OVERSEAS RESOURCES DEVELOPMENT BILL (Hansard, 18 February 1958)

§ THE MINISTER OF STATE FOR COLONIAL AFFAIRS (THE EARL OF PERTH)

My Lords, this Bill falls into two parts: the one enlarges the area where the Colonial Development Corporation may operate; the other increases its borrowing powers. I will deal with the area of operation first, not only because it comes first in the Bill but because it gives effect to points raised and pressed very hard by your Lordships during the Ghana Independence Bill debate and subsequently. It will be recalled that the pressure from all parts of your Lordships' House was satisfied only on the Government's saying that they would make a comprehensive review of the rôle of the United Kingdom in the economic development of the Commonwealth. This was done and a White Paper (Command 237) was published last summer.

I do not intend to go into any detail on the White Paper except in so far as it deals with the Colonial Development Corporation. In paragraphs 31 and 32, it was confirmed that the Colonial Development Corporation should continue to work in newly independent territories, and should be allowed to put up further capital for projects already started, but not new investments in new schemes. At the same time, it was accepted that the management skills of the Corporation should not be denied either to newly independent countries or to members of the Commonwealth, should they wish to take advantage of such expertise. It was felt, however, that in the event this should be made available on a commercial basis without commitment of the Corporation's funds. All of this has been given effect in the Bill in various subsections of Clause 1.

Some noble Lords may regret that the Corporation cannot enter into new schemes in independent countries of the Commonwealth. This point was examined exhaustively in the White Paper and, for reasons given there, it was decided that normally Government to Government financial assistance was not desirable. The Colonial Development Corporation, as a Government instrument, falls into 788 this category. I will not go into the reasons—they are well known; and, of course, they are fully set out in the White Paper—but they include such factors as our economic difficulties, and our belief in the value of investment through private enterprise which has served so well in the past; and with this in mind our belief is that the new territories should stand on their own feet and establish their own credit in the markets of the world as soon as possible. Some may argue that this takes time, and may ask: what about the interim? The answer is that, anyhow, so far as the two recently independent territories of Ghana and Malaya are concerned, they both have useful sterling balances on which they can draw. Given that the policy as out-lined in the White Paper is Government policy, the Colonial Development Corporation support and approve the clauses in the Bill which cover the scope and area of action—indeed, the Bill has been drafted in close consultation with them.

Turning to the increase in the Corporation's borrowing powers, I may say that here again this meets with the approval of the Corporation, though they would have liked the Bill at the same time to clear up what I would call certain of their old troubles, including the special losses and the interest rate they are charged on loans. On these old troubles I have no comment to make to-day, beyond saying that I understand very well their anxieties. As my right honourable friend the Secretary of State for the Colonies said in another place: these matters are being studied afresh, and I am not in a position to say more about them at this stage. They are important; they are recognised as such; but they raise very difficult matters both of accounting and policy. At best they will take a good time to work out. In the meanwhile, we felt that it was most important not to delay to fulfil the policy set out in the White Paper. Hence this Bill now.

Your Lordships will see that the borrowing powers of the Corporation are to be increased by £50 million; that is, from £100 million to £150 million. Of this increase, £30 million may come from the Treasury and £20 million from other sources. The idea of the Corporation raising money from other sources is not new; indeed, it was allowed for in the 789 Overseas Resources Development Act of 1948. But this gives further encouragement to the Corporation to seek capital for its purposes outside Government sources, which the Corporation itself is anxious to achieve. I think we should welcome this outside capital wherever it may come, from, whether from the United Kingdom, from the Commonwealth or from foreign sources. The more money and people interested in the development of the Colonies, the better, particularly if this should be in collaboration with a United Kingdom partner, as would be the case here.

Noble Lords may ask how this outside money is to be raised and whether the Corporation could pledge its assets or whether there could be a Government guarantee. On the first point, the Corporation's assets stand in their balance sheet against their liabilities. By far the greater part of those liabilities are to the Exchequer in respect of advances made to the Corporation from the Exchequer. Though their assets are not formally pledged to the Exchequer, any pledge on their assets to another lender would affect, to a greater or lesser degree, the security for the Exchequer's advances to the Corporation. We do not say that for this reason there could be no question of the Corporation's being allowed to pledge any part of their assets when borrowing from sources other than the Exchequer; but this question would have to be considered in the light of all the relevant circumstances when a particular proposition is made.

On the second point, whether there could be a Government guarantee, provision for a Treasury guarantee of borrowing by the Corporation from sources other than the Exchequer has existed tinder the Overseas Resources Development Acts from the beginning. But here again the question of a Treasury guarantee for such borrowing would have to be considered in the light of all the relevant circumstances at the time, though it is not contemplated that a Treasury guarantee should become a normal feature of such loans. The intention is that the Corporation should raise money on their own credit: and this is certainly what they themselves wish to do.

I hope that the foregoing is enough in regard to the introduction, and now I 790 turn briefly to the more important aspects of the clauses. Clause 1 deals with where and how the Corporation may operate. Subsection (1) excludes from the scope of the Corporation colonial territories which become independent. The Overseas Resources Development Act, 1948, defined the territories in which the Corporation could operate as territories to which the Colonial Development and Welfare Act, 1940, applied at the date of commencement of the 1948 Act. That is changed by this Bill. Colonies which since then have become independent—for example, Ghana and Malaya—are excluded; and those that may become so in the future—for example, Nigeria—will, on gaining independence, also be excluded from the normal scope of operations of the Corporation.

Subsection (2) confirms how the Corporation may continue a scheme already started in the newly independent territories, may put more money into it and may modify or extend its original purpose if the appropriate Secretary of State judges it expedient. In this case it would be the Secretary of State for Commonwealth Relations. Subsection (3) I have already touched on, and subsection (4) explains itself. Subsection (5) absolves the Corporation from certain responsibilities in regard to the interests of the inhabitants where the Corporation may be operating. Clearly, what may be appropriate in the case of a Colony for which we retain ultimate responsibility becomes less appropriate when the Corporation is dealing with a sovereign nation. It also gives the Secretary of State for Commonwealth Relations powers in certain circumstances, though in practice it is most unlikely that these powers will have to be used. Subsection (6) affirms the Treasury's usual interest in the work of the Colonial Development Corporation.

Clause 2 increases the long-term borrowing powers of the Corporation. Clause 3 deals with the Title and repeals subsection (4) of Section 3 of the Ghana Independence Act, 1957. It will be recalled, as I have already mentioned, how your Lordships pressed on this particular section. For various reasons, including the difficulty of time table, it was not possible to meet the wishes then expressed, but it is good that we are now 791 able to give them effect. As I have already said, this Bill carries out the policy laid down in the White Paper, and I very much hope it meets your Lordships' main wishes. It remains for me to wish the Corporation every success in their new fields and to express the hope that the new money will prove valuable in the continued development of the Colonies. I beg to move that this Bill be now read a second time.