 or $1,500 per capita? The eastern European countries are richer than that.

§ Mr. Baldry
As I said, the CDC has not yet even applied to invest in eastern Europe or the former Soviet Union. If it were to do so, one of the things that we would have to consider is the fact that other organisations are already able to invest there, so the hon. Gentleman raises an entirely hypothetical point.
There is wide support for the CDC and the Bill, and I hope that the House will grant it a Second Reading with acclaim.