Lords Sitting of 17 July 1957

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers

LORD RANK
Joseph Arthur Rank, Esquire, having been created Baron Rank, of Sutton Scotney in the County of Southampton—Was (in the usual manner) introduced.
The Lord Inverforth—Sat first in Parliament after the death of his father.

TRADE WITH CHINA
2.40 p.m.
VISCOUNT ELIBANK: My Lords, I beg to ask the first Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether a quantitative control for exports to China is being worked out in "Chincom" in Paris, and, if so (1) what strategic purpose, if any, is such a control designed to serve; (2) on what basis of allocation is the control being worked out as between the United Kingdom and other N.A.T.O. countries; and (3) what steps are being taken to ensure that the advantages of the initiative shown by Her Majesty's Government in acting unilaterally to reduce the China embargo are being fully maintained in the interests of British traders.]
THE JOINT PARLIAMENTARY UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF GOSFORD): My Lords, it is correct that quotas for the twenty-five items under quantitative control for export to China are being discussed by the China Committee of the Consultative Group in Paris. While these items are not necessarily of strategic importance as single units, they become important if exported in sufficient quantities. The basis of allocation is a matter for adjustment between member countries in the light of the strategic potentialities of the items in question.
1240
There is no question of British exporters being in a special position in this matter since the majority of the countries represented on the China Committee have now adopted the same control list for both the Soviet bloc and China. It is for business men themselves to follow up the opportunities for trade in non-strategic goods which Her Majesty's Government's action in relaxing the embargo should open to them in the China market. In this they would be effectively supported by the Sino-British Trade Committee and they can, of course, rely on all possible help from the Board of Trade.
VISCOUNT ELIBANK: My Lords, whilst thanking the noble Earl for his answer, and while still holding that there is no justification for extending the out-of-date Korean embargo, to a general embargo to China, may I ask him whether he can explain why, in the case of many articles in the second list which are of non-strategic character, they should be subjected to a quantitative control at all, especially having regard to the fact that they can be obtained by China from non-N.A.T.O. and other countries, and also that China herself is manufacturing many of them at an increasing rate?
THE EARL OF GOSFORD: My Lords, it might appear outwardly reasonable that certain of those items should not be in the quantitative list, but it is certain that in those items there may be materials which, if exported in quantity, will result in lowering the embargo on strategic goods as such to China. As for the list itself, that is not a matter for Her Majesty's Government to decide: it is a decision taken by the Committee as a whole.
VISCOUNT ELIBANK: I thank the noble Earl, but is he also aware that quantitative control, in practice, is throwing British exporters back into all the irritations and uncertainties which obtained under the end-use procedure?
THE EARL OF GOSFORD: I would suggest that the noble Viscount waits until the Committee has had the meeting which is going on at present before arguing in detail about this subject.
THE EARL OF LUCAN: My Lords, can the noble Earl explain on what information Her Majesty's Government decide what is the critical level of exports after which they become strategic?
THE EARL OF GOSFORD: I think I should rather have notice of that question; it does not form part of the noble Viscount's Question.
VISCOUNT STANSGATE: My Lords, if notice were given, would the noble Earl be willing to give a clear definition of what is "strategic value "? It is not very clear
THE EARL OF GOSFORD: I think I should have to consult my right honourable friend before committing him to a definite reply.
VISCOUNT STANSGATE: I will give notice.
VISCOUNT ELIBANK: My Lords, I beg to ask the Second Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether they will state the names of the countries having representatives on "Chincom."]
THE EARL OF GOSFORD: My Lords, the countries represented in the China Committee are Belgium, Canada, Denmark, France, the Federal Republic of Germany, Greece, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Turkey, the United Kingdom and the United States.
VISCOUNT ELIBANK: My Lords, I thank the noble Earl for his Answer. Is is not quite astonishing that America, which does no export trade at all with China and frowns upon countries which do, should nevertheless have a representative on this secret Committee "Chincom" in Paris, allocating trade between British exporters and their foreign competitors?
THE EARL OF GOSFORD: As I understand the noble Viscount, he is indicating that America does not export to China,
VISCOUNT ELIBANK: Yes.
VISCOUNT STANSGATE: Is the noble Earl not aware that America appears, from what one reads in the papers, to impose a total boycott as regards both persons and goods to China?
THE EARL OF GOSFORD: I do not quite understand the noble Viscount. I do not see how this comes into the original Question. The original Question was concerned with countries who are members of "Chincom." I cannot argue the reason for their membership.

REGISTRATION OF OPTICIANS
2.45 p.m.
LORD MILNER OF LEEDS: My Lords, I beg to ask the Question which stands in my name on the Order Paper.
[The Question was as follows:
To ask Her Majesty's Government whether, having regard to the fact that it is now five years since the Crook Committee reported unanimously in favour of the Registration of Opticians and to the various promises on the subject, consideration will be given to its inclusion into the gracious Speech opening the next Session of Parliament.]
THE MINISTER OF STATE, SCOTTISH OFF ICE (LORD STRATHCLYDE): My Lords, the introduction of legislation for the registration of opticians is still dependent on Parliamentary time becoming available, as was stated by the noble Earl the Leader of the House on February 5. I fear that I cannot give any indication whether it will be possible to include it in the programme for next Session but preliminary work is proceeding.
LORD MILNER OF LEEDS: My Lords, is the noble Lord not aware that this matter is quite non-controversial, that the Report of the Committee was unanimous, and that the Parliamentary time involved would be very short indeed?
LORD STRATHCLYDE: My Lords, I understand that to be the case.

THE COLONIAL DEVELOPMENT CORPORATION
2.46 p.m.
LORD OGMORE LORD OGMORE rose to move to resolve, That in the opinion of this House the Colonial Development Corporation is not being permitted by Her Majesty's Government to make full use of its opportunities in Commonwealth and Colonial development, and that Her Majesty's Government should change their policy and practice in this respect. The noble Lord said: My Lords, I have ventured to put this Resolution on the Order Paper to-day and to draw this subject to your Lordships' attention largely because of the Report and Accounts of the Colonial Development Corporation for the year 1956. So far as I am aware, no Report from a nationalised industry or a statutory corporation has ever been published in the history of Parliament which is as critical of the Government as is this Report. I and my noble friends on this side of the House felt that we could not allow this Report to pass without your Lordships' giving it consideration and having from the Government a statement in answer to the serious criticisms it contains. Recently the present Secretary of State for the Colonies said:
" Colonial problems are the touchstone by which our competence as a Government and our right to remain a great Power will in the long run be judged."
We agree with that. We think that that is the touchstone; and it is in view of that expression of the Secretary of State that we venture to bring this Report before your Lordships to ascertain whether or not the Government's touchstone is all that it should be.
During last year the Corporation had a very satisfactory trading period. There was a surplus for 1956, after providing interest of £416,173, of over £500,000, namely, £572,809, and there was a net operating profit from direct projects and subsidiaries of £371,718. In view of all the criticisms of the Corporation in the past, I think it is only right, when they have this splendid record for the year 1956, to congratulate the Board, including the Chairman, the noble Lord, Lord Reith, and the staff on an excellent year's work. New projects and continuing projects are sixty-six in all, and there are certain investigations as well.
At this stage, I want to say something to clear up a misunderstanding. It is often said that the Colonial Development Corporation cannot do this, that or the other because it would mean that United Kingdom taxpayers' money would be given away to some country or institution. In fact, the Corporation does not give away money or services. It is a nationalised industry, but it is an industry, and, as everyone knows who has dealt with the Colonial Development Corporation (as indeed I have), it operates on commercial lines. There is no element whatsoever of charity or anything of that kind—no philanthropic principle about it. It is a commercial undertaking. Therefore, when the Corporation operates in territories abroad we are not, in fact, making them loans or giving them gifts: we are undertaking with that territory overseas a commercial proposition but of course one which takes into account many elements which cannot be, or are not, taken into account by private enterprise.
In the Report there are six heads of disagreement with the Government—there are six charges in the indictment, as it were. The first charge is that the borrowing limit has been reached. Your Lordships will remember that the Corporation is entitled to borrow £100 million and to invest this in its various activities overseas. The borrowing limit has been reached—that is to say, the work in hand and the moral obligations which the Corporation has to meet mean that the Corporation has involved itself in expenditure of over £100 million. I do not mean that over £100 million has already been spent, but that it is committed. I say this because yesterday in another place the Secretary of State denied in fact that this was so, he implied that there was a sum of, I think, speaking from memory, £16 million available to the Corporation. I am told that that is not so; that in fact the Corporation's funds are committed in the way that I have mentioned. This means, of course, that the wheels of the Corporation are grinding to a stop; they cannot undertake any new projects at all. This is a matter which was put to the Government, as long ago, I believe, as May, 1956. They were warned of it, but nothing has been done, and, unless the situation is remedied, the Corporation

1245
will virtually, so far as fresh projects are concerned, come to an end.
The second charge against the Government by the Corporation is in regard to alternative finance. They have been told that if alternative finance is available the Colonial Development Corporation cannot participate in or take on a project. This, of course, is a fantastic position so far as they are concerned. First of all, it would mean that they would be left with only those projects in respect of which no alternative finance was available—in other words, all the live rounds would go to private enterprise and all the duds would go to the Corporation. Secondly it would mean that they would have to assure any partners who wished to come in with them that the project was not commercially sound; that nobody but themselves would put up money for it. They are bound to take in partners because that is one of the rules of the Government. The Government fore; them to take in partners in projects. So the refusal by the Government to allow them to undertake projects unless then; is no alternative finance means, in practice, that they are not able to undertake any projects at all.
The third charge against the Government is the charge relating to emergent territories. The Corporation is prohibited from starting new projects after independence in any colonial territories which achieve independence within the Commonwealth. This is distasteful both to the Corporation and, to my knowledge, to some at least of the countries which are obtaining or which have achieved their independence. The Government have moved forward a short step in the right direction, and they have now agreed that the Corporation can act as a management agent for a country which has achieved independence, so long as there is no commitment of the Corporation's funds. That goes a little way. In fact, we suggested that on a previous occasion in this House, but we meant it only as an alternative; we did not mean it to supersede or take the place of the normal method of working—that is to say, where the Corporation involved some of their own funds.
They can also provide capital for existing projects when necessary. But there has been no definition of "necessary", and we should like to know who is to decide when it is necessary to provide
1246
the fresh capital—whether it is the Corporation or the country concerned, or whether it is the United Kingdom Government. But the rule prohibiting the Corporation from entertaining new projects after independence is a bad one. It seems to us that the Corporation should be able to invest in emergent and emerging territories if they wish to do so. It is obviously to the advantage of both countries. To cut them off from aid of this nature, aid which they cannot get from any other source, is, I should have said, the wrong thing to do when the country becomes independent.
We understand that the noble Earl, Lord Perth, has been chairman of a committee which has been considering the question of aid to emergent territories. Nothing has yet evolved from that committee, and it is difficult to see how anything will evolve. Without any disrespect to the noble Earl, I would say that there is no other instrument: by which the Government can achieve such aid. The Commonwealth Development Agency and the Commonwealth Bank have not obtained the support of other Commonwealth countries, we are told, and these potential agencies are not, and will not be, in existence either.
I think it is most important to continue this aid, quite apart from the fact that we need trade and the mutual assistance which the Colonial Development Corporation can provide. Quite apart from than it is most important to continue the aid and the operation of the Colonial Development Corporation at the time of independence, for this reason. It so happens that in many cases the peoples in colonial territories equate independence with a higher standard of living and an increased prosperity. Sometimes colonial politicians take active steps to foster that view. Sometimes they are inclined to say, "When the British go, you will all be much better off". But in fact it so happens that sometimes the reverse is the case, and for a time the standard of living and prosperity may even decrease after the withdrawal of the British until the country has got on to its feet and evolved new methods of economic development. But if, at that particular moment, when already there is a danger of frustration and disillusionment on the part of the people, the one type of aid—I do not like to call it aid; it is not aid in a sense—the one type

1247
of operation which we can bring to their help, is going to be taken away rudely and abruptly from them, then I think that there will be considerable danger of a blow to democracy and to constitutional Parliamentary government in these various territories. In fact, just at the moment of independence we probably need to help them more than ever. I should like to know whether at the recent meeting of the Commonwealth Prime Ministers, this subject, which is a very important subject, was discussed, and whether any decision was reached. I do not suppose we shall be told that to-day, but we should like to know anything we can be told this afternoon, because surely, with the Prime Minister of Ghana present at the meeting, and the certainty of the Prime Minister of Malaya being present at the next one, it must have been a subject which came before the attention of the Prime Ministers assembled around the table at No. 10 Downing Street.
The fourth charge made by the Corporation against the Government is that their interest is high and that the charges made to them by the Government are also high. As to the interest, it appears that on long-term loans they paid as much as 5¼ per cent interest, and the Corporation says that, so far from any assistance being given to them in the fact that they are developing colonial territories, they are actually paying in interest more than the Government are paying for their own needs in this country. The rates are not, in fact, based on the cost of Government borrowing here; they are greater than the rates at which the Government can borrow money in this market, and they feel that that is rather unfair, having regard to the type of project they have to deal with and to the fact that they are developing colonial territories.
The fifth charge that they make is the charge relating to special losses. Capital is still debited to them, although it has been lost in schemes abandoned years ago. In the early stages of the Corporation, when this was an entirely new feature in the uncertain conditions of the post-war world, projects were started which were found to be uneconomic, and they were abandoned, with the consent of the Government. But this vast sum
1248
of money in respect of these projects still sits on the Corporation's shoulders, as I said previously, like the Old Man of the Sea on Sinbad's shoulders—with the same effect, a very depressing effect, for the Corporation. The Government have never allowed them to write off this capital. They have made an offer that the Corporation should be allowed to write off part of it, and they have also allowed a certain amount of the interest to be forgone. But really there is no point whatsoever in keeping this large sum of £8 million "sitting" on top of the Corporation, and the Government might just as well allow them to liquidate it so that they can start off feeling that they no longer have this very heavy burden of debt on their shoulders.
As I have said before, one must remember that in all these types of projects, where one is dealing with backward and undeveloped areas, there is always in the beginning a good deal of loss. I was interested to find recently that the United Nations Technical Assistance Programme had run into the same sort of trouble, although they, of course, had the advantages of the experience we had gained in the Colonial Development Corporation, and they had the whole world to "milk," as it were, for technical aid and assistance and advice. But I find that 9 per cent. of the projects established in backward areas by the United Nations Technical Assistance Programme were disappointments. Out of 1,334 projects, "Below expectation" ratings were applied to 47 projects, and 16 more were terminated before completion. No judgment was passed on 141 projects which were in their earlier stages. The report goes on to say that the resident representatives in charge of the projects blamed the shortcomings of the assisted Governments in 71 per cent of the failures. Your Lordships will see that even the United Nations, with all their tremendous advantages in this way, have run into a great many difficulties, and that a great many projects have had to be abandoned.
The sixth charge made by the Corporation is that in trying to clear up certain doubts in an Act last year, particularly with relation to Southern Rhodesia, in spite of the warning of the Corporation the Government have achieved new doubts. The question of what is needed

1249
(because they can act and take over projects operating in Southern Rhodesia only in case of need), as the Corporation warned the Government, is proving a stumbling block. It is very difficult to decide whether or not a project is needed for the development of the economy of a country. The Corporation suggested that the word "desirable" was a better word, and one would think that was so. That is, I think, quite a minor point compared with the others, but apparently it is causing some concern in Southern Rhodesia.
The Corporation have always received a great deal of support from noble Lords on both sides of the House, in fact in all parts of the House. But looking quite objectively at the situation as represented by this Report it seems to us that the Government are trying to stifle the Colonial Development Corporation, to kill what is now a very promising youngster. Noble Lords may ask why. I think the reasons for this are partly doctrinaire and partly personal. They are doctrinaire in that the Government too often have the sort of 19th century idea of enterprise in colonial territories which one hears every now and again, and which is found in its finest flower in the speeches of the noble Lord, Lord Grantchester, who in this supports them to the hilt. We have seen it on many occasions—with steel, road transport, air trooping, commercial television. I.T.V. and so on.
THE EARL OF SWINTON: Who was the noble Lord who made the speech that has been so much censured?
LORD OGMORE: Lord Grantchester. On a recent occasion he felt that the only Members of Parliament should be those who have very successful businesses and were able to devote such time as they could from these successful businesses to the work of the public in Parliament. That is a view he is entitled to hold; I am not suggesting he is not. And I am saying that the noble Lord's views in this field—that is to say, how we should operate in colonial territories—seem to be views which are held by the present Conservative Government. They have not only shown their views in the other way I have mentioned, but even in this field they have shown what their views arc, because they have developed, or are trying to develop, as a competitor to the Colonial Development Corporation
1250
a private enterprise corporation or company called the Commonwealth Development Finance Company, Limited. This is said to be—it has been said to be by a Minister, by the noble Earl, Lord Perth—intended to take the place to some extent of the Colonial Development Corporation.
THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS AND LORD PRESIDENT OF THE COUNCIL (THE EARL OF HOME): May I get this clear? The noble Lord says that the C.D.F.C. is a competitor to the Colonial Development Corporation, but since it does not operate in the colonial territories, how can it be a competitor?
LORD OGMORE: There is nothing to stop it operating in the colonial territories—in fact, it is intended to operate in the colonial territories.
THE EARL OF HOME: But in the Commonwealth as a whole it does not compete—in the independent Commonwealth.
LORD OGMORE: I do not quite know what is the object of that intervention.
THE EARL OF HOME: I am trying to get clear what the noble Lord means.
LORD OGMORE: The fact is, as I understand it, that the Government have created—when I say "created" I mean they have made possible, or encouraged, the development of the Commonwealth Development Finance Company as a private enterprise competitor to the Colonial Development Corporation.
THE EARL OF HOME: I am obliged to the noble Lord. I now understand his point.
LORD OGMORE: That is what we believe to be the fact—indeed, the noble Earl, Lord Perth, more or less said that in our previous debate.
THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH): Perhaps I may be allowed to intervene, as I have been quoted as saying a certain thing. What I said was that in the independent Commonwealth territories, where the C.D.C. cannot operate, we hoped the C.D.F.C, a private enterprise Corporation, might step in and do the job.
LORD OGMORE: Yes. I think we now have that point clear. The fact is that in Commonwealth countries, in independent and in colonial territories, this Company, which is not confined to independent countries but is intended to operate in colonial countries as a whole, is intended by the Government to be a competitor.
Why Ministers opposite are now so worried about this I do not know. I thought that one of their great slogans was "competition". All I am saying is that they have created a competitor to the C.D.C. I am trying to establish a fact. There can be no doubt that it is the fact. We do not object to that at all. We say: let us have as many links with the Colonies or Commonwealth as we can have; have some of the money from the City of London, and so on. That is all well and good. I am not objecting to that. What I am objecting to is the attempt to make this Finance Company replace the Colonial Development Corporation, because it cannot possibly do that. There is room for both, but this company cannot possibly replace the Corporation, simply because the company has not the personnel, the money or the organisation. In fact, it has said so in its report. In its first report, the chairman said, in effect: "We do not intend to operate, ourselves, in overseas territories; we are a finance house"—in other words, "We do not intend ourselves to provide the necessary technical assistance and 'know-how'". It means that the Finance Company is just going to be a finance house. But the colonial territories need the technical "know-how", experience and organisation which the Colonial Development Corporation have and the finance company do not have.
The second reason, the doctrinaire reason, is a personal one. There seems to be a feud between the Secretary of State for the Colonies and the Chairman of the Corporation, Lord Reith. Neither of them has told me this, so I may be wrong. I am only assuming it from the fact that I do not think that if personal relations were—I will not say good but even moderate, any such Report as this would ever have been presented by a State Corporation; and I cannot believe that good relations can, in fact, be subsisting between them.
Now what of the development of underdeveloped territories? This is, undoubtedly,
1252
one of the pressing needs of our time. The Government pay lip service to this problem, but I am afraid, with the history of this Corporation before us, that it is only lip service. There is need for a stable and enlightened financial and economic policy of association between us and the territories overseas. What is the sort of association now? I take this quotation from the Daily Telegraph of June 3, from an article by the City Editor:
" The Malayan and Indian Governments are considering means to combat the ' menace ' of take-over bids for rubber companies in Malaya and, to a lesser extent, tea companies in India. Mr. W. Kenneth Warren, chairman of James Warren and Co., the merchants and rubber and tea agents, says in his statement that many of the bids are being made for the purpose of liquidating and acquiring the current assets of the companies and enforcing a sale of the estates involved. The Malayan Government have now realised that this is having a disturbing effect on labour.
" Consequently, he says, the Government is taking steps to combat the menace. The Indian Government was also taking steps ' which should make such transactions unprofitable '.
" Take-over possibilities are also having a disturbing effect on managerial staff, says Mr. Warren. They ' may become affected by the operation of speculators and those who advise them in search of tax-free capital gains for personal advantage at the expense of the industry and all concerned with it'".
If that is true—and I cannot imagine the Daily Telegraph printing, or Mr. Kenneth Warren saying, anything which was not true—that is a very disturbing feature. When one thinks that this is occurring in the rubber industry of Malay, a country for which we are still responsible; that this great rubber industry is at the peril of take-over bids by those in search of tax-free capital gains for personal advantage, it seems odd, that for some doctrinaire reason, the Government will not allow the Colonial Development Corporation to continue its beneficent operations unchecked. We allow take-over bids affecting one of the two main industries of Malaya on behalf of those who are out to make high profits and tax-free capital gains.
What is required in these countries has been well set out by the Economist intelligence unit who have prepared a special report for the Uganda Electricity Board. There is perhaps nothing new in the report, but it puts the matter in a neat way. On page 149 it says:

1253
" It is only toy industrialisation that the basis for a permanent improvement of living standards can be provided—and all that this improvement means in the way of better health, education and more developed administration. For many decades yet, the industrial sector of the economy is bound to be small, although the previous sections have shown that this sector is growing rapidly and is considerably larger than is generally realised. So long as the agricultural sector accounts for such an overwhelming proportion of the Uganda economy, however, the country's prosperity will remain unduly subject to the vagaries of international commodity markets; and if only on economic grounds increasing industrialisation is to be strongly welcomed."
The Economist spoke only too well, if the vagaries of commodity markets are indeed to affect the country's economy and these great industries are now also to be subject to the vagaries of those who wish to make capital gains by means of take-over bids.
In the Report of the Uganda Development Corporation there was this statement:
" The expansion of manufacturing industry, as has been stated and re-stated will depend entirely on the growth of the purchasing power of the people which can, only follow the expansion of agricultural production; that is the key to our future. It must be recognised that new manufacturing industries on any large scale can only be established against substantial local requirements of goods; a large proportion of manufactures are, in any event, excluded through lack of raw materials."
The picture, therefore, in Uganda, as in most colonial territories, is of the necessity for the development of their agricultural products and the tying in, as it were, of their industrialisation, in order to make use, so far as possible, of those agricultural products. There is no short cut, and the necessity for an organisation such as the Colonial Development Corporation to help them with their industrialisation is so apparent that there is no need for me to stress it.
I do not wish to weary your Lordships at much greater length but there are just one or two things I should like to say before I conclude. First, as I have said, Commonwealth development is of mutual benefit, both to the United Kingdom and to the colonial territories. The participation of the Colonial Development Corporation is not a gift or a loan; it is a commercial venture, and one which is needed by the territories. And this sort of association is, moreover, needed by us. According to the noble Viscount, Lord Bruce of Melbourne, in a recent speech, during the last ten years we have
1254
paid out £3,500 million more than we have received from exports and investment income. The gold and dollar reserves are lower today than they were in 1951, when the present Government came to power. Since 1951, Britain's share of the world market in unmanufactured goods has dropped from 22 per cent. to 19 per cent. Since the same year the purchasing power of the pound has dropped by 3s. 11d.
According to the Colonial Annual Report, the United Kingdom is still the largest individual supplier and customer of the colonial territories, but I regret to say that our relative position is declining, and declining pretty fast. If we take the distribution of exports by destination from the Colonies, we find that exports to the United Kingdom fell from 29 per cent. in 1954 to 248 per cent. in 1956—in two years. The distribution of imports from Britain to the Colonies, excluding Malaya and Hong Kong, fell from 376 per cent. in 1954 to 36·4 per cent. in 1956. In the case of Malaya and Hong Kong, imports from the United Kingdom for the same period fell from 16 per cent. to 15·6 per cent. So there is a definite decline both in exports from and imports to the colonial territories. In view of our position, as mentioned by the noble Viscount. Lord Bruce of Melbourne, that is a disturbing factor, one which I feel sure we should strive to put right and not further to diminish.
I should like to touch for a moment on the Labour Party's policy, to make sure we all know it. The Party's Statement of policy on Colonial affairs of 1954 said this:
" The rôle of the Corporation—
that is, the Colonial Development Corporation—
" should be re-examined 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.
The experience of both has revealed the necessity for increasing the facilities for training more technicians within the territories and in Britain."
Recently the Labour Party produced an official pamphlet, Labour's Colonial Policy: Economic Aid, in which this is said [page 29]:
" In office it—
that is, the Labour Government—
" will take steps to change the Corporation's constitution to enable it to become the main

1255
instrument of public investment in colonial under-developed areas. It will also create an instrument available to the emerging territories of the Commonwealth who still need capital and practical assistance during the early years of their independence and will equip it with adequate finance and powers for its rôle."
In other words, they will do what the Corporation are criticising this Government for not doing. I think that it is also important to carry out what we have suggested for the last two or three years to the Government—namely, to change the name of the Colonial Development Corporation to the Commonwealth Development Corporation. This would enable their operations to take place in the emergent territories without any question of any kind of colonial link.
We would give a message of hope to the Corporation. First of all, we wish and urge the Government to remedy the matters that the Corporation have asked them to remedy. But if they will not do so, we would ask the Corporation to possess their souls in such patience as they can until the electorate decide to change the Government, when, as they will see the Labour Party has made abundantly clear, the next Labour Government will give Commonwealth development such assistance as they think desirable and necessary. I beg to move.
Moved to resolve, That in the opinion of this House the Colonial Development Corporation is not being permitted by Her Majesty's Government to make full use of its opportunities in Commonwealth and Colonial development, and that Her Majesty's Government should change their policy and practice in this respect.—(Lord Ogmore.)
3.25 p.m.
THE EARL OF SWINTON: My Lords, I think that we should all agree that the Colonial Development Corporation have done a lot of good work. If we were discussing only Part 2 of the Report which is before us to-day, I think that we could all join hands in congratulating the Corporation on the good showing which that part of the Report makes. But I am bound to say that it strikes me as a little more unusual that in Part 1 of the Report we are asked to consider—and the noble Lord, Lord Ogmore, devoted the greater part of his speech to this—a recital of the disagreements and disputes which have taken place between the Corporation and the Colonial Office. Indeed, the noble Lord, Lord Ogmore.
1256
said that it was an indictment of the Secretary of State, and he proceeded to recite six charges or counts in the indictment.
In reading the Report, I was reminded of those circulars we sometimes receive from dissident shareholders asking us to vote for a change of management or a change of directors. I should like your Lordships to be clear on the legal position. The noble Lord, Lord Ogmore, said that there ought not to be any personal differences, implying that if only the Secretary of State would do what the noble Lord, Lord Reith, told him to do all would be well. I do not want to say who was right or wrong, but I should like the Government to make perfectly plain to the House to-day where the statutory right and duty lies as laid down by the Act of Parliament.
As I understand it, Parliament has laid down that the general policy is to be settled and enunciated by the Secretary of State and then it is the function of the Corporation to carry out that policy. I should like the noble Earl who is to reply to make clear where the responsibility lies. Of course, the Secretary of State is responsible to Parliament for his policy and for his administration, and it is quite in order, and common form, that Ministers should be criticised and attacked and, if necessary, censured. When I sat on the Front Bench I have known criticism to be made of Ministers from all quarters of the House, and I hope no Minister ever resented it. What has been more usual in the past, and I think is the more convenient practice, is that the censure of Ministers came from Members of another place or of your Lordships' House. I do not think it should come in the form of a report by the Minister's own agent. If an agent cannot carry out the policy he is appointed to carry out, there is a simple course open to him, which is open to all of us when we cannot find ourselves at one with our colleagues—he can always dissociate himself from them. I should have thought that that was the more usual plan. I am not talking of the merits now. I think it would be rather odd if all the agencies the Government have set up—and heaven knows there are a lot of them!—were to present every day to Parliament a vigorous indictment of their principal. However, as the noble Lord

1257
said, I may be very old-fashioned in this respect. I wonder, if and when the Socialist Government come into office, and if all the national boards then join in a chorus of condemnation, what will be said by the Socialist Front Bench.
VISCOUNT ALEXANDER OF HILLSBOROUGH: My Lords, I suppose we should do exactly as the Secretary of State has done now. He has presented this Report to Parliament in a Motion, in order that it may be printed and circulated. I can see nothing wrong in that; and I can see nothing wrong in the Report.
THE EARL OF SWINTON: The noble Viscount is entitled to his opinion: we all have ways of doing things. Of course, the Secretary of State, when he gets the Report, presents it to Parliament, and quite rightly we are discussing it. But I think the noble Viscount would find it a little odd if all his national instruments joined in cursing him when he took office again.
VISCOUNT ALEXANDER OF HILLSBOROUGH: Will the noble Earl excuse me? I understood at the beginning of this part of his speech that he was rather inclined to challenge the legality of this provision and would like to get a legal explanation from the Government. I can see nothing illegal about it.
THE EARL OF SWINTON: Perhaps the noble Viscount will kindly allow me to make my speech. Nobody has ever challenged the legality of this Report. Of course it is legal for anybody in a free country to write anything they please. What I asked the Government to do was to make plain what was the legal position of the Secretary of State, as laid down in the Act of Parliament, and of this Corporation. As I understand it, the legal position which Parliament laid down was that it is for the Secretary of State to formulate the policy, and for the Corporation to carry it out. I am not asking the noble Viscount. I want to ask the Government, who are the only ones competent to answer that question.
I now come to the Report itself. The criticisms in the Report, as has been said, are twofold. One: set of criticisms is on the detailed exercise of powers, and the other is on the part which this Corporation ought to play in non-colonial territories. The noble Lord, Lord
1258
Ogmore, has said that he thinks the Corporation are right in all their criticisms. I will take just one or two of them. In paragraph 11 of the Report the Corporation complain of the rate of interest which the Colonial Office have been charging. The noble Lord said that, of course, they should be able to get the money much cheaper; but I am bound to say that I do not agree. Honestly, I cannot see why they should. I should have thought that the right thing for this Corporation, as for any other corporation—the National Coal Board, the local authorities of this country, or anybody else—was to pay the market rate for what they borrow. I cannot see anything wrong in that. If a Crown Colony itself borrows on the market, as many of the Crown Colonies have done, and enjoys a good credit, it has to borrow on the market at the current market rate; and so has every borrower. Unless the market rate, or a fair rate, is paid, what the Corporation would be doing would be receiving a concealed subsidy. I do not think that that is right. I think they should pay the normal rate for their money.
I must say that one thing I agree about is this. If capital has been irretrievably lost—and there is still a certain amount of capital which has been irretrievably lost—and has not been written off, then I should have thought it was a reasonable thing to write off that capital which can never be recovered, because each venture ought to stand on its own feet. I should have thought that where the whole thing in in liquidation, the sensible thing to do would be to write off the capital invested in that particular business.
Then there is the question of alternative finance. Frankly, on this matter I take a different view from that of the noble Lord, Lord Ogmore. When this Act went through—we all shared in it; I forget whether it was our Government or our predecessors who passed it—I thought it was an agreed measure and we were all glad to carry it out. But I am bound to say that I did not understand at the time, nor during all the time I was in office, that it was ever suggested that the object of this Corporation was to toe a competitor with all the other sources of investment. On the contrary, I thought its object was to fill a gap. The noble Lord says that if they do that they will get only bad business. I do not think so at all. Very

1259
often there is business, particularly when capital is short, for which you cannot borrow in the open market, especially the rather small concerns for which it is difficult to get the £50,000 which may mean the difference between the thing being floated or not.
May I venture on a personal reminisence? I well remember that when we established the United Kingdom Commercial Corporation in the war, we did two things. We carried on the economic warfare, and over that we lost money, because what we did was to buy up the goods at any price so that the enemy did not get it. That is rather like firing off a shell—you cannot make a profit but you try to get value for your money. Then we had another side, running into hundreds of millions of pounds, where the Government corporation financed business which could not be financed through the ordinary channels; and I may say that on that we made a handsome profit. There is a great place for undertakings which supply a need of that kind.
Then we come to the other side of Part I of the Report: what is to be the future of the Corporation in what are called the "emerged territories"?—that is an odd phrase which refers to the territories which have now attained sovereign independence. I was personally concerned with this matter, and I feel, and on consideration I am sure the members of the Corporation would agree, that the Report is a little unfair to the Government in paragraph 15 (8). The House will remember that that dealt with a rather infelicitous clause which occurred in the Ghana Bill; I think everybody would have liked to deal with it in a different way. Paragraph 15 (8) of the Report says:
" Government was still urged to drop the clause as infelicitous, and rely on informal agreement with C.D.C. pending outcome of promised review "—
that is, the full review of the whole of Empire finances—
" but Government insisted on retaining the clause."
I do not think that that is quite fair. I made the proposition that this direction should be given as an administrative direction. The House will remember that it was most carefully considered by the Lord Chancellor and the Law Officers,
1260
and the Lord Chancellor, in a carefully considered speech, told us that he and the Law Officers were bound to advise the Government that it would be ultra vires for the Secretary of State to give an administrative direction of that kind. When the Lord Chancellor tells us that that is the law and what is the limit of the Government's powers, then I am bound to say that I think it should be accepted in all quarters of the House and everywhere else, and that paragraph ought not to have appeared. The Government in those days, quite rightly, I think, took the line that the future functions of the Corporation in the independent territories must form part of the review of the whole finance of Commonwealth development, and in this review, as they told us, they would immediately consult with all the Commonwealth Governments. That, I understand, has been done; and I have no doubt that there were further discussions at the recent Commonwealth Conference in London.
Surely, before a decision is given on one particular Corporation, one particular agency, if they are having this review—not only a review by the Government, but a review in which the whole Commonwealth is taking part—then it is reasonable that any decision about this Corporation should form part of that review. Indeed, I would say it is not only reasonable, but imperative on any Government. But the Corporation do not want that at all. They state quite flatly that they ought now to be given the authority to operate in any independent territory, and that the title of the Corporation should be changed. I do not at all wish to prejudge what ought to be the powers of the Corporation to-day, but I do say that we cannot possibly judge that in isolation.
The Corporation advance in paragraph 16 of the Report a reason why this isolated decision should be taken. They say it would be unfair that the skilled personnel of the Corporation—and they have a very good personnel—should not be available outside the colonial territories. Whatever decision is ultimately taken about the functions of the Corporation, I do not see what is to stop the personnel from being used. The Corporation could perfectly well operate as an agent for some other body. The

1261
Corporation could perfectly well lend, at a fee, any of its experts for a particular project. Really that does not seem to me a reason for prejudging this matter. I think, therefore, that it is premature to pass judgment until we know what the Commonwealth countries have agreed.
In conclusion, I would put in only a few general considerations about the finance of Commonwealth development. Whatever effect the earlier part of my speech may have had on some noble Lords opposite, I think here I shall probably carry most of the House with me. I would say, first of all, that we all want the maximum investment in the Commonwealth. Next, I would say that we all want as much Commonwealth cooperation as possible in finance and in deciding what should be done, and how it should be done. I do not believe that you can have anything in the nature of a joint Commonwealth Executive—the Commonwealth does not work in that way. Each Government has to take its own decision and carry it out, and shoulder its own responsibility. But that, of course, does not prevent close consultation and agreement on policy and agreement on execution.
Then I would say this. There will never, at any time that we can foresee, be enough capital available, whether State capita] or other capital, for all we want to do. You cannot lend from an overdraft. You cannot borrow short and lend long—as the noble Lord, Lord Brand, would tell us, you would pretty soon get into trouble if you did. Therefore, surely, it is most important, in join: Commonwealth planning and in the action taken by each country of the Commonwealth, that priority decisions should be carefully weighed and should be sound. Surely, it follows that the Government in the United Kingdom must decide about this Corporation, as about other ways and means, after reviewing the whole field. I think that that goes for the borrowing limit of this Corporation, by which I mean any large extension. Obviously, they ought to have enough to carry on from day to day. I gather there is some argument as to whether they have, or have not, £10 million or £12 million in the kitty. But I would say that if there is some useful proposition that ought to be carried out, then they ought to have the advance to
1262
do it. But, broad and large, any great extension of their borrowing power over a long term of years must surely be part of the general decision.
I wish to say this finally about the relation of the Corporation to the independent countries of the Commonwealth I do not think it is at all easy. I think there are difficulties, and real difficulties, in treating the full members of the Commonwealth, differently, one from another, in the matter of finance. It is not only that financial independence and financial responsibility are essential elements in independent status, though that is important. It is particularly important to all the States that constitute the Sterling Area. We have seen recently how an over-ambitious programme, pursued in India after it became apparent that it was far and away beyond the resources of that great sub-continent, looked like bringing the whole institution of the Sterling Area into peril. I sincerely hope that that has been set right, because anybody can lecture as much as they like—that does not do us any harm—but we should object to one of the partners bankrupting the others. That would not be a good plan. That emphasises the importance of the individual responsibility and the collective responsibility of the individual countries who constitute the Sterling Area.
I do not want to be a pessimist, but we must not be too optimistic about these things. We must not be misled by improvements in reserves which are more apparent than real. We are glad to see it, but when we look at the improvement in the reserves it is important to see whether that is a real improvement, as a result of favourable balances, or whether it is what I may call an adventitious aid. I think my figures are right, but I shall no doubt be corrected if I am wrong. To take round figures, 100 million dollars comes from the waiver of the American loan interest, and something like 550 million dollars or 560 million dollars from drawing on the International Monetary Fund—both of them perfectly proper operations, but not to be looked at in the same way as if we had earned, on our own, a new surplus. I have this other suggestion to make about the treatment of these independent Commonwealth countries. None of us, no-one in the Commonwealth, wants a two-tier Commonwealth. Is there not a risk of

1263
this if we treat the emerged countries as if they were Colonies? You will not avoid that merely by a sort of baptismal regeneration, by altering the title of this Corporation.
We should all like, certainly those of us who feel that the decisions must form part of a concerted whole, to have as soon as possible a full Government pronouncement. If possible, I hope we may have it before the adjournment. If not then, I am sure both Houses of Parliament would agree that it should come as soon as it can, and not wait for Parliament to reassemble. But let us have whatever is the full statement of Government policy, agreed as far as possible with the Commonwealth, as soon as it can be made, so that, even if the House is not sitting we can have a chance to consider it during the Recess and debate it when we return.
3.50 p.m.
LORD MILVERTON: My Lords, in rising to intervene for a brief moment in this debate, I feel in many ways torn, as I imagine many of your Lordships feel, between two opinions. I have the greatest sympathy with a good deal of what was said by the noble Lord, Lord Ogmore, and, with great respect, I am not able to agree with the noble Earl, Lord Swinton, in saying that Part I of this Report, which I have in my hand, is an extraordinary document, in that it does undoubtedly suggest that the Corporation has not received the treatment it was entitled to receive and expect from the Government. But, if your Lordships consider it, the Corporation was set up in 1948 in a wave of enthusiasm; and all of us, on both sides of this House, or any other House, were filled with an enthusiasm which practical experience showed us to be based on a number of fallacious assumptions.
We asked the Commonwealth Development Corporation to run its business on strictly commercial principles, and we then proceeded to lay down certain rules, regulations and controls which would have made it totally impossible for any organisation to run its business on commercial principles. Slowly, over the years which have elapsed since, there have been various relaxations and amendments to the way in which the Corporation is
1264
asked to work; but still there remain these difficulties, and I would suggest that the statement in Part I is perfectly fair and reasonable. I am not going into it again because the noble Lord, Lord Ogmore, stated it quite clearly in his speech. I think that those difficulties ought to be faced, and the only way in which the Corporation could bring them to the notice of the public was in this way.
This Report is an account of the way they have conducted their business and the difficulties which they have encountered in discharging the public trust which was put upon them. If one of the difficulties in discharging the public trust put upon you is the regulations as interpreted by the Colonial Office and the Treasury, surely it is only reasonable to give them a statement in your Report and to say why it is difficult to run a business on commercial principles if those self-same principles are violated by the control to which you are subjected.
The public, however, expect to be told how the money entrusted to the Corporation is spent and why any failure which may have eventuated has taken place. I think that, in describing how, through important vicissitudes, the Corporation has finally steered its way to a credit balance and to a condition of its affairs in which it is attempting, almost successfully, to fulfil the conditions under which it was appointed, it is entitled to say what will be necessary in the future if it is to be enabled to complete that work. I personally feel rather strongly on this question of the emergent territories. I am not able to follow the noble Earl, Lord Swinton, in his regret that there should be any attempt to set up a two-tier organisation of the Commonwealth—there is nothing of the sort. If we face the facts, however, we all know that these emergent territories have politically outrun—and, indeed, are still doing so and likely to do so, inevitably, for reasons into which this is not the occasion to go—their economic possibilities and independence. They do and must require assistance, and the way I look at it, we have to say what is the most suitable instrument through which we can channel the assistance which we still have a moral duty to give them.
We have here in the Colonial Development Corporation (and one can cut out and alter the name and alter the Act) a

1265
body which has been built up, which has an efficient stall, and which has won through many difficulties in the formation of that staff. As I see it, to say, and to think it is an adequate answer to say, that the Corporation can, if it likes, undertake the job of an agency house in the emergent territories, and that it is not to commit any funds of the taxpayer in that process, does not, to my mind—it may be that it is due to my ignorance—make sense. But who is paying for this organisation which is built up and which is to be used as an agency house? Is not that agency house the product of the taxpayer of this country? Have we not built it up, and if it is there, if we desire to channel help to the emergent territories, it is obviously a matter of the utmost ease to see to it that the conditions under which it legally operates are altered so as to legalise this new development. It is less than ten years since the Act was passed, but I think I may safely say that none of us foresaw the amazing changes which have taken place in those brief years in the conditions with which a Colonial Development Corporation would have to deal. It seems to me merely a matter of sense that we should adjust the machine which we ourselves have built to deal with the circumstances of the changed cases of to-day.
I do not wish to go into or repeat what has already been said in this debate (so much of it has been said before, in the debate on Ghana and in other debates, that I do not wish to weary your Lordships with repetition), but I should like to ask the Government one or two questions. First, I should like to ask: are the Government satisfied that the Colonial Development Corporation is fulfilling efficiently the purposes for which it was set up? Do the Government regard the Colonial Development Corporation as an expanding organisation with an ampler future before it, or do the Government envisage its future as one of diminishing importance and scope? If the reply to the first alternative is "Yes", and to the second alternative "No", how do the Government reconcile this view with its prohibition of new activities in any of the territories which achieve independence?
My Lords, do let us try—I almost said to be sensible, but I do not wish to be offensive—to take an objective view of
1266
this matter. Within the next few years all the territories which can, economically, will be among what are called the emergent territories, and the Colonial Development Corporation will be left with a very minor scope before it. If that is what the Government envisage, then I think we are entitled to be told so; and certainly the Corporation is entitled to be told so. Personally, with my own experience of many of the territories concerned, and also for three years as a member of the Board of the Colonial Development Corporation in the difficult initial days, when we were all learning by experience, I feel that the Corporation is having rather less than what one would normally call a fair deal from the Government.
We are all agreed on this, there is no dissentient voice in our desire to help the territories which need help in their development, and it is surely just a question of adopting a sensible business-like view of what is the best way in which to employ such money as we can spare for that purpose, so that it may have the greatest possible effect. I suggest that all these other organisations—the Development Finance Company, the Export Credits Guarantee Department, the International Monetary Fund, and all the rest of them—have none of the general experience: they have not won the confidence, as can safely be said the Colonial Development Corporation has done, of these former colonial territories and territories which are still colonial territories. Surely it is a sensible thing to ask that that Corporation should be employed for that purpose. And if there are reasons—I am not denying that there may be reasons, of policy and otherwise—which would make it desirable to return a negative reply to that request, then let the Government say so quite clearly and openly. Do not let them stifle the activities of this Corporation and make it impossible for it to expand. Let us know-quite clearly what the Government think, (If the Corporation is functus officio then let it die with dignity and with the credit which it has now hardly won for itself.
My Lords, I do not think there is any more that I can reasonably say—these questions have been debated here so often. To go back to what I said at the start, I think that we should never lose sight of the fact that all of us were utterly mistaken, if we are to tell the truth, when

1267
the Overseas Resources Development Act was originally passed, in thinking that there was a wonderful field of activity in between private enterprise and purely Government work. If we are honest, we now know that no such field exists and that the Colonial Development Corporation must be allowed to operate, preferably in partnership with private enterprise firms, but at any rate in a field where there is possible competition from private enterprise, otherwise they cannot possibly shoulder the load of debt with which we have legally saddled them. I look forward to hearing the Government endeavouring to satisfy us that they really are taking an objective view of these activities.
4.5 p.m.
THE EARL OF PERTH: My Lords, the original terms of Lord Ogmore's Motion were restricted to the 1956 Report. No doubt we in your Lordships' House should have ranged considerably wider, but I am glad that the Motion he has introduced is in broader terms, because, amongst other things, it enables us legitimately to consider the pamphlet on Labour's Colonial Policy: Economic Aid in which the C.D.C., or, rather, a "blown-up" monster of a successor, is to play a leading part. The Motion falls conveniently into two parts—the C.D.C. and the Commonwealth, and the C.D.C. and the Colonies. I intend to concentrate on the colonial aspect, and in particular I will try and deal with those charges arising from the 1956 Report to which Lord Ogmore has drawn attention. I am grateful to the noble Lord for giving me notice before this debate of what he was going to ask; that will enable me to tackle the questions thoroughly, although I doubt whether I shall tackle them all entirely satisfactorily from everybody's point of view, because certain of them are, if I may so describe them, "hardy annuals."
Before I deal with the charges, I should like to answer the point raised by the noble Earl, Lord Swinton. The Secretary of State for the Colonies alone has the responsibility before Parliament for the activities, and so for the broad lines of policy, of the Colonial Development Corporation. I do not think there is any point in my going further into the controversy which various noble Lords have raised in one way or another, but
1268
I hope that that is a clear statement of the responsibility and where it lies.
I will now deal with the various points which the noble Lord, Lord Ogmore, raised. First of all, I should like to talk about alternative finance. The noble Lord said that the Corporation have been told that they may not operate if alternative finance is available. I have no knowledge of their ever having been so told. The Annual Report says:
" If this argument as to alternative finance were to apply generally in future, and if C.D.C. had to produce evidence that alternative finance were not available "—
then I admit that, as written, the Report might be held to imply that the Colonial Office had put forward one or other of these premises. But we have not done so.
LORD OGMORE: Would the noble Earl read the first sub-paragraph? He has read the second sub-paragraph of paragraph 13 but not the first, and without the first it is very difficult to follow. If the noble Earl reads sub-paragraph (1) he will see the point.
THE EARL OF PERTH: That reads:
" This project led to another difference with Colonial Office which finally advanced the further argument that C.D.C. participation should be disallowed on ground that alternative finance was available."
I understand that, and I am going to refer to it in a moment. But I still repeat what I said, that there has been no ruling that if there is alternative finance the Corporation may not undertake a project.
I suspect that perhaps one of the purposes behind the various extracts which we have just been quoting was the hope that, if I may put it this way, the Colonial Office might be "smoked out" as to exactly in what way and where the C.D.C. may operate, so that it would be able to go ahead, not worrying about Colonial Office approval. Unhappily, things are not as simple as that. Some of the propositions are clearly in the "white" category, some of them are in the "black" category: and some of them fall in between, into a sort of "grey" category. For example, if the Corporation asked for approval of a straight loan to a borrower who could raise it without difficulty in the ordinary markets, I should think it was extremely likely that the Colonial Office would not give sanction to it. If on the other hand, the Corporation was working on a

1269
project and found that the partner with which it was working was ready to do the necessary job only if the Corporation came into it, although in fact the partner could find money outside, then I think it is quite likely that the Colonial Office would approve. But what we do not want is for the Corporation to use its money on projects when alternative finance is easily available. We feel that this would be a dissipation of the Corporation's funds, which are necessarily limited and therefore must be carefully husbanded. We shall have to continue to treat each individual application or its merits and in the light of the prevailing circumstances. Alternative finance will remain one among many factors that come into the judgment; and, in relation to the particular point the noble Lord, Lord Ogmore, raised, which I read out, that was one of the factors that came into the judgment and not the only one.
LORD OGMORE: My Lords, all I can say on this point is that the Corporation, as I understand it, is definitely of the opinion that this is the general rule, not completely restricted to that one case.
THE EARL OF PERTH: I hope that after they have read what I have said this afternoon, that opinion will no longer exist. At times it has been suggested that if alternative finance was a criterion the Corporation would be deprived of profit-making opportunities. I would only say that I can think of another body which is well known to many of your Lordships, namely, the Finance Corporation for Industry, which has an absolute rule that it will not operate unless it has been proved that alternative finance is not available; and yet that Corporation has done great things for development in this country and has at the same time made good profits.
The next point on which I touch is that of high interest rates. In the Report it is said that, while it is recognised that high interest rates may be required to control home economy, they slow down colonial development which is necessary or desirable. That is quite true. They also slow down home developments which are necessary or desirable. That is their purpose. It may be very unfortunate, but that is how we are to-day. Many of your Lordships will think of all sorts
1270
of projects in this country which you would like to see go on—the building of roads, new factories, what you will. We have to slow them down. And that is the same thing which unfortunately has to be applied to some colonial development. The Government set up the Colonial Development Corporation on commercial lines. To allow them to have interest rates deliberately lower than those prevailing would, as the noble Earl, Lord Swinton, said, be a form of subsidy and strike at the whole concept of the Corporation.
I have been looking through the Report and I cannot find where it is said, as the noble Lord, Lord Ogmore, made the charge, that the interest rates are unfair and deliberately higher than they should be. All I can say about it is this: in our opinion the rates charged to the Colonial Development Corporation are very reasonable. May I give your Lordships an example? If you look at the rates that were charged earlier in this year, you will see that the highest rate for long-term money was 5 per cent. Just recently—I think in the last week or so—that has been changed, or it is going to be changed. But during the same time a Colonial Government went to the London market and raised a loan at 5¾ per cent. I cannot see that on that basis it can be said the Corporation is being deliberately charged a higher rate than is warranted.
Again, the Report mentions the fact that the Corporation will have to pay £957,000 of additional interest. My Lords, that does look a formidable figure; but when one realises that it is, in fact, spread over forty years, the figure becomes less formidable—somewhere around £20,000 to £25,000 a year. Of course, as the Report indicates, this is unwelcome—any additional charge is unwelcome. But the fact is that unless the charge was made we should have been breaking the law, breaking what was laid down by Statute, and, of course, nobody would want to do that.
Now I come to the question of special losses. This, my Lords, is a long story. It has a long history. I do not think I will weary your Lordships by going into too much detail about it. It is a question which is frequently under review and is, indeed, under review at the present time. If there are to be write-offs, if that is to

1271
be the policy, then I believe it is most important that the record of those write-offs should remain clearly expressed for ever; for example, in a footnote to the balance sheet. Otherwise, it seems to me that there is the danger that when new régimes come in they may want to write off ventures of their predecessors if they have gone sour; and it would be extremely difficult for anybody to judge whether the Corporation was, or was not, fulfilling its task of balancing out, taking one year with another. Several noble Lords have said they think it is a shame that some of these special losses are not written off when the projects have been abandoned or irretrievably lost—I think that was the phrase used by the noble Lord, Lord Milverton. I can only repeat that Her Majesty's Government have been ready to agree to write off projects which had been abandoned and irretrievably lost.
THE EARL OF SWINTON: That was my proposal.
THE EARL OF PERTH: Yes. But the Colonial Development Corporation, for their part, have refused to work on that basis. They said they would not accept only a partial write-off of that type. They also wanted other projects which are still continuing to be written down to what they judged were realistic figures because they thought the capital was lost. It is here, if I may so put it, that the argument still rests.
Then the noble Lord, Lord Ogmore, raised the question of the changing of the name of the Corporation. So far as I can see, the only justification for a change of name would be if the Corporation were, in fact, to operate in a wider field than that in which it is allowed to operate at the present time. Nothing, of course, is unchangeable, but I think I am correct when I say that I do not believe the noble Lord who is now chairman of the Corporation is pressing for such a change. He could always, if he found some objection, operate in any territory through a subsidiary. Your Lordships must remember that the Colonial Development Corporation by to-day has built up a great fund of goodwill, and we all know the value of goodwill in a name. I think myself one would have to consider very carefully before deciding it would be right to change the name, unless and until there was a complete change in the type of operation.
1272
I noticed the other day in The Times an article about North Borneo. There it was said how the inhabitants in that country were anxious that the United Kingdom should clearly state that she is going to stay as a colonial Power in those territories, in order that they might have a firm foundation on which to build their economic and political future. My Lords, stranger things have happened than that a name which, for a time, was looked on with disfavour becomes one which is treasured. I think that that may well come about with the word "colonial".
Another question which has been raised is that of the borrowing limit, or further capital for the Colonial Development Corporation. I do not wish to get into an argument with the noble Lord, Lord Ogmore, or with the Corporation for that matter, about just what is, or what is not, the state of their finances at the present time. The noble Lord referred to the answer given in another place yesterday by my right honourable friend the Secretary of State for the Colonies when he said that £86 million of the funds were committed. I can only say that technically that is approximately the right figure. It may be that in the future the Corporation will have need for further funds for projects which are already going on, but in the true sense of the word "committed", as we use it between the Corporation and ourselves, the figure is £86 million. And it is not true to say that the Corporation cannot undertake new projects at the present time. Only in the last month or two a number of new projects have been put forward which we have approved.
On the question of borrowing limit, we recognise that the present limit is very nearly reached. As announced yesterday in another place, conversations are going on at this moment between the Corporation, the Treasury and ourselves regarding an increase. I hope it will be possible to announce something before the end of the month. I would only, perhaps, utter this word of warning: that, with the best will in the world, in the light of the many claims on our resources at the present time, we cannot expect a figure that will satisfy everybody and every demand. Let us not forget, however, that whatever the figure may be, this is not necessarily all that goes into these projects which are sponsored by the Corporation. There is co-operation with

1273
other interests, and that means very often that more money goes into schemes in which the Corporation is interested. In that connection, the Corporation has recently been talking with several foreign groups on the question of working together on a project, and I should like to take this opportunity of saying that that is a most welcome development. If I may so put it, the more the merrier.
The noble Lord, Lord Ogmore, raised the question of Southern Rhodesia and "need". It is suggested that a new difficulty had apparently arisen because of that word "need." Perhaps I ought to make it clear that Southern Rhodesia, as such, is not a territory under the Act in which the Colonial Development Corporation can ordinarily operate. Being, however, next door, as it were, to Northern Rhodesia and Nyasaland, it has been recognised that a situation could arise when an operation in Southern Rhodesia was necessary in connection with a particular development in the two Northern territories. Such cases, I believe, would be very rare. One which occurs to me is the classical example of the Kariba Scheme. Proof would need to be pretty convincing. The suggested words "advantageous" or "convenient" do not seem to us to be sufficiently convincing, so we were not able to accept the Amendment proposed by the Corporation.
I would ask your Lordships to remember that it is the Secretary of State who decides and who is charged by Parliament with the use of funds for colonial purposes. This is his responsibility and he certainly would not wish to seek a way round it. Whether a case will, in fact, qualify or not can be decided only in the light of the circumstances. We are most anxious to avoid disappointing or making unnecessary work for the Corporation, and they and we agree that the best way to avoid this is early consultation between the Corporation and the Colonial Office—and that is what we intend to have.
The last charge which Lord Ogmore made was in relation to the newly independent territories—the "emergent territories", I think is the phrase, though I am not very happy about it. Your Lordships will know of the Government's policy as announced in an answer in another place a few days ago. To some
1274
of your Lordships it would perhaps be useful if I quoted part of it. The question was in relation to what might be the Corporation's activities in Malaya and other colonial territories which become independent. The answer was given that the Corporation will
" be permitted to continue with schemes existing at the date of independence, and if necessary to provide further capital for these schemes after that date. It will also be enabled, on the request of the Government of any independent member of the Commonwealth, to undertake the management of any project on a managing agency basis without commitment of the Corporation funds."
I think that that was the suggestion made by the noble Earl, Lord Swinton. Of course it is entirely right and proper. The Corporation having built up their staff, no one wants to see it wasted.
I hope that your Lordships will, in general, be satisfied with this policy, for it has taken into account a point which was raised and pressed by many of your Lordships during the debate on the Ghana Independence Bill. Curiously enough, I think we may have very shortly an example of the use by a newly independent country of the expert staff of the Corporation, because the regional controller of the Corporation in Malaya has been invited to be the first chairman of the Federal Land Development Authority in Malaya. He has played a leading part in getting the Industrial Development Corporation started there. I hope that the Corporation will allow him to continue these activities when Malaya has achieved independence. That seems to me a very good example of how this idea may operate.
LORD OGMORE: And also, if I may say so, a very good example of how Malaya, an emergent territory, regards the Corporation.
THE EARL OF PERTH: I thank the noble Lord. I quite agree. When British or, indeed, other overseas interests are thinking of going into the Colonies or into one or two independent territories where the Corporation is operating, they might be very wise to consult and make use of the Corporation's staff. I hope that many Corporations and many bodies overseas will bear that in mind, because there is no doubt that the Corporation has built up a considerable experience in certain territories. Apart from the question of the use of the staff, it will be seen

1275
from the Parliamentary reply to which I have referred that the Corporation can keep its existing interests, in Malaya, for example, and, in certain circumstances, invest further funds in these.
On the broad question of policy, and the reasons that have led the Government to the decision not to have the Corporation operating in independent territories, which the noble Lords, Lord Milverton and Lord Ogmore, raised, I do not propose to go into details, because that I think will be more conveniently dealt with by the noble Earl, Lord Home, who is going to deal with matters in relation to the Commonwealth as a whole.
I should now like to touch on one or two points in the Colonial Development Corporation's Report which are not connected with the charges that have been made. It will be seen that the Corporation in this year has a net increase of three in the number of projects which it is handling. That may not sound a very formidable figure, but, in fact, eight new projects have been started and no fewer than 52 have been examined. I think one ought from these figures to bear in mind how much work goes into the job of choosing and picking schemes. Then, what does not appear in the Report, the Corporation have done work of great value on one or two projects in which, in the end, for one reason or another, it has not played a part. I have particularly in mind the industrial concern known as "Riscom" the Rhodesian Iron and Steel Corporation, which the C.D.C. took a leading part in getting started. We all know what a great prospect is before it.
Reference has already been made to the fact that profits from direct projects and subsidiary companies have gone up from £113,000 to £371,000. As the noble Lord, Lord Ogmore, said, that is a most satisfactory figure. In a sense one might say that that is what one might expect when schemes come to fruition, but so often what one expects does not happen. In this case it has happened and it is most satisfactory to see.
I should like to refer to the footnote to the balance sheet No. 7, which shows that during the year certain interest charges which the Corporation in the
1276
end will be called upon to pay now total £6·8 million, compared with about £4·3 million last year, an increase of £2·5 million. The reason for that is that under the terms under which the Corporation borrow it has, as it were, a "holiday" from any payment of interest for the first seven years. Then the amount which should have been paid during that time begins to be paid off. I think it is important that that figure should be borne in mind when we are considering what are the profits in any one year. It is quite natural for this form of "holiday" to be given in relation to the various projects undertaken where the investment is an equity proposition. Personally, I am not sure whether it is wise, when the Corporation has made a straight loan; but never mind, the fact is that that is how it works at the present time. The question of the presentation of the accounts is something we have it very much in mind to go into the near future, because I think that, as things now stand, it is difficult for people to interpret what the Corporation is truly doing at any one time. That is not meant to be a reflection on the Corporation.
There is one other thing I should like to say in relation to the Report. When one looks through it at random, and reads about the various projects which are going on, it is very satisfactory to see, for example, that it is said about the British Honduras Fruit Corporation that:
" Cocoa grows well and further expansion is under consideration "
and, again, about Nyasaland, that
" experiments with coffee justify expansion".
And again, in North Borneo, where the Corporation pioneered and deal in quite a large way in hemp, rubber and cocoa, we see the first profit since the project was started in 1948. It is good to see an egg of this sort hatch and produce good results. Overall, I think that what we find in this part of the Report is extremely satisfactory, and the Corporation should be congratulated.
I should like to turn for a moment to the pamphlet Labour's Colonial Policy: Economic Aid, which was mentioned by the noble Lord, Lord Ogmore. I have read this pamphlet with a great deal of care, in order that I could see what sort of things the Labour Party have in mind for the Corporation if and when they

1277
come into power. Frankly, I do not get much comfort from reading this pamphlet. I hope your Lordships will allow me to quote one or two points and to make my comments. On Page 28 it says:
" Indeed, the Corporation should play a much greater part than it has done in the past in planning the balanced development or the Colonies."
I can only say that that appears to me to be something contrary to the whole policy which we have followed to date—namely, to encourage the Colonies it, every way to govern themselves and to plan their economic development for themselves. I wonder what the Colonies themselves would say if the Corporation interfered and planned a greater part of their balanced development. It should be remembered that, of the gross capital formation in 1956 in the Colonies of £450 million, less than £90 million came from overseas; and of this only a very small part came from the Corporation.
Then on Page 26 we find this statement about the Corporation:
" It cannot therefore play its proper part in the execution of development policy, nor inspire the tone of management. It cannot, for instance, insist on proper trade union conditions and negotiating machinery."
Again, on the same page it says:
" It is obviously desirable that where public money (through the Corporation) is invested in any project, its control should remain in public hands."
In those circumstances it seems to me that there would be very little chance in some cases of getting overseas money and foreign money to co-operate; and we all know how important that is at the present time.
The remark about insisting on proper trade union conditions is a rather curious one, when it is remembered that it is for a country itself to lay down the laws on trade union practice, and any company which did not comply would be breaking those laws. As to the remark that the Corporation cannot play its proper part without a controlling interest, frankly, I think that is nonsense. If there were something that the Corporation did not approve on high moral or other grounds, it certainly could bring great pressure to bear or go to the Government concerned and say that it would not do.
The pamphlet continues, on the same page, to suggest that the Corporation
1278
" gradually hands over to local interests. This is a sensible development which frees the Corporation for work elsewhere."
I am wondering how the Corporation is "gradually to hand over." By a gift? Or is it for the Colonies themselves to find the money to take over the projects? I thought that the Colonies were short of money and that the purpose of the Corporation was to bring in money from outside. Perhaps the Colonies should raise the money themselves from private enterprise outside. It is all very strange. On page 27, the pamphlet says that Labour will ensure that
" essential colonial devlopment schemes are not held up as a result of high rates of interest."
A little earlier in the same paragraph there is mention of a 2 per cent. rate. If the Corporation is charged this rate, it can only mean a change from its original purpose: it would then no longer be a commercial concern. Or perhaps the idea is that others might be charged 8 per cent., or some such rate, to get the right balance of 5 per cent.
I am not going to elaborate further on that part of the pamphlet. Clearly, the whole concept of the Corporation as outlined in the pamphlet is that it should function in an entirely new way. Although on page 24 the pamphlet says:
" The purpose of the Corporation is to finance projects which will pay their way commercially: it is an investing not a grant-making organisation",
later on there is the suggestion that it must be allowed to incur losses which Parliament should be prepared to meet, or alternatively, that it must be given a grant towards the cost of its non-commercial, social and welfare activities. Frankly, my Lords, I do not envy the task of anybody who had to try to run a Corporation with so many conflicting and, as I see it, impracticable lines laid down on what it should do.
For a moment, because I think it is important, I should like to turn to the pamphlet generally. In the earlier part of the pamphlet there is mention of many international bodies, and tribute is paid to the work done by them. There is one body rejoicing in the name of S.U.N.F.E.D., the Special United Nations Fund for Economic Development. Again, tribute is paid to all sorts of other international bodies, and the work that they might do, perhaps with money coming

1279
from this country, for Colonial development. Yet when I look through this pamphlet, I find no recognition of, or credit given to, the work done by this country through the Colonial Office or the Colonial Service—now the Oversea Service; no recognition or credit to the countless voluntary bodies and associations who have done so much for the Colonies in helping them to stand where they do to-day. I think that to play all the cards on some rather curious international bodies, and to give no credit or recognition to the great work done by the Colonial Service, is most odd.
I have one last comment to make on the pamphlet. Reference is made to bulk purchase agreements and how these are to be one of the panaceas for all troubles and ills. I would only observe that when the long-term contracts which are referred to came to an end, they did so in many cases, at the instigation of the producers; it was they who wanted to end them. The pamphlet does one thing which I do not think does it great credit. It quotes from the Economic Survey for Europe for 1948—and I should like to quote what it says:
" The explanation of the relatively low prices paid by the United Kingdom for its imports of food and raw materials appears to lie largely in the extensive use which has been made of long-term contracts and bulk purchasing agreements covering a large proportion of its purchases."
If I read that correctly, the only possible interpretation of it is that there has been exploitation by the United Kingdom of the Colonies in ways of that sort.
I have gone into considerable detail on the charges raised in relation to the Report, and also on the pamphlet of the Labour Party because I felt it was most important to see what they had in mind for the future of the C.D.C. I hope I have quoted enough to show that what they suggest would result in an impracticable, hybrid type of monster whose activities some of the Commonwealth and Colonial countries might themselves resent. The Motion is that the Corporation is not permitted "to make full use of its opportunities." I am not quite clear what the words "full use" in that context mean. If I had more leisure and more money, I know that I should have many more opportunities of spending, and perhaps more opportunities for greater fun. But I think one has to be "down to the
1280
ground" on these things: we have to remember that at the present time there is not unlimited money; we have to face realities, and not follow a dream such as that set out in the Labour Party pamphlet, which, presumably, represents their policy.
LORD OGMORE: Would the noble Earl prefer the policy of take-over bids that has been illustrated by reports in the Daily Telegraph?
THE EARL OF PERTH: I should not prefer a policy of take-over bids; I should prefer the policy that is being followed by the Government at the present time. The funds of the Colonial Development Corporation are necessarily limited, and there is plenty of scope for the Corporation to continue to operate in the Colonial territories. For example, it is doing nothing in Malta or Cyprus; nothing in Sierre Leone or Gambia; nothing in Fiji or the Solomons. That is not meant as a criticism of the Corporation, but is intended merely to show how-much work remains to be done; and I know that the Corporation, when it faces a challenge like that, will rise to the occasion. The important thing is for the Corporation to co-operate with private enterprise; to co-operate with it locally, and co-operate with overseas money, and particularly, foreign money. On the past record, that has worked out pretty well, and is a cause for great satisfaction. We are anxious that the expert staff should not be wasted, and that jobs already started should not be neglected. It is for that reason that we have made the arrangements, or are to make the arrangements, to enable the Corporation to continue to operate in the territories which are, or shortly will be, independent. Soon we shall be announcing the increase in the capital.
The noble Lord, Lord Ogmore, said that he thought we were trying to stifle the Corporation for doctrinaire or personal reasons. I hope I have said enough to show that we certainly have not in mind doctrinaire reasons. When it comes to the question of personal reasons, I do not feel that that is a charge which the noble Lord would wish to pursue; and, really, if one thinks of it, the suggestion that anybody for personal reasons would try to stifle the Corporation is hardly worthy of a reply. There is plenty for the Corporation to do in the Colonies,

1281
and I know that the C.D.C. will bend all its efforts to do what it was originally intended to do. It remains only for me to wish the Corporation good luck and continued success in what is often a difficult task.
4.49 p.m.
LORD BARNBY: My Lords, the noble Earl who has just sat down is to be congratulated on having carried out a most admirable task. He had a difficult explanation to give, and he has, with patience and clarity, covered a great deal of the ground. The points he made which want further interpretation will be so treated by the noble Lord, Lord Grantchester, who is to speak after me. We are indebted to the noble Lord, Lord Ogmore, for putting down this Motion, which is drawn sufficiently widely to bring in not only the Colonial Development Corporation Report but also the wider question of finance for Commonwealth development. It is on that particular phase that I shall ask for your Lordships' indulgence while I make a few remarks.
Before I come to that point, I should like to make a few observations on the Report of the Commonwealth Development Corporation. We have had the advantage of some informed opinion from the noble Lord, Lord Milverton, who was formerly a member of the Corporation. I, as a layman, reading this Report, am naturally inclined to be in accord with the noble Lord's view that Lord Reith is entitled to credit for having pulled round this organisation from a very sticky start. It has now reached a position where he has every ground to feel gratified with its achievements. For myself, I cannot help but be puzzled with regard to the criticism of it. It has on its Board men who stand high in the esteem of the City, Sir Hugh Beaver and Mr. Tyser, all well-known men essentially associated with private enterprise. Therefore I must ask your Lordships' forgiveness if I admit to being somewhat perplexed as to the conflicting remarks that are made.
The points with which I particularly wish to deal are really an echo of the concluding remarks of the noble Earl, Lord Swinton. He emphasised the hop: that we should have a full and early statement on what are the Government's intentions with regard to trying to
1282
improve the availability of resources for Commonwealth development, Suggestions are continually being put forward for new financial machinery for lending money to the Commonwealth, and the usual reply is that what is needed is not more machinery, but more money—and the shuttlecock of debate continues. This is a subject which, curiously enough, was brought up prominently in a debate in your Lordships' House on the Ghana Bill. At that time, the noble Earl the Leader of the House, as Secretary of State for Commonwealth Relations, made some remarks. The Press interpretation of what he said with regard to a possibility of new methods was that there might be a combination of new methods and of the instruments and machinery at present used. That, I think, was the sense of his remarks. That is really where we stand now, those of us who are most concerned with regard to finance for Commonwealth development as a whole.
Here may I interpose that there are many who believe that the subject of Commonwealth development is not sufficiently in our national picture. Commonwealth development, of course, means both people and resources—that is, migration, and the availability of resources and of capital investment to absorb them. I am among those who are honestly puzzled. A great deal of emphasis is put by Ministers on the importance of our development in Europe. This seems to be done at the expense of emphasising that if we do not somehow succeed in channelling resources so that they are available as complementary to migration, we are not going to make the Commonwealth the expanding force in which we all believe.
Now as to how this is to be done. In the early part of the year a statement was made that this problem ought to be left until after the Commonwealth Prime Ministers' Conference. Like others in the House, I hoped that either to-day or, as the noble Earl, Lord Swinton, said, before the House rises for the Summer Recess, some statement would be made. Perhaps the noble Earl is in a position to say something to-day. We shall look forward to that with the greatest interest. There should be some authoritative guidance as to the machinery whereby available funds could be channelled into investment in the Commonwealth. I must admit that I am one of many who attach

1283
more importance to the availability of finance for developing, shall we say, Australia and New Zealand, than for the emerging territories, important as they are. I believe that the strength of the Commonwealth depends on the continual, steady expansion of population and resources of the Dominions, particularly Australia and New Zealand. I emphasise that because, of course, so far as Canada is concerned there is a stupendous inflow of investment capital. Anyone who cares to look the matter up will see that it is a sum which I would hesitate to mention here because it is so tremendous. Therefore, that is rather outside the immediate matter we are discussing. But Australia and New Zealand, and Rhodesia as well, are quite different.
There are many who hoped that it might be possible for the Government, in its wisdom, to find in the extension of the powers of the Colonial Development Corporation a vehicle through which the channelling of these funds might appropriately be made. Much reference has been made to the Commonwealth Development Finance Company Limited, of which Lord Godber is the Chairman. But they have no organisation personnel comparable with the personnel in Lord Reith's organisation. How they could be built up rapidly to do what is necessary is difficult to understand. On the question of the availability of resources, the noble Earl, Lord Swinton, said that you cannot lend money from a deficit. We seem to find money for tremendous development at home. I cannot refrain from quoting what I saw in the Press yesterday. We have spent £350 million on the re-equipment of the coal industry in the last seven years; we have raised wages 30 per cent., and we have had no increased output of coal. There are many industries who desire complete re-equipment, but who are hesitant now as regards re-equipment at home because they feel it would be better to wait until something more evolves in regard to the European Common Market. I will admit that that would make more available for investment overseas in the sterling area.
This question of the availability of finance governs the whole matter, and I suppose that that is more important than the machinery through which it should be done; but we must hope that the
1284
noble Earl the Leader of the House will be in a position to tell us something regarding it, for it implicates the whole question of the expansion, the power and the strength of the Commonwealth. At any rate, if the noble Earl cannot tell us to-day, perhaps he will give us an assurance that before long something will be made public.
I refer now to the Commonwealth Economic Committee, which, we are told, will report shortly (there was a reply yesterday in another place) on the development of raw materials in the Commonwealth. There are some who seem to think that in some way this Commonwealth Economic Committee can be an ancillary in this question of financing, but I must confess that it seems to me difficult to conceive how that can be really effective. That is the note on which I would close. If we are going to have this report, which will give us greater information than we have now concerning the undeveloped resources of the Commonwealth, we shall get a clearer picture, which is what we want. The noble Viscount, Lord Bruce of Melbourne, suggested that there could be in this case a lack of available capital for investment, and that more should be done in collaboration by, let us say, Australia and Great Britain, working with the International Bank. I am one of those who believe that American participation in a substantial degree in the development of our Commonwealth, provided that there is a steady flow of people from Britain to the Commonwealth, need give no cause for concern.
5.3 p.m.
LORD GRANTCHESTER: My Lords, the noble Earls, Lord Swinton and Lord Perth, dealt adequately with the complaints of the Corporation so I do not propose to say anything more about those complaints. The noble Earl, Lord Perth, also admirably enunciated the principles by which the Corporation should be guided. In these days there is a lot of sentimentalism when discussing aid to under-developed territories. There is also, I think, a lot of loose talk and the noble Lord who moved this Resolution was not free from loose talk: in one breath he referred to this Corporation being based on commercial principles, and in the next complained about the

1285
application of ordinary commercial principles, such as paying a market rate of interest.
Hostile propaganda about the past has fostered an idea that the richer countries—and this country in particular—owe something to these under-developed territories. In the business sense, at any rate, I do not think this is true. We certainly have put into these territories, over a period of years, more than we have had out. To-day, if anyone has a legitimate complaint, it is not the under-developed territories, but this country. We may as well be frank. I will not quote from a report from a country which might be considered prejudiced because they have colonial territories but, if noble Lords will allow me, I will quote from a Swiss study published recently in the Swiss Review of World Affairs. This study says:
" The extension of aid to several underdeveloped countries is hampered by the memory of large losses suffered in the past, partly as a result of poor debtor morality, and partly as a result of nationalist and ' dirigist ' and other measures inimical to private property, lot to mention political instability and inflationist policies."
The study continues:
" It is up to the under-developed countries to improve the conditions for foreign loans and investments. The great damage done to all countries in need of capital by the recent unfortunate example of Egypt has not been sufficiently realised everywhere, unfortunately."
The report concludes:
" No mutually satisfactory economic relations can be developed on a foundation which confuses the criteria for sound investment."
I notice that prominence is given in the preface to the Report which we are considering to this statement:
" C.D.C. is a commercial organisation and is required to pay its way."
That was emphasised by the noble Lord, Lord Ogmore, although he jibbed at the consequences of that statement. Last year I congratulated the Directors and management on last year's result. The Directors, in their last year's Report, stated that
" having struggled out of the red, C.D.C, must go on raising its net revenue each year to stay there."
Last year the return on the capital employed was approximately 2 per cent., including interest paid to the Colonial Office, and about 1 per cent. after paying interest.
1286
The noble Earl, Lord Perth, has drawn attention to the fact that the interest is chargeable only after a period, and therefore it is difficult to see whether, in a particular year's Report, the interest is the correct amount applicable to the year. I rather suspect that in this year it is not. But the result this year is much the same as list year, on a rather larger capital; that is to say, the Corporation has earned something like 2 per cent. on the capital entrusted to it. In such circumstances, can we agree with the sentiment underlying this Resolution that there should be or that it is desirable that there should be, a wide extension in the operations of the C.D.C.? If it is not desirable to have a wide extension on the basis of these results, then it does not matter very much if the Corporation can only complete existing projects in territories which become independent and can only start new projects in colonial territories, even if these gradually diminish as more and more of them achieve independence. I have no wish to disparage the work of the organisation, or the ability of the body that the Corporation has built up. The management is releasing itself from the unfortunate mentality with which the Corporation started its career.
The noble Lord, Lord Ogmore, referred to the ideas set out in the Labour Party's pamphlet on Colonial policy. But there has been a later pamphlet published by the Labour Party. Having studied the criteria for investment suggested by the Labour Party in their proposals for national superannuation, I cannot understand Lord Ogmore's suggesting that any more money at all should be put into this Corporation. That study, published by the Labour Party recently, makes it clear that no pension fund money would be invested on the present terms in this Corporation. If it is not suitable for a pension fund investment, I do not think it is suitable for a taxpayers' investment. But I do not think that the present Government would desire to make government impossible—as I think would happen if the principles of the latest pamphlet of the Labour Party were followed—or to hamper development by destroying confidence in Government securities or prior stocks.
I should like to see Her Majesty's Government try an experiment with this Corporation. For once, I should like

1287
to see them refrain from taking money from the taxpayers and "dishing it out" to this Corporation until at least the Corporation can show that it can earn more with the capital entrusted to it. Let them agree to leave in the money that the Corporation already has, and authorise the Corporation to invite members of the public (if I may put it in colloquial terms) to take up the privilege of putting a pound on the development of the Empire, if you like in some form of participating shares. I should like to see a share such as that sold through the Post Office and through the banks with a sixpenny stamp. I do not see why the Corporation should not raise another £50 million in this way, for a start; and the Corporation could then answer to a number of small investors and prove to them—which might be more difficult than to the Colonial Office—the case which it is putting to your Lordships to-day. The Corporation will have to prove that the work which it is doing and the results achieved serve both the interests of the people of the underdeveloped territories and the investors of this country who find the money and that it is to their mutual advantage. I should like the Corporation to have the opportunity of so doing.
5.15 p.m.
LORD LLOYD: My Lords, the speech of the noble Lord, Lord Ogmore, will not come as much of a surprise to any of us who have regularly taken part in these debates. I could not find anything in the speech of the noble Lord which was new or which he had not said before. I mean that in no disparagement of the noble Lord; it shows that he is both consistent and persistent; and if he has not by this time managed to convince your Lordships of the soundness of his argument, then I can only think that there is either something wrong with your Lordships or something wrong with the argument. This time his speech was, in fact, little more than an elaboration of paragraphs 9 to 15 of the Report of the noble Lord, Lord Reith and his colleagues to my right honourable friend the Secretary of State.
I think the Report is very much the same in its style of presentation as it was last year, but it has two notable differences both of which have been commented upon by your Lordships to-day. The first
1288
—and this is a most satisfactory difference—is that there is a considerable reduction in the loss on the profit and loss account. The other is that there is a considerable increase in the paragraphs this year devoted to criticism of the policy of Her Majesty's Government, to which my noble friend, Lord Swinton, has already drawn attention. I do not know that there is any connection between these two facts, but I will again say that I think it is most satisfactory, and calls for congratulations to the noble Lord, that this result should have been achieved. I feel quite sure, when one looks at the general melancholy state of public corporations in this country as a whole, that if the noble Lord were able to eliminate entirely the loss on the profit and loss account, the Government would be only too delighted to see a Report entirely, instead of only half, as at present, devoted to criticisms of themselves.
My Lords, the noble Lord, Lord Ogmore, has acted this afternoon as the advocate of the Corporation. I thought that he put the case very well indeed. I do not think he could have done it better if the noble Lord, Lord Reith, had given him a brief. He mentioned six points of indictment in the charge. I think they may be condensed under two main heads. First, there is the scope of the Corporation and its activities, and secondly there is the financial structure of the Corporation.
Before dealing with these propositions, I think that perhaps we all ought to refresh our minds once again about the purposes for which the Party of the noble Lord opposite set up this Corporation in 1948. Noble Lords opposite have a theory that private enterprise has failed dismally in colonial development. They say—one can find it in all their speeches; one can find it again in this notable work which I have just been reading here, their new Colonial Policy pamphlet—that private enterprise has done nothing except exploit opportunities and take "fat" dividends; that it is interested only in quick returns, and has left much desirable, if less profitable, development undone.
I do not feel that that is quite a fair view. I think that noble Lords opposite underestimate the work that has been done in the past by private enterprise. I do not think it has all been a matter of quick profit or easy return. On the other

1289
hand, if I may point it out to noble Lords opposite, some of the schemes which they thought would be profitable have, in point of fact, been unmitigated disasters. I do not wish to rub any salt into the wounds of the past, and I hardly dare mention the word "ground-nuts", or the £8 million loss which we see on the balance sheet of the Corporation. But it is not as easy as all that, and the quick returns and the easy profits are, I think, not quite so easily obtained as those who have never had anything to do with colonial development seem to think.
There is, however, one proposition on which we can all agree—namely, that there can be no advantage, cither to the people in the colonial territories, or to the British taxpayer, or to anybody, in schemes which ultimately are not going to pay their way. It is no use creating edifices which can be kept going only by subsidy. I notice in the Labour Party pamphlet a great deal about all the social services that are to be built up. I am all for them, in so far as the resources and financial structure of these territories will ultimately support them, but it is no good, and is doing no favour to the people in the colonial territories, to erect vast edifices which cannot be supported by the resources of the country.
Therefore we come to the original proposition, with which I have a certain amount of agreement—the theory of the "twilight zone"; that is to say, that there are some projects in the colonial territories which are obviously not attractive to private enterprise—perhaps, as Lord Swinton mentioned this afternoon, because they are small businesses which find it difficult to raise capital, or because the projects may be long-term and the return offered may not be attractive. As I have always understood it, from the speeches of noble Lords opposite and from the speeches of the Minister during the debates on the Overseas Resources Development Bill, it was primarily to cover those, as an adjunct to but not a supplanter of private enterprise, that the Corporation was set up. It enjoys favourable conditions; it is financed at Treasury rates to undertake projects which could not possibly raise the required capital at Treasury rates. It exists, as I see it, to help territories which could not otherwise find the necessary
1290
finance or pay the rate of interest which the sort of project they have would normally command. That, my Lords, as I see it, was the raison d'être of this Corporation, and it is against that background that I should like, very briefly, to examine the noble Lord's propositions.
His first proposition, as I see it, involves not merely a vast extension but a radical alteration in the whole of the conception of the Corporation's purposes. In addition to providing cheap finance for dependent territories in the future, if I understand the noble Lord rightly, it would provide cheap finance for independent territories, Ghana and Malaya. Whatever the merits of the proposition, I do not believe it can possibly be confined to Ghana and Malaya. What logic or sense is there in that? If it is to assist independent territories in need of economic development, why not India and Ceylon? India's need for capital is just as great as that of Ghana; in fact, I think that possibly the resources per head of population are rather less. Therefore, in effect it would mean a vastly increased capital requirement, because even now, operating in the dependent territories, the Corporation is fully stretched; and if it is to be allowed, as I think it logically must, to invest in India and other places, it will need enormously more capital.
May I say a word here about this question of capital for investment overseas? Our own investment programme is fully strained, and our capital resources are strained to their limit merely to carry out our own programme here. There is no means that I know of of getting more capital for colonial development unless we delay our own capital programme here, with the risk of delaying, and possibly even jeopardising, our own recovery. The noble Lords opposite, in this pamphlet, talk in terms of giving £160 million a year to an organisation called S.U.N.F.E.D. However admirable that may be, we need to reflect a little on how £160 million a year more is to be produced at the present time in this country. I notice, incidentally, that noble Lords do not appear to have great confidence in the willingness of the people of this country to contribute this vast sum. It is going to be taken in taxation; they are not going to be asked to subscribe it.

1291
I myself still believe that the people of this country are fundamentally glad and anxious to take part in Colonial development, provided that the projects are sound and they can see that good will be done. I do not think they want any more ground-nuts schemes. I am not at all sure they would be prepared to advance money on the same basis to people who are independent, because I think they believe that independence means what it says. If a country is independent it stands on its own feet, both politically and economically, I do not think they would feel that people who become independent can have all the political advantages of independence and the economic advantages of dependence. Therefore I think that they will expect these people—I do not say immediately, but increasingly—to stand on their own feet and to prove themselves creditworthy and to borrow their money in the markets of the world, in the same way that everyone else has to do. I do not deny that it may be necessary to help them for a time; I believe it probably will. What is more, provided that such countries prove themselves creditworthy, I do not believe they will have as much difficulty as some noble Lords opposite think.
I believe that where there is reluctance to invest, it is perhaps because of lack of confidence in the régimes where the investment is proposed. I believe that confidence can be built up only by the leaders in those countries themselves, and I hope they will make an effort to do it. I do not think that the independent territories should for long rely primarily on Government finance. I think it ought to come from the markets of the world; although, as I say, I agree that for a period it may be right and necessary for some Governmental agency to be created. I believe, however, that if we are to do that, this country cannot alone bear the whole burden. If there is to be any sort of finance corporation for the independent territories it should be on a Commonwealth basis, something to which we all contribute finance and in which there is an agreed plan of priorities and everything else. Therefore, my own view is that there is not a case for allowing the Corporation to extend its activities to the independent territories. I think it should continue to do the job for which
1292
it was designed—that is, to help the dependent territories.
Let me turn to Lord Ogmore's second proposition. Here his thesis was that the Corporation was a commercial concern which was undertaking enterprises of considerable risk; that it should be relieved of interest payments; that its bad debts should be written off and, in effect, that it should have mainly equity capital. I am rather surprised to hear the noble Lord, Lord Ogmore, make these strictures.
LORD OGMORE: I do not by any means suggest that all the interest payments should be relieved. I said that this large sum of £8 million relating to capital losses should be written off. I never suggested that current projects should be relieved of interest.
LORD LLOYD: I beg the noble Lord's pardon. I thought his theme was that interest rates were far too high and ought to be reduced, and that capital ought to be written off. If I misrepresented him in any way I apologise. I should like to point out that the financial structure under which the Corporation is operating at the present time is the financial structure imposed on it by the Party opposite when it was set up. I am not using that as a debating point; it is a fact. The noble Lord suggested that the present financial structure—and indeed if the noble Lord's Motion means anything he must imply this—has prevented the Corporation from making full use of its opportunities in colonial development. I do not myself think that, so far, that has happened.
What is the position? The Corporation is financed exclusively by the taxpayer, and he is compelled to invest in the Corporation, poor chap! whether he likes it or not; and until he elects a Government which does not believe in the policy of having a Development Corporation he will have to continue to invest. The Corporation is investing about £7 million per annum, as I calculate, and a position has been reached where it has invested or committed the bulk of the original £100 million which was allowed to it. Most of it has been sunk in long-term schemes, and I do not imagine that there is much prospect for a number of years that any of that capital will be released and available for fresh projects. Of course there has also been the loss of

1293
£8 million. The profit, before paying interest, this year amounted to about £1 million. Clearly, there is no question for a long time of future developments being financed out of profits; the profits would have to increase sevenfold before that could be done. Therefore I think that clearly the Corporation cannot go on much longer—indeed it is commonly admitted that it cannot—without a fresh infusion of capital.
I do not think that the rate of interest or the amount of interest has affected the position at all. Since 1948, the Corporation has paid, I believe, about £1,500,000 in interest. For the first seven years it did not pay interest, so it is only really beginning to pay it now. If it had not paid that £1,500,000 it would have had the money to invest in new projects, though, of course, £1,500,000 is only about one-quarter of the annual average rate of investment. So it means that the Corporation could have waited three months longer before going to the taxpayer for fresh capital.
Then we come to the repayments of capital. Here I think the situation is more difficult. Apart from short loans, I do not imagine that the Corporation have had to pay back much capital yet. But they will soon have to begin doing so. When they begin, repayments will mount speedily. I think this must have had some effect on their activities, because they have been forced to indulge in more finance house investment than they would otherwise have done, though the Report says that this has not been excessive. I know that some noble Lords think it would have been better if they had not had to do so much of it. But I do not think the noble Lord can say that any of this financial structure has stopped the Corporation from doing its job up to date.
I am bound to say this—and here I feel I must make an apologia. I have reached the conclusion that the present system has serious defects. The noble Lord is entitled to say that I have defended the system for a number of years. So I have. But I have defended it with less conviction as time went on. The more I think about it the less certain I am that I was right. I think the mistake we have all made is to regard this organisation as an ordinary commercial organisation. I do not believe it is, or
1294
can be so regarded. I think it is somewhere between colonial development and welfare and private enterprise. If it is going to undertake the sort of projects which it was set up to undertake, it is going to do jobs which are not normally attractive to private enterprise. If it is not going to do this, there is no point in its existence. Therefore, it is bound to operate on slender profit margins and in long-term undertakings. So I do not think you can expect it to begin to repay its capital, after seven years.
The situation which is being reached is really rather absurd. It is a situation in which, in order to repay capital to the taxpayer, the Corporation has to borrow some more from the taxpayer to make repayment. As a taxpayer myself, I must say that that does not seem to help me very much. If I waive my interest the demand is only postponed a few months. Therefore, from the taxpayer's point of view, I do not think there is much to be said for the present system of finance. The taxpayer has to pay if the Corporation is to continue. If the Corporation is to continue it must borrow more money. And it is going to borrow some more money pretty soon. I do not pretend that I can think of a solution ready-made, but I feel that the time has come, now that this new capital is going to be borrowed, when the Government ought to consider whether some new system of finance for the Corporation cannot be evolved.
From the taxpayer's point of view—speaking as a taxpayer—I should be much happier if I received no interest but knew that there was a definite limit on the constant drain of my capital to the Corporation. I think the taxpayer has the right to expect that he should not be continually mulcted for fresh capital. I should like to see some control of that factor. If a situation could be reached where the Corporation could, by ploughing back profits and hiving-off established schemes, finance its own activities, and so become a sort of revolving credit, I am sure that that would be the most satisfactory situation to be arrived at. Whether that could be done or not depends on a number of factors. There might have to be some definite limit on the Corporation's capital needs; a considerable part of the permanent loan might be interest free subject to the Government's right to wind up the Corporation, the remainder being

1295
a long-term loan at Treasury rate. But the position in which the Corporation would finance its own activities is a position we all aim at, and I hope that perhaps the Government might consider this idea when they are considering this question of finance.
Finally, I do not know whether the noble Lord opposite intends to divide the House on this matter. I do not think that hitherto he has made out a case for saying that the Government have injured the work of the Corporation, and I entirely rebut the suggestion that the Government have been trying to injure the interests of the Corporation. Therefore, personally, if the noble Lord takes this to a Division I shall be bound to support the Government.
5.36 p.m.
LORD SHEPHERD: My Lords, in rising to support the Motion moved by my noble friend Lord Ogmore this afternoon, I find myself in some difficulty. First, to enjoy the indulgence of your Lordships' House I must be non-controversial, and therefore I am precluded from raising points which were raised by the noble Lord, Lord Grantchester, and the noble Lord, Lord Lloyd. Secondly, as a maiden speech, my speech must be of limited duration. Therefore it is not possible to render true service to the many peoples of our colonies and their very great problems. I therefore propose to devote my few remarks to the question of the Colonial Development Corporation and its future activities in Malaya. I do not know whether I should declare an interest, but for the last ten years I have been living in Malaya, and I still have business interests there.
As your Lordships will be aware, a Bill granting, or making it possible to grant, independence to the people of Malaya is now going through another place. This Bill, as it treats the Colonial Development Corporation, is a decided advance on the Ghana Independence Act, in that it does not exclude the Colonial Development Corporation from continued operations in Malaya. However, a reply given in another place by the Secretary of State for the Colonies last week indicates that the British Government policy will severely restrict the activities of the Colonial Development Corporation, in that the Corporation will not be allowed
1296
to invest in any new enterprise in the Federation after independence. It will, however, be permitted to make additional investments, if necessary, in existing enterprises and to act as managing agents in any enterprise at the request of the Federation Government, provided no Corporation funds are utilised.
The Corporation, as the Report shows, has approved capital investment in Malaya, Singapore and North Borneo in the region of £16 million, and has invested in projects for the development of agriculture and secondary industries. Many of these projects are still in their infancy. They are mere pilot schemes and naturally considerable further investment will be required if these projects are to prove of real worth to Malaya. I wish to draw your Lordships' attention to just two lines in the reply given by the Secretary of State to which I have just referred.
" The Corporation, however, will be permitted to continue with schemes existing at the date of independence and, if necessary, to provide further capital for these schemes after that date."
The key to that reply is the words "if necessary". I think that we should know what sort of interpretation is going to be given to them by the Secretary of State. Is it going to be a wide interpretation or is it going to be a narrow one? Do the Government mean that further investments will be permitted until these pilot schemes have grown into such a state that they can continue on their own?
Malaya has played a great part in the stability of the sterling area and enjoys a higher economic standard than any other country in South East Asia. However, her economy is extremely unbalanced. Malaya's wealth at present depends upon rubber and tin. Over 70 per cent. of the agricultural land under cultivation is devoted to rubber; 80 per cent. of her overseas earnings and 50 per cent. of her Federation revenue come from these two industries. Much of her food has to be imported, and because of few secondary industries, practically all of her consumer requirements. If there is any recession in any of the industries which absorb natural rubber, Malaya will be gravely affected. It is, therefore, of paramount importance that her agriculture is developed, particularly in products other than rubber.

1297
The Colonial Development Corporation have been aware of this fact, and through their own initiative, in partnership with a number of companies, have started the cocoa industry. It is estimated that in Malaya there are 300,000 acres of land suitable for planting cocoa and two estates have now been planted, of approximately 1,500 acres. I understand that there are great hopes of this industry, particularly as cocoa is in short supply on the world market. But to develop this industry considerable capital will be required, and it would be regrettable if finance from the Corporation was not available to this new industry in its critical years.
The Corporation have also taken a keen interest in smallholdings, particularly in palm oil. I understand that they have agreed to lend money to the Federation Land Development Authority for the development of new agricultural areas. It would be pleasing to hear from Her Majesty's Government that the Corporation may continue to provide finance for this important product. There are few secondary industries in Malaya, and it is essential that these are created and developed, not only to ease the burden of imports but also to provide employment for the fast growing population of Malaya. Since 1945, the population of Malaya has grown by approximately 25 per cent., and in view of its age structure this population will grow a good deal more quickly over the next ten years. I think it is agreed that it is on employment that the social standards of a country depend, and, in the case of Malaya, on racial harmony. Opportunities for the Malay must be provided; and since the bulk of the capital in Malaya is Chinese-owned, it would appear that capital to assist the Malay will have to come from the Federation Government or from overseas investors.
The Corporation are aware of the importance of these secondary industries as is shown by their recent investment in the Central Electricity Board, which has brought power to central Malaya. The Corporation have promised to invest in the new Malayan Industrial Development Corporation, where their partners will be the main banks and the Federation Government. I wonder if we could hear from Her Majesty's Government whether the Corporation will have sufficient funds to
1298
continue investment in these two important projects.
Malaya, I understand, is going to remain in the sterling area, and, of course, in the British Commonwealth of Nations. Naturally, it will look to this country for investment and help. Her Majesty's Government have already signified their intention of granting loans to help Malaya with the cost of the emergency, but this will not be sufficient, for Malaya, within her own resources, cannot provide the capital for immediate development. We all appreciate that this country has its own economic problems. We may not be able to do all that we should like. Therefore, it is essential that when we do make investments in Malaya, we make them for the greatest advantage of that country. I think that we should remember all that Malaya has gone through since 1948. In spite of murder and insurrection, the people there kept their rubber and tin industries open and earned hard currency for the whole sterling area. I hope that we shall hear from Her Majesty's Government that it is their intention to help Malaya to the maximum possible in the early days of independence, and that their chosen instrument will remain the Colonial Development Corporation.
5.47 p.m.
THE EARL OF HOME: My Lords, I am going to ask the indulgence of your Lordships to alter my intention, which was to wind up the debate. As your Lordships are aware, Queen Elizabeth the Queen Mother is returning from her successful tour of the Federation, and I know that your Lordships would wish me to go and greet her. Therefore, if I may, I would suggest making a short intervention at this point. The noble Earl, Lord Lucan, has kindly said that he understands the reason. My intervention will be short because my noble friend Lord Perth has dealt with many of the questions which concern the Colonial Development Corporation.
The Motion of the noble Lord, Lord Ogmore, can be divided into two parts, that which deals with the Corporation and that which raises the larger consideration of investment in the Commonwealth as a whole. May I say at once that the noble Lord has stimulated an interesting debate; and not only interesting, but timely, because there is evidence wherever I go that there is an increasing interest in Commonwealth development and

1299
Commonwealth trade. In his speech, my noble friend Lord Swinton said that we were all agreed that there should be the maximum investment in the Commonwealth. I accept that absolutely, and I think that that is common ground in all parts of the House. Both in your Lordships' House and in another place it has been suggested that we may best achieve the maximum development within the Commonwealth by some joint Commonwealth investment effort. Of course, we have a joint effort already in the Colombo Plan, which gives technical aid on a considerable scale, and perhaps technical aid is of more value than anything else to a good many of the countries, particularly Asian countries, of the Commonwealth. Indeed, one of the greatest of Asians testified in a marked way that the best way for an Asian to equip himself was to be familiar with the techniques of the twentieth century. That was the late Aga Khan's finding, and I think it is true that technical education is perhaps the most important thing that can be brought to the Asian countries of the Commonwealth to-day. So we have the Colombo Plan, to which the. United Kingdom makes a considerable contribution.
Then, arising out of the Conference of the Commonwealth Prime Ministers, there was the proposal that we might make more of the Commonwealth Economic Committee, about which the noble Lord, Lord Barnby, asked me. Originally, the idea that we might make more of that body was put into my head by my noble friend Lord Bruce of Melbourne, in a speech in this House. He suggested that the world, and the investors in the world, did not know enough about the resources of the Commonwealth. He asked what was being done about it at the present, and what might be done about it in the future. So, jointly, the Commonwealth Prime Ministers the other day decided that it would be a good thing to ask the Commonwealth Economic Committee how they could make their work more effective, and how they could most effectively keep the knowledge of the resources of the Commonwealth permanently in the eyes of the world's investors. So there, in the Colombo Plan and the Commonwealth Economic Committee, we have joint Commonwealth efforts.
1300
But the suggestion that has previously been put forward, both here and in another place, was something more ambitious: that we might have something like a Commonwealth bank or a Commonwealth Development Corporation. I circulated all the Commonwealth Governments with this idea some months before the Commonwealth Prime Ministers' Conference, and I think that none of the Commonwealth Governments felt at that time that this was a practical proposition; and they confirmed that original impression when the Commonwealth Prime Ministers lately met. By and large, it was thought, and I believe rightly, that a bank does not create fresh capital—and as several noble Lords have pointed out, fresh capital is the essential need of the Commonwealth to-day—and that a system of priorities would be extremely difficult, and probably impossible, to work. So, my Lords, apart from the joint Commonwealth efforts I have described, it was thought that no further advance on those lines, at any rate, could be made for the present.
Therefore, Her Majesty's Government have thought it well to put together in a White Paper (and I can tell the noble Earl, Lord Swinton, and other noble Lords who have asked that it will in all probability be ready before the end of July) the United Kingdom's contribution to, and rôle in, Commonwealth development. I think it will be useful to Parliament and to people in this country. Not only that: I hope it will be useful to the Finance Ministers, when they meet in Ottawa, when they are considering the general question of Commonwealth economic development and Commonwealth trade. I think it is necessary, and probably a good thing, to produce a White Paper at this time because these debates that we have from time to time deal only with a section of the picture of Commonwealth development and are rather apt, perhaps, to give the impression that the United Kingdom is doing very little. The urge, the natural urge, which we all accept, is to do more; and if the suggestion always is that much more should be done, then the impression may remain that we are, in fact, doing very little. Of course, that is not so.
I do not want to anticipate the White Paper in any great detail, but we are at present expending 1¼ per cent. of our

1301
annual gross national product on the Commonwealth; 7 per cent. to 8 per cent. of our gross fixed investment at home is invested in Commonwealth countries; and 70 per cent. of the external capital invested in the sterling Commonwealth countries over the period 1946 to 1955 came from the United Kingdom, whereas from the United States it was 15 per cent. So there is really a good story to tell. And when it is all added up—£150 million a year to the sterling Commonwealth, some £30 million (and it is growing) to Canada, and on top of that the technical aid and grants—it will be seen that we are pushing into the Commonwealth to-day some £200 million a year in investment. That, taken absolutely and comparatively, and taking into account our circumstances after two world wars, is surely not an inconsiderable sum and effort by our people. The greater part of the monies invested in the Commonwealth has come and is coming from private sources. That is the natural source of the majority of the funds, and on this side of the House we believe that it should be the main source. And so far as the independent Commonwealth is concerned we feel that the Commonwealth Development and Finance Company should be stimulated as a useful instrument in Commonwealth investment.
So the White Paper—although, as I say, I am not going to anticipate it in any detail—will broadly put this picture before your Lordships: that private investment is the main source of Commonwealth development, although there should be Government transactions, as indeed there have been in the past. For instance, we helped to finance the Indian Steelworks, a great enterprise; and we have helped to finance paper and pulp in New Zealand. We are willing to go on giving help of this kind when a case of merit is put up. There have been many significant enterprises financed in this way; and there will be grants and technical aid. All that will be set before your Lordships in the White Paper, which, as I say, I hope will be produced towards the end of July.
One of the main questions that has been raised in this debate (and it was bound to be so because the Motion of the noble Lord, Lord Ogmore, was directed towards it) is how can the Colonial Development Corporation best
1302
be used—the noble Lord used in the Motion the phrase "the full use of the Colonial Development Corporation." Let me get two suggestions out of the way at the start. Nobody says or insinuates that the Colonial Development Corporation has not done well. It has clone excellent work and has been most ably directed by Lord Reith, who deserves a great deal of the credit for the transformation which has been brought about in the work of the Colonial Development Corporation in recent years. I would firmly and absolutely rebut the charge that there is any personal grudge between the Colonial Secretary and Lord Reith. Government policy is not conducted on whether people like each other or have an antipathy against each other. Government policy is formed on the merits of the case.
Two considerations, speaking personally, have influenced me largely in this case when considering, I hope with an open mind, whether or not the Colonial Development Corporation should be used in the independent Commonwealth. First of all, I have been convinced beyond doubt that inside the colonial territories there will be enough opportunities to occupy all the energies, ingenuity and capital of the Colonial Development Corporation for generations to come. There is plenty of work in the colonial territories. After all, towards these colonial territories the Government have a special responsibility, and a quite different sort of responsibility from that which they have towards the independent Commonwealth countries. There will be many desirable development projects in the colonial territories which cannot be fully financed, and for which they cannot raise all the money, and it is there that the Colonial Development Corporation, with its expert knowledge, will be able to fill the gap. It is doing it extremely well, and can go on doing so. Therefore, as a deliberate act of policy the Government think it well to confine the capital controlled by the Colonial Development Corporation to the colonial territories.
I look on this master, however, with an open mind, and I have been persuaded by your Lordships, and by conversations which I have had outside—and the Secretary of State for the

1303
Colonies and the Government have been persuaded by your Lordships and by others—that while we may confine the capital of the Colonial Development Corporation to the Colonies, it would be a waste indeed to confine the expert personnel whom they employ (and they have very good expert personnel) solely to the colonial territories. So we have decided—and we will make the necessary provision—that those expert personnel should be used, if so desired, by any Commonwealth country, with the assent of course of the Colonial Development Corporation, on an agency basis so that they may have the benefit of their expert knowledge.
I hope and all your Lordships will hope that the noble Lord, Lord Shepherd, will join in our debates on many occasions in the future, and that he will bring his expert knowledge in these matters of the colonial territories to the benefit of your Lordships. The noble Lord asked me whether we would be sympathetic towards Malaya, Ghana and other developing countries in their need. The answer is that certainly we shall be sympathetic, but so far as the independent Commonwealth countries are concerned, and whether or not the Colonial Development Corporation should operate in those territories, there are certain considerations which I would ask the noble Lord to bear in mind, some of which were mentioned by the noble Lord, Lord Lloyd. The aim of every Commonwealth country—and I have had this impressed on me time and time again—is to be independent, not only politically but economically. I think we all accept that. If that is so, then the most urgent task of an independent Commonwealth country is to gain the confidence of its own people, so that its own people will lend to its own Government for its own development; then its second task is to gain the confidence of the world outside in its stability and its prospects. When that is established, such a country can go to the London market, to the merchant banks, or to the International Bank or to an international agency and get assistance which is based on its own credit. That is the position I think we all want to establish and which every independent
1304
Commonwealth country wants to establish.
Then again, it is almost impossible to have a two-tier Commonwealth Government as my noble friend Lord Lloyd said. If we extend the operations of the Colonial Development Corporation to Ghana or Malaya, why not to India, Pakistan or Ceylon, since some of the emerging Commonwealth countries are perhaps rather better off than some who have been independent for some time? I think it is really no contribution to the independence and status of those emerging countries to give them the impression that they can rely endlessly on the British taxpayer, because there are not unlimited resources of capital available in this country. But, equally, they have the proof of our sympathy in the existence of the Colombo Plan, where we help with technical aid, and in our willingness—I have given only a, few examples—to help them time and again to finance their great projects. They know that perfectly well, and they know that they will always get a sympathetic response from this country as far as our resources allow.
My last word is really conditioned by the words "as far as our resources allow". It is no use pretending that we can invest enormous sums abroad in future years—and this is my real quarrel with the Labour Party's pamphlet—unless that money is saved at home. Investment at home or in the Commonwealth can rest only on the savings of people here. We have an enormous task so far as our own investment in atomic energy and in coal is concerned. If noble Lords will look at the figures, they will see that they are very large indeed, and we have to invest in our own country because unless our own country is strong we cease to be the centre of the Commonwealth and to be of service to our Commonwealth partners. But we accept—and I repeat this—that we should make the maximum investment possible, based on the savings of our own people, and I hope that when your Lordships read the White Paper which I have promised will be brought before this House before the end of July, you will feel that the Government are pursuing an investment policy, so far as the Commonwealth is concerned, which is realistic and which will help to meet development needs as we all know your Lordships wish to do.
6.7 p.m.
LORD WINSTER: My Lords, the noble Earl the Leader of the House having spoken, I feel we are now rather in the position of playing Hamlet without the Prince.
THE EARL OF HOME: My Lords, if I may interrupt, I would say that, with the leave of the House, my noble friend Lord Perth will be the Prince later on.
LORD WINSTER: That will in some measure console us for the absence of the noble Earl. In any case, I am sure we are all happy to think of the purpose which carries him away at this moment. I am happy also that it falls to my lot to be the first on this side of the House to congratulate my noble friend Lord Shepherd upon his admirable maiden speech. He spoke with ease and fluency, but what was still better, he spoke with knowledge and experience of the subjects upon which he touched. Although I have been a Member of your Lordships' House for only a short time, I feel safe in assuring the noble Lord that the House is always glad to hear anyone who speaks with knowledge and experience of the subject in hand, and that, accordingly, the House will always listen, not only with pleasure but with appreciation and gain, when the noble Lord, Lord Shepherd chooses to address us.
I should like to start what I have to say—for I have some criticism to make, I must confess—with a word of praise for the dispatch with which these Reports of the Colonial Development Corporation are prepared and presented to Parliament. I think it is especially commendable since they deal with a great multiplicity of enterprises all over the world. As something has been said in criticism of the fact that this particular Report contains strictures of Colonial Office policy, I should like to point out that the Report is not made solely to the Government who present it to Parliament, but that it is also a Report to the people of the country whose money is employed in the enterprises mentioned. Therefore to me it seems perfectly right that if the Chairman of the Board feels that, in his duty to the country, he is bound to point out matters which are hampering him in pursuing the task with which he has been entrusted it is not merely proper but a matter of duty that he should do so, as
1306
has been done in the particular Report under consideration.
Perhaps the noble Lord, Lord Reith, will not mind my saying that, while I praise the speed with which the Report has been got out, I still continue to dislike the staccato style in which it is written. But the noble Lord is a man of strong personality and he must be allowed his little foibles, which we all have, and this method of publishing a Report is one of his foibles. It seems to me to be the first of the noble Lord's Reports which has not relied upon criticism of the past or of private enterprise partners, and I think that that is a great advantage. He will not perhaps mind my saying that I have noticed that the average age of the directors on his Board is sixty-six. I am inclined to agree with the Daily Express which says that the 20th century had better be run by 20th century men. Perhaps the noble Lord, Lord Reith, as opportunity offers, will feel able to introduce a little more younger blood on to his Board. May I say, also, that I hope that the extremely eccentric letter to The Times written by Mr. Arthur Gaitskell does not represent the spirit in which the deliberations of the Board are carried on.
Last year I advanced the view that too great a proportion of the Corporation's activities is devoted to finance house activities. I propose to return to that theme to-day—finance house business in preference to employing capital in productive activities. The current Report endeavours to justify this policy which I think has been increasingly stressed during the Chairman's seven-year tenure of office. The activities of the Board are set out on pages 4 and 5 of the Report, where they are classified under five headings. There is first "Direct projects and subsidiary companies", under which, in column (1), there is "Investigations and development"; and in column (2) there is "Revenue-earning". Then we come to the main heading "Investments and commercial loans". Under that, column (3) is "Investigations and development" and column (4) is "Revenue-earning". Column (5) is "Loans", which comprises loans to Governments, Government agencies, or loans guaranteed by them.
I would say that many of the Corporation's commercial loans, such as are entered in columns (3) and (4), could just as fairly be described as finance business

1307
as those entered under column (5) under the heading "Loans" and agreed to be finance house business. The only difference between the two types of loans that I can see is that one is guaranteed by a colonial Government while the other is not. But, in spite of that distinction, I regard both as finance house business.
Another matter in these columns to which I should like to draw attention is Williamson Diamonds, which appears in column (4) under the heading "Revenue-earning". That would lead one to suppose that this is a revenue-earning investment or a commercial loan, but it cannot be revenue-earning business because, although a loan of £500,000 to the company for the mechanisation of the mine was approved in 1955, nothing had been drawn to the date of December 31, 1956, nor had anything been drawn up to the date of the signing of this Report. It seems to me rather strange that this item of £500,000 appears year after year and is added also to the total of capital committed although nothing has been spent. But if and when it is drawn, in what material sense will it differ from finance house business although it is entered as I have said? It will differ only in the sense that it is a Government-guaranteed loan. To my mind, to employ Corporation money in such a way is simply a money-lending transaction, and only by a stretch of the imagination can it be justified as an investment in which the Corporation should have interested itself.
By contrast, column (2), I agree, shows several genuine, real enterprises now emerging from the chrysalis into the profit-earning stage—which, I may say, is to my mind a justification of those who pioneered them. There is another matter to which I should like to call the attention of your Lordships and that is the frequent changes of names which occur in these enterprises. I think the matter has been briefly referred to this afternoon. I could give not one but several instances of these changes of names. I hope that there may be an end of this sort of thing, because uniformity in nomenclature is very desirable especially in reading a somewhat long and complicated Report. I hope that the noble Lord, Lord Reith, will remember that there is a very well-deserved suspicion of men who change their names, and that he will endeavour
1308
to preserve the names of the enterprises over which he presides.
As to the new projects for this year, an analysis of the Report reveals that all the new capital commitments in 1956 were what I have termed "finance house" operations. According to the Report, eight new projects were approved, and I make it that, of these eight, seven were new acts of lending and only one was an investigation—not a project but an investigation. I cannot see that the word "project" is appropriate for any of these seven lending transactions, which of course could have been handled just as well by any merchant bank or joint stock bank. I will not weary your Lordships by giving you particulars of these seven loans—I have them all here—but I think it is sufficient to state the fact that out of eight new projects seven, it cannot be contradicted, are money-lending transactions. The eighth is an investigation, the Ox Bow Lake Power and Water Investigation, Basutoland. The Report makes no mention of any commitment on this project. It only says that the Corporation has been asked to share an investigation, an investigation which I should have thought would be of more interest to South Africa than to Basutoland.
The impression left on my mind by these items is that columns (3) and (4) to which I have referred, on pages 4 and 5, might just as well be included under column (5) "Loans". If columns (3) and (4) are included under column (5), then things get into their right perspective and the great preponderance of finance house business becomes evident. These three columns, Nos. (3), (4) and (5), show that 41 out of the 66 individual undertakings of the Corporation at the end of 1956 between them represent 57 per cent. of the capital deployed by the Corporation at that date. Only 38 per cent. was deployed in the 11 undertakings listed under column (5). I think that that is apt to give a somewhat misleading account of what is in fact taking place. I should like to add, too, that of the undertakings initiated by the Corporation since 1950, all but one fall into these three columns, (3) (4) and (5), which I regard as referring to lending transactions; and 24 out of 25 of the direct projects and subsidiary companies at present carried on by the Corporation were begun before the noble Lord, Lord Reith, became Chairman.

1309
My Lords, there are, no doubt—in fact, it has been expressed in this House in a previous debate—those who find comfort in thinking that the noble Lord, Lord Reith, is pursuing the safe road of a finance house business. He has had praise in the Press for his performance on the moneylending "wicket." But I am not quite sure that moneylending through a United Kingdom Government Corporation is the best way to promote colonial development. I agree that the method was provided for in the Overseas Resource:; Development Act, 1948, so that the noble Lord is quite within bounds and within the terms of the Act, in using it for new business, even if doing so to the exclusion of any other business. But perhaps in doing so, when seeking new business, he has lost sight of the original purpose for which the Colonial Development Corporation was set up.
I may mention here that it has been said in speeches this afternoon (I think the noble Earl, Lord Perth, was one who said so) that the Corporation was set up to operate upon commercial lines. I did not understand it quite in that way at the time. I speak now in the spirit and not, perhaps, in the exact letter, but I thought that the Corporation was set up in order to engage in ventures which, while they held promise, were not of such a nature as to attract the ordinary or the usual run of commercial business. That is my very distinct recollection, and I think that is a certain qualification of what has been said by the noble Earl—that the Corporation was set up to operate upon commercial lines. I think there was that margin left open to it where it might operate in businesses which commercial
1310
undertakings would not normally undertake.
THE EARL OF PERTH: My Lords, I think I would agree with the noble Lord. I think that the position is that, taking one business with another, on balance the scheme works out satisfactorily.
LORD WINSTER: My Lords, I am happy to think that there is no difference between us. Certainly, there can be no difference on this: that the Corporation was set up to engage on its own account in productive activity. Lending to others was to be a secondary activity, and it was not expected that many of the early projects would show profits in their early days. My recollection is that, when passing the Act, Parliament thoroughly understood that and acquiesced in the view which I have put before your Lordships. Inevitably, upon that understanding, there have been failures. If you are to take risks of that nature, there must be some failures. Equally, to my mind there have been direct projects closed down because—I may say this to the noble Lord quite frankly—I think the noble Lord, Lord Reith, prefers to divest the Corporation of marginally economic direct projects in favour of banking and money lending.
EARL FORTESCUE: My Lords, there is to be a Royal Commission at half past six. I suggest that the House do now adjourn during pleasure. I have already warned the noble Lord who is speaking.
House adjourned during pleasure.
House resumed.

ROYAL COMMISSION
6.30 p.m.
The following Bills and Measure received the Royal Assent:

National Health Service Contributions,

Maintenance Agreements,

Cheques,

Superannuation,

Housing and Town Development (Scotland),

Legitimation (Re-registration of Birth),

Thermal Insulation (Industrial Buildings),

Advertisements (Hire-Purchase),

Parish Councils,

Representation of the People (Amendment),

National Health Service (Amendment),

Exchequer and Audit Departments,

Judicial Offices (Salaries and Pensions),

Ministerial Salaries,

Electricity,

Aberdeen Harbour (Superannuation) Order Confirmation,

Baird Trust Order Confirmation,

Glasgow Corporation Order Confirmation,

Kilmarnock Corporation Order Confirmation,

Aberdeen Corporation Order Confirmation,

University of Exeter,

Buckinghamshire County Council,

London County Council (Money),

Croydon Corporation,

Tyne Improvement,

Channel Islands (Church Legislation) Measure, 1931 (Amendment) Measure.

House adjourned during pleasure.
House resumed.

THE COLONIAL DEVELOPMENT CORPORATION
6.47 p.m.
LORD WINSTER: My Lords, I was saying when the House adjourned that I felt that the Chairman of the Corporation had a certain predilection in favour of banking and moneylending as opposed to direct projects. But the current Report, which we are discussing, shows that more and more of the direct projects initiated in the early years are bearing fruit and are now justifying the pioneering of the first Board. Fourteen of the direct enterprises made profits last year—four more than in 1955. Their profits aggregated about £477,000, which was an increase. Seven direct enterprises made losses, but these losses totalled only just over £105,000. Of that comparatively small sum of £105,000, over £77,000 was lost by one of the enterprises, the Macalder Nyanza Mines, which had teething troubles. As to the other six losing projects, between them they lost only £28,000, and none lost over £14,000. In view of those figures, I feel that those who laid the foundations in the early years must now be feeling some encouragement. I think that some of the projects upon which Lord Reith laid his hand might equally have succeeded, with perserverance and patience.
LORD REITH: Nonsense!
LORD WINSTER: I am glad that the noble Lord has broken silence—whether his intervention is in order or not. But, at any rate, that is an opinion widely held, and in reply to his cry of "Nonsense!" I will only say that I hope that the one investigation which perhaps can be described as a project which is included among his eight new projects will meet with great success and yield abundant profits.
I must refer to another matter which keeps recurring in these reports—that is, the special losses account. These losses move through the pages of these reports like a wailing banshee, an uneasy ghost which nobody seems able to lay. Put in a nutshell, the Colonial Office refuse to agree to the Corporation's figure of £8 million for special losses, attributable to projects started before 1950, and the Corporation refuse to whittle down the amount, and they press for a waiver of

1313
interest on the whole of it. During the last two years, the Corporation have met the interest commitment by a wide margin, but they seem to feel that they must eschew risk in order to obtain the money with which to pay the Treasury interest.
I have done my best to make an analysis of these special losses from information given in the Reports since 1950, and I would put the losses at about £6½ million. In doing that, I have taken no account of deductions which should be made for the sale of assets of abandoned projects, such as Eleuthera, Andros and Cramer Estates, which were finally disposed of last year. The price of land in Eleuthera has trebled since the Corporation bought the land from Mr. Arthur Davies in 1950. If that is so, the noble Lord, Lord Trefgarne, seems to have made a very good bargain in that transaction. Sales of land in Eleuthera in 1956 must have shown a profit on the price paid in 1950, and it seems unrealistic to regard the final loss, if there is indeed any final loss, as the figure estimated at the end of 1952. Surely, when reckoning up the special losses, account should be taken of special gains and gains on sale of assets. I have in mind the sale of such Corporation interests as Chilanga Cement, Trinidad Cement and East Africa Industries. So far as I know, these sale prices have never been disclosed. I should say that the reckless sale of assets is as bad as reckless expenditure and should be searchingly inquired into.
If the figure of over £8 million is realistic, as the Corporation maintains, then I can understand the Corporation pressing to have the whole slate, not just a part of it, wiped clean. If the failure to get rid of the special losses, both interest and capital repayments, is the reason why the Corporation lean towards finance house business and safe investments to pay their interest bill, then the sooner the matter is straightened out the better for the cause of improved colonial development on the lines laid down by the 1948 Act, which are just as sound to-day as they were then. But if there is to be a special losses write-off—and I should not be opposed to that—it ought not to be allowed to go through without an independent inquiry into the necessity for the write-off and
1314
into the method employed in realising assets.
These are some of the points which make me feel that the Corporation and the Colonial Office are at cross purposes. But I wish at once to dissociate myself entirely from any suggestion that these cross purposes are due to any personal feelings existing between the Colonial Secretary and the Chairman of the Corporation. They are far too big men to let their personal feelings come into such a matter as that. But if these differences of opinion are not reconciled, they may provoke bad blood and jeopardise the future of the Corporation's operations. It would be very difficult for such a Corporation to continue to function if it were chronically at issue with the Colonial Office. I do not want to use that terrible cliché "frustrated", but I think that, members of the Board of the Corporation perhaps feel rather hamstrung. To quote a saying of the day, perhaps they are not "Angry Young Men" but "Angry Old Men" over these matters. Of course, the Government expect to have the last word on policy
" Shall the clay say to him that fashioneth it—' What makest thou?'".
The Government must have the last word. In any case, I am not prepared to agree that the Corporation's difficulties are entirely to be laid at the door of the Colonial Office; that, so to speak, the noble Lord, Lord Reith, has been given a job but the Colonial Office withhold from him the necessary tools.
In connection with the Resolution of the noble Lord, Lord Ogmore, which I will certainly vote for if he presses it to a Division, I notice that the recent Labour statement on colonial policy has advocated the more vigorous initiation and prosecution of direct projects by the Corporation. This is in line with the original purpose of the Act and is in line with what I have been saying this afternoon. I cannot say that I feel that such a policy has marked the chairmanship of the present incumbent. It was never the intention of the Labour Party, I am sure, that the Corporation should be a finance house, and that it has become so is the work of the Chairman and not of the Government. I think it would be advantageous were the Corporation given a statutory direction that no more than 10 per cent. of their projects should consist

1315
of advances at fixed interest involving little or no risk. There are plenty of banks and finance houses to do that sort of business.
In conclusion, I hope the noble Lord, Lord Reith, will allow me to say that I can feel sympathy with him at having to sit and listen to some of the criticisms which have been made and to which, by his office, he is prevented from replying as any other noble Lord under criticism is entitled to do. I hope he will believe that these criticisms are made in complete good faith and without animosity to him, to his Board or to the Corporation which he directs.
6.59 p.m.
LORD HASTINGS: My Lords, although I welcome the opportunity which the noble Lord, Lord Ogmore, has given us to debate a subject of the greatest interest and importance, I cannot agree with the precise terms in which his Motion is couched. It seems to me inappropriate that the noble Lord should wish to challenge Her Majesty's Government for doing something which clearly they have not done—namely, restrict the operations of the Colonial Development Corporation. The noble Earl, Lord Perth, when he spoke, made it clear that there is still £15 million available out of the balance of £100 million, and I would point out that that matter is mentioned in the Report itself, which says that although £85 million out of the total sum of £100 million, is definitely committed, the balance of £15 million "may be required" in order to bring these projects to fruition—not that it is needed immediately, or that it will be definitely required. Therefore, quite clearly, £15 million is still available, added to which the noble Earl did say that negotiations are now proceeding with the Colonial Development Corporation about increasing the amount of loans allowed to be outstanding. Therefore, I submit to your Lordships that the major part of the case of the noble Lord, Lord Ogmore, falls to the ground immediately.
The second important point the noble Lord made—because I believe that the other strictures he passed on the Government are largely of an administrative and organisational character—dealt with the emergent territories. As that is a matter which has been fully discussed by your
1316
Lordships, I am not going to say much about it to-night—certainly not as much as I should have done otherwise.
I must admit, however, that even after hearing the speech of the noble Earl the Leader of the House I am somewhat worried. I cannot quite get out of my mind the plight of those people that I visited last January in the Northern Territories, Ghana (and it is well known to your Lordships that the Northern Territories, however much we may welcome the independence of Ghana, did not ask for, or really want, their independence to be linked to Ghana), who live at the end of a magnificent road, built through the Coast Construction Company by the Colonial Development Corporation, to Bolgatanga, and are dependent for their existence on Colonial Development and Welfare grants. Your Lordships will remember that the C.D. and W. grants will also be withdrawn on the gaining of independence. There is a splendid agricultural project there, where primitive peasants are living, rather cheek by jowl, at a density of 380 to the square mile, or even, in some cases, 800 to the square mile, trying to scratch a living at what can hardly be called subsistence level. They are being taught good husbandry, in the fullest meaning of that word, rather in the same way that it is being carried out so brilliantly, and much more rapidly, under the Native Land Husbandry Act in Southern Rhodesia. I am worried as to what will happen to those people.
I know that the Government of Ghana intended last January to ask Her Majesty's Government for a loan of £30 million for the exclusive development of the Northern Territories, to be spent over a period of ten years, knowing full well that the economic balance and prosperity of that country, and possibly its political stability, may depend on that development and the expenditure of that sum. I mention that point because I feel—and in this respect I disagree, to a certain extent, with my noble friend Lord Lloyd—that we have some responsibility in this regard, and it is in our own interests to see that political stability is safeguarded in a country where one cannot say that democracy is yet firmly established.
When I was trying to get into perspective the whole problem of investment in the Colonies I had recourse to the

1317
Report on the Colonies for 1956–57, presented to Parliament last month, of which the noble Lord, Lord Ogmore, made use in a part of his speech, referring to figures of imports and exports. Your Lordships will find it there stated (I think it is on page 84) that over the next few years the Colonies are planning to spend £150 million per annum on their development—five-year economic programmes drawn up at the instigation and with the encouragement of the Colonial Office itself. Out of that total sum, 10 per cent., at least, is to be provided from Colonial Development and Welfare grants; and as to the balance, between a half and two-thirds, let us say some 60 per cent., will be found from the financial resources of the Colonies themselves. That still leaves a substantial gap of some 25 per cent. or even 30 per cent. to be raised by external loans. So it is quite clear that, although the Colonial Development Corporation could never close that gap, there is immense scope for it to operate in the Colonies in assisting them to find the necessary money. And it is fairly clear, I think, that when the sum which is now under discussion is agreed upon there must be a substantial increase in the amount made available to the Corporation, although I have no doubt that it will not be enough to satisfy many of your Lordships, and certainly not enough to satisfy all the desires of the Colonies.
I should like to mention one or two specific cases, for this is the only opportunity we have of discussing the affairs of the Colonial Development Corporation in any detail. I would draw your Lordships' attention to the fact that under the economic programme put out by the Government and Federation of Nigeria, where they will have to raise £30 million from external loans over the years 1956 to 1960, I think I may not be far out in guessing that they are depending upon, or hoping to be able to rely upon, participation of the Colonial Development Corporation to the tune of no less than £10 million.
As an example of the value of the work of the Colonial Development Corporation in Nigeria I would cite what has been done in Lagos. Those of your Lordships who have visited Lagos, as I had the good fortune to do earlier this year, and have seen the work of the Lagos Executive Development Board and the
1318
Nigeria Housing Development Society, cannot fail to have been impressed with their achievements. A great stretch of land has been reclaimed along the port for subsequent industrial development, and low-cost housing is going on in and around Lagos, in conjunction with the clearance of slums, which can only be described, I think, as among the worst in the world: they are horrible, terrifying—a perpetual invitation to cholera and the bubonic plague, which has not been unknown there in the past. I do suggest that if any alteration is to be made in the constitution of the Colonial Development Corporation, and any expansion of a financial nature is to be extended to it, there is at the same time room for closer co-operation and co-ordination between the Corporation and the Colonial Development and Welfare Organisation, which, I believe, is controlled directly by the Colonial Office.
As an example of how this co-ordination might work to advantage, I would cite two projects in Nyasaland, one actual and one potential. The potential one is that of the Shire Valley Hydro-electric Power Scheme, in which the Colonial Development Corporation has repeatedly expressed interest, and on which research and investigation work has already been done by the Governments concerned. Since this is a case where money is not available—there is no question of this difficulty of alternative finance arising; the scheme is more or less "bogged down" for lack of finance—surely it is one where the Colonial Development and Welfare people might step in with an initial grant, in anticipation of the subsequent participation, on a profitable basis, of the Colonial Development Corporation with the Federal Government.
If that were done, it would to some extent, I suggest, make amends for the other scheme I am going to mention—the fiasco of the Nyika Forestry Development Syndicate. Your Lordships will know that that has been discontinued this year, largely on account of the lack of transport facilities—in other words, the roads and communications are inadequate. If that scheme had been worked out originally, in consultation with the C.D. and W. officials, possibly there might have been a grant to lay those roads, so that it would never have been necessary eventually to discontinue that

1319
scheme on that ground, which I understand was the main reason for the withdrawal of the private partners in that enterprise.
While we are on that scheme there is another reason given in the Report for the discontinuance of the Nyika Forestry Development Syndicate. To get the words right, I will quote from the Report. It says:
" But when negotiations between Syndicate and Nyasaland Government were resumed in November "—
that is last year—
" difficulties inherent in the long-term leasing of a large area of African Trust land, on top of the well-recognised risks of a project such as this, led the Syndicate to conclude that the project must be discontinued…"
I would ask the noble Earl, Lord Perth, when he replies, if he could perhaps clarify that situation, as all these schemes are started in collaboration with, or rather with the encouragement and knowledge of, the colonial Government concerned. Why was that difficulty not foreseen at the outset? I would also ask what is the precise difficulty now affecting this long leasehold, and whether such a difficulty, which is bound to arise in the future, cannot be resolved? I should be grateful if the noble Earl could reply to that point.
While I am on the Nyika scheme, I feel that I must bring up another point which is not particularly to the credit of the Corporation, though as an admirer of the Corporation and its staff I do so regretfully. When I was in Southern Rhodesia last March and this Scheme was discontinued, a statement was issued from the London office, I understand—not from the regional office—of the Colonial Development Corporation, giving, amongst other reasons, that this scheme was discontinued also because of the uncertainty of the political situation. That statement caused grave distress and dismay, not to say considerable anger, not only in Nyasaland but throughout the whole Federation, and was, I believe, the subject of a formal protest from the Federal Government. I hope the noble Earl can give an assurance that his right honourable friend the Secretary of State will see that no such thing occurs again. Also I trust that the noble Lord who is Chairman of the Corporation has already taken steps to see that in future no official
1320
of the Corporation gives out statements of a political or semi-political character.
While upon that topic, I feel that I should touch upon the point which the noble Lord, Lord Winster, raised—I was not going to mention the name of the gentleman concerned but the noble Lord did. There was the question of this letter from Mr. Arthur Gaitskell in The Times—a letter of a highly controversial character, and far from complimentary to Sir Roy Welensky and the various people in the Federation of Rhodesia and Nyasaland. I may be wrong here, but I feel that perhaps a principle is involved, and I should be grateful if the noble Earl could give his view, and possibly the official view of the Government, when he replies, as to the propriety of a member of the Board indulging in public and in the Press in political controversy, especially when it concerns a Colony with which the Corporation on which he serves is concerned. This is a statutory Board, and the members are appointed by the Secretary of State. I thought I should mention that subject, and perhaps there can be an official ruling upon it.
That brings me, naturally, to consideration of the case of Southern Rhodesia. The noble Lord, Lord Ogmore, did not get the facts quite correct—and in fact he was put right by the noble Earl, Lord Perth, when he spoke—in that the operations of the C.D.C. in Southern Rhodesia are virtually excluded altogether; and they cannot be for the benefit of Southern Rhodesia. They can be placed in Southern Rhodesia only if they are for the benefit of the two Northern Territories of the Federation. Noble Lords opposite, of course, had the opportunity, when they created the Colonial Development Corporation in 1948, of including Southern Rhodesia, but they were content to rest upon the definition of a "Colony" contained in the Colonial Development and Welfare Act, 1940. The definition there is that "Colony", for the purposes of the Act, is not a Colony possessing responsible government.
There seems to be an anomaly here, and I would seek a clarification of what is "responsible government." Is it different from what we understand normally as self-government? I ask that because it occurs to me that before Ghana achieved independence, it must surely

1321
have had self-government, under the 1951 Constitution, and its own Prime Minister; and yet the Colonial Development Corporation was permitted to operate in the Gold Coast. And what of the situation of Nigeria, where Eastern and Western Regions are about to have self-government bestowed upon them? Is that not "responsible government"? I seek clarification of the subtle difference between "responsible government" and "self-government". Either the two Regions I have cited in Nigeria should be excluded—which is far from being my wish—or Southern Rhodesia should be included in the operations of the Colonial Development Corporation.
I have already detained your Lordships too long, and I would only say, in closing, that I feel that the attitude we take to-day to this smaller problem of the Colonial Development Corporation will affect very largely the feeling outside this House of what is likely eventually to happen in the Commonwealth as a whole. I would only echo the words of the Leader of the Liberal Party, speaking in another place in that excellent debate on Commonwealth and Colonial Resources (I think it was called), some two months ago, when he said that he hoped the House would not evade the fundamental issue of what the people of this country are prepared to give up for the sake of the Commonwealth and Empire—and, if I may add in my own words, for their own sakes. For I am sure that investment to the maximum possible limit, and even beyond it, in the Commonwealth and Colonies will benefit in the near future the people of this country and generations of Englishmen to come.
7.20 p.m.
THE EARL OF LUCAN: My Lords, it would be tempting to follow the noble Lord who has just sat down into a general review of Commonwealth and Colonial development, but we should need several more days for that, so I propose to refer only briefly to some of the points; that have been brought up in his debate. The impression I get from this debate is that it is thoroughly disappointing. I think that my noble friend Lord Ogmore will feel the same. The points he raised have been dealt with by the Government spokesman, but, to my mind, the replies carry no conviction at all. There was the point about whether the Corporation had,
1322
in fact, reached the limit of their statutory borrowing powers. The noble Lord, Lord Hastings, said that there was still £15 million available. I notice, however, that paragraph 14 of the Report says that £85 million out of £100 million was committed, but on top of that there was £38 million of capital requirements for new schemes under examination. Those are schemes which are not fully accepted but I think the Corporation feel that they are morally committed to them, and that carries the requirement of capital far above the £100 million limit. Before I go any further, I should mention the very notable speech from the noble Lord, Lord Shepherd, which we all heard with great pleasure, knowing what a respected and loved figure his father was here. When the noble Lord comes and delivers a speech out of experience of one part of the world, Malaya, and gives us the benefit of that experience, we congratulate him and hope we shall often hear him again.
The noble Earl, Lord Perth, dealt with a good many of the points of criticism that were raised, and he also brought in the Labour Party's new policy pamphlet on economic aid to the Colonies. None of us have any complaint of that: it is perfectly fair, and we are not in any way ashamed of this policy pamphlet. Indeed, it seems to most of us to be a tremendous advance in giving in broad outline and a certain amount of detail the policy that a Labour Government would pursue. But I would ask that, when it is quoted and commented on, that comments should be fair ones; that they should not be short phrases extracted from their context, and the policy should fee looked at as a whole.
The noble Earl quoted something about planning. The phrase about planning was taken out of its context. He complained of the pamphlet saying that
" the Corporation should play a much greater part… in planning the balanced development of the Colonies."
If he had taken into account the whole of the previous paragraph, which explains that what is advocated is the co-operation of the Corporation and its finances with local interests and local colonial Governments and their finances, in order to ensure a balanced development of the territory, then surely nobody would quarrel with it. He complained that the pamphlet gave no credit to this country

1323
or to the members of the Oversea Civil Service for what had been done in the Colonies. But this is a pamphlet on economic aid, and there is no mention of political or administrative subjects. It would be out of place to go into a general review of our record in the Colonies. On pages 9 and 10, however, the pamphlet details the sums set aside by this country for colonial development over the last ten or fifteen years. On page 20, it quotes the total sums allotted, and it does so in order to draw the lesson of the inadequacy of the sums that we have spent up to now.
The noble Lord, Lord Lloyd, gave us a glimpse of an attitude of mind that I thought went out in politics in this country sixteen or seventeen years ago—the idea that a Colony could have only the social services that it could afford to pay for itself. That concept of Colonies was abandoned, I think, with the Colonial Development and Welfare Act, 1940, which I believe was carried through Parliament by the noble Lord's father himself, the late Lord Lloyd. Ever since that day it has been accepted that we in the home country must contribute towards the development and welfare of the peoples of the colonial territories, and it was disappointing to hear that the old conception is still in the minds of some noble Lords. The noble Lord, Lord Grantchester, spoke as if the only thing that mattered in Colonial development was that capital should get as much per cent. interest as possible, so that investors should get their money back. Those ideas, we hope, are dead.
I should like to refer, briefly and regretfully, to the noble Earl, Lord Perth, who mentioned the agencies outside the Commonwealth from which capital investment might come. They are mentioned in the Labour Party pamphlet because they are part of the whole picture of aid from the highly developed to the underdeveloped countries of the world, and that, as we all know, is probably the greatest and most dangerous problem in the world to-day. It was deplorable to hear the noble Earl, particularly with his tradition, refer to "odd foreign bodies" when he meant the World Health Organisation, the Food and Agriculture Organisation and even S.U.N.F.E.D., which surely has been talked of and discussed for two or three years. For one of Her Majesty's Ministers to protest that
1324
he knows nothing of it and that it is a "queer foreign thing" is very deplorable.
There is one other question which arose in the speech of the noble Earl, Lord Perth, and which I should like to follow up. Do I understand from him that every project that the Colonial Development Corporation has before it has to be submitted for approval to the Colonial Office? It may be that I misunderstood him, but something he said sounded very much as though that was the situation. If that is so, what on earth are the Chairman and Board of the Corporation supposed to do? Do we collect a lot of distinguished people and pay them high salaries and then allow them no discretion at all? I think we ought to hear more about what the situation is.
Finally, the basic question really is that of the emergent territories. It surely is no question of a two-tier Commonwealth. Rather facile phrases like that do not get us much further. The basis is need. If a country needs outside assistance and outside capital investment, we see no reason why it should not have it. India has been mentioned. We have been contributing for a number of years to help India economically through the Colombo Plan. If there is a call for further investment in any of the older self-governing countries of the Commonwealth—well, why not? As to what we mean in regard to the emergent territories, surely it is totally unrealistic to say that they must show their credit-worthiness. How can a country that has newly achieved political independence at the same time be completely economically independent? The noble Lord, Lord Milverton, put his finger on the trouble, which is that their political advancement has outrun their economic strength.
With one proviso, which I will come to in a moment, I would say that it is surely grossly unjust, and there is something of malice about it, in the idea that if you give political independence you then immediately turn off the tap of economic aid altogether. The proviso I would make is this: that the emergent countries are sensitive of the word "colonial". I think there is a clear case for the title to be changed. There is no reason why it should be changed to a large extent; the word "Commonwealth" could be substituted for "Colonial". The initials and their goodwill could remain. Clearly,

1325
there is a case for that. I would end by saying that I, and I think my noble friends, are deeply disappointed that the Government are not able to give any further help.
7.32 p.m.
THE EARL OF PERTH: My Lords, with your Lordships' leave I will make a few finishing remarks, because, as you know, the noble Earl, Lord Home, has had to go off for some very important reason, and so he spoke a little early. First, I should like to say what a pleasure it was to hear the noble Lord, Lord Shepherd, make his maiden speech. Curiously enough, some few years ago I, too, made my maiden speech on the subject of the Colonial Development Corporation. It seemed to me that the noble Lord spoke as an "old hand," practised in the ways of the House. I, and I think we all, look forward to hearing many more speeches from him. It was not only a first-hand tribute from someone who knows Malaya and the activities of the Corporation there. He asked me two specific questions. One was if the Corporation is to continue with projects which are already in operation, what is the meaning of the words "if necessary"? We are up against the usual problem there. It is quite impossible to give a clear definition which will operate in every individual case. It must be something which will be decided according to the circumstances of each individual project, and as a matter of record we are looking into the various projects at this time with the Colonial Development Corporation to try and get some guidance. He also asked whether the Corporation would be allowed to continue further finance for the Industrial Development Corporation. The answer to that is, No. I think the same answer is applicable in relation to the Federal Land Development Authority.
Lord Lloyd made some interesting suggestions on how any new money that may be coming to the Corporation should be made available. I know that due attention will be taken of these suggestions. Lord Milverton asked one or two specific questions. He asked whether the Corporation is fulfilling its purpose. My answer to that is, Yes. He further asked whether there was more scope for the Corporation in the Colonies. Again, my answer most emphatically would be,
1326
Yes; and we think it is of first importance that the Corporation should concentrate on the Colonies. I assure your Lordships that there is no danger of atrophy if it continues its activities in these fields.
Lord Winster made various points about the presentation of certain items in the Report. I know that these will be given proper and due weight and consideration. He also made certain comments on the eight new ventures which the Corporation has started this year. I must confess that I have not had an opportunity to go into each one of them in detail, but I am sure that in two or three respects he is wrong in saying that they are only straight loans. If he likes, I will take up that matter further with him outside the House.
LORD WINSTER: My Lords, I would say that the nature of the loan and the advance varies in the case of the seven different investments, but, in any case, they cannot by any stretch of the imagination be called direct projects.
THE EARL OF PERTH: I do not think we need go into further argument on this point. They have to take an equity interest in the venture and its fortunes. Lord Hastings made one or two points which I thought I might possibly answer later, because I have not received notice of the details. It is, of course, of great interest to hear certain comments of his which come first hand. He made a suggestion that there may be co-operation of a kind between the Corporation and Colonial Development and Welfare, by which the Colonial Development and Welfare met the Corporation and then the Corporation carried on. I think that that is a dangerous concept, because it certainly sounds to me like some form of hidden subsidy.
The noble Earl, Lord Lucan, referred again to the question of the borrowing powers of the Corporation and just where they stand. I do not think there is any point in going further into that matter, because, as has already been announced, more money will shortly be forthcoming for the Corporation. I am sorry if the noble Earl feels that I was unfair in certain respects in my quotations from the Labour Party pamphlet. I will only say that I shall be happy to leave the record to speak for itself. In relation to the international agencies, I may say that

1327
I was not running them down; I was merely saying that it seemed to me a curious thing—and I will repeat this—that the pamphlet goes into considerable detail about the activities of international agencies but makes no mention at all of the activities of the Colonial Service or Oversea Service in regard to what it has done here.
My Lords, this has been a most valuable debate. We have had many valuable suggestions, all of which will be noted and, in certain cases, I am sure, acted upon. I hope and believe that many of the misunderstandings which have arisen—such as the charges that Lord Ogmore mentioned in the Report—have been cleared up. What is interesting to me is not the past but the future, and I can assure noble Lords that our aim is smooth working with the Colonial Development Corporation, which I know is their aim, too. We have heard that the Colonies are to have more money; but we have also heard that the Corporation is not to have an expansion of its activities in the independent Commonwealth beyond what has already been announced—that is to say, in one or two of the independent countries it will now be able to carry on what it has already begun, but it will not take on new projects. I will not go further into the reasons for this decision. My noble friend Lord Home has touched on them, and the matter will be further developed in the White Paper. All I will say is that we have to consider the broad policy and the facts and realities of our economic position; and it is that, and no doctrinaire judgment one way or the other, which has convinced us that the proper rôle for the Corporation is colonial development, and only in the most limited sphere, where it has already started, work in the independent Commonwealth.
7.40 p.m.
LORD OGMORE: My Lords, I thank all noble Lords who have contributed to this debate. I felt, and still feel, that
it was necessary, to have this debate. This is a Report laid before Parliament which contains very severe charges, and it was necessary that Parliament should debate them. I want to thank the Ministers also for the care they have given to their replies; I shall say something about the contents in a moment, but they have been careful in giving the House all the information the Government wish it to have. I am particularly grateful to the noble Earl, Lord Home, for giving us a preview of the White Paper. We cannot say very much about it because we have not seen the actual text and have not heard the contents, but he has given us some indication of what they are likely to be. I should like to join with other noble Lords in congratulating the noble Lord, Lord Shepherd, on a very interesting and informative maiden speech: we shall hope often to hear him make a contribution in our discussions.
I was glad to receive confirmation that there was no personal feeling or animus in this matter between the Secretary of State and the noble Lord, Lord Reith, in spite of what one might have thought to the contrary, in view of the situation which has arisen over the Report; but I accept the statement made by the noble Earl, Lord Perth. One can only assume that the reason for the Government's attitude is a doctrinaire one. As my noble friend Lord Lucan has said, we on this side are dissatisfied with the Government's reply. We feel that it is evasive, that both the noble Earl, Lord Home, and the noble Earl, Lord Perth, have been full of specious promises of which they have been unable to give any details—and it is actual, definite detailed promises that we require. In those circumstances, as we are dissatisfied, I must ask your Lordships to divide on my Resolution.
On Question, Whether the said Resolution shall be agreed to?
Their Lordships divided: Contents, 18; Not-Contents, 41.

CONTENTS

Attlee, E.

Burden, L. [Teller.]

Quibell, L.

Lucan, E. [Teller.]

Crook, L.

Reith, L.

Haden-Guest, L.

Shepherd, L.

Alexander of Hillsborough, V.

Lawson, L.

Sinha, L.

Stansgate, V.

Mathers, L.

Winster, L.

Milverton, L.

Wise, L.

Archibald, L.

Ogmore, L.

NOT-CONTENTS

Kilmuir, V (L. Chancellor.)

Swinton, E.

Hastings, L.

Hawke, L.

Lansdowne, M.

Colville of Culross, V.

Howard of Glossop, L.

Stonehaven, V.

Lloyd, L.

Buckinghamshire, E.

Luke, L.

Dundee, E.

Ashbourne, L.

Merrivale, L.

Fortescue, E. [Teller.]

Bennett of Edgbaston, L.

Mills, L.

Glasgow, E.

Birdwood, L.

Mowbray and Stourton, L.

Gosford, E.

Chesham, L.

Remnant, L.

Grey, E.

Conesford, L.

Rockley, L.

Howe, E.

Congleton, L.

St. Oswald, L.

Morley, E.

Digby, L.

Strathclyde, L.

Onslow, E. [Teller.]

Dovercourt, L.

Strathcona and Mount Royal, L.

Perth, E.

Fairfax of Cameron, L.

Tweedsmuir, L.

St. Aldwyn, E.

Grantchester, L.

Waleran, L.

Resolved in the negative, and Resolution disagreed to accordingly.

BARRY CORPORATION BILL
Reported from the Select Committee, with Amendments.
DARTFORD TUNNEL BILL
Reported from the Select Committee, with Amendments.
WORKINGTON HARBOUR AND DOCK (TRANSFER) BILL
The Queen's consent signified, and Bill reported, with Amendments.

WHITSTABLE HARBOUR BILL
Reported, with Amendments.
House adjourned at ten minutes before eight o'clock.