OVERSEAS RESOURCES DEVELOPMENT BILL (Hansard, 27 February 1958)

§ LORD OGMORE

My Lords, even at this hour, which is, for us, somewhat late. I feel that this is too important a measure to pass without a word being said on Third Reading. I shall not detain your Lordships long, but there are one or two matters to which I want to refer. I should have raised them on Second Reading, but I arrived back from Nigeria only on Monday and therefore I had no opportunity of doing so. First of all, I would say that I am sorry that the Government have not taken the same course in regard to the Colonial Development Corporation as they did with regard to the old Imperial Institute whose affairs we have been considering—namely, to turn it into a Commonwealth Development Corporation, for I believe 1079 that as the years go by, that title will more truly represent its character. Perhaps in the course of time the Government will consider that point. It has been put to them on numerous occasions, and on the next occasion that a Bill relating to overseas resources comes before your Lordships' House they might insert a proviso changing the name in this way.

The second regret that I have is that the Corporation is excluded from projects in colonial territories which have become independent, except for schemes which are already in being at the time when the country or Colony becomes independent, and except as agents. I have no objection to those provisos—in fact, I fully agree with them. The last thing I should want would be to see the Corporation estopped from completing schemes which it had undertaken to commence and pursue. Moreover, as I have for years past advocated in your Lordships' House that the Colonial Development Corporation should act as agents, it would ill become me now to quibble when the Government are making provision for it to do so. I agree with that portion of the Bill, but I think that it is a mistake to have excluded the Corporation from territories which have become independent—what we call emergent territories—where such emergent territories desire it to engage in operations, and also where the Corporation itself desires to operate schemes of one kind or another.

There can be no involvement of United Kingdom money in the sense of providing grants or loans, because, of course, the Colonial Development Corporation would expect to recover the money that it spends, together with interest on that money; so that there can be no objection from that point of view. I believe, from what has been said by spokesmen who on several occasions have enunciated policy, that Her Majesty's Government have the wrong idea about these emergent territories. They appear to think that when an emergent territory becomes independent we can push it off, just as a Victorian father used to push off a younger son, with £50 cash and a gold watch, saying. "There you are, boy, get out into the cold, hard world and do your best."

In these days, it is quite impossible for any country to stand en its own feet economically; and many countries, in 1080 spite of the fact that they have become independent, need a considerable amount of assistance. We need it here ourselves. Since the war we have had a great deal of assistance, and so has practically every other country. The noble and learned Viscount on the Woolsack, the noble Earl, Lord Perth, and myself, among others, were at the Independence celebrations in Malaya. I am sure that the noble and learned Viscount will bear me out that it was perfectly obvious that that country has a large number of problems to face, economic as well as others; and if we do not help them, in this and other ways, they will be tempted to go to other countries and other sources for aid—sources that may be, to say the least, antipathetic and even hostile to us. They do not want to do it, but they may be driven to go to other sources for help. I will not elaborate upon this point because this is a Third Reading, but I believe that it is a mistake to make a provision of this kind which prohibits the Corporation from operating in these territories in the circumstances which I have described.

The final point I want to make is a rather different one—as to the policy of the Corporation itself. This applies particularly to Clause 2 of the Bill, under which a large sum of money is placed at its disposal, and the amount which the Corporation may borrow is increased. What are the purposes for which the Corporation is going to borrow this money, and how is it to spend it? What are the conditions under which the Corporation is to assist colonial territories? When the Corporation was formed, the object was to assist in the development of the resources of the colonial territories. We knew very well that at that time there were a number of resources in the colonial territories which, for one reason or another, could not be developed by private enterprise; and it was hoped that these resources, many of which could be dealt with only on a long-term basis, would be developed by the Colonial Development Corporation, either in conjunction with Colonial Governments or otherwise.

It now seems—it may be on the instruction of Her Majesty's Government—that the Corporation has lately changed its policy and in one or two instances it appears to have been the case that the Corporation is unwilling to participate in schemes in colonial territories if there 1081 is no private enterprise partner with a substantial financial interest and no private enterprise management. I am not saying that, under certain conditions, it may not be desirable to have a private enterprise partner or management: it may be that in certain conditions it is. The case that I am making is that where, for one reason or another, desirable schemes are held up because the Corporation insists upon private enterprise management or private enterprise capital, and that management or capital cannot be provided, that surely is running against the whole intention of the original Act, and the Acts which have followed it; and. I should say, is quite inimical to the whole purpose of the Colonial Development Corporation.

The kind of scheme that I have in mind is one in which there is no quick or ready return but which is a long-term project that will be of enormous interest to the Colonial territory and will develop not only the actual project but also a large number of undertakings, such as electricity, railways and the like. It may be fundamental to the development of the economy of a particular territory for a particular project to be undertaken. It may well he that at that stage private enterprise may say (one cannot blame them, and I am not blaming them for saying it): "This is not the kind of project in which we can invest our shareholders' money. It will be rather a long-term project. Undoubtedly it will be of great benefit to the country and community, but it is not one in which we are entitled to invest, so far as our shareholders are concerned." What then is to happen to the project? If the Corporation does not come in and assist, who is going to do so?

The particular Colony itself may not have available the finance or the technical skill necessary to bring the project to fruition. That is the kind of difficulty we are up against, and I believe that if the Corporation, on the instructions of Her Majesty's Government, is maintaining that kind of view, it will be most detrimental to many important schemes in the colonial territories. The noble Lord, Lord Reith, talking in the Report of the Corporation for 1956 about new business, said in paragraph 8: Tests applied are: (a) eligibility in terms of 1956 Act. (b) good development endorsed by territorial Government: (c) viability both as to 1082 scheme as a whole and CDC participation; (d) availability of expert management when appropriate, with substantial financial stake; (e) association with local interests". The noble Lord, Lord Reith, does not state there, in terms, the necessity for private enterprise partners with substantial financial interest and private enterprise management before he will participate. He might be held vaguely to be referring to that under (d), when speaking of "availability of expert management ", but he does not say so; and all the expertise is not in private management—there is some elsewhere. In the 1954 Report and Accounts of the Corporation the noble Lord, Lord Reith, and his colleagues said, on page 6: (1) Management. (a) CDC has paid heavily for inefficient management and supervision it has also found that private enterprise has not always efficient management for hire; (b) there is no complete alternative to the hard way of training up one's own staff. With that I would agree. In many cases, it is impossible to find suitable management, either in private enterprise or otherwise, and it is necessary to build up one's own staff; and therefore to make it a condition that there should be private enterprise management may mean, on the noble Lord's own showing, that there can be no participation at all.

With those few objections, my Lords, I support the one or two parts of the Bill to which I have referred, although as I say, I think it is unfortunate that the Government have not taken the opportunity in this Bill to remedy the defects to which I have drawn attention.

§ THE EARL OF PERTH

My Lords, I am glad that we have had the opportunity of hearing Lord Ogmore, who has always shown such a particular interest in the affairs of the Colonial Development Corporation. He was away on important business in Nigeria at the time of Second Reading, but I am glad that we have had the opportunity today of hearing his points. On the question of the name, I think we discussed that matter rather fully on Second Reading. The point was made that if there was some difficulty where the Colonial Development Corporation was operating in Commonwealth territory, it was perfectly open to the Corporation to set up a subsidiary which had a Commonwealth name in order to get over that difficulty.

1083 So far as the scope of the Corporation's activities is concerned, we remain very anxious that the funds which it has should be, by and large, devoted to the purpose for which it was set up—namely, the development of the Colonies. The Colonies still have immense scope for development: they are always needing new capital. Quite frankly, apart entirely from any other policy reasons, we should rather see the situation left as it is, in that what has been allowed for future development of the Corporation's purposes is, in a sense, not enough for the Colonies, so that it would be a great mistake to go outside.

When we come to the question of the territories which have recently been made independent, it is not true, if I may say so, that we just throw them by, and say, "There you are; there is £50—off you go into the world!" In fact, they continue to get assistance in one way or another from us. It may not be direct Government-to-Government assistance in the way of money—we went into great detail in the White Paper as to why we thought that was not normally appropriate—but there are other ways of helping. The London market is available and there is the assistance coming from private enterprise; great investments may be made and there are all the ordinary matters of that kind. There may be a certain amount of exaggerated fear about what happens, and certainly so far as the countries which have recently become independent are concerned they are themselves (if I may put it this way) pretty well off. That is true of Malaya; it is true of Ghana; and it will be true, if we take another example, of Nigeria. So I think that the fears which have been mentioned are exaggerated, and it is right that the Colonial Development Corporation should continue to operate mainly in the Colonies.

The third point which the noble Lord raised was whether there had not been some change in policy on the part of the Colonial Development Corporation so far as it operated schemes which were in measure marginal schemes, and whether it was no longer prepared to go into these unless it had a partner which was a private-enterprise partner. I can assure the noble Lord that there is no foundation for that fear at all. If he looks at the 1084 Report of 1956 he will see that in that year eight new schemes were started. Of those eight new schemes, half were schemes in which the Corporation alone was operating. In another one, both Government and private enterprise collaborated, and in the other three, private enterprise was partner.

Coming to more recent times, I would point out that only a short while ago we were asked by the Corporation to approve a scheme involving over £1 million, and that scheme was a very important scheme for the development of the particular Colony. They were anxious to have, if they could, private enterprise to collaborate with them in it, but they approached various firms who knew the territory, and for one reason or another none of them was anxious to go in. That does not mean to say the scheme was not in every way highly suitable and that one of these days it will not be very profitable. That did not deter the Corporation: they went ahead, and in due course I feel sure we shall see how wise they were and how unwise the others were not to join in.

On the other hand, I can think of a case in which the Government of a territory was very much interested in a large scheme, which would have entailed very important results for that territory and in which they would have gone into partnership with a group of private firms for the development of the scheme. For one reason or another, the farther they looked into it the less the private firms liked it, and one after the other they withdrew. Then the Government approached the Colonial Development Corporation and asked whether they would join in. The Colonial Development Corporation looked into the matter carefully but came to the conclusion that it just did not measure up to what they wanted, to what they thought they were justified in doing. Therefore, in that case, they said, "No, we are a little nervous about this; nervous about the fact that a lot of other people have withdrawn; and at this moment we would rather not go through with it."

It may be that we all have our own pet schemes and that we should like this or that scheme to be developed for the benefit of this, that or the other territory; but, my Lords, I think that that is where the Colonial Development 1085 Corporation must be allowed to use its own judgment, and that is indeed why we set up this Corporation originally in the form in which it was set up. But I can assure the noble Lord that there is no change in the general policy which has been followed previously. And so we come now to the end of the debate. It may not be all that the noble Lord 1086 and some other noble Lords opposite would have wished for, but it has gone some way, and let us and let them be grateful for the small things.