§ 3.5 p.m.
§ LORD OGMORE rose to call attention to the Report of the Colonial Development Corporation for 1955, with special reference to the financial position of the Corporation and to move for Papers. The noble Lord said: My Lords, the Colonial Development Corporation is eight years old, and for the first time its activities show a surplus after paying all outgoings, and £307,000 for what it calls "Colonial Office interest." The profit is £409,233, and we on this side of the House should like to congratulate the noble Lord, Lord Reith, the Board of the Corporation, including my noble friend Lord Macdonald of Gwaenysgor, and the staff of the Corporation, at home and abroad, on this outstanding achievement. But I warn Lord Reith that he is in a dangerous position. Now that the Colonial Development Corporation has made a profit no doubt the Government will want to denationalise it, as they have in the case of other industries in that happy position.
§ Various important considerations arise from the Report, and I think it is our duty in this House to consider them. So far as my recollection goes, for most of the eight years—certainly the last five—of the Corporation's existence, we have had a debate here on the Report, and although nothing very apparent has happened as a result of those debates we always live in hope that some clay the words of wisdom which we offer the Government in regard to the Corporation will be listened to and bear fruit. Perhaps to-day will be the lucky day.
The purpose of the Corporation is defined as
The duty of securing the investigation, formulation and carrying out of projects for developing resources of colonial territories with a view to the expansion of production therein of foodstuffs and raw materials, or for other agricultural, industrial or trade development therein.
Those are the words of Clause 1 (1) of the Overseas Resources Development Act, which set up the Corporation. Then follow the powers granted to the Corporation for the carrying out of this duty. These powers are couched in very' wide terms. Winding up the debate on the Second Reading of the original Bill in
another place in 1948, I said [OFFICIAL REPORT, Commons, Vol. 443, col. 2115]:
The purpose of the Colonial Development Corporation is to do anything necessary for the starting up of any legitimate productive enterprise which is likely to pay its way in the Colonies.
§ Those words were carefully considered, naturally, and I am quite sure that I am right in saying that they were the basic underlying impulse of the Government of that time headed by my noble friend who is now Lord Attlee.
§ The present trend, it seems to us, has departed front that wide and imaginative concept, and to-day there seems to be an unimaginative financial policy by the Government which seriously hampers the Corporation in the exercise of its functions. As Lord Reith has pointed out in his informative Report, during the years, and particularly in the early years, for a series of reasons into which I need not go this afternoon, the Corporation has lost on abandoned ventures a sum of roughly £8 million. Unfortunately, the Corporation has not now, and never had, anything in the shape of risk capital. It borrows from the Treasury, and whatever the risk of any of its ventures, and whatever may he the result of some highly speculative undertakings—and highly speculative undertakings have occasionally to be attempted in this field—the Corporation is under obligation to repay the loan with interest, and it has to pay its way, taking one year with another.
§ In respect of past losses, incurred mainly during the first few years of trial and error, when it was exploring an entirely new field, the Corporation has incurred what it calls "special losses" of £8,020,441. Some part of the "special loss" account no longer bears interest, but the capital load is still there. I think that we on this side of the House can claim that three or four years ago we pressed to remove interest from the special loss account. But the capital load is still there and some of it still bears interest. The Corporation pays interest at the rate at which the Treasury borrow. This makes it pay, on short-term loans, 4 per cent; on medium-term loans, 5 per cent., and on long-term loans, 4¾ per cent. These are high for the type of project with which the Corporation is expected to deal. The interest charge was £306,756 in 19.55, and will rise to over £1 million in 1960 and to upwards of £2 million in 1127 1964. This represents a pretty heavy burden on the Corporation.
§ I will make some suggestions in this field. First, I would suggest a bit of surgery. I would cut away the capital lost on projects started in the early years where those projects were abandoned, and also excess capital on projects partially salvaged and reconstituted. In other words, I think the "special loss" account of £8 million should be lopped off, and the Corporation excused repayment of this sum. The Government will never get it back so they might as well face the fact, and just clear it away. It will make matters much happier for the Corporation; and those concerned will be much more satisfied to go on with the work in hand. At the very least, £6.269,468 should go. This applies especially to projects which are absolutely dead and not just partially salvaged. We have to buy our experience, and we have had to buy in this field—as any other experience has to be bought—in a sellers' market.
§ Secondly, I suggest the cancellation of all interest on this "special loss" account, for the reasons that I have applied to the capital itself. Thirdly, I would suggest that the Government provide the Corporation with something in the nature of equity capital. As I have shown, the Corporation has to pay for all the money it borrows at mortgage rates; and, whatever happens to a project, however desirable it may be at the beginning and however unfortunate it may be, the capital and interest always have to be repaid. No private enterprise company would ever dream of operating in that way without risk capital. Starting off in a highly speculative field, and having an obligation to repay capital in the form of debentures, whatever might happen to the projects they have in hand, it is as if the Corporation were a company with all debenture holders and no shareholders. I have never yet heard of any private company in that unfortunate position, though the Corporation is.
§ So I would ask the Government this one important question: is it possible to treat a proportion of the advances as risk capital instead of as debenture capital? As a result of having no equity capital, the Corporation is becoming chary about taking on risky but desirable projects, and even projects which, though desirable, are 1128 not likely to yield a handsome return for some years to come. The making of a handsome return is not really the object of the Colonial Development Corporation. It is just in those fields where there is a certain amount of risk, or where other people are not very keen on taking the risks, that the Corporation can do its best work. In the fields in which the Corporation is supposed to employ its advances—agriculture, forestry, and fisheries—it is undoubtedly being prevented from assisting a number of projects because of the tight financial structure in which it is bound.
§ The fourth suggestion I would make is one on which we have argued with the Government for a couple of years and one which I put forward years before the noble Lord, Lord Lloyd, was sitting opposite to answer debates of this kind—namely, that an ideal method of solving this difficulty in cases where there is a good deal of risk is for the United Kingdom Government, either through Colonial Development and Welfare Funds or otherwise, or the colonial Governments or colonial municipalities to employ the Corporation as their agents. In such a case they would have the experience which the Corporation possesses in technical matters, the "know how," without, at the same time, expecting the Corporation to risk its own finances on projects where there may be a great deal of risk. It is obvious from the Report that to an ever-increasing extent the Corporation is becoming a partner with such bodies as I have mentioned, and also with the development corporations formed by Colonial Governments and with private enterprise. But, so far as I know—and certainly the Report does not make any mention of it—there has not been any development in this field of employing the Corporation as agent, which I think is very important.
The £100 million limit of the Corporation's finances will soon be reached, and I should like to know to-day what plans the Government have for extending the limit of the Corporation's activities. Presumably, fairly soon they will consider the preparation of the necessary legislation to extend this limit, and perhaps, when they do so, they may take into account some of the other points which I shall be making in a moment
or two. In its Statement of Policy on Colonial Affairs, passed at the annual conference in 1954, the Labour Party said something on this question which I should like to quote. I am sorry that the public, and even legislators, have not studied this policy statement more closely, because it is very good and I constantly hear people making statements about Labour Party policy on colonial questions which have no basis in fact. The book is here for everybody to study, and an excellent discussion pamphlet was published at the same time which carries it forward a little and discusses the various problems that we may have to meet in the years ahead. This is what the Statement of Policy has to say:
In 1947 the Labour Government set up the Colonial Development Corporation to undertake pioneering work and to promote the diversification of the economies of the Colonies. The rôle of the Corporation should he reexamined in the light of the experience gained. In particular we shall consider how the work of the Corporation can be made to combine more effectively with the Colonial Development and Welfare Schemes so that they complement and supplement each other.
§ I think that that is a most important statement of policy, and it reinforces in a most authoritative way the suggestions I have been making to your Lordships for some time on the use of the Corporation as an agent and in other ways, rather than having the Corporation always risk its own capital on projects.
§ Before passing to more weighty matters I should like to refer to a legal knot in which the Corporation seems to have become tied. The lawyers, the Law Officers and the Treasury and Colonial Office legal advisers have awakened, somewhat belatedly, it seems to us, and I imagine also to the Corporation's legal advisers, and have given a ruling that all the Corporation's projects relating to housing and roads, amounting to £7½ million under contract and more promised, were ultra vires. In other words, everything they have done in this field—and they have done a great deal in the last seven years—has been ultra vires. Why the Government lawyers have not discovered this before, I cannot understand; but they have not. I think that it is clear that the Corporation's lawyers do not agree with them. However, if there is a doubt, I am sure that we on this side should wish it to be 1130 cleared up as soon as possible. This type of development is very important for the preliminary development of a territory. I would ask the Government whether they will introduce legislation, at the earliest possible moment, to confirm any actions which have taken place in the past under this ruling, and also to permit the Corporation to take its part in development projects of this kind in future. We think that it is urgent that the position should be put right 'because a large number of these projects are in hand and a number of contracts are about to be prepared. We hope that the Government will not hold up legislation for any other amendment, but will get on with it at once.
There are other questions of interest referred to in the Report. Paragraph 10 says:
C.D.C. terms of reference suggest expansion of foodstuffs and raw materials; its field of operation is mostly tropical.
And then it says:
There is pressure from synthetic substitutes against raw materials traditionally grown in tropics; and of these C.D.C. is directly interested in rubber, hemp, ramie (now discontinued), lung oil, and (through tanning materials) leather; as to foodstuffs it has been found that by heavy capital applications (fertilisers, mechanical aids) production can be so stepped up in developed countries as to undercut producers in undeveloped and more remote lands.
Then, in paragraph 10 (5), we see these words:
C.D.C. must assess what is saleable at a profit in 10–20 years' time, in competition with scientific ingenuity financed in industrialised countries (with high taxation) from capital allowances chargeable before assessment of profits…
The Report goes on to this devastating comment:
People will continue to live and make a living in the tropics; C.D.C. helps to raise the living standard but assured markets for tropical produce efficiently grown are essential; U.K. decision to support banana and citrous growers in West Indies may help towards one solution.
§ These paragraphs are most important, and they show two things. They show first, that in modern conditions the industrial countries are tending to compete with the countries depending upon the production of raw materials in the latter's own field by synthetic substitutes for their products. We have long seen this happen in regard to Malaya, with rubber, and it 1131 is now extending to other primary producing countries. What then is to happen to these countries? If the industrial countries are going to undercut them by means of synthetic goods, in the only goods which they can produce, what are these unfortunate people to do? I think it is entirely humbug, at a time when probably more humbug is talked in the world than ever before in history, for the developed countries to talk about developing the under-developed nations when, at the same time, they, the industrial countries, are proceeding in the most ingenious way to drive them out of business and pauperise them. It must inevitably lead to a widening gap between the industrialised and the underdeveloped nations, with all that means in frustration, bitterness and strife.
§ Already, at the end of last year, the sterling holdings in this country for the Colonies amounted to £1,281 million, of which more than half was held by Malaya, Nigeria and the Gold Coast. Investments, grants and long-term loans from the United Kingdom to the Colonies over the past six years, according to the Chancellor of the Exchequer, amounted to £600 million, less than half the sterling balances. That is a yearly average of £100 million for 70 million people, and compares most unfavourably with our capital investment in this country for 50 million people. So at the presen: time it is obvious that it is not we who are developing the Colonies, but the Colonies who are developing us.
§ An indication of present trends may be seen in the Trinidad oil deal, and a striking example of our present difficulties may be seen in these developments over Trinidad oil. The objections to the transaction are said to be fourfold. First, American big business, oil business, obtains an increased hold over oil from Commonwealth sources, and, having tried to "jockey" us out of the Middle East, will no doubt do the same thing in the Caribbean. Secondly, they obtain control of a petrol-distributing company in the United Kingdom—namely, the Regent Company. Thirdly, they obtain considerable assets in Canada, where already our interests are dwindling at an alarming rate. Fourthly, and most important, American big, business, oil business, will exert an overwhelming influence in Trinidad, for, of course, the oil company in 1132 Trinidad is by far the biggest employer of labour.
§ On this point I would ask the Parliamentary Under-Secretary of State for the Colonies to look at the history of the United Fruit Company of Boston, Massachusetts, and what they were up to in Jamaica. When we were in office we did all we could to see that the Jamaica producers got fair play for their products, in the face of intense competition from this big American Company. This oil deal is not colonial development; it is exploitation of colonial resources already developed. Others have taken the risks in the past—British capital and colonial labour. The Americans come in and take off the cream, and the skimmed milk is left for the Colony.
The reason for our humiliation and impotence is not far to seek. We need go no further than the statement by the noble Earl, Lord Selkirk, in this House last Thursday, when he said [OFFICIAL REPORT, Vol. 197, col. 997]:
If, on the other hand, we were to refuse permission for this transaction, we should, as I have said, he under a moral obligation to see that the necessary capital was forthcoming to expand the undertaking. The provision of this capital from private sources, even if it could be obtained, would represent a considerable burden on the resources of the United Kingdom, and since much of the expenditure would be overseas, an additional strain on the balance of payments. The same would apply if the capital came from public funds, and I do not think that this could be justified in the present circumstances.
§ There is the Nunc dimittis of colonial development. We can roll up the carpet, pull down the blinds, and close the shop. The British firm goes out of business, so far as colonial development is concerned, if this is the policy of Her Majesty's Government.
The second point that emerges from these paragraphs in the Report—and this again I would ask your Lordships to bear in mind—is that
assured markets for tropical produce efficiently grown are essential".
§ Out of the mouths of Lord Reith and Mr. Hume, Sir John Hathorn Hall and Mr. Tyser, among others of the directors (I should have expected it out of the mouth of my noble friend Lord Macdonald of Gwaenysgor, but it is out of the mouths of these gentlemen, who one presumes are not Socialists—I do not know what is their political colour) comes this statement, which has been for years past one 1133 of the basic policies of our colonial policy and which, when the Conservatives came in, they shattered. It is exactly what we on these Benches have been telling the Government for years past: namely, that without assured markets in the United Kingdom for colonial products there can be no colonial development; and to that we would add what we think is an essential corollory, that there should be long-term contracts.
§ But the Government, seduced by the Whips and business interests, have been duped—they have been very willing dupes—and have taken away this great policy of colonial prosperity. No longer are there assured markets here for the Colonies, and no longer are there long-term contracts for their products. We feel that the Government and the people of this country must develop a realistic colonial policy—one which will benefit the Colonies and, in the long run, us, even though temporarily there may be some adverse financial and industrial repercussions in this country. It is difficult indeed to see where the savings are coming from in a time of inflation such as we are going through now, but this we are quite sure must be the fact: that the people of this country will have to sacrifice if they intend the colonial areas to be developed in the way that they should be. We know only too well that nothing can equal the applause in an audience if you talk about developing the under-developed countries; and, too, probably nothing would equal the fury of many of these people if they were told that it would mean considerable sacrifice on their part. But I think the British people will realise, particularly if it is put to them, that it is essential for the interests of the people of this country as much as for the interests of the colonial peoples that this should be so.
§ The situation is made even worse because, as a result of the war, many of the nations which have no tradition of overseas development, and no experience of it, are now the wealthy countries. I would particularly instance the case of Switzerland, to which I have paid two visits recently. There is a country where there is absolutely no experience of overseas development, particularly colonial development. They are as rich as Croesus, and they do not know what to do with their money; their finance houses and their banks am at their wits' end to 1134 know what to do with it. Into this vacuum—where we are finding it difficult to find the resources for overseas development—have come Russia and her satellites, with their barter arrangements and their offers of goods on credit. The first one on a large scale, of course, is with Burma, where, up to now, the circumstances have been difficult. But there it is. We are no longer by any means alone in this field, and if we and the other nations of the free world do not take steps to help these countries, then obviously Russia and her satellites will.
There is great need for public and private capital from such countries in the free world in the under-developed territories. In the 1954 Policy Statement, the Labour Party said, and I quote:
Rapid economic development requires capital from private as well as public sources. Colonial Governments should he encouraged to define the conditions on which private investment would he welcomed,
§ I would ask the Government whether they are taking any steps, in view of the difficulties of countries like Holland, France, Belgium, to sonic extent, and ourselves—the traditional countries from which, in the past, development funds have conic for colonial territories—to tap some of the great resources in countries like Switzerland and Sweden, countries which were enriched by the war, for the benefit of the under-developed countries.
§ Lastly, there are two points which I should like to put quite shortly to the Government. First of all, the name of the Corporation. Would it not be better for the Corporation to follow the example of other bodies, such as the Crown Agents and the Colonial Service, and change its title from "Colonial" to "Oversea" or "Commonwealth." Finally, I should like to see the possible field of operations of the Corporation extended to cover countries which at any time in the past have been in the Commonwealth, particularly in technical fields. This would enable many countries we could think of, to benefit greatly from the "know-how" which the Corporation would be able to afford them. In their case it is often a question not so much of finance as of technical assistance and help. I should like to ask whether the Government would consider an extension of the scheme. At the present moment, the 1135 Corporation is confined to activities in the Colonies.
THE PARLIAMENTARY UNDERSECRETARY OF STATE FOR THE COLONIES: (LORD LLOYD)
May I ask one question, for clarification? Is the noble Lord restricting that particular development purely to advice, or is he suggesting that money should come in as well?
§ LORD OGMORE
I realise that money is perhaps a little tighter, but I certainly think that, on the agency basis I have been talking about, we might extend it to them. As to the question of finance, it rather depends on where the country is. We are already helping several of the countries with finance in other ways, and it might be possible to use the Colonial Development Corporation in this respect. There is the Colombo Plan, for example, and there are other forms of financial assistance outside the scope of that Plan. I should like to hear what the noble Earl, Lord Home, has to say on this. I am sure that he would welcome the possibility, at all events, of the Corporation acting in this way with any country which either is now or has been in the past in the Commonwealth. In conclusion, I commend the Report to your Lordships. I beg the Minister to reply to the many important questions arising out of it that I have ventured to develop before your Lordships to-day. I beg to move for Papers.
§ 3.35 p.m.
§ LORD COLYTON
My Lords, I feel certain that noble Lords in all parts of the House will be grateful to the noble Lord, Lord Ogmore, who speaks with such great experience and authority in this matter, for raising it this afternoon. There is one question that he has indicated upon which public interest, both in this country and elsewhere, is centred to-day, and that is the development of the backward overseas countries. Indeed, it is not untrue to say that this question has become a major factor in international politics, in the new economic cold war, or if you like, "peaceful coexistence" into which the West and the East have now entered.
So far as we are concerned, of course, sentiment and loyalty, as well as British material interests, alike dictate that we 1136 should focus our attention as far as possible on our own Commonwealth and, in particular, on our overseas dependent territories. In this matter, the Colonial Development Corporation operates as the chosen instrument of Her Majesty's Government, but that does not mean in 'any way that we should wish to restrict the activities of private enterprise. On the contrary, it is our view—certainly it is the view of those of us who sit on these Benches; and the noble Lord, Lord Ogmore, has indicated that it formed part of the Labour Party Policy Statement of 1954—that there should be the maximum flow of British investment capital into the overseas territories. But, of course, the difficulty of securing any great flow of money from this country at the present time, whether through the Colonial Development Corporation or through the Colonial Development and Welfare Funds by loans on the public market, or by direct investment, is great. It all represents a great drain on our financial resources. So long as we are experiencing balance of payments difficulties, so long as we are living in deficit, there must be a limit to what we can do. Here I would say to the noble Lord who moved the Motion that the best way he and members of Her Majesty's Opposition can help to ensure that more money for colonial purposes is available, is by helping in any way they can to control inflation in this country and using all their influence to that purpose.
I cannot pass on from this point without expressing satisfaction at the decision which the Chancellor of the Exchequer announced yesterday in another place to introduce measures next year for relieving the pioneer industries in the Colonial and Commonwealth countries. That is a proposal which many of us who have been concerned with colonial territories have for a long time advocated and have been most anxious to see introduced. My right honourable friend's announcement will certainly have been greeted with great satisfaction in those colonial territories which have already introduced pioneer industries relief schemes or may be contemplating doing so. I am thinking particularly of some of the West Indian Colonies where I know from personal experience that they have the feeling, on the one hand, that we in this country either have not been able to find the capital or, through our taxation, have 1137 been frustrating the advantages which they hoped would accrue to them through their pioneer industries relief legislation.
On the other hand—and I would venture to call the noble Lord's attention to this point: it is the view of Governments in the West Indies; it has been said to me personally by the chief Minister in Executive Council in Jamaica, and has been said to me in Trinidad as well—they feel (and I think they feel it quite wrongly) that Britain has been adopting a "dog in the manger" attitude towards them by not being ready to offer capital themselves but seeking to prevent the flow of investment capital from other countries, notably the United States. That view has been held in countries, it has been contradicted, but it is certainly the view of many people in the West Indies. That, in my view, is the supreme justification for the decision taken by the Government in regard to the Trinidad oilfields. That is the supreme justification, and I should have thought that, from the representatives of the Government which gave away the Abadan oilfields, the less said about Trinidad the better.
§ LORD OGMORE
Is this not Colonial exploitation—not Colonial development? The thing has already developed. They have the benefit of the work in the past.
§ LORD COLYTON
I was coming to that. The point is this. So far as the Trinidad oilfields are concerned I have no doubt, from what has been said by Mr. Gomes himself, that it is the view of public opinion in Trinidad generally. I have no doubt that, if we had sought to block this deal, it would have been the gravest blow we could have administered to the federation of the West Indies. The noble Lord said something about a Boston company, the United Fruit Company, but he seems to have forgotten about a certain Boston Tea Party. If we try to do this sort of thing in these constitutionally fully-developed territories today, we shall soon find that they are only too anxious to cut themselves adrift from us.
I know that some of my noble friends on this side of the House, and certainly some of my honourable friends in another place, have sometimes been hesitant in their support of the Colonial Development Corporation—indeed, on occasion some of them have shown active hostility—but I hope that the Report of the Cor- 1138 poration for 1955 will serve to dispel many of those doubts or antagonisms. For the first time the Corporation has made a net profit, and I join with the noble Lord in offering my best congratulations to the Chairman and his, associates, and also, perhaps even more, to all the members of the Corporation's staff in the field who have helped to bring their efforts to success. Moreover, not only have they made a profit for tire past year but they have, now that the tragic mistakes of the earlier years have been largely rectified and now that the dead wood has been cut away and the period of retrenchment and consolidation has been completed, introduced for the first time since 1950 a number of new projects which we hope will point the way to a still greater development of their work. As The Times newspaper of April 26 said in its leading article:The way is now clear for positive development work.I think it is up to us in this country and in Parliament to see what we can do to help them.
Before I address myself to what I consider to be the most important point arising out of the Corporation's Report, I should like to deal with three points of detail also arising. First of all, there is the question of the name of the Corporation, to which the noble Lord referred. Certainly, in my view, the very wide field covered by the Corporation's activities, including some territories in a highly advanced state of constitutional development, appears to justify giving serious consideration to changing the name of the Colonial Development Corporation to that of the Overseas Development Corporation. As the noble Lord said, similar changes have already been made in regard to the Colonial Service and the Crown Agents, and I do not think that we should allow any unhappy memories that may still remain in our minds in connection with the old Overseas Food Corporation to deter us from reviving a similar name for the Colonial Development Corporation.
The second point I wanted to touch on was the position of the West Indies Navigation Company, to which reference is made in various places in the Report. This project is, of course, sponsored by the Colonial Development Corporation in conjunction with Messrs. Jardine 1139 Mathieson and the Indo-China Navigation Company. There is at present only one vessel, the "West Indian", which serves British Guiana, Trinidad, Jamaica, Barbados, the Windward Islands, the Leeward Islands and other territories. Your Lordships will remember that this service came into existence as the result of the unfortunate disappearance of the old "Lady" boats which were of such value to the economic life of the West Indies. I feel certain that all your Lordships, and especially those who have direct knowledge of the West Indies, will agree that the one vital factor in the success of the new Federation is the development and improvement of communications, and in that I would include sea communications just as much as air communications which B.W.I.A. have done so much already to improve and modernise.
In 1955, the "West Indian" vessel which is now owned by this Association made eleven round voyages, covering some 37,000 miles and carrying over 25,000 tons of cargo and over 7,000 passengers. I am informed that, in order to continue this service and to meet requirements there is an urgent need to increase it still further and, above all, to ensure that it continues beyond 1957. To do this and to ensure regular communication between the territories of the new Federation—and I would submit that this is a crucial time in the history of the West Indies—it will require at least two more ships. Of course, that in itself will entail further increases in subsidy and the provision of capital. As I understand it, the question of increased subsidy would have to be discussed, in present circumstances, with each of the individual Governments of the West Indies. That is bound to take time. It may be suggested that we should wait until the Federation comes into being. That again will take time, and I venture to say that time is what we do not want to lose in this case. I understand that the Corporation are in touch with the Colonial Office. I would venture to ask my noble friend to consider, if he can, the possibility of finding some means of bridging the gap between the consultation of these various Governments and the introduction of federation, so as to enable us to get on with the provision of the necessary additional services, whether it 1140 would be by means of a guarantee or a loan or some other method.
The third point I should like to refer to is that of hotels. I was delighted to see from the Report that the Fort George Hotel at Belize, British Honduras, has this year produced a trading profit of £3,512. There have been many criticisms of this hotel project in the past, and I can remember suggestions being made from time to time that this was an asset which the Corporation would do well to divest itself of. On the other hand, some of us who knew the hotel felt that, under its excellent management and by the appeal which can be made to the tourist industry, notably on account of the big game fishing which is some of the best in the Caribbean it could be made to pay. This profit has justified our hopes and we hope that it will continue. Certainly the building of the swimming pool for which some of us pressed has helped. I should like to suggest to the Government, or it may be to the Corporation, that a further increase in this important tourist traffic could be made if the hotel were provided with two well-equipped, up-to-date, big game fishing launches, such as one sees throughout the West Indies round the Bahamas. I know they are very expensive but I feel certain that after a year or two they would have paid for themselves.
In view of the success of this hotel project, I hope the Corporation will be encouraged to give further consideration to other propcsals which I understand have been made to them by the Government of Kenya for the building of hotels in Nairobi and Mombasa, in this case with the help of private enterprise. I agree with the principle that the Corporation ought not to be managing hotels. It ought not to be in the hotel business, but I think that any help it can give to private companies to construct hotels in these places which will assist in the economic development of the country should be given. But it does not detract from the credit which should go to the Corporation and to the management of the hotel in Belize for their success in the past year.
As regards the important issues affecting the Corporation's future which emerge from this Report and to which the noble Lord has referred, such as the provision of equity capital, the special losses account, the interest rates on loans and 1141 so on, in which I may say I have a good deal of sympathy with what the noble Lord said and a good deal of sympathy with the views of the Corporation, I feel that in these matters we have to be realistic, face the facts and do what we can, even if it means a somewhat unorthodox treatment, to help the Corporation and to provide them with the sort of structure that they need. But I should like to say a word or two about what I consider to be the most important and pressing of all these issues affecting the Corporation at the present time—I am referring to the need for the passage of legislation validating, for the past and for the future, the Corporation's housing and works activities which have 'low been held to be ultra vires. This point is dealt with in paragraph 12 of the Report, but I think it may be helpful to your Lordships if I were to go into rather greater detail on some of these matters because they are all of great importance.
As the Report says, the decision to suspend activities was the result of a new interpretation, with which the Corporation do not agree, of the Overseas Resources Development Act. Under this interpretation it was held that these activities, which had been approved and, indeed, encouraged by successive Secretaries of State, were ultra vires. As I understand it, there is no diminution of interest on the part of the Colonial Office in the continued activity of the Corporation in this field; it is merely a legal matter. It is a question of validating the Corporation's activities, and I submit to your Lordships that action is most urgent. The projects include a number of housing programmes in East Africa, Central Africa, West Africa and Jamaica, and also public works activities in West Africa. There is first of all the £2 million loan to the Kenya Government for improved housing programmes for Africans in urban districts of Kenya, and, in particular, Nairobi. I feel sure that your Lordships know very well how urgently African housing is required in Kenya—those who have seen the slums of Nairobi can testify to this. Undoubtedly the provision of good housing at this stage in Kenya can be a very real factor in restoring confidence and hope among the Africans, and in particular the Kikuyu, for the future, once the emergency has been terminated.
1142 Then, in Southern Rhodesia, there is a loan of £1 million which is being used to help housing schemes for Africans, most of whom come from our own Protectorates of Nyasaland and Northern Rhodesia. Incidentally, I understand that the Nyasaland Government are themselves now anxious for a loan of £1 million for housing, on which, of course, as in the case of Nairobi and Southern Rhodesia, all action has now been suspended. Then again, in Central and in East Africa discussions have been taking place about the establishment of building societies, like the society which has been such a tremendous success in Malaya—the Federation and Colonial Building Society. That, again, is held up. In Nigeria the Federation Government asked the Colonial Development Corporation to come in and help them with the provision of a building society like the one in Malaya. I feel sure that those of your Lordships who know Lagos will agree how vitally important better housing conditions are to the future of the capital of the Federation. All these things have had to be held up, and everywhere, and particularly in Nigeria, where Federal ministers have shown themselves to he in full agreement with the scheme, it has caused grave disappointment. And, it is not only there; it is so in Jamaica and elsewhere.
I would strongly urge upon the Government that this legislation validating what has been done in the past by the Corporation and what it desires to do in these matters of housing and contracts, including communications such as roads and even telecommunication, should be carried out as quickly as possible. I admit at once that communications, whether roads or telecommunications, are primarily matters for the Government of the territory concerned. The same is true of housing: it is among the projects of social welfare which a territory should undertake for itself. But if on account of the lack of resources of the country concerned or lack of technical staff, I suggest that the Colonial Development Corporation should come in and help. I suggest that they ought to be asked to do so and that we ought not to allow ourselves to be too rigid in these matters. From my own knowledge and experience I feel sure that, my right honourable friend the Colonial Secretary would be 1143 the first to sympathise with these proposals. I have no doubt whatsoever, as indeed he has said, that he is anxious to introduce validating legislation as soon as possible—indeed, in the present Session. I realise that perhaps, owing to pressure of other legislation, it may not be possible to introduce it in another place before the Summer Recess. But is it out of the question to introduce it in your Lordships' House? As I understand it, it is not a finance Bill, for it is simply to make provision for certain activities paid for out of funds already authorised by Parliament. I would ask my noble friend who is to reply whether he would consider the possibility of getting this Bill, which I know is difficult and is complicated to draft, introduced in this House before the Summer Recess.
My Lords, I apologise for taking so much of your Lordships' time this afternoon, but I venture to suggest that the importance of the topic we are discussing, with its relevance to so many other topics of a similar nature and the encouragement which the attention and the speeches in this House will give to colonial peoples all over the world, justify our spending as much time as we think we need on the matter. I know very well that to-day's debate, although it may not perhaps receive much publicity in the national Press here, will be fully reported throughout the colonial territories, and that what we say here will give great encouragement and hope.
§ 3.58 p.m.
§ LORD GRANTCHESTER
My Lords, it is always very pleasant to see a loss turned into a profit, even if it is a meagre profit of only something like 1 per cent. on the capital employed. But the story which the Report and Accounts of the Colonial Development Corporation tell for 1955 is a welcome improvement, on which I should like to add our congratulations from these Benches to the directors and to the management. I think we need to remind ourselves that we are discussing the Report and Accounts of the Colonial Development Corporation and not the Report of schemes undertaken under the Colonial Development and Welfare Acts. I suggest that it might be for the convenience of the House, if, in future, we were to consider these two 1144 Reports together so as to get a better appreciation of the complementary yet distinctive nature of the respective operations of these two bodies. The Colonial Development Corporation have been commendably quick in getting out their Report and Accounts—a Report which covers so many projects round the world. But the Accounts of the Colonial Development and Welfare Fund are made up to March 31 of each year, and they are not yet available in printed form, This difference of date does not seem to me to be an insuperable difficulty, and perhaps the Minister would be good enough to consider my suggestion for another year.
I understand that something like £29 million has been expended for the year ended March 31, 1956, out of Colonial Development and Welfare funds, bringing the total expenditure since 1946 up to something over £160 million—I am referring to the expenditure under these Acts as this money is used for welfare in a narrow sense. This expenditure is money given and is not a payment made with any direct commercial purpose. But if these funds are intelligently used, the expenditure should be complementary, as the noble Lord, Lord Ogmore, has said, and helpful to the work of the Colonial Development Corporation. The Colonial Development Corporation was, in conception, something different. As I understand its constitution, born in the heyday of the Labour Government, it was something in the nature of a gigantic Premium Bond. The Colonial Development Corporation was entrusted with a capital fund by the taxpayer, and it was hoped that the taxpayer would not lose his capital but that the Corporation could do a "flutter" with any surplus earnings. In other words, they were not expected to increase the talents entrusted to them, except perhaps by accident.
§ LORD OGMORE
May I ask the noble Lord whether his racing analogy is not rather inaccurate. The Corporation were always expected to return the capital which was loaned to them, and still are. They are also expected to return interest on the capital right from the time the money was borrowed, so that I cannot see how that can possibly be a "flutter", even though my knowledge of racing is perhaps less than that of the noble Lord.
§ LORD GRANTCHESTER
My Lords, I did not say that they had not to pay interest on their capital. I particularly referred to surplus earnings. After all, if one borrows capital one expects to pay the interest and to make a profit on top of that; and I said that it was a "flutter" with the surplus earnings.
As one would expect with what I would call such lack of direction, the capital started to melt away and some £10 million (I believe it is £10 million, although the noble Lord, Lord Ogmore, referred to £8 million) of current and accumulated losses that is still carried in the balance sheet, rather ironically, among the assets—presumably still retained there and not written off so that it shall be a warning. This loss represents a very high proportion of the capital employed—something, like one-third—and even if it is not written off, in view of the "new look" which the Report and Accounts have taken this year we can accept the comment of the Report and let the "past be considered as passed." For in considering and studying this Report I am left with the impression that sound business sense has won through; that it is realised that making losses does no one any good—certainly not the British taxpayer who found the money; and certainly not the local workers who, after being diverted from their former employment, are left stranded in bankrupt and abandoned projects.
It cannot be too strongly emphasised that projects are, in general, detrimental to the economy unless they can become profitable. This is one of the lessons—part of the Western "know-how", if you will—which we are under an obligation to teach and demonstrate in less-developed territories. The essential for success is, of course, good management, both here and locally in the territories in which projects are sponsored. A great deal depends on the skill and ability of the six regional controllers. Men good in management are, as we all know, in short supply, even for work in this country. The best we can do for the less-developed countries is to supply good management. I am glad that the Colonial Development Corporation is now working less on direct operations and more through locally promoted enterprises, and in many cases through loans. No one should think that operating by loans is an avoidance of risk-taking. Whether help 1146 is given by loan or by providing equity capital, or by a combination of both, capital is put at risk and, if so staked, must earn its reward or melt away. One final observation I should like to make: the private investor in less-developed territories in recent years has had little or no assurance of security against confiscatory attacks. He is not the exploiter portrayed by malicious propaganda but too often the exploited party.
In principle, I should, of course, prefer to see the capital of the Colonial Development Corporation voluntarily subscribed out of individual savings, instead of being provided by a levy on the people of this country as a whole. But if this investment which is made on behalf of all taxpayers in this country brings home sound business principles to every British citizen, as well as to these who wield an increasing share of responsibility in local government in colonial territories, we should be grateful for the existence of this Corporation.
I should like to join the noble Lord, Lord Colyton, in expressing my satisfaction at the assurance given yesterday by the Chancellor of the Exchequer as regards subsidiary companies and pioneer enterprises in Commonwealth and Colonial territories. May I also express the hope that, in any discussions which take place between the Colonial Office and representatives of colonial territories regarding the transfer to the territory of additionL1 powers, the basic principles on which the standards of living have been raised will be adequately understood and safeguarded. These basic principles are security for capital invested and profitability from its employment. If this is not done, the material advance which these countries seek, and which we and other Western countries can bring, will be halted, to their detriment.
§ 4.9 p.m.
My Lords, I should like to congratulate my noble friend Lord Ogmore upon initiating this debate and also upon his admirable and most important speech. Perhaps I might also take this opportunity of congratulating him upon the fact that the Government of Burma have recognised his great merits. His speech was so full of weighty matter that it will require some studying. I think there was almost nothing in it 1147 with which I would disagree. One small point I did notice. That was (I think I got the noble Lord's words correctly) his suggestion about the Colonial Office and the Colonial Development and Welfare Fund using the Colonial Development Corporation as an agent. That suggestion certainly deserves consideration. The only point it raises in my mind at this juncture is whether it would not perhaps rather tend to minimise what I understand is the real pioneering function of the Corporation. Agents do not, as a rule, show great initiative. They are merely responsible for carrying out orders and instructions given to them, and I should fear that such a development might tend still further to reduce the pioneering element of the Corporation, a matter about which I shall have something to say later.
I should like to say, in considering the work of the Corporation, that I think the frequent changes in the executive posts of the Corporation during the past five years have been rather disturbing; and all the more on that account I should like to congratulate the noble Lord, Lord Reith, upon having had his appointment as chairman extended. Anything which makes for continuity in the work of this Corporation is a good thing; and on that account I am very glad to see that news. When the noble Lord took office in 1950 he practically scrapped the existing organisation and made a pretty clean sweep of his predecessor's executive staff. In fact, I think the only one left was the Director of Finance, Mr. R. F. Daly. He went in 1951, and since then I believe there have been three new controllers of finance. There have also been a great many changes in other posts. I venture to hope that the era of these changes is now at an end, and that there will be more continuity in office, as in the case of the noble Lord, Lord Reith himself, because frequent changes in the top posts in any organisation—and especially, may I say, in the accounting staff—tend to undermine confidence down below. And this prompts the question whether the methods of appointment in the Corporation are really the best possible.
I should like to ask another question also. What is the rôle and influence of these top executives? So far as I know, none of them now sits on the Board. I presume they are summoned and answer 1148 questions put to them, and then withdraw. But such a system must tend rather to undermine their confidence, and also their sense of security; and, of course, it leaves decisions in the hands of older men who serve on the Board only on a part-time basis, who have many interests outside the Corporation and who may not be readily accessible to the executives responsible for carrying out decisions. Another thing I notice is that there seems to be a preponderance of chartered accountants among head office controllers. Four out of seven of them, including the general manager, are chartered accountants. I find, on talking to them, that that is not a system which inspires great confidence amongst businessmen, who acknowledge and respect the proper rôle of accountants but. at the same time, have a very clear idea of what that rôle is. They certainly would agree that accountants seem to do rather too well in getting these appointments.
Meanwhile, in regard to appointments, the Secretary of State seems to continue to ignore Section 2 of the Overseas Resources Development Act by failing to appoint directors with experience in the Colonies, as well as the other section requiring local committees. These obligations are specifically laid upon the Secretary of State by the Act, but he seems for some time past to have ignored them, and continues to do so. Last year, of course (many previous speakers have mentioned it) the Corporation, as we have been delighted to notice, made a profit after paying Colonial Office interest. But to my mind, on examining this profit, certain rather disturbing features emerge. The profit reflects a fundamental change in the Board's interpretation of its functions. Successive Reports have shown alterations in the Corporation's own classification of its activities. The 1955 Report does, however, divide them, and it divides them into groups which are now intelligible to laymen—which they have not always been in the past. I hope that the Board will stick to this classification in future, so enabling us to follow from year to year changes in the direction of its capital outlays, and ending the confusion that has existed in the past.
It is clear, however, that nearly nine-tenths of the 1955 profit came from loans and investments, and only one-tenth from undertakings under the Board's direct 1149 control. So far as I can work out the figures, 58 per cent. of it came from interest on loans, 30 per cent. from revenue from investments in commercial enterprises, and only 12 per cent. from projects and subsidiary companies run by the Corporation. Of the near-£38 million capital outlay listed for 1955, half is in loans and investments—a complete change from the state of affairs which existed prior to 1951 when the Corporation was almost exclusively engaged in projects and investigations on its own account. My reading of these figures is that the Corporation is ceasing to be what I would call a "venture organisation" and is becoming merely a money-lending house.
This change of direction is very clearly seen if we examine the projects undertaken during the past two years. Seven new projects were listed for 1954, of which I would say four were loans and three were investments or referred to the provision of finance. Among the loans, I noticed, with some surprise (no doubt there is a good explanation of it), one of £500 million to Williamson Diamonds, Limited, in order to mechanise a mine. So it really comes to this: that private enterprise appears to have been unwilling or unable to finance what I have always understood is a very remarkable undertaking indeed. I wonder why there had to be resort to the Corporation. There was also, of course, the West Indies Navigation Company, to which the noble Lord, Lord Colyton, referred in his most interesting speech. The noble Lord spoke of the necessity of two new ships. I entirely agree that sea communications in the West Indies have been most inadequate and unsatisfactory for generations, but two new ships means putting down very big money at present shipbuilding prices, and I notice that the Corporation's investment in that navigation company is £15,000.
§ LORD COLYTON
My Lords, I understand that it is a question of ordering one or two ships necessary to give complete service. I did not mean that necessarily they would be brand new ships. Ships could be acquired for that purpose.
§ LORD WINSTER
I fully appreciate that point; nevertheless, at present prices big money would be involved, and this investment seems a drop in the water, 1150 if I am right in thinking that that is the amount of the investment.
On my reading of the seven new projects listed in the 1954 Report, I would say that they do not include one which involves constructive action by the Corporation, other than that of signing a cheque. They are really seven acts of lending money in order to promote activity. Now let us look at 1955. The 1955 Report lists ten new projects, and again I would say that these are not new projects. I have a list of them here. I fear that your Lordships would find it wearisome if I were to enumerate them, but I feel that I am right in saying that the ten projects listed as projects are not projects at all, but loans, investments or financial advances—such, for instance, as the £l million loan to the Southern Rhodesian African housing—a very worthy object indeed, but still not a project. So, if we take the Reports for 1954 and 1955, we find that of seventeen so-called projects enumerated, not one really represents pioneering enterprise; they are loans or investments.
In other words, the Corporation has changed the direction of its activity and is now primarily an investment and not a development corporation. I agree that this change of direction may be due in part to the financial structure of the 1948 Act, which has been referred to by previous speakers, and that the Corporation may have been felt driven to it in the difficulty it has found in the past of finding efficient managerial staff for a great variety of projects; but there it is. I fear that this change of direction has taken place. No doubt the noble Lord, Lord Lloyd, will he able to refute the view which I hold on this subject. May I tell him that nobody will be more delighted than I shall be if indeed he is able to refute this view, because I regard the pioneering side of this Corporation as the real justification for its creation.
In that respect, may I remind your Lordships that the Act of 1948 charged the Corporation…with the duty of securing the investigation, formulation and carrying out of projects"?In other words, the Act laid the emphasis on what I have described as pioneering work—venture, enterprise. To my mind, the Act laid primary emphasis upon the power of the Corporation to carry out activities on its own account. That, I 1151 will say, was the dog. And only secondarily did it lay emphasis on those powers to promote activities by other bodies, by assistance, financial or other, by taking up share or loan capital or by grant alone. I would say that that was the tail. But the new state of affairs is that the tail is now wagging the dog.
I feel that over the past four or five years the board have shown a certain lack of perseverance. They have shown a certain readiness to abandon projects on encountering difficulties or not very satisfactory initial results. They have reported first of all favourably on projects—the noble Lord, Lord Reith, reported favourably on the projects which he inherited—and then closed them down when perseverance was called for. Perseverance is an essential in pioneering enterprises. I do not wish to speak at undue length, but I have made a note of six or seven enterprises which were closed down when I should have thought, at least in the case of some of them, that perseverance was called for and should have been shown. I will not enumerate those ventures. Probably something will be said about "rash enterprises", and about it being better to "cut the losses", but I would say that losses can arise from the precipitate sales of assets as well as from rash enterprises. To my mind, the sale of the Trinidad Oil Company, which has been referred to once or twice this afternoon, is a case in point.
There are many questions to weigh when disposing of assets, and I hope that the Minister and the Treasury examine with equal care the proposals for capital expenditure and the proposals for the sale of assets. The Corporation and the public can suffer just as much damage from the unwise sale of assets or from their sale at inadequate prices as from inconsidered capital investments. The Corporation's Reports give very little information about these sales of assets, although many large sales have been made during the past five years. I think that it would be right, and certainly it would be of value to those interested in these matters, if the Reports went into rather more detail about the closing down of a venture and the sale of assests.
In conclusion, I should like to say that it is not at all a grateful task to criticise this Corporation. I think we have had our fill of acrimony over it during the past 1152 five years and some of it in the Reports. I have endeavoured to criticise fairly and to quote facts to the best of my ability, as I understand them. I think there is great force in the suggestion which has been made this afternoon that the Treasury might hold an inquiry. I consider that it would be quite enough to hold it inside the Treasury. I am not suggesting an outside committee or commission or anything of that sort, but I think that the Treasury should hold an inquiry into the running of the Corporation and find ways of either making it fully efficient or more efficient or else closing it down.
But, of course, such an inquiry would certainly involve consideration of the financial provisions of the Act of 1948, and inquiry into whether that Act really gives the right financial structure for carrying out the work which the Corporation are enjoined by the Act to carry out. An inquiry of that sort would be reassuring to the public, and it would be valuable in its findings to the Corporation. If this is not to be done, and if the Corporation is to continue in its present form and on present lines, I hope that the Chairman, the noble Lord, Lord Reith, will to the best of his ability and power encourage constructive efforts to carry out the purposes for which the Corporation was established, which is the development of the economic resources of colonial territories. The scope and need for such development is just as great as ever.
§ 4.31 p.m.
§ LORD DOUGLAS OF BARLOCH
My Lords, I agree with what my noble friend Lord Winster has said in his extremely interesting and informative speech. It does seem that the time has arrived when there ought to be some comprehensive and careful survey of the activities of the Colonial Development Corporation from the beginning. That is, obviously, something which could not be attempted in detail in the course of a debate in your Lordships' House. There have been, I suppose, some 50 to 100 different undertakings in which the Corporation have been interested from time to time. It is quite impossible, from the published Reports and Accounts of the Corporation, to arrive at an objective analysis of what has happened to every one of these undertakings or investments. The Reports lack continuity; they are not arranged 1153 upon the same basis from one year to another; comments which are contained in them are often not factual, but, merely opinionative. It is, therefore, extremely difficult to understand the detail of what has been happening.
However, I think it is clear that a change has taken place in the overall purposes and objectives which the Corporation have had in view. The original conception was, undoubtedly, that the Corporation were to be a trading concern, and that they would undertake things not attempted by private enterprise. That inevitably set before the Corporation an extremely difficult task. Private enterprise is always upon the look-out for those ventures in which it expects to be ale to make a profit. Therefore, those left for the Corporation to undertake were clearly of a more risky character, and the conduct of their undertaking must certainly require first-rate commercial judgment, and also, as my noble friend Lord Winster said, the energy and drive necessary to overcome the initial difficulties, reverses and troubles which so often occur in undertakings in a new venture and which are almost inevitable in commercial enterprises of a novel character.
Some losses were to be expected. It was never understood, at the time when the Colonial Development Corporation was formed, that every enterprise upon which they embarked would necessarily be successful; but it was hoped that, by and large, in the totality of their undertakings there would be a profit and not a loss, even if individual undertakings happened to suffer losses and not make profits. The conception by which the Corporation are governed at the present time appears to be of an entirely different character. It appears to be one of playing for safety and of investing in other people's enterprises, rather than in creating new ones. This, I think, is borne out clearly by the statement which is contained in the current year's Report, on page 18, showing the sources from which the various profits of the Corporation were obtained. If I understand this correctly, the profit obtained from direct projects, for which the Corporation were responsible and in which they took the risk and supplied the managerial ability, was £113,000: but the income which was derived from investments in other undertakings was £800,000—nearly eight times 1154 as much. That seems to me to be a clear indication that the purpose of the Corporation has been changed. It is a matter for earnest consideration whether that is fulfilling the purposes for the benefit of the colonial peoples, which was the primary object when the Corporation was established.
This is borne out, also, I think, by various observations made in the Report. There is, for example, the passage on page 9, in which an association is sought with Colonial Development and Welfare funds. But those, I have always understood, were intended to be devoted to purposes which in themselves were not expected to be profit-earning. Surely, the two things ought to be kept entirely separate, otherwise the commercial purpose of the one will become mixed up with the benevolent purpose of the other; and it may in time become quite impossible to determine whether the profits of the Colonial Development Corporation are being earned with the money which is devoted to this purpose, or being earned by a subsidiary use of Colonial Development and Welfare funds. I should have thought that the case for keeping these two things quite separate and distinct, and under separate management, was clear and incontrovertible. Similarly, on page 7 of this Report there is a passage, under the heading of "Association", which appears to make it perfectly clear that the present policy of the Corporation is merely to finance other undertakings and organisations, and not itself to be the primary instrument of colonial development. Incidentally, in this section of the Report there is a passage which says that the Colonial Development financial contribution given to other enterprises would spark a greater development. I am not so sure about that. Then the Report goes on to say:…recent examples are Federal and Colonial Building Society Limited…and Chilanga Cement Ltd…I do not know what they are recent examples of, because looking back over these Reports I find that both of these undertakings, which appear to have become profitable, were started as long ago as 1950.
Another question which arises out of the present and earlier Reports is: how long does it take before projects which are undertaken by the Corporation begin 1155 to fructify and yield profits? This year is the first in which it is claimed that a profit has been earned. When I look at the details which are given in the Report of the sources from which the profit is obtained, it seems that, so far as direct enterprises are concerned, out of £113,000 of profit, all except £9,000 arises out of enterprises which were initiated in 1950 or earlier. That is a remarkable fact. Out of the £800,000 profit derived from loans and investments, well over half—if I am correct, £450,000—also arises out of enterprises which were first initiated as long ago as 1950 or earlier. Incidentally, it seems extremely difficult to reconcile those figures with the allegation which is made on page 6 of the Report, that £8 million has been lost in respect of pre-1951 investments. I do not see how that can possibly be so, especially in view of the fact that, according to the table on page 3, the gross amount which was spent up to the end of 1950 was £10 million. If £8 million of that has been lost, it is rather surprising that £2 million is able to earn the major part of the profit which is claimed in this year's Report. I think that all needs a little examination, because in my view it does not make sense.
More than that, I think a little attention ought also to be paid, from another point of view, to the section which deals with what is called, "Special Losses Account", and which, as I have mentioned, purports to make out that these losses were all incurred in respect of projects which were initiated in 1950 or earlier. When we were considering the Report for 1950 I made an analysis of what was contained in it. It included a free and destructive criticism of everything which had been done up to that moment, but it appeared that all the things which were criticised as being ill-advised involved an expenditure of only £1,800,000, and the others were approved and continued. Therefore, it seems to me just a little unfair that the present management of the Colonial Development Corporation, having decided to continue a number of projects and to spend money upon them, and thereafter to abandon them, should write them all back to the year 1950 and disclaim any responsibility for what it has been doing. That does not seem to me to be quite the correct way in which to deal with a matter of this kind.
1156 I wish to say something more about the question of writing off capital losses. After all, this undertaking was intended to be conducted upon commercial principles, and it is not usual, in commercial enterprises, which have many irons in the fire, to adopt this procedure. Nor, on the other hand, do they usually write up capital appreciation. But if the one process takes place, the other process, of course, has to take place also. When, on November 16, 1954, we were dealing with the Overseas Resources Development Act, the noble Lord, Lord Lloyd, said that the Government had decided to waive interest upon certain sums, and that it had also offered a once-and-for-all writing down of the capital loss on any loss which had been inherited from the previous administration to August, 1952. I understand that the amount involved was under £4 million, but that apparently did not satisfy the Colonial Development Corporation, and they rejected the proposal. If I understand it correctly, they now want to write off £8 million. Upon that basis, of course, it would be easy to conduct this great undertaking so as always to show a profitable and comfortable financial position—when you write off the losses and accumulate the profits and the capital appreciation. I think the financial build-up of the accounts in the financial procedure of the Corporation calls for expert examination, as well as the question of what its real objective and purpose has become.
§ 4.50 p.m.
§ THE EARL OF LISTOWEL
My Lords, this debate has been unique in one respect: it has attracted a larger number of speakers than any previous debate on the Annual Report of the Colonial Development Corporation. This shows not only an increasing Parliamentary interest in the work of the Corporation but an increasing appreciation of the value of the work that it has done and may still do for the Colonies. Speaking from my own recollection, I think I have attended every debate and inflicted many speeches on your Lordships on this subject. The speeches this afternoon have, to some extent, been repetitive because several noble Lords have made the same suggestions about what the Government should do to facilitate the work of the Corporation. The Government may disagree with me about this matter, but I think that that is a good thing, and I 1157 shall not apologise for being repetitive myself. I think it is a good thing because the very fact that the same suggestions have been made by several noble Lords from both sides of the House indicates that these suggestions have a good deal of Parliamentary support. Although there has been a certain amount of disagreement, there has been no disagreement about this: that the Colonial Development Corporation is to be warmly congratulated on the record of achievements shown in its latest Report.
The fact that it has now recovered from its earlier difficulties and for the first time is "out of the red" is a tribute to the efficiency of the Board and its Chairman and the excellent support they have received from the staff of the Corporation. To my mind, the real significance of this improvement is not its financial aspect—there I may differ from some of the previous speakers. The Corporation, after all, was rot set up by Parliament to make a profit. The test of its success is, therefore, not the test that would be applied to private enterprise. The significance of this financial improvement is surely that it will give the Corporation a better opportunity than it has ever had—certainly a better opportunity than it has had for many years—to get on with the job for which it was established by Parliament: that of expanding production and starting new projects in the Colonies. The opportunity which the Corporation now has to operate in the particular field for which it was chosen, that of marginal economic development, as a sort of layer between commercial enterprise and Government development, will, I am afraid, be lost unless the Government are prepared to give the Corporation much more help than it has hitherto received in modifying and improving its present financial structure. This is the answer to the criticisms that were expressed by the noble Lords, Lord Winster and Lord Douglas of Barloch, in relation to the lack of enterprise of the Corporation in starting new projects of its own.
§ LORD WINSTER
I expressed the hope that the financial provisions of the 1948 Act might be scrutinised with a view to enabling the Corporation more fully to fulfil its purposes.
§ THE EARL OF LISTOWEL
I agree entirely with that; I listened to the remarks towards the end of the noble Lord's speech. I am delighted that he agrees that the main handicap under which the Corporation has laboured and the main reason for its failure to operate to the extent that many of us would have wished in the field for which it was chosen has been the handicap of its financial structure. Unless a greater measure of help is forthcoming, I do not believe, though this may be taking a pessimistic view, that the Corporation, in spite of its present financial position, will be able to-make any real headway in developing the effective resources of tile Colonies. I hope that the Government will pay serious attention to the suggestions that have been made about ways and means of easing the financial position of the Corporation.
I shall not repeat in detail what has been said before, but I share the view that there ought to be some method of getting round the difficulty in which the Corporation has been placed because none of its capital is in the nature of risk capital. The 1948 Act really placed the Corporation in an impossible position by instructing it to take normal commercial risks without allowing it any method in its financial structure of dealing with bad risks—methods which private companies obviously possess.
The other financial difficulty of the Corporation, which has been dealt with at some length by other speakers, is that it has still to meet most of the losses that were made in its earlier years. Those have been set out in the special losses account. By the 1954 Act, the Government have assisted by releasing the Corporation from the obligation to pay interest on the capital in projects that have been completely abandoned as total losses, but I do not feel that this goes nearly far enough. I hope that the Government will be willing to discuss with the Corporation the possibility of relieving it of some part, at least, of the burden of capital debt and of interest owing, not only on schemes that have been abandoned as total losses, but also on schemes which are partial losses and are part of the capital, completely unretnunerative. I believe that in 1953 an offer to write off some of the capital loss was made, which shows that the Government accept in principle that the Corporation should be afforded 1159 some measure of relief. That being the case, and, provided that both sides are willing to accept something less than their full claim, I cannot see why if negotiations are begun there should not be an agreement to write off a substantial amount of this dead weight of lost capital and lost interest on capital.
A matter of greater immediate urgency is one which was alluded to by the noble Lord, Lord Ogmore, in his opening speech—namely, the validation of the Corporation's undertakings in the field of housing and public works, which are now the subject of legal doubt. I understand that this legal doubt about the Corporation's competence in this field is not only holding up useful development in the Colonies but is causing the Corporation financial loss, because it is not receiving interest on loans which would otherwise be in use by public authorities. I should like to ask the noble Lord whether a Bill has been already drafted for this purpose, because it is most important that this matter should be put right during the present Session of Parliament. If a Bill has not been drafted, I cannot see any conceivable way, although the noble Lord may be able to suggest one, of getting a measure passed before the end of the current Session. There surely cannot be any valid excuse for delaying a good deal of useful work that may otherwise be done in the Colonies as a result of what appears to have been an oversight in the drafting of the 1948 Act. I hope that if this Bill has not been drafted and if it is not going to be introduced in the present Session, the noble Lord will be able to give us a valid reason for the delay.
My final point, which I believe was also made by the noble Lord, Lord Colyton, is one of less urgency but is of some importance. I hope it will be considered by the Government when they consider long-term policy in relation to the Corporation. It may be said, and some people say it, that nomenclature is a matter of little importance and that the work of the Corporation will not be affected by its name or title. I believe that this is true so far as our own country is concerned—it does not matter in the least what we call the Corporation—but I am quite sure that it is 1160 far from true of the rest of the Commonwealth and of our dependencies. There, I think, the name of the Corporation matters a great deal. We are all fully aware that the words "colonial" and "colonialism" suggest to many minds inferiority and subordination, and are resented by many of the politically-concious inhabitants of our dependencies.
Again, although of course we believe in political freedom and our aim is self-government in all our dependencies, so long as we use the terminology of colonialism, as I might call it, our policy will be confused with that of other colonial Powers, and the organisations that carry it out will be stigmatised in the same way. Moreover, from the practical point of view, it is obviously inaccurate to describe as "colonial" a body that operates in Protectorates and trust territories. It is wrong that in the Protectorates in Africa, South East Asia and so on, the word "colonial" should be applied. I believe, indeed, that in order to avoid embarrassment in the Malay States the local organisation of the Corporation has been called Malay Developments Limited. In that way, the word "Colonial" has been omitted.
Another practical difficulty will arise when territories that are at present dependencies, such as the West Indies and the Gold Coast, become fully self governing The Colonial Development Corporation has projects in these territories and will clearly wish to continue operating them after the moment that self-government has come. Although technically it may be able to do so, yet obviously there may be some feeling on the part of the peoples and Government of those territories if a commercial body operating their territory still has a title that reminds them of the days of their colonial status. Changes are going on the whole time in the Commonwealth, and many changes have been taking place in this particular direction. The Colonial Service has become the Oversea Service, and the Crown Agents for the Colonies have become the Crown Agents for Oversea Governments and Administrations. There is no mention of the word "colonial" or "Colonies" in the Royal style and title. Why should not the Colonial Development Corporation become the Overseas Development Corporation? Let us not lose any opportunity we may have of altering the 1161 terminology of colonialism, which is undoubtedly offensive to many of our fellow citizens in different parts of the Commonwealth, whatever we here may think.
I hope that the noble Lord and his right honourable friend will address themselves to those matters of long-term policy—of course, this is not an immediate matter at all; I am not suggesting that it is—in relation to the future of the Corporation, as well as to the urgent issues to which I have directed the noble Lord's attention.
§ 5.4 p.m.
My Lords, this debate on colonial development is rapidly becoming an annual event in your Lordships' House, and over the last five years the match has been played with great regularity, the bowling usually coming from the noble Lord, Lord Ogmore, and the noble Earl, Lord Listowel, and the batting usually being performed by my noble friend Lord Munster, and myself. Indeed, I should have feared that something was seriously wrong if the noble Lord, Lord Ogmore, had not put this Motion on the Paper. It would have seemed almost as if the Derby were not being run, or Henley Regatta were not being held.
Inevitably, of course, once you get an annual event of this kind, some of the bowling becomes familiar. We have Lord Ogmore's slow leg-break about the writing off of the £8 million to the Colonial Development Corporation. We have his rather faster ball in regard to the equity capital, and to-day we have had also a "No ball" about Trinidad Oil—a "No ball" in the sense That even by the Rules of your Lordships' House, it had nothing to do with the Colonial Development Corporation; and I thought it was politically a "No ball" because it did not seem to me that any representatives of the Party on the other side were really in a position to talk about the abandonment of Imperial assets after Abadan or the failure to get into the oilfields in Canada immediately after the war.
§ LORD OGMORE
My Lords, to-day we have gone from racing and the Church to cricket, and may I say, in regard to the noble Lord's metaphor, that this subject was put into the game, as it were, and the ball comes from the statement by the noble Earl, Lord Selkirk, which specifically enlarged the area of dispute 1162 over Trinidad Oil to this question of the development of the Colonies and the finances for colonial development. I would say that it is absolutely germane to our discussions to-day. Of course, if the noble Earl had not referred in his statement to the difficulties of obtaining capital in regard to colonial development, then the noble Lord would have been perfectly right.
In spite of the Rules of Order in this House, and since the noble and learned Viscount on the Woolsack is not an umpire, everybody can make his own decision as to what is a "No ball." I personally regard that subject as a "No ball," and I certainly am not going to deal with the question of Trinidad Oil this afternoon.
Having dealt with the preliminaries, I should like to say straight away that I think it most desirable that we should, at any rate once a year, debate in this House the whole problem of development in the colonial territories. Therefore, I am delighted that the noble Lord has put down his Motion. I think it is important that we should debate this, because as I have said before, not once but quite frequently, I am afraid, in your Lordships' House, it is the crises and the political developments which generally catch the headlines in the newspapers; nobody reads much of all the steady and unspectacular work that is continuously going on in the economic field. Yet I think the noble Lord will probably agree that, for the ordinary citizen in the Colonies, some new agricultural or industrial development probably means more, in terms of material wellbeing and happiness, than many of the more sensational political advances that we read so much about; and certainly of all that we do to promote the advance of the dependent peoples, probably what we do for them in the field of development is, in the last analysis, the most important thing of all.
Having delivered myself of what is perhaps one platitude, let me deliver myself of another. It will, I feel sure, be apparent to all your Lordships that if any development has taken place in the past, it is because this country has had the capital and the resources to carry it out; and certainly if colonial development is going to continue in the future, the first thing that we must logically look 1163 for is the capital to do the work. Therefore, I am glad that the noble Lord, Lord Ogmore, devoted a portion of his speech to this subject. I had rather hoped that he might devote a larger portion of his speech to it; it came in at the end, rather by a side wind, whereas in point of fact, as I see it, it is the first and foremost consideration of all. Without the capital and the savings to do the job, there can be no colonial development. Therefore, I make no apology for wasting a further moment of your Lordships' time in saying a word about this matter.
Before we look to the future, I should like to say a word about the past, because we have considerable advances to our credit. Since 1949, £600 million, much of it freely given as grant, has flowed into the Colonies, and by far the greater part of that has come from the United Kingdom. It is, in point of fact, an average of £100 million a year. Gross capital formation in the Colonies in 1951 was at the rate of an addition of £300 million a year. In 1955, it had risen to £450 million a year, an increase of 50 per cent. in money terms, and perhaps one-third in real value. The greater part of this is local investment, reflecting, of course, in the main, the favourable trading conditions of the Colonies. But it is perfectly fair to say that an important contribution to this rapid expansion has been made by long-term funds provided from this country.
We estimate that in 1955 alone some £90 million was provided by the United Kingdom for the Colonies, despite the unsettled condition on the London market which prevented the Colonies, in common with other borrowers, from issuing loans at the level reached in preceding years. For the period between 1955 and 1960 the Colonial Governments expect to spend some £600 to £700 million on their development plans. Of this total, £120 million has already been promised by Parliament, by its approval of the Government's Colonial Development and Welfare Act. Some considerable part will also undoubtedly come from loans raised in London and through the activities of institutions such as the Colonial Development Corporation. Further, as the Economic Secretary to the Treasury made clear in another place last month, Her Majesty's Government accept the 1164 responsibility, and are planning their policies accordingly, that Colonies with large reserves deposited as part of their sterling balances in London can utilise them, despite the burden on the United Kingdom economy. In all, a very considerable slice of the finance which the Colonies will need to fulfil their plans will come from London, quite apart from the steady stream of finance going to the Colonies on purely private account.
I am sorry to have wearied your Lordships with all those figures, though I do not think an apology is needed, because it is no bad thing that people should know exactly what is going, into the Colonies to-day from this country. Our past record is one of which we have no need to be ashamed. I should be the first to admit that if more money could be provided it could certainly be usefully spent: but whether this rate of investment can be expanded, or indeed whether it can even be maintained in the years to come, must depend upon the savings which we can make available for this purpose.
This question of savings is most important, and in any consideration of colonial development it is the first thing of which we have to think. Perhaps I might here deal with the suggestion made by the noble Lord that the scope of the Corporation's activities should be extended to countries which once had a Commonwealth connection. He had in mind such countries as Jordan or Iraq. I know the noble Lord forgave me for interrupting him, but I wanted to know whether he had in mind financial contributions or contributions purely in the form of advice and so forth. We do, of course, contribute to foreign countries through various international organisations to which we contribute, but I should certainly like to consider what the noble Lord has said in regard to contributing advice and similar help to these countries.
When it comes to contributing finance, however, we must consider a further point. I do not know quite what the noble Lord had in mind when he referred to countries which had a Commonwealth connection, because that would almost include the United States of America—and I do not think we are yet quite rich enough to be giving money to them. In any case I do not feel that that idea—if that is what the noble Lord has in mind, that we should include within the 1165 scope of the Corporation countries outside colonial territories—is really in accordance with the intentions of the Overseas Resources Development Act which was introduced by the noble Lord's own Party and which was designed especially to help those countries for which we have a direct responsibility.
§ LORD OGMORE
My Lords, very often it is not a question of any financial worry in these countries but of the fact that they have no one to do the sort of work which the Corporation is now experienced in doing. If they are prepared to pay for the services of the Corporation in helping them in some particular project, I see no reason why the Corporation should not be allowed to help them. At the present moment it cannot. Jordan, Iraq and other such countries are not now able to have the services of the Corporation, yet a very close Government agency like the Crown Agents, quite rightly, is able to act, and in fact does act, for such countries. When you, quite rightly, permit the Crown Agents to act for countries like Jordan, I see no objection in principle to permitting the Colonial Development Corporation to do the same.
§ LORD COLYTON
My Lords, may I ask my noble friend a question on a factual point in this connection? Under the Overseas Resources Development Act, certain scope is laid down for the activities of the Colonial Development Corporation. If, before we again discuss an Annual Report of the Colonial Development Corporation, the Gold Coast achieves Dominion status, which is very likely to happen, will the Corporation be able to continue its activities as heretofore, or shall we find that there is some legal flaw then discovered which will hold the whole thing up? Has that point been examined?
If I may deal first with the point of the noble Lord, Lord Ogmore, I am grateful to him for developing his theme, and I should like to think about it. It is an interesting idea and I believe there is something in what the noble Lord says. In view of the point he made, I will not dwell on the financial side of the question. With regard to what my noble friend has said, obviously this is a matter which has to be con- 1166 sidered. At present it is being considered with the Commonwealth Relations Office, the Treasury and others concerned. I am afraid that at, present I cannot tell the noble Lord much more; but obviously it is a matter which must be considered before the Gold Coast achieve such status.
§ THE EARL OF LISTOWEL
My Lords, would the noble Lord answer this same point, which was put by the noble Lord, Lord Colyton? Is there any legal difficulty arising out of the Overseas Resources Development Act which would prevent the Corporation from continuing to operate in a dependency which became self-governing?
I am afraid that I am not sufficiently legally expert to give an answer on that point. I should like to have notice of the question, but I will certainly inform the noble Earl in writing if he is interested.
My Lords, the question of savings is of first importance and that encourgement of savings is the basic objective of the current economic and monetary policy of Her Majesty's Government; and, as I have already said, it is on the success of these policies that our ability to divert investment to the Colonies in the future will depend. Nevertheless, it is quite idle to pretend that we shall be able to do in the Colonies all the things we are urged to do, and all the things Her Majesty's Government are anxious to see done, unless the people of this country are prepared to make the necessary sacrifices. Because, after all, whether colonial investment takes place through a Government Corporation such as the Colonial Development Corporation, or whether it takes place through private enterprise, operating with money put up by the private investor, the savings and sacrifice which that involves still remain an essential basis. I have a feeling that this sacrifice is not perhaps sufficiently appreciated to-day in the country at large, and I hope that all those who have urged this afternoon that more colonial development should take place will also urge upon those who are primarily involved the necessity of making the sacrifices for which such development will inevitably call.
1167 Her Majesty's Government are determined to press on with these policies with the utmost vigour, for we believe that from their success the Colonies, as well as Britain, are bound to benefit, since the result will be an increase in funds available for investment and, equally, an increase in the capacity of this country to provide the goods and services for export to the Colonies as well as other overseas markets where the need for our exports is as great as our need to sell them. It is adequate savings here and in the Colonies (because I may remind your Lordships that a good deal of development is financed from savings in the Colonies as well) that is the basis of any policy of colonial development. Certainly I should be the first to agree that efficient use of the money available is of the first importance. It is a matter in which the Government, the Colonial Development Corporation and private enterprise all have their parts to play. In this connection the noble Lord, Lord Ogmore, I think, rather suggested—certainly the noble Lord, Lord Winster, did—that the task of the Corporation should be primarily that of undertaking schemes which are too speculative to be considered by the Government or private enterprise. Lord Winster, I believe, spoke of an adventure corporation.
§ LORD OGMORE
My whole thesis was that in the case of highly speculative ventures it is the Government who ought to operate them. The Corporation certainly cannot be expected to deal with many projects which are highly speculative while they have this present obligation to repay capital and interest. That is my point. The Corporation ought to indulge in projects which private enterprise is unwilling to indulge in because they are of a risky character.
I apologise to the noble Lord if I have misrepresented him. I gather that the noble Lord, Lord Winster, will agree that what he wishes to see is more of the pioneer spirit in the Colonial Development Corporation. Both noble Lords, I think, felt that the Corporation were not fulfilling this function properly, and that too much of the Corporation's money was now invested in safe propositions which might well have been financed by some other agency. There may have been something in that. 1168 But I think we have to look at it in this way. To begin with, perhaps, the pioneer spirit was a little too strong in the Corporation. Certainly a great deal of that pioneer spirit was shown and it cost the taxpayer £8 million. I will not argue with the noble Lord about that I take note of his interesting speech and I take note of his figures. What I have just mentioned involved losses and it also involved something more serious: it tied up a large part of the Colonial Development Corporation's capital in long-term schemes, whereas the whole idea should be to some extent that of revolving credit.
I agree with Lord Winster that the Corporation should finance a reasonable proportion of speculative ventures. I think that that is right. When we talk about speculative ventures, I do not imagine that either of the noble Lords would suggest that the Corporation should engage in ventures where there was little reasonable chance that the enterprise would ever pay its way. The establishment in the colonial territories of enterprises which can exist only with the help of permanent subsidies would be something which would not in the long run be to the interest or to the advantage of the populations concerned. I do not think that that was suggested by either noble Lord. But there is a field where the prospect of ultimate reward is too distant to be attractive to private enterprise and where the Corporation have a function to perform. I see the noble Lord wishes to intervene; perhaps he will just allow me to finish this. I must remind your Lordships that the Corporation has a statutory duty to "break even" over a period. And I think that the Corporation needs some reasonably secure investments if it is to take risks in other directions. Equally, there must be some limit to these investments as well: otherwise all its capital becomes committed and no further "risk" development is possible. There must be some limit to the amount that the Corporation can have committed at any one time.
§ LORD WINSTER
I only wish to say that I hope the noble Lord will agree that there were bound to be mistakes and losses associated with the initiation of this completely novel scheme. This is a personal matter, and I must say that I think that perhaps the noble Lord charged with the initiation of the scheme has been 1169 rather harshly dealt with. Everything which has been wrong has been attributed to him, but nothing of what has happened since. I only ask the noble Lord to agree.
I would not suggest otherwise. Perhaps we went a little too fast at first, and perhaps we are going a little slow now. Surely the answer is to try to keep some balance in the whole thing. Clearly, we have ultimately to come back to the idea of a revolving credit. The right policy must be that when the Corporation has brought some project to success it should hive it off to private enterprise in order that the capital may be re-invested. What amount of capital the Corporation should have committed in short-term as opposed to longterm projects, and how much it should have committed in safe as opposed to speculative projects, is a matter of very nice individual judgment; but I put it to your Lordships that clearly there must be some balance in the Corporation's portfolio, just as there must be balance in the portfolio of any other corporation. If either Lord Ogmore or Lord Winster have any particular schemes in mind which they consider the Corporation should undertake and which they are not undertaking, I suggest that the noble Lords should put the facts before the Corporation, whose job it is to go into them.
May I turn from the rôle of the Corporation in financing colonial development to the question of the management and administration of schemes, which has also been raised? It has for some years now been the policy both of the Corporation and of the Government that in principle the Corporation should, as a normal rule, work in partnership with some other interests, be it the colonial Government concerned or private enterprise, in any scheme which it undertook. I believe this policy is sound and that the experience, the responsibility and the risks of any particular scheme should be pooled in this way. Clearly—and I think again your Lordships will agree—where the Corporation is in partnership with private enterprise, it may often be better for the private enterprise firm to undertake the management, since they are usually experts in this particular field.
Where the partner is a colonial Government or a statutory corporation in one 1170 of the colonial territories, then it may indeed be found advantageous for the Corporation to make its contribution to the joint project by supplying management rather than capital. That was,I think, the noble Lore.'s idea, and may I say this on behalf of Her Majesty's Government: there would be no objection on the part of the Government to their so doing if that was what the Chairman and his Board thought right to propose. I must say that I still feel that it is for the Corporation to judge how best to run their schemes. The Government could not interfere in the day-to-day management. The Corporation have regional controllers throughout the Colonies to whom colonial Governments can put forward their ideas and through whom constant contact between the Governments and the Colonial Development Corporation is maintained. Many of them have been visited by the Chairman and members of his Board and staff—which I think is a very welcome arrangement.
May I again say that I am grateful for this debate? It will, I hope, draw the attention of Governments once again to this particular point. Lord Grantchester spoke about the relationship between operations carried out by the Corporation and work carried out by colonial Governments under the Colonial Development and Welfare Act. In paragraph 13 of this Report, the Corporation speaks of the connection between the two things and suggests that the initial unremunerative and experimental projects should be financed under Colonial Development and Welfare, the remainder of the work being done by the Corporation. I rather gather that the noble Lord had in mind not only that that should be done but also that the Report should be published simultaneously. This is an issue which has been raised in Parliament on more than one occasion, and there has been this suggestion of some sort of integration between Colonial Development and Welfare and the Corporation. With great respect to the noble Lord, I believe that what is called for is not integration, because, for reasons; which I will explain, this would be inappropriate, but good liaison. I say advisedly that integration would be inappropriate, since the purposes of the Corporation and of the Colonial Development and Welfare Acts, although to some extent complementary, are really different. The funds provided 1171 under the Colonial Development and Welfare Acts are administered by the Colonial Office or colonial Governments, and not by an individual agency comparable to the Corporation, and one must presume that Parliament, which itself created two separate systems with different purposes under two different Acts, did not intend that such integration should take place.
§ LORD GRANTCHESTER
My Lords, I did not suggest integration. The words I used were that we might appreciate the complementary and distinctive nature of these two bodies. I suggest that we might have two Reports together and be able to distinguish the different nature of their work. I agree that one is to give money away and that the other is to develop projects on a commercial basis, but I thought that we might have the two Reports together.
I beg the noble Lord's pardon if I misrepresented him, but I think another noble Lord made the same suggestion, and I want to make it clear that I believe that a good deal can be done not merely by looking at the two Reports together but by good liaison. In practice, the Corporation, through its regional controllers, is aware of what the colonial Governments are doing, and the Governments also know what the Corporation is doing. There are a number of examples of the sort of co-operation which is taking place, with which I will not weary your Lordships. I shall certainly bear the noble Lord's suggestion in mind and see what more can be done about it.
May I turn to the financial position of the Corporation? Here I am in some difficulty, as I told the noble Lord, Lord Ogmore, privately. If I may return to the cricketing metaphor, I shall have to play back through most of the next over. As I told the noble Lord, and now tell the House, most of the financial points to which noble Lords have referred this afternoon have been raised recently by my noble friend Lord Reith, the Chairman of the Corporation, with my right honourable friend, and they are shortly going to be discussed. I am sure that your Lordships will appreciate that I am in a difficult position from the point of view of giving final answers on a number of questions, but, having made these 1172 initial reservations, I shall certainly do my best to give such answers as I can.
§ THE EARL OF LISTOWEL
My Lords, may I ask the noble Lord whether he can say at this stage what matters in relation to the finances of the Corporation are going to be discussed? I am not asking him to say anything if he wishes to regard it as confidential.
My Lords, I will tell the noble Earl what I can about every point as I go through the list and point out those which are going to be discussed. The first question raised was the general financial structure of the Corporation. The general suggestion seems to be that the Corporation's capital should be provided as equity capital. May I say to the noble Earl that this is one of the matters which is going to be raised by the Chairman. All I should like to say on this matter, without prejudice to what my right honourable friend may think, is that in drawing this analogy with private enterprise there is a danger that you might find yourself misled. It is perfectly true that when private enterprise undertakes schemes of the kind undertaken by the Corporation, it raises part of its capital as equity, but the amount of capital it can raise in this way and the terms in which it can get it depend upon the prospects of earning a commercially attractive return. Few, if any, private enterprises engaging in risk ventures could expect to raise their capital on such favourable terms as the Corporation, which gets it at a rate corresponding to the cost of Government credit from time to time.
I do not pretend to be a great economist, but I must confess that I do not entirely understand the noble Lord's attempt to distinguish between equity capital and fixed interest bearing capital when the sole subscriber in each case is the public purse. I do not want to go too deeply into this point, but I think it is far-fetched. When it is sought to compare the Corporation and private enterprise, we are not comparing like with like, and I do not believe that any comparison is applicable. I do not wish to say any more on this point because that is one which is going to be discussed, and I do not want to say anything that will prejudice the discussion. I must leave the matter there.
1173 Another point which is going to be discussed is the present borrowing limit of £100 million, which will be reached before long, and I am afraid I cannot give the noble Lord an answer this afternoon. The next point is an old friend, a ball which my noble friend Lord Munster and I, have been playing back for some years—the writing off of the £8 million described in the Report as "special losses". I do not feel that I can say much more about this. The noble Lord and I discussed this matter fully in your Lordships' House on November 16, 1954. At that time I gave him a full explanation of the views of my right honourable friend on this issue, and at the moment there is nothing I can add to the explanation I gave him then. Again, this is one of the matters which my noble friend Lord Reith proposes to discuss with my right honourable friend, and, certainly, if there are any new arguments which the noble Lord, Lord Reith, is able to put to my right honourable friend, I am sure that the latter is prepared to consider them objectively. Therefore, I do not think that any useful purpose can be served by discussing the matter further this afternoon.
I will turn to the question of the legal position of certain of the Corporation's investments, which was raised by certain noble Lords. It is a fact that in relation to the Overseas Resources Development Act, 1948, my right honourable friend has been advised that certain of the Corporation's investments are ultra virus. I understand that this legal opinion is disputed by the Corporation. A point on which there is no dispute by anybody in any quarter of the House is that the activities in question are desirable from the point of view of the development of the colonial territories. In those circumstances, it seemed right to my right honourable friend that the issue should be put beyond legal doubt and he proposes to introduce legislation for this purpose. The noble Earl, Lord Listowel, asked me whether a Bill had been drafted. Let me give him the assurance that the Bill has been drafted, and it is the hope of the Government to introduce such legislation before the end of the Session, provided, as I hope it will, time permits. If the noble Earl will forgive me, I do not propose to enter into the details of this legal dispute, which is highly complicated, and which, in any case, can be discussed 1174 when the measure comes before your Lordships' House.
I should like to add only one point, A number of other matters have been raised which, if it were decided to take a different view from that at present taken—and I may add that these points all need consideration—would also involve legislation. I hope that your Lordships will agree that it would be wrong to let the possibility of such legislation, or even the consideration of it, hold up the legislation to validate the actions which have been taken by the Corporation and are assumed to be ultra virus. It is of first importance to the Corporation and their work that this legislation should go through speedily. Let me make it clear that the Government's view is that nothing should stand in the way of the urgent disposal of this particular matter.
The noble Lord, Lord Ogmore, raised one or two further issues of importance. He referred to paragraph 10 of the Report and, in particular, to the question of assured markets for colonial products. It is right that I should say a word or two on this subject before I close. In considering the question of markets for colonial products, it is only fair to remind the House, in the first place, that for certain products, notably tin, rubber, cocoa and coffee, an assured market in the United Kingdom is, in any case, impossible, since United Kingdom consumption falls short—sometimes very far short—of total colonial exports. Indeed, as colonial production of such items expands, it may be increasingly necessary to enlarge the traditional markets for these products outside the United Kingdom and to develop new ones. Apart from this particular difficulty, it is right to say that the only Way in which the provision of completely assured markets could be provided in this country for other primary products would be by bulk buying by Her Majesty's Government. I am bound to say frankly that, in the view of Her Majesty's Government, such a policy would induce an undue rigidity into the United Kingdom economy and might affect the competitive position of United Kingdom experts, on which so much of the well-being of the sterling area as a whole, including that of colonial territories, depends. It is our view that, in general, the interests of the Colonies are best served by maintaining healthy 1175 economic conditions, both here and in the field of international trade.
In connection with this matter of markets, the noble Lord touched upon the question of synthetics. I freely admit that the development of synthetics is bound in some cases to have an adverse effect upon the market for the natural product. Rubber is only one example—though, in point of fact, I am advised that in connection with rubber the probability is that world consumption is such that there will be room for an expansion both of the natural product and of the synthetic product. But it is no good disguising from ourselves the fact that for certain purposes synthetic rubber is not only cheaper but also better than the natural product. In a case such as this, I do not believe it is any good trying to stifle a technical improvement which, in the long run, is bound to win, whether one likes it or not.
But having said all this—and to that extent I admit that synthetics may make things more difficult for primary products, although this does not apply in all cases—I should like to emphasise that Her Majesty's Government have done a good deal to secure adequate markets for colonial products, especially where these products look primarily to the United Kingdom for a market. Obviously, the approach depends upon the circumstances which surround the production and sale of the particular commodity. But we have the colonial waiver and, as a result, have been able to increase the import duty on bananas and on lime oil. That is one example. Further, price assistance schemes have been generally agreed for Jamaica bananas and West Indian citrus. We have, of course, the Commonwealth Sugar Agreement, and we participate in international bodies such as the International Sugar Council, the International Tin and Rubber Study Groups and the International Cotton Advisory Committee, all of which concern themselves with commodities of particular interest to colonial territories. It is our policy to take our place in international discussions on a wide basis in order to try to avoid excessive fluctuations in the price of primary commodities.
The noble Lord, Lord Winster, mentioned the question of appointing directors with experience of the Colonies. The Secretary of State does his best to comply 1176 with that particular section, but I will certainly investigate the matter further to see whether the noble Lord has any reasonable cause for complaint. I hope that I have now dealt with most of the points.
§ THE EARL OF LISTOWEL
Before the noble Lord sits down, and in case he had not intended to mention it, could he say whether he and his right honourable friend will consider the question of altering the title of the Colonial Development Corporation? That matter has been raised by several noble Lords in the course of the debate, and I know that noble Lords who have raised it attach great importance to it.
I beg your Lordships' pardon. Obviously I cannot this afternoon commit my right honourable friend to any particular course, but I will draw his attention to the matter and I am sure that it will be considered.
To conclude, I would return briefly to the Report of the Corporation. I agree with the noble Lord, Lord Winster, and other noble Lords who have said that it is encouraging that, for the first time in its eight years history, the Corporation has shown a profit, after paying interest on capital, of over £400,000. If I may say so, with due respect to the noble Lord, Lord Reith, this is a most satisfactory result, upon which he and his Board, and all concerned, are to be warmly congratulated. And I am sure I say that on behalf of all noble Lords. Nor do I take exception to the fact that a considerable part of this profit is derived from the more conservative investments which the Corporation has made—for reasons which I have already given.
I would only add that I hope that, before long, some of the longer-term and more speculative investments of the Corporation will begin to make good, and that we shall thus see restored the conception of the revolving credit which, despite the vicissitudes to which the Corporation has been exposed, is, I am sure, in principle, the right conception. In that connection, my noble friend Lord Colyton gave the example of the hotel in Belize, which only a few years ago was regarded as practically a hopeless project. That is now coming to fruition. It is an encouraging sign, and I hope that there will be many more.
1177 Finally, it is my hope that the Corporation may continue to consolidate and stabilise its financial position, and that in the years to come it may become one of the main pillars of our whole development policy. For, however much politicians in colonial territories may talk about independence, true independence must always mean standing upon one's own feet, not only politically but economically; and the best contribution that we can make to true independence is to provide, through development, the economic self-sufficiency that is so essential.
§ 5.48 p.m.
§ LORD OGMORE
My Lords, I should like first of all to thank all noble Lords who have contributed to the debate this afternoon on this important subject. They have all taken a great deal of care in the preparation of their speeches, and have added much to our knowledge of this matter. In particular, I would thank the Minister, who has obviously taken a great deal of care in the preparation of his speech, and who did what he could, in the circumstances, to give us as much information as possible. We have been using cricketing metaphors to-day-except for the noble Lord, Lord Grantchester, with his knowledge of racing; and I think that we should have been using racing metaphors to-dayand I confess that I feel that the noble Lord, Lord Lloyd, has "stone-walled" a fair amount. He has hit balls to the 1178 boundary once or twice, but he has also been bowled or stumped.
I hope that there will be a happy outcome of the financial discussions which the noble Lord, Lord Reith, is to have with the Secretary of State, and I also hope that the Government will consider the matters other than financial to which we have referred to-day. As the noble Lord, Lord Winster, said, there is wide interest in the colonial territories in colonial debates in both Houses of Parliament, and colonial debates are widely reported in their Press. The Colonial Development Corporation is very important to them, and they take a keen interest in it. It is most important that we should have had this discussion to-day on the Corporation's Report. I feel that it would have been a black mark against us if we had not adopted our annual practice of discussing it. We on this side of the House—and I am sure noble Lords on all sides will join with me—wish every possible success to the Corporation in the years ahead. With that, I beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.