HL Deb 27 October 1949 vol 164 cc1313-20

4.8 p.m.

Order of the Day for the Second Reading read.

THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM)

My Lords, I rise to move the Second Reading of the Overseas Resources Development Bill. I hope the House will agree that this is not the occasion for a major debate on Colonial affairs, if only because the noble Earl, Lord Listowel, is absent; or, if another reason is necessary, because the noble Lord, Lord Tweedsmuir, who is so well versed in these matters, has a Motion of his own which will be taken in this House before long. Nevertheless, I would just say in advance that this Bill, which is short and which I propose to deal with shortly, does touch on great and important matters to which all of us attach real significance.

Your Lordship will recall that towards the end of the last Session the noble Earl, Lord Listowel, in whose absence—well understood, I think—I am speaking to-day, introduced to your Lordships what is now the Colonial Loans Act, which enables the Treasury to guarantee loans made by the International Bank to Colonial Governments for reconstruction and development purposes. To-day I am asking your Lordships to give a Second Reading to the Overseas Resources Development Bill, the sole purpose of which is to enable the Treasury, as in the Colonial Loans Act, to guarantee loans by the International Bank. This time, however, the loans will be to the two Corporations established under the Overseas Resources Development Act, 1948—the two Corporations being, of course, the Colonial Development Corporation on the one hand and the Overseas Food Corporation on the other.

Section 12, subsection (2) of the 1948 Act, to which I have just referred, enables the Treasury to guarantee the principal and interest on such loans, but it does not enable them—and this is really the sole point in the Bill—to guarantee the other charges required by the International Bank under its constitution. These other charges are two in number: first, a statutory commission of between 1 and 1½ per cent. I should here explain, for the benefit of any of those in this House who feel that bankers are extortionate people—and, of course, I would not hasten to number myself among them—that this commission is not a bankers' profit, but is set aside as a special reserve for the protection of bank creditors and members. The second charge is called the commitment charge, which can be described as a reduced rate of interest on the undrawn part of a loan.

The Colonial Development Corporation, as your Lordships are perhaps aware, are currently negotiating with the International Bank for a loan of 10,000,000 dollars to purchase from the United States mechanical equipment, mainly agricultural, which is unobtainable elsewhere. I would bring home to the House that until this measure which is before us this afternoon is placed firmly on the Statute Book, the negotiations cannot be concluded. I hope your Lordships will allow me to be as brief as I have been in dealing with this simple measure, which will enable the two great Colonial Corporations set up by the Government to draw, for purposes of reconstruction and development, funds from the International Bank. I feel sure that this object commends itself to the whole House, irrespective of Party, in so far as it will increase the facilities for capital investment in the Colonial territories. With this brief explanation about a matter which comes very close to wide issues in which we all take a deep interest, I beg to move that the Bill be now read a second time.

Moved, That the Bill be now read 2a.—(Lord Pakenham.)

4.13 p.m.

LORD TWEEDSMUIR

My Lords, as the noble Lord, Lord Pakenham, has said, this Bill is very much on a par with the Colonial Loans Act. In other words, it rectifies an emission made in the original Act. Therefore, we on this side of the House welcome this Bill, for we welcome anything which tends to promote further development of these overseas resources.

There are just one or two questions which I should like to ask the noble Lord, in the hope that he can give me an answer either now or later. The first is, does the restriction on dollar purchases which was laid down last summer apply to purchases made out of loans advanced by the International Bank? The second point is this. When Departments of State require dollars for dollar purchases they make their submissions to a Treasury Committee. Do the same Committee scrutinise similar applications from the Overseas Food Corporation and the Colonial Development Corporation when they want to spend dollars under loans received from the International Bank? Thirdly, are the same facilities for raising a loan from the International Bank to be given to private industries in these territories as are given to these Government Corporations? Private industries, too, require dollar equipment, and they are mostly longer established and more conversant with conditions, even if their workings are rather less spectacular. Last of all, the noble Lord in his brief speech said that the Colonial Development Corporation had in mind a loan from the bank of 10,000,000 dollars. I wonder whether that was a slip, and whether he did not mean £10,000,000. I should be grateful if the noble Lord could enlighten me on that point.

Now, my Lords, the parent Act, the Overseas Resources Development Act, was passed early last year. We have had a great many reports on the progress of the two Corporations since—rather more in the case of the Overseas Food Corporation, who have the good fortune to have a Cabinet Minister as public relations officer. All we have been able to glean underlines heavily, as I think we all agree, the magnitude of the problem that faces these two Corporations. It underlines, also, the need for attracting all possible additional capital from all available sources. I think, too, it shows the unlikelihood of our getting it until it is clearly recognised that there are two distinct spheres—one for the investment of Government capital, and another for the investment of private capital. The loans which the International Bank make are in effect American finance. But we have failed so far to attract American private capital to take part in these developments.

The Foreign Commerce Department of the Chamber of Commerce of the United States have just put out a very interesting brochure concerning investment possi- bilities in British Africa. What it says, in effect, is that the prospects of private American investment in British Africa are not very tempting at the moment, and will not be until the provision of transportation, ports, communications and the like—all things suitable to Government investment—has been made. I think this applies generally to private investment from any source. I will not delay the House any longer, but I believe there is a stronger and stronger argument for a re-alignment of the activities of these two Corporations to focus on this sphere; and if it comes about it will necessitate a considerable change in the structure of the original Act. I repeat that we on this side of the House welcome this small Bill, and I hope that the noble Lord, Lord Pakenham, will see his way to give me some enlightenment on the questions I have asked.

4.18 p.m.

LORD STRABOLGI

My Lords, this, as the noble Lord who introduced it said, is a simple Bill, and I am glad that the noble Lord opposite, who no doubt spoke on behalf of his Party, gave it a welcome. I do not think there is any difference between any of us on this matter in broad principle. We agree that there is in the Colonies a crying need for development. The noble Lord, Lord Tweedsmuir, mentioned the great need of harbours—a need which still exists—and of roads. The problem of roads, all-weather roads particularly, is one of the greatest of Africa's problems. If, as a result of the operations of these Corporations, these capital developments can be made, I believe it is right to say that private enterprise will fill in the gaps, further developments will attract investors, and new areas will be opened up for the benefit of all.

So far we are all agreed. I wish only to pose this question to my noble friend. I understand that the loan is of 10,000,000 dollars and not £10,000,000, and that it is under negotiations now with the International Bank. And I presume it needs the passage of this Bill before they can be completed. My noble friend said that a great deal of this money would be spent on mechanical agricultural equipment which is to be obtained only in the United States. That is as may be, but I should like to ask (and I hope that the noble Lord will not think I am presuming on the fact that he is deputising for another Minister) whether it is necessary when we make a dollar borrowing from the International Bank that we should spend the money in the United States. That was not laid down in the Charter of the International Bank, so far as I remember, or at the time of the discussions in Bretton Woods where, I think, the Bank was set up. I do not think we are bound to buy from the United States. If, on the other hand, we need certain equipment and it cannot be obtained anywhere else than from The United States, then of course there is a case for buying it there.

I am glad that we are going ahead with this broad policy in spite of the events that have happened since the present Bill received its Second Reading in another place in June last. I am glad we are going ahead with this general policy because I think, in view of our present difficulties, that this is a time for boldness, expansion and development, and not for timidity and going back on well-examined schemes.

With regard to the mechanical agricultural equipment that we have to buy from the United States, my information is that the manufacture of heavy mechanical agricultural equipment has gone ahead very rapidly in this country. One of the difficulties in the past, so I am advised, has been that the tracks for tracked vehicles were not made in this country—at least, not the large ones. It is a most extraordinary state of affairs that for many years we were dependent for our tracks, not only for bulldozers, road-making machinery and heavy agricultural tractors, bet also for tanks and military vehicles needing tracks, upon the United States. I understand that they are now being made in this country, or that the factory making the tracks is nearly ready and will be in production very soon.

Also, we are embarking upon the manufacture of another American monopoly which is absolutely essential for the development of many of these areas—that is, bulldozers which were an American invention and monopoly and one of the winning weapons of the recent war. They are beginning to be made in this country—whether ones big enough for the jungle I can lot say. If my information is correct (it comes from good sources) I hope we shall look twice at any proposition to spend in America the dollars we are getting from the International Bank—for after all, dollars are scarce just now—unless, as I suggested earlier, there is a compulsion. I hope we shall examine most carefully any proposals to purchase heavy agricultural equipment in America until we are quite certain that we cannot make it here or that we cannot, by spending some of the money, develop the plant to make it here, because it seems to me that when we really get going with our Colonial development schemes, the demand presently for this heavy equipment for road-making, bush-clearing and scrub-clearing will be great. Great quantities are required in India, but that does not come under this scheme at all. The Indians would like to buy such equipment for clearing jungle from us. I suggest that it would be a long-sighted policy to use some of the money to encourage the manufacture and setting up of the plant to make this heavy equipment that is needed for clearing jungles and rough land in many parts of the Colonies. With these remarks, which I venture to think are important, I also would like to welcome the Bill and thank my noble friend for the lucid and clear explanation that he gave.

LORD HAWKE

My Lords, would the noble Lord opposite answer one question for me? Do His Majesty's Government anticipate that the purposes for which the money obtained from the loan is to be spent will be sufficiently remunerative to service the interest and amortisation?

LORD PAKENHAM

My Lords, one or two speakers have been kind enough to say that they hope they have not embarrassed me by putting these technical questions. I hope they feel that they are not embarrassing me. Certainly, as regards the last question, I would only say what is clear to every noble Lord, that that is, no doubt, the firm hope of all those concerned, but I have no detailed information about the period it will take to amortise the loan. However, if the noble Lord wishes to have further information, no doubt he will raise this point in a different way. This is a small Bill, as the noble Lord, Lord Tweedsmuir, said. I am glad that the House has accepted it with cordiality. I am grateful to noble Lords in all parts of the House for doing so. Certain points were raised which one might say are concerned more with the loan than with the Bill—I make the distinction only because your Lordships' House to-day is not really pronouncing on a particular loan but is discussing a piece of machinery which is not in dispute.

May I now turn to the points raised by the noble Lord, Lord Tweedsmuir? He asked me whether the restrictions on dollar purchases apply to purchases made out of loans advanced by the International Bank. The restrictions do not apply to the loan which is at present under negotiation—that is the only loan before us at the moment. The restrictions in question do not apply there because the matter has been so thoroughly investigated that it is thought that it should now go forward when this Bill is passed. In connection with that, the noble Lord raised the question whether the same kind of Treasury scrutiny that applies to ordinary dollar purchases applies to dollars spent under loans raised from the International Bank. That, I take it, is a more general question and, while I would like to confirm my answer here, I understand that the answer is, "Yes, the same kind of scrutiny does apply and will apply." But, in order to be absolutely certain, perhaps the noble Lord will allow me to communicate with him later on that point.

The noble Lord then asked a pertinent question whether the same facilities for raising loans from the International Bank are to be made available to private industrialists. The answer to that is, "Yes, in the sense that there will be the machinery of the Colonial Loans Act—the machinery will not be the machinery of the Bill which we are discussing to-day—and, through that machinery, it will be open to private industrialists at the time the noble Lord appears to have in mind to apply for loans from the International Bank." I was then asked whether I am certain that when I say "10,000,000 dollars" I mean 10,000,000 dollars and not £10,000,000. Like other members of the House, I am always certain of my figures until they are challenged, and then a faint doubt creeps into my mind! I was completely certain of that figure until the noble Lord suggested that I might be mistaken. However, I am right. It is 10,000,000 dollars and not £10,000,000.

The noble Lord, Lord Strabolgi, discussed the agricultural aspect of this matter with authority. I will not venture to follow him there. I can tell him only that I am assured that this equipment is unobtainable elsewhere and I hope that he, at any rate as a very good supporter of the Government, will be ready to believe that there was no disposition to seek equipment from dollar sources which could be obtained otherwise.

LORD LLEWELLIN

So would we be, I think.

LORD PAKENHAM

I am most grateful to the noble and generous Lord. I would like to add one further word to what the noble Lord said. He asks whether it is necessary to use in the United States all the money derived from loans of this kind. The answer is that it is not necessary to use it all in the United States, but it cannot be used in the sterling area. I should like again to obtain rather more details on that point. It cannot be used in the sterling area. That does not mean that anybody would go and buy equipment from the United States which could be obtained from the sterling area. I think those were the main points raised, apart from the question put by the noble Lord, Lord Hawke, in regard to which, as I say, I can only express the conviction that the answer is, "Yes"; otherwise I should think that the wise and expert people concerned with this matter would not have embarked upon this enterprise.

I know the House is always kind to a Minister deputising for another Minister, and although some of these points fall within a very interesting sphere, they are a little outside the rather small technical change involved in the present Bill. I take it that the House approves of the measure, and I am grateful to your Lordships for your good will.

On Question, Bill read 2a; Committee negatived.