COLONIAL DEVELOPMENT CORPORATION'S REPORT

HL Deb 27 July 1959 vol 218 cc543-84

2.45 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH rose to call attention to the Report of the Colonial Development Corporation for the year ended December 31, 1958; and to move for Papers. The noble Viscount said: My Lords, we are calling attention this afternoon to the Report of the Colonial Development Corporation for 1958. I would say two things at the outset: first, that although we may have some criticisms to offer on Government policy in this matter, this debate at any rate will be on perhaps a happier basis than some of the other Colonial debates this week. The second thing I would say is that this is the last Annual Report of the Colonial Development Corporation which will be issued under the authority of the Corporation with Lord Reith in the chair. I should like to say how much we on this side of House, and, I feel sure, in many other parts of the House, too, appreciate the great work which he has done in connection with the Corporation. I think that, compared to the early days of the Corporation, the recent years have shown very great consolidation and advancement.

Having said that, may I say that I am not quite sure whether your Lordships will have had the benefit of seeing the Press release that was made just about a month ago with regard to the Report. I was able to get a copy of that official Press release, and its gives a very adequate and ample summary of the Report. It shows record figures of the total amount of capital invested and of the numbers of projects. At the end of 1958, there were 77 continuing projects in 24 Commonwealth and Colonial countries, with a total capital commitment of £81,717,000. As I look down through some of the ventures and I cast my mind back to my reading of the debate last week on the desirability of helping other countries as well as our own, I cannot help thinking that if underdeveloped countries all over the world were getting the same opportunities as we are striving to offer and to widen and to deepen in this Colonial development, then great changes in world prosperity would rapidly take place.

In 1958, according to the Report, five projects were started in North Borneo, in Tanganyika, in connection with the Sierra Leone Government in Freetown, and in participation with American partners in a fertiliser industry in Trinidad. I expect that if I were to look back through the records I should probably find other previous years in which a larger number of developments were started. It seems to me, as I have been reading through the Report, that, through no fault at all of the Corporation itself, perhaps we are being a little slow in getting all the projects going that might have been got going through the years. The summary the Report gives of the percentage of the total expenditures of £81 million made in respect of general groups, I think is exceedingly interesting. It shows that 51.8 per cent. is for development of utilities like electricity, housing and hotels; 32.9 per cent. is for primary production—that is, primary production covering not only agriculture and forestry, but minerals as well—and that the remaining 15.3 per cent. applies to manufacturing and processing industries. No doubt as the years go by, if this country is wise enough to continue the general policy of Colonial development, there will be an alteration in the emphasis in those three main groups. But obviously it is very wise to have considerable expenditure in the early years of the Corporation on utilities, electricity, power and the housing necessary for the development and so on; and once that is basically provided there may be more room to proceed with other classes of development.

The Report itself, I think, in the light of my very long experience of reading Government Reports and White Papers and the like, is one of the models of how to present a Report. I think Lord Reith must have had something to do with it. He reminds me very much of what I always learned as a lad, as I grew up, in my Bible, that the shortest Gospel is probably the most emphatic. Look at St. Mark's Gospel, a model of English at the time of translation. What do you find—"immediately", "forthwith", "straight away", "at once". These sharp and crisp sentences in this Report do me a lot of good in reminding me that the short sentence and the crisp statement get you through your business much more quickly.

There are just a few paragraphs in the Report to which I should like to draw attention. One you will find on page 7, and it concerns the relations between the Corporation and the home Government. It says: Last report optimistic in tone; but unfortunately 1958 was not a happy year; many irritations; no capital reconstruction; I quite understand those three words being put in, because more than once my noble friend Lord Ogmore, who has often spoken on this Report in the past, has drawn attention to the urgent need for dealing with capital reconstruction, the whole financial structure of the C.D.C., because of the great handicaps that were laid upon the Corporation, while not only special losses but some main losses also were not being properly dealt with.

By the way, I ought to say that the House has been given the opportunity by the Minister of having a look at the typescript of the Sinclair Report. I have had it with me over the weekend, but I have had so much else to do that I cannot claim to have read it deeply and carefully. But so far as my scanning goes, and especially in reading the conclusions, there can be no doubt left in my mind that the Sinclair Report comes out 100 per cent. behind the requests that the Corporation have made on previous occasions for this capital reconstruction. On whether or not the position is going to be entirely met by the technical recommendations of the Sinclair Commission I do not profess to be sufficiently expert to give a judgment, but there is one main proposition that it seems to me may work out. That is that instead of leaving certain losses constantly overhead, hanging over the Corporation, they would be issued a new class of stock, a C stock, not under the same terms of either regular or general amortisation arrangements, without interest in some respects and able to be relieved according to what the future results of the Corporation might actually be.

Then the same paragraph of the Report, paragraph 7, says that as C.D.C. came to real terms with itself in its task, relations with Government departments became such that Corporation felt frustrated and discouraged, due maybe, to an extent, to differences of interpretation of Overseas Resources Development Act; I think it is a great pity that that should be the case. Your Lordships will observe that there is no minority report in this Report of the Corporation; this is the unanimous view of the Corporation. I feel that these matters are a constant irritation and often lead to delay. I have a shrewd suspicion that perhaps the noble Earl, Lord Perth, will be able to tell us later on that often it is not the wicked Colonial Office. We charge them with lots of things. It may well be the poking finger of the Treasury, and the holding up of technical examination of projects that it is really left to the Corporation to examine from the technical point of view, as part of their general terms of reference. I should have thought they might have had an easier channel to work through than seems to be indicated by this paragraph.

Then I turn to the next page, still on paragraph 7, where it is recollected that the C.D.C. early accepted a capital sanction procedure… I do not propose to read the whole of sub-paragraph (7), but it quotes a principle set out in a Colonial Office circular, that the Corporation should be in some degree insulated from the complex and many-sided internal procedures upon which Government policy is founded, and goes on: C.D.C. feels that because this procedure has not been followed unnecessary trouble has been caused. I very much hope we shall have an assurance from the Minister this afternoon that some change is going to take place, and that that will no longer be a handicap to the Corporation in the future. Very often if delays take place in this sort of thing not only do you greatly damp down the enthusiasm of those in the countries concerned with the projects but you actually sometimes lose the opportunity altogether.

Now I turn to sub-paragraph (10) (b) at the bottom of page 8, which says of the Corporation: as it became organised, disciplined, confident, and as its work grew, official encroachments on matters which C.D.C. maintains to be within its responsibility and competence have become increasingly annoying and difficult to understand. I shall be very anxious to hear what the noble Earl, Lord Perth, has to say upon that particular point. It seems to me, as I have read this Report very carefully right through, that there are many instances in which something more might have been done to ease the situation.

Then I am very interested in sub-paragraph (11), on the same page, where reference is made to operations like the Lake Kariba Development Company and the proposed joint Regional Government/CDC development companies in Nigeria. I see there is a general comment in the Report, as a result of their experience in dealing with such matters, and it is this: The emphasis often seems to be heavier on the negative of doing nothing than on the positive of encouraging development… That was certainly not our intention at the outset of the project of having a Corporation to do this work. I do hope that something can be done to clear up that matter.

I look next at sub-paragraph (11) of paragraph 7, which points out that when the Corporation are dealing with a project, and doing what, as it seems to me, they often need not necessarily under the terms of reference—that is, to go to the Colonial Office and to the Treasury, in advance of some of the preliminary examinations on the subject: Applications are held up because it is suggested… (c) that a loan to a public utility is 'finance house stuff'". In other words, as I read it, the Treasury, or whoever is responsible, seem to exercise a sort of political control, as well as general financial control, by saying, "Surely this can be done by the City". In other words, when it comes to Colonial Development, wherever they can do so, they try to switch from a project which has been sought out, and which could obviously be both profitable and basically constructive in the future of the territory, and therefore likely to pay well, and say that it is "finance house stuff" and ought to be done by the City. It is not fair to any great Colonial Development Corporation, after it has done part of its work by examination, and has found out what is wanted, to have the cream taken off the milk. That seems to me to be entirely unreasonable, and I hope that we shall have a word from the Minister on that matter.

I was going to say a word about capital reorganisation, but I feel that in view of the Report of the Sinclair Committee it is not necessary to do so. I would refer, however, to paragraph 9, which deals with interest rates. This is a very important issue for this kind of Report on development schemes. Briefly, it says: Despite fall in Bank Rate to 4 per cent., long term rates have not conformed; CDC's long term rate, normally used for development projects, remained at 5¾ per cent. until 9.12.58; since when it has come in two stages to 5½ per cent. I must say that a Government-financed organisation like this ought not to continue to have to be charged the high rates I have quoted, especially if we are to see the reasonably quick placing of the new projects upon a sound financial basis. Every one-half per cent. which is extra in charge on the sinking fund of the particular project concerned is likely to keep back the pace of the development towards entirely profitable operation, and I should have thought that the Government might pay special attention to that point. I am not moved by the idea that in many private ventures to-day there are many private finance companies that will offer the investing public anything from 6½ to 8 per cent.—and even 8¾ per cent., as I saw in one case—of continuous lending, for them to finance industry with. If industry is really taking up that sort of proposition, then it may easily in some instances be paying 10 per cent. plus for developmental projects. It only goes to show that when you really want to get on with the world's business as well as our own country's business, if you are to get to a state of increasing prosperity throughout the world you have got to come away from that kind of finance as soon as possible.

I think it would be a pity if no reference were made to the paragraph in the Report which deals with emergent territories. Paragraph 13 on page 11 says: There was evidence from Montreal Conference that H.M.G. recognises an obligation for ensuring continuance of development finance to emergent territories. CDC regrets that the restrictions imposed upon its future activities in these areas will deny them full use of its unique facilities and managerial experience at the critical transitional stage in their development.'

I remember that in your Lordships' House some two years ago we often had this matter under discussion with reference to projects that were either established or were in contemplation in Ghana. And although the situation here may be slightly different from that which existed at the time when we were making our request to the Government, nevertheless there is surely a strong case to be made that, wherever within the British Commonwealth there are great projects which can be undertaken by the help of public supervision, public expert knowledge in development, and by public finance, our first efforts should be to get that development in the Commonwealth rather than spread our efforts all over the place, however good may be the objects elsewhere—I hope very much that we may have a statement from the noble Earl which will deal with this question of development within emergent territories, and particularly countries like Nigeria. Even if the Government stick like leeches to their project for Federation in Central African and certain other territories, I think they should not cut off from the operations of the Colonial Development Corporation projects that had been undertaken, and projects that could be done for those people in the future.

Paragraph 14 greatly impressed me. The first paragraph says: Despite difficulties and delays noted above, C D.C. has done some good; it could have done a lot more. I read into that statement that it is not because they were not capable of doing more, but because they were often held up—and even prevented, in certain projects which they considered to be good, from going on with them. Then I thoroughly agree with what is said in the last subparagraph, that: A lot has been done and much remains to be done; but success must depend on first-class management, confident that it is trusted to use its commercial judgment in the best interests of overseas development and thus of Great Britain itself. I note that in this last year the measure of progress is emphasised by the very substantial increase in net profit on the working for the whole year—I think it went up from £300,000 to over £1½ million. I have not all the figures in my mind, but certainly the figure was well over £1 million. I notice, too, that other losses have been written off under a satisfactory arrangement. Although, as the Sinclair Committee point out in their Report, it was almost inevitable that in the opening years of a Corporation like this, going into new experimental development in territories of this kind, they should have been operating, in most cases, at a lost, there is no doubt in my mind that if Parliament is wise enough to continue to support and encourage the work of the. Corporation, we shall have much to be grateful for in the future in the results which can be shown in the Commonwealth. My Lords, I beg to move for Papers.

3.10 p.m.

LORD HASTINGS

My Lords, I am sure we are all most grateful to the noble Viscount the Leader of the Opposition for bringing forward this Motion on the Colonial Development Corporation. Your Lordships will remember that last year the noble Lord, Lord Ogmore, had a similar Motion down but we never found time to discuss it. Therefore, this is the first full debate we have had on the Colonial Development Corporation since Lord Ogmore's previous Motion at about this time in 1956. As the noble Viscount has said, this is pretty well a non-controversial subject and of rather a technical nature, but it is none the less interesting and none the less important for all that, and we are certainly grateful to him for bringing it forward even though it is piling up the Colonial debates in one week. From my point of view that may mean hard work but quite a lot of fun.

As I shall not have the opportunity of congratulating Lord Twining on his maiden speech—it would be improper to do so before he has; made it—I should like to say how pleased we are to see him here this afternoon and are looking forward to his maiden speech, which is bound to be of the greatest interest to us, with all the vast knowledge and dynamic energy which he has shown in the development of Tanganyika. I welcome this opportunity of saying how glad I am to be able to say this much to him in view of the very fine facilities he showed me when I went there.

The first point I would make on this Annual Report for 1958 is in connection with the profits, because we see that the annual profits are bigger than they ever have been and amount to £1,174,000, compared to £700,000 on the previous year. The previous two years to that they were £400,000 and £572,000, so there has been a steady increase over four years, and the result is that we find, if we turn to the balance sheet, that the £1,174,000 profit is apparently sufficient now to write off the entire balance of accumulated losses on trading account of £1,049,000. As a consequence there is, I imagine for the first time in the history of the Colonial Development Corporation, a working profit of £125,000 to carry forward. I am sure that we all agree that this is an eminently satisfactory position upon which the noble Lord, I Lord Reith, and his members should be heartily congratulated.

The second most important point, I think, is in connection with the financial structure. As the noble Viscount said, we have just received the Report of the Committee of the noble Lord, Lord Sinclair of Cleeve, and I am relieved to find that he has not read it either. I have not even had the benefit of having it over the week end. I have had to rely largely on the summarised version in The Times, which I have no reason to assume is inaccurate; The Times is usually very accurate in these matters. It is rather interesting, in view of what the noble Viscount opposite said, if one turns back to the 1957 Report, which possibly your Lordships do not have. Paragraph 8, pages 8 and 9, of that Report gives the requirements, or the desires, of the Colonial Development Corporation, and when one comes to compare those requirements with the findings of the Report one does not find very much difference. Certainly, the Report does not say that the losses on the abandoned projects must be written off altogether, although I think it prefers that, but it does give this alternative of the "C" stock so that these capital losses would be the last to be repaid. The most important point in that connection, I think, is that interest which is accumulating at present on these losses on written-off projects should not continue and the Corporation would be entirely relieved of interest on projects which, in fact, no longer exist.

It may well be that the Government would prefer to accept that alternative rather than write off the debt altogether, which would perhaps be a cleaner process but I daresay would meet with technical objections from the Treasury. In regard to the "A" Stock, which is for Government and Government-guaranteed loans, the main recommendation is that interest should not fructify, but should be payable like any ordinary commercial debt from the day it is taken. That also is recommended. It was asked for by the Colonial Development Corporation and was recommended in the Report.

As for the other loans, it is suggested there should be a "B" Stock but that interest should be payable only to the extent of available earnings of the Colonial Development Corporation in any one year. It would be subject to a maximum of 5 per cent. and would not be cumulative. I do not know whether the Government would be able to accept that maximum of 5 per cent. I think we all hope they will, but in view of the past arguments they may perhaps not like that altogether. There is only one question I think I need ask in that connection, and it is the only question I am going to ask during the course of my speech. It is not quite clear to me whether the interest will be payable out of the overall earnings of the Colonial Development Corporation in any one year assuming that it makes a profit. The assumption is that if it does not make a profit, this interest on the "B" Stock will not be paid. But if it does make a profit, then interest on loans under the "B" Stock will be paid. Or does it depend on the profit-making capacity of the new project for which the money has been borrowed? I think that is the only point I should like clarified.

Two years ago we were discussing the financial position of the Corporation, and the result of that was an increase in the monies available for loan from £100 million to £150 million, which eased the situation very considerably. Now, two years later, I cannot see that the second great necessity of the Corporation has yet been granted—we shall perhaps learn that later from the Minister when he replies. But we have reached the stage when an independent Report has been submitted recommending that the second great requirement of the reconstruction of the financial structure of the Corporation should be admitted.

Therefore, in regard to any major problems or any major discussion I think we are left over with the question which the noble Viscount brought up and which is cited in paragraph 7, and that is this matter of relations with the Government. I am not going to repeat what the noble Viscount has said, but there are just one or two additional points which perhaps I could make. I think it is only fair to draw attention to sub-paragraph (10) (a) at the bottom of page 8, in which it is admitted that: Initially projects were approved in barest outline". That was in conformity with the original intention that the people running the Corporation should be given the maximum scope to get on with the job. The sub-paragraph continues: but when in late 1950 jobs went bad and very bad, requirements expanded, with CDC in no shape to protest. It is only fair to say that in the early days of the Colonial Development Corporation there was a lot of mismanagement, inexperience and bungling, and the Government were quite right to take action to control the finances very much more closely than they had done. Now the Corporation has proved itself, has balanced its profits and losses over a long period, and it is to be hoped, I think, that there can be some reversion to the former custom of letting the people who are running the Corporation get on with the job efficiently and on a commercial basis, which now, if this Sinclair Report is accepted, they will be better able to do, with as little interference as possible.

Turning to sub-paragraph (11) on page 9, one finds there is one clause there which the noble Viscount did not mention, clause (b), where there are specific complaints made in these terms: that projects are turned down because the CDC is doing too much itself or is lending too much money to better qualified folk". It is quite clear that those two criticisms cancel out because they are contradictory. If the C.D.C. is doing too much, that is an invitation to it to lend money to other people to do their work; but if it is not lending money for financing business, upon which it was criticised strongly two years ago, then it must be doing more itself. Therefore, those two criticisms do not seem to make a great deal of sense.

There is one criticism that projects, or money for them, has been refused on the grounds that a Colony is too near independence. I hope that that is not true, because although there are funds available now for the Colonies which become independent and become members of the Commonwealth, I do not think it was the intention of Parliament that they should have to wait unnecessarily and experience a hiatus of a year or two before they got those Commonwealth funds, simply because there was some chance of their becoming independent. I hope that the Minister will be able to refute that particular criticism in his reply.

My Lords, I am now going to refer to something at the top of page 8, but still in paragraph 7, and that is sub-paragraph (3), where it is stated: CDC authority is qualified thus:

1. (a) there must be consultation with colonial governments and local interests".

Lower down in sub-paragraph (4) it is stated: As to (a), CDC's regional organisations are in close touch with colonial governments". So far we have had criticisms perhaps of the Government, and I think it is only fair that the C.D.C. should be willing to bear its own share of criticisms—friendly criticisms, of course, but they are none the less necessary. Those two quotations which I have just read I would link with the 1957 Report, which in paragraph 12 said: Appointment of qualified and representative local individuals a directors has been a feature of subsidiary and associated companies and this also will continue—incidentally, encouraging inter-racial co-operation. That was sub-paragraph (3); and sub-paragraph (4) states: The increasing amount of responsibility carried by local political leaders means increased responsibility and opportunity for CDC. That is all very true, but I have wandered about a little in parts of Africa and the Caribbean area and I have not always been altogether happy that these relations with Colonial Governments are as good as they should be. In most cases they are, but there are definitely some places where they are not; and that links up especially with my last quotation about local political leaders. I think I could mention one or two cases where the local leaders and the local technical authorities have perhaps been rather ignorant and not been taken into full consultation, with the result that the C.D.C. in such places is regarded really as representing Her Majesty's Government, of whatever political Party it is. Although we know that that is not true, it is so regarded. It is very important, I think, that this matter should be looked into fairly carefully, as also should the question of appointments of so-called—that is my interjection, "so-called"—qualified and representative local individuals. It is difficult at times to overcome local jealousies, but there are occasions when perhaps the best appointments have not been made. These remarks are, of course, being addressed more to members of the Corporation than to the Government, because they concern Corporation business; and I hope that perhaps the noble Lord, Lord Ogmore, who is so interested in these things, can do a little probing in that direction to ensure that any roughages of this nature are smoothed out. I do not really know, of course, whether these matters are left almost entirely in the hands of the regional controllers or whether there is a very strong control at headquarters here; but, whichever it is, I think that there is at least room in some areas of the world for improvement.

I think it is of some interest, possibly, to the Corporation itself and to this House that we should occasionally look at one or two individual projects. It shows that we are taking an interest in various things from year to year, and there are some lessons to be drawn from so doing. May I refer for a moment to the Melville Hall Estate in the Island of Dominica in the West Indies? Your Lordships will notice that it has had a considerable loss this year. It is a mixed plantation of bananas, coconuts, cocoa, and some citrus and coffee in a very mountainous and rainy area. It has had a loss of £9,000, which follows a loss in the previous year of £5,000. For the two years before its profits were, I think, £5,000 and no less than £15,000, and in just looking at the latest Report one might think that things were going badly. They had a bad drought and there were other reasons as well, but I should just like to say that one cannot always get proper impressions from the Report without knowing what is really going on. It is undoubtedly one of the best run projects of the C.D.C. that I have seen. It is doing immense good in an island which needs developing, which is the least developed of the whole of the West Indies. We certainly hope that it will manage to make profits again when conditions are more favourable, both climatic and price conditions; but I do not think we need worry about that. It is a first-class project, and I have no doubt that it will pay in the future.

Another one in that area, British Honduras, is the Fort George Hotel. The Colonial Development Corporation had an arrangement with an American hotel organisation who hoped to take it over. The profits, however, were not sufficient for them to find it attractive, so the Corporation are running it by themselves. There again, the project is doing a great deal of good in that area. I think that, if they could stick to it, there are profits to be obtained from that hotel. It is a wonderful tourist area for yachting, swimming, and deep-sea fishing; and quite an unknown part of the world, I would say, which could become a very attractive tourist centre. I agree that it is not the job of the Colonial Development Corporation to run a hotel, and I hope that they manage to get rid of it.

That brings me to my next point. If they do dispose of it they will be going from direct projects into investments. Is that going to be called finance housing? Of course not, my Lords. The Colonial Development Corporation, having started the hotel, would be passing it on to private enterprise. That, surely, is one of the Corporation's duties in all the Colonies—to be able to start something and, where possible, pass it on to private enterprise, and then to use their new finance in starting new projects. Surely that is the right policy. A considerable number of these items that we see under "Investments" are, in fact, semi-directed by the Colonial Development Corporation, and are not just purely finance house business.

Another project is the Chilanga Cement Works, in Northern Rhodesia, which started by being managed, as well as; at least half owned, by the C.D.C., and is now managed by private enterprise. There, a combination of interests is involved. That is now a first-class organisation, and has had a very great bearing on the building of the Kariba Dam. Virtually the whole of the cement for the Kariba Dam has been provided by Chilanga, which, at a rough guess, I suppose, is not more than 100 miles or so distant. Now supposing those works had not been there, it would have made the building of that dam very much more difficult and much more expensive. I think that it is a feather in the cap of the Colonial Development Corporation that they started those works; and it is perfectly right and correct that they should have handed over the scheme to these people who can run it, while retaining the benefit of their original energy in the form of investment—and I am glad to say that they are doing very nicely out of it, too.

The last project I want to mention is the Kasungu Tobacco Estates in Nyasaland. I have had my eye on them for some time. I have not been there—I wish I had—but I do grow tobacco myself, and I could not make out why this project was losing so much money: £9,000 four years ago; a profit of £11,000 three years ago; a loss of £9,000 or £10,000 two years ago, and of no less than £45,000 last year. My Lords, no tobacco-curer in Rhodesia stays in business like that, and it seems to me quite ridiculous that this scheme should go on. I say merely that I am glad to know that there has been a delegation out there; and following some pretty sharp criticism of the management, action has been taken. I hope that that project will do better in future, for there really is no excuse for its losing money.

Finally, there is just the one new project, Federation Chemicals, Limited, in Trinidad. It was started with American money, and that is why I mention it. I think it is the first time that American money has been used in the work of the Colonial Development Corporation, and I believe it is a good thing. We need money from where we can get it in most of these places. In that connection, I am a little anxious that preference should be given to Canadian money. Canada has a very close connection with the West Indies. The Report of the Economic Conference at Montreal contains two paragraphs which touch on that subject, and I hope that the Colonial Development Corporation might prefer to introduce Canadian money into the West Indies rather than American money.

My Lords, I am afraid I have been rather lengthy, but it is a technical subject which I suppose needs covering, if we are to deal with it only once every two years. I apologise for the length of my speech; but I would just wish the best of luck to all the members of the Corporation, the new as well as the old. I would also offer my congratulations to the retiring Chairman, the noble Lord, Lord Reith, who has put the Corporation on its feet in no small way, and who has not only balanced the budget, so to speak, but has also increased the money available in the way that he wished—and now, perhaps, is to hear that the financial reconstruction which he has been awaiting with such anxiety is at last to come about.

3.36 p.m.

LORD TWINING

My Lords, whilst I am very conscious of the honour to be able to speak in your Lordships' House, I find that that in no way diminishes the apprehension with which one approaches one's maiden speech. I have read the Reports of the Colonial Development Corporation every year, I think, since they began. I have read them with the emotions of hope and disappointment, and now of achievement. I feel that the Report we are discussing, that for the year 1958, which really marks the end of chapter 2 of the history of the Corporation, shows some very great achievement. In the Colonial territories in which the Corporation have been operating there are countless thousands of people who have benefited from their activities. The towering figure of the noble Lord, Lord Reith, the retiring Chairman, is well known in many of these countries, and he has gained great respect there.

I can only say that I am sorry that the noble Lord, Lord Reith, should wish to look back in anger in some paragraphs of his Report. Those of us who have had to deal with Government Departments most of our working lives have also found, at times, that one is frustrated and irritated, and that one becomes impatient. The noble Lord, I believe, has not had the experience—I was going to say the benefit—of serving in the Civil Service, and therefore of understanding their approach to affairs. But I myself have always found, although I was a civil servant, that I could get on with the Colonial Office; and I have found that they have understood what I was talking about and can produce results reasonably quickly. I will not make any remarks about Her Majesty's Treasury, who have a very good technique of supporting their "No, no, no" with very strong arguments, even if sometimes they are not always convincing. But, as the guardian of the public purse, they have, of course, to be on their guard.

I think that perhaps Lord Reith's achievement (or what he might regard as one of his achievements) has been to see the appointment of this Committee, headed by the noble Lord, Lord Sinclair of Cleeve, to look into the financial structure of the Corporation. Like the other noble Lords who have spoken, I have had a busy week-end reading papers on Colonial affairs, though I have been unable to give the time to it which I should have liked. But no doubt your Lordships' House will be given a chance, once the Government have studied the Report and come to their conclusions, to debate the matter on some future occasion.

What I have had in mind, however, as a big query, is: to what extent have the Corporation fulfilled Parliament's intentions? That is a query which, I am afraid, I find myself unable to answer, but it is a matter which I feel should be considered very carefully when the Committee's Report is being studied, so that if the original intentions of Parliament need any change, they can be made at the appropriate time. I have always felt that one could not properly appreciate the true rôle of the Colonial Development Corporation except in relation to Colonial development as a whole, and I crave your Lordships' indulgence in order to sidetrack the subject for one moment to have a look at the methods of the Corporation, some of which were referred to by the noble Marquess, Lord Lansdowne, in an interesting debate in your Lordships' House last week.

I will not touch on foreign aid, which has come into the picture only fairly recently. There have been four types of aid from British sources. First, there are the resources of the Colonial territories themselves. During the war the territories accumulated various balances, which after the war they rapidly expended on the first steps towards development. Those balances are now exhausted. At that time, too, the territories made substantial contributions from their revenue, which they can no longer do, because the recurrent contingent expenditure on development schemes has eaten up any surplus revenue which they may previously have enjoyed. Then they went to the money markets, particularly the London market, to raise loans; and since the end of the war they have raised loans to a total of about £200 million, of which £187 million have been obtained from the London market. But I am afraid that for various reasons, during the last few months—perhaps during the last year—the London market has not been so available to Colonial Governments, who have borrowed probably almost to the full extent to which they are able to do on their present economies.

The second type of aid is that obtained from the Colonial Development and Welfare Fund. Between 1946 and 1958, we are told, the territories have been made grants from this Fund of £155 million—a substantial sum. Even when divided by thirteen years, it remains a substantial sum; and I am sure that I am voicing the views of the Colonial Governments in saying that it has been a very welcome supplementary amount of finance available for schemes, although I have yet to meet the Colonial Governor who has been satisfied with his share of the allocation.

The third method of financing Colonial development is private capital. During the first few years after the war there was considerable private investment in Colonial territories, but in the last year or so that has tended to dry up as a result of political uncertainties—and I emphasise the word "uncertainties". I have been having talks in the City and elsewhere, and I find that it is very difficult to restore confidence in the Colonial territories as places for the investment of risk capital. It is true, of course, that many of the more reputable firms operating in the Colonial territories are ploughing back a large proportion of their undistributed profits, but that is not enough. I hope that it will be possible during the next year or so to restore that confidence, so that investment may flow to the places where it is needed.

The fourth form of financing Colonial development is the Colonial Development Corporation. Since 1948, I believe, they have expended something in the nature of £95 million—a substantial contribution, despite some initial losses. I feel that, because of the lack of confidence about investing private capital in the Colonial territories, there will be increasing pressure upon the Colonial Development Corporation to invest more and more of their funds. They have some £50 million left, I am told. Is that enough? Well, it is not only money that counts; it is also a question of management. It is no good supplying the Colonial territories with more money unless we are satisfied that they have the management to spend it wisely.

There are a few points with which I should like to conclude, which your Lordships may take in the form of mild criticism both of the Colonial Governments and of the Corporation. The first is that I have always felt that they select in a rather haphazard manner the schemes in which they invest money. Most Colonial Governments have development schemes, and those schemes make provision for the investment of private capital and of the funds of the Corporation. But it is often found that somebody says he cannot raise any money for a particular scheme, and suggests, "Try the Corporation." The result is that the Colonial Development Corporation have on their plate a large number of schemes which were financially unsound from the beginning. At one time, they swallowed some of those schemes; now they are more careful, I believe. I should like to see some better means of selecting schemes, and I should like to see Colonial Governors and Governments working in closer co-operation with the Corporation to help develop their territories.

The second point concerns local participation. I feel that it is of tremendous importance that the people of the Colonial territories should not only understand what is meant by Colonial development and what the Corporation are trying to do, but should be given opportunities of participating in the investment side and in the operational side. In the last two or three years there has been great improvement in this respect, but there is still a long way to go. I can assure your Lordships that I have been round several Colonial territories, and I have found that few people have even heard of the Colonial Development Corporation, and that fewer still understand what the Corporation stand for. There has been quite inadequate publicity. During the next decade or so we are likely to be faced with requirements from the remainder of our Colonial territories for enormous sums of capital to develop them. It may seem, in the eyes of some political leaders in the Colonies, that we have to compete with other sources—the rouble and the dollar. I heard one African Colonial leader, well known for his moderation, say the other day that if he could not get any money from Her Majesty's Government, and he did not think he would, when he came to power he could get £100 million from some other source. Perhaps he could, if he was prepared to sell his soul. But we must make sure that the Colonial territories will be able to turn to us for their reasonable requirements, particularly where the investment of money of this sort can help to build up those territories to stand firm on good foundations when they achieve their independence.

3.49 p.m.

LORD WINSTER

My Lords, I regard it as a happy accident of the batting list that it falls to me to have the privilege of congratulating the noble Lord, Lord Twining, upon the weighty and authoritative speech which he has just delivered—if I may say so, an imminently successful speech. I was particularly interested in the admirable summary which he gave of the various forms of aid which have been available, and are now available, to the Colonies. I assure the noble Lord that his long, distinguished and varied career, his experience, his knowledge and his abilities, will always ensure that he will be listened to by your Lordships, when he addresses the House, with both pleasure and profit.

I feel that one of the main interests of this debate will centre round the Report of the Sinclair Committee, and so far as I am concerned that interest lies specially where the Committee concerns itself with the special losses account of the Corporation. I think that all through it is a most praiseworthy Report, and I can well imagine how much the Committee owe to the services of Sir Harold Howitt, who is. I believe, a member of the firm of accountants who were appointed by the Secretary of State auditors to the Corporation. Lord Reith may well feel that the Report of the Committee has supported his long campaign to get the special losses account swept away. I do not know that I can entirely agree about that, because, to the best of my knowledge—and I sincerely trust that I am speaking correctly—I do not think that the noble Lord, Lord Reith, has ever precisely defined the special losses; and the Committee only go so far as to recommend that they should be changed into a kind of deferred stock. There have certainly been arguments between the Colonial Office and the noble Lord, Lord Reith, over this matter—we have the noble Lord's own word for that—but perhaps the arguments may have spread to the auditors, who may possibly have found themselves in a somewhat delicate position in the matter.

But Lord Sinclair of Cleeve's Committee have approved the existing system with what I should call a resounding ambiguity, for they use these words about the existing system: There is no reason why it should not be operated sensibly. That is an ambiguity which would certainly be of good all-round application to all concerned with the Corporation. But, looking to the future, I feel that what we want from the Corporation or from the Government is a statement of what precisely is included in these special losses. I have read carefully all the | Reports as they have appeared, but it I seems to me that very little has been published on that subject. It would, for instance, be valuable to have some information on such matters as by how I much the Chilanga cement shares have I appreciated; whether there was any | option on the Trinidad cement shares; and at what price Kramer Estate shares were bought in 1949 and sold in 1951. Then there were the Eleuthera shares, which were resold to an aluminium millionaire and have since, I understand, appreciated some threefold. I would say that all these and other similar matters merit inquiry. As a matter of principle, I would say that, before passing legislation to release a State Corporation from its obligations to pay interest and repay capital on its loans by the Treasury, an inquiry into all these and similar facts should be called for.

The C.D.C. published figure for special losses is £8,022,441; and I ask your Lordships to notice that that sum j is not a round figure, but has been calculated to the last pound, evidently with meticulous care. I do not think that Parliament or the public have had a breakdown of this very considerable amount. I take it that the Treasury and the Colonial Office will have had the figures. But have these two departments agreed about them when they have discussed them? As regards these special losses, I can imagine the chairman saying—I am not quoting actual words: "This particular job will never pay. Let us shut it down and salvage what we can from the wreck. Parliament will pay off the rest," I think we I want something a little more precise than that when Parliament is being asked practically to sweep away these special losses. In particular, I think that Parliament ought to be satisfied that the assets of the Corporation which have been disposed of were soundly disposed of; and, if so satisfied, should proceed to ascertain the extent of any capital gains which have been made to set off against special losses.

Surely there have been some profits on pre-1951 commitments. After all, capital values, as we know, have appreciated very much during six years of inflation. Are the C.D.C. assets worth less to-day than when they were acquired? Has there been any appreciation, for instance, on the real estate which was acquired in the early years of the Corporation? In this matter of special losses, I feel that the C.D.C. sometimes do what we are all prone to do, and that is, want to have their cake and also to eat it. These losses are a very mixed bag, and they are by no means wholly those of abandoned projects—there have been losses on other projects which have not been abandoned. They were shown in four groups in the balance sheet published by the Corporation at December 31, 1955. I feel that perhaps many C.D.C. operations from projects to loans could qualify for inclusion. Where there has been a bad investment after 1950 a home could be found for it in the special losses account after that account was instituted.

There seem to have been what might be called bulk transfers from C.D.C. accumulated deficits on profit and loss account, and in 1953 the Secretary of State waived interest on nearly £6 million worth of special losses. The following year special losses made their first appearance in the balance sheet, and they appeared at that date as £6,269,000. £6,162,000 was transferred to this account at the beginning of January, 1954, and the remainder was transferred during 1954, and £1,750,000 was transferred in 1955, bringing the special losses account up to its present figure of £8,022,441. There was in 1953 a breakdown of the £6 million-odd of special losses then quoted, but I do not find that that breakdown greatly helps towards breaking down the present figure of over £8 million, as some pre-1951 commitments must have been abandoned after 1953, and there must also have been adjustments to other losses from sales of assets. It indicates that by no means all this £8 million owed is necessarily for abandoned projects.

Studying the Reports to the best of my ability, I would put the losses on the abandoned projects at a maximum of £5½ million. To that we must add £750,000 for amounts now known to have been written off continuing projects. On those figures—if my figures are fairly correct—I would get a maximum of £6.3 million as attributable to special losses, with about £5.4 million, I should think, a more probable figure. But we cannot judge these things unless we have more knowledge than we have yet been given, and a more detailed and accurate breakdown of the figure for special losses.

I find it curious, too, that the figure for special losses has not been adjusted since 1955, although, for instance, the land on the island of Eleuthera, to which I have already referred, has more than trebled since the C.D.C. bought it in 1950. But in spite of that appreciation, I cannot see that the figure in respect of special losses has been adjusted. Details of the projects and investments involved in these special losses should, in my opinion, be made available for scrutiny, otherwise it might be thought that the C.D.C. wants Parliament to agree to writing off development expenditure on certain projects which should rightly be recouped from their trading operations, as is general commercial practice. Such good progress is being made with what is left of the pre-1951 projects that, given time, all development expenditure on those and on some which might perhaps have been spared the axe may be made good, taking all the C.D.C. operations together, as was always intended to be the case.

It seems to me that these are matters of fact and of principle which should be examined before Parliament can be satisfied with the C.D.C. figure of over £8 million special losses. I think, too, that consideration should be given to the extent to which this agreed figure should be off-set by special gains, such as by the sale of part of the C.D.C. investments in Chilanga Cement, Trinidad Cement and East Africa Industries, Surely, profits on all those projects should be set off against the special losses. I think Parliament might well ask for these details in the light of C.D.C.'s wish and repeated urging to get a waiver on the special losses. I think it world also be relevant to ask for information on the probable valuation of the remainder of C.D.C.'s assets, investments and projects. Fourteen out of twenty-one C.D.C. directly operated projects made a profit in 1955–56, and the losses on the others were only small, apart from a loss on the Macalder-Nyanza Mines, for which there were good reasons. It is customary practice nowadays for companies periodically to revalue their assets. One project helps to pay for another, and I think C.D.C. might follow this excellent example and write down its special losses by any resultant surplus over book values of assets in projects and investments. In my opinion, there should be no writing off of public monies until the balance sheet has been tidied up by such a revaluation.

The noble Lord, Lord Reith, claimed in 1956 that, in contradiction to what was happening prior to his becoming Chairman of the Corporation, everything was now going to the pride and satisfaction of the directors and that mistakes were to be attributed to his predecessor. That is all very well; but I think that Lord Reith has perhaps lost sight of the original purpose for which the C.D.C. Act was passed. The noble Lord, Lord Reith—I speak with respect—is a man who is apt to judge success in commercial matters by a profit; and he has achieved profits for the Corporation. But is it not possible that in doing that the original purpose of the Act has somewhat been lost sight of? It was always intended to be an Act which would engage in marginal ventures, ventures such as ordinary industrial enterprises would not take on. I hope myself that we shall now get back to the original purpose of the Act which, in the terms in which it was passed, I feel can do a great deal for some of the backward territories for which we have responsibility.

Those are the two things I would venture to put before your Lordships. We should now do these two things: insist upon an inquiry, a scrutiny, into the nature of the special losses—a thorough investigation with all the facts brought forward about them—and from now on restore the Colonial Development Corporation to the functions for which it was originally set up.

4.8 p.m.

LORD MILVERTON

My Lords, before making the few remarks on these subjects that I wish to make, I should like to add my tribute to those that have been paid to the noble Lord, Lord Twining, and the memorable maiden speech to which we have had the privilege of listening this afternoon. He speaks with such great and recent authority on most Colonial problems that it will indeed be a pleasure to look forward to future contributions from him to debates in this House. The boisterous energy with which he has so successfully fulfilled the duties of his various offices will indeed be an addition to our debates, and we shall look forward to hearing him frequently in the future.

One of the advantages of speaking after many other speakers in a debate of this sort is that it eliminates the necessity for saying half of what one intended to say. As the noble Viscount who introduced this Motion said, this is not a controversial subject. The noble Earl who represents the Colonial Office may take another view on that, but certainly it is not a controversial subject in the sense that Members of the House differ from each other. In past years we have rather concentrated on saying from time to time what we thought of Colonial Office control, although, as has also been said, I have no doubt that in this case much of the blame which the Colonial Office are getting might be better addressed to the door of the Treasury.

The subject of our debate to-day, the Eleventh Annual Report of the Colonial Development Corporation, is remarkable, as I see it, in two respects. It is the last Report to be signed by the noble Lord, Lord Reith, who retired from the chairmanship at the end of March, and it is marked, as The Times says, in the most appropriate possible manner by the extinction of the debit balance on current operations, that had to be carried forward from year to year in the Corporation's balance sheet. In passing, I think it is worth mentioning, as an example to other Corporations and Departments, that this Report and Accounts was published on June 3 of this year as a House of Commons Paper. It had been signed by the Chairman and the members of the Corporation on March 26 and then submitted to the Secretary of State for the Colonies. This is indeed quick work, as such things go, involving, as it does, the gathering together of Reports and Accounts for the year ended December 31, 1958, from subsidiary and associated companies and projects all over the world.

It is, if I may pause to say so, Lord Reith's substantial achievement that during the eighth year of his term of office he has not only brought the Corporation to the profit-earning stage but has, in the process, built up an intensely loyal and highly competent team, which is one of the things at which he is known to excel. As your Lordships know, Lord Reith has a gift for imaginative leadership and for creative organisation. All the public service that he has rendered to this country has a quality peculiarly his own. For himself, as for others, he insists on "filling the unforgiving minute with sixty seconds worth of journey run." He wastes neither words nor time nor money. It is true that his refusal to waste words has sometimes been the source of criticism in this House when his Reports have been considered, but I agree with the noble Viscount, Lord Alexander of Hillsborough, that it is a refreshing pleasure to read a Report in which no words are wasted. In the result. Lord Reith has given to Parliament, in the Colonial Development Corporation, a precision instrument for the execution of its purposes, and has left one more monument to his capacity for public service. I say all these things particularly because I myself had the privilege of working for a time under Lord Reith in the Corporation, and I felt that this appreciation from the Back Benches of this House might well find an echo in other parts of it.

To turn to the Report, I do not propose to weary your Lordships with repetition, since the ground has already been so ably and fully covered, not only by the noble Viscount who opened the debate but by other speakers, that it will spare me the necessity of going into any of the figures or financial details of the Report. Over the past few years the intrinsic difficulties arising from the financial structure of the Corporation have been fully debated in this House. The Report before us speaks for itself, and when in paragraph 14 the Chairman says in his typically laconic manner that the "CDC has done some good" the under-statement has considerable force. Every critic of the Corporation should read paragraph 14 on page 11 of the Report, in which its achievements are summarised. It is true that in paragraph 7 the Report deals rather drastically with relations with the Government. It is to be hoped that, with alterations in the financial structure, the seemingly vexatious over-lordship of the Colonial Office will be modified, or perhaps even entirely eliminated.

The Corporation's pleas over the last few years for some reorganisation of its financial structure have received considerable sympathy and support in this House and in another place. The noble Lord, Lord Twining, said that he had considered what were the intentions behind the Colonial Development Corporation. I think a great deal of trouble in the execution of its work, and a great deal of the friction which has arisen between the men who are trying to do the work and those in the Colonial Office who are also trying to do what they conceive to be their duty, arose from a great deal of vagueness in its inception. This Corporation, like some others, was started in a fit of nebulous enthusiasm, and I think that as we have gone along we have all learned a great deal of what it was possible for it to do and what it was not possible for it to do. For that reason alone, perhaps it is desirable that considerable thought should be given to reorganisation of its structure.

The Report of the Committee which has just sat under the Chairmanship of Lord Sinclair of Cleeve has been received. I personally had the pleasure of reading it over the week-end, and I was delighted to see that it fully supports the pleas which Lord Reith has been urging over so many years. The Report will, I hope, in due course be approved by Her Majesty's Government, and so make the Corporation's future operations easier and perhaps make it easier to keep in line with its stated aims and objects. To quote The Times comment: Most of the detailed cause of delay and frustration suggest that Whitehall has been trying to judge commercial affairs by other than commercial standards. In the long run the C.C.D. will stand or fall on its commercial success or failure, and under Lord Reith's direction it has scored some substantial successes. The last success of all has been the "posthumous" victory, so to speak, which Lord Reith has won, represented by the findings of Lord Sinclair of Cleeves' Committee.

In setting up the C.D.C., Parliament, I think, clearly intended that the Corporation should support risky and marginally profitable projects. But it is also required by Statute to pay its way. Under its present financial structure it is almost impossible to do both those things. I need not go into any further detail on that aspect. It has been so often emphasised that either the Corporation must refrain from undertaking much development for which it was established or it must fail in the requirements to pay its way. Despite these difficulties and restraints, the Corporation, as the Report states, feels that it has done some good and has made a worthwhile contribution to Colonial development over these past eight years. Its activities, as it says, are helping to create more wealth in the Colonies, and through its projects more people have been better fed, better housed and better clothed. What greater tribute could be paid to the work of the Corporation than that? I feel great sympathy with its concluding sentence, which was quoted (so I need not quote it again) by the noble Viscount, Lord Alexander of Hillsborough, at the end of his speech to-day. In conclusion, I should like to congratulate the Board on the last year, which was a very successful year, and to wish it the greatest of successes in the future, in perhaps easier conditions.

4.20 p.m.

LORD SHEPHERD

My Lords, at the beginning of the speech of the noble Lord, Lord Hastings, I felt that he used a word inadvertently, but one that, frankly, jarred me, when he was speaking of the number of debates that we shall have this week on Colonial affairs. He said that he recognised the amount of hard work involved, but that he would gain a great deal of fun out of it. I do not believe that any noble Lord in this House has entered this week without a very heavy heart and, as to some of us, with a good deal of emotion. No doubt the debates this week on Central African affairs will cause great divisions, but I believe that this afternoon there will be no division in extending our congratulations to the noble Lord, Lord Twining, on a remarkable maiden speech, and also passing our compliments and our gratitude to the noble Lord, Lord Reith, who this year gives up the chairmanship of the Colonial Development Corporation. These are the last accounts that the noble Lord, Lord; Reith, is presenting, and it is these that we are considering this afternoon.

There are, as we know, a number of disturbing points, in particular that in Section 7 on which my noble Leader, Lord Alexander of Hillsborough, spoke at some length, and which has been mentioned by other noble Lords. I do not wish to dwell too much on this, but I would ask the Minister whether, in principle, the Colonial Office work on the Colonial Office circular despatch of January 20, 1950, which is detailed in | the Colonial Development Corporation Report. This ruling says that the Corporation should be in some degree insulated from the complex and many-sided internal procedures upon which Government policy is founded. It earlier says: The first is that the requirements of official administration should not nullify that measure of independent executive responsibility. We all recognise that the Secretary of State appoints responsible people to manage the affairs of the Colonial Development Corporation. If you do not give that responsibility to the Board, I believe that you place them in an intolerable position, not only so far as business is concerned but so far as their staff, in particular their overseas staff, are concerned; and I hope that the noble Earl when he answers can give us a definite ruling.

The Colonial Development Corporation is going through a difficult time—in fact, it is going to face a severe contraction in areas in which it may work. As we know, the Corporation is not to be permitted to carry out any new work or new project in emerging territories—those territories which obtain self-government. What, in fact, does this mean? In physical terms, it means by October, 1960, a contraction in area from 1,962,000 square miles to 1,446,000 square miles, a reduction of 26 per cent. in area; but in population it means that they will be able to operate only in an area 52 per cent. less than they are operating to-day. It may be said in some parts that the Corporation will be able to concentrate their efforts in a smaller area. This may be so. But it must be faced that the Corporation is going to have to work in an area far more backward than the area in which it works to-day; and this is bound to have a most serious effect upon the type of work the Corporation can undertake.

We have had over the week-end an emergency printing of the Sinclair Report. I do not think that this is an opportunity really to discuss that Report, because I believe that the Report is not in many hands; but noble Lords on this side of the House hope that at a not-too-long-distant date we shall have a full debate on this Report. As we have heard, the Corporation has made a substantial profit this year. It is a profit that has grown. But, as the Sinclair Report says, from the way the Accounts are produced to-day we do not get the true picture. There is the question of the interest charges on the outstanding loans. As we know, the Corporation draws its capital from the Treasury. It was granted a seven-year interest holiday. But we now find that the Corporation will have to pay that interest over a period at the end of the seven years. According to the Sinclair Report, this means that the interest outstanding on January 1, 1959, is in the region of £8,400,000. If you take that into account and also the special losses, you have a figure, I believe, of £15½ million. What opportunity has the Corporation of paying back to the Treasury that large sum of money when to-day it is operating on approximately £56 million?

I believe it is utterly impossible for the Corporation ever to pay back the interest and the special losses, and I hope that the Government, when they study the Sinclair Report, will come to the same conclusions as has the Sinclair Committee—that is, as we have heard from the noble Lord, Lord Hastings, that it should become a special "C" Stock. I think that that is a very good suggestion, although perhaps from the accountancy point of view the Corporation would prefer to see the whole amount written off. Whichever way it is done, I think the Government must recognise that it is quite hopeless to expect the Corporation to pay back this very large sum of money. I would ask the Government to consider very carefully the conclusions of the Sinclair Report. As I say, we shall have an opportunity of discussing it, but I hope that by the time we have this debate the Government will have carefully considered the Report and will be able to come to Parliament with definite proposals.

4.31 p.m.

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

My Lords, I think we are all indebted to the noble Viscount, Lord Alexander of Hillsborough, for bringing this Motion before your Lordships to-day. It is quite true, as the noble Lord, Lord Hastings, pointed out, that we missed a year last year; and it seems to me that we have only just got under the ropes this year, but I am very glad that we have done so. Since the Motion was laid and the Report of the Colonial Development Corporation was published there has, of course, been the Report of the Sinclair Committee. As various of your Lordships have pointed out, that Report is not only of great importance and has a great bearing on the accounts, but is something we have all got to study very carefully; and perhaps, in due course, we may debate our conclusions on it. I will not go into it in any great detail to-day, but I will refer to it from time to time as it helps to illuminate points.

I should like to congratulate the noble Lord, Lord Twining, on his maiden speech. Curiously enough, some years ago, I, too, made my maiden speech on the report of the Colonial Development Corporation. But there is this difference between my efforts and his: he spoke in a far lighter vein, and with full knowledge and experience; and he made a contribution which I am sure all your Lordships will recognise as of the greatest value. I look forward to any other speeches on Colonial affairs that the noble Lord may make. I think it is also appropriate, although there has been little time to consider it, for us to thank Lord Sinclair of Cleeve and his other members, Sir Archibald Forbes and Sir Harold Howitt for their report. In particular, I want, on behalf of Lord Sinclair of Cleeve, to say how very much he regrets not being able to be here to-day. He hopes that nobody will think that it is any discourtesy to your Lordships' House. But even before he undertook to produce this Report for us, he asked if he would be allowed to leave for South Africa, where he had a longstanding engagement for July 23; and much as he wanted to try to change it, that just was not possible. I am sure that we all understand, and that we are very grateful for what he and his colleagues have done.

As the noble Viscount, Lord Alexander of Hillsborough says, the 1958 Report of the C.D.C. is a memorable one as being the last Report of the noble Lord, Lord Reith, as Chairman. He has had over eight years as Chairman, and during that period there have been great developments in the Corporation and our warm thanks are due to him for all the services that he has given us. When he took over it was a weak child, not three years old. Now he has left it a sturdy youth. But, as the Sinclair Report shows, this youth cannot, as things stand, make his own way in the world without an allowance or subsidy from father. That is something we shall all have to consider in due course; but it is quite clear from the Sinclair Report that that is the case.

We find from the Corporation's Report what important things the Corporation has done during the tenure of office of Lord Reith. As several noble Lords, including Lord Milverton, have pointed out, they are to be found in the synopsis of physical results in paragraph 14 of the Report. I do not think I need go into great detail because it is all set out in paragraph 14, but the Report shows how many things have been covered and what a good spread there has been of the Corporation's work throughout the Colonial territories. In a sense I am not altogether surprised at this outcome, when we think that some £60 million has been spent during the time. But for me this is not indeed the noble Lord, Lord Reith's greatest achievement in his tenure of office. Rather do I find it in the point referred to by several other noble Lords: that success must first depend upon first-class management. To me, as Lord Milverton also pointed out, that is what counts. When we look back on what Lord Reith has done, I would say that it is in building up this first-class management, both at home and in the regions, that his greatest performance lies: and I want to thank him on behalf of the Secretary of State and others for this work.

I am sorry, as others of your Lordships are sorry, that we have in this last Report one that is in some degree a complaining Report. It was "not a happy year," we find. Speaking personally and frankly, I am both sad and surprised at this tenor which runs through the Report, because I personally have tried over the past years to ensure smooth working between the Colonial Office and the Colonial Development Corporation. In particular, your Lordships have referred to the item under paragraph 7, "Relations with Government." It refers to "many irritations," and goes on to say …relations with Government departments became such that the Corporation felt frustrated and discouraged… Generally through the Report there runs a theme of unnecessary delays, of applications held up, and so forth. The noble Viscount said that it seemed that the Government had been very slow on these things. I therefore thought it was both necessary and appropriate that I should get down to what are the facts over the last year.

The facts are, my Lords, that during the last year there have been 21 applications for capital for new projects or supplementary projects. Of these 21 applications, the answers to 16 have been provided within three weeks, on an average, of the request from the Corporation to the Colonial Office. With the other 5, it is true, there has been delay in answering of over a month. Then we come to the items where they ask for clearance in principle before getting on to Stage 2. Here there have been 57 requests for clearance in principle, and of these no fewer than 49 have been given the answer within a month. Only 8 have taken a longer period.

Noble Lords must remember that the Secretary of State has a very real responsibility to Parliament for the money which is spent by the Corporation. There is also the eagle eye of the Public Accounts Committee and, generally, we have to see that what we are given as a task is carried out. In that I would say that we have had a great deal of help from the Treasury. I certainly would not want to shield behind them and say it is their fault if there have been delays. I do not believe it. I think that, all in all, we have not only done well, but, as the facts I have quoted show, have really acted pretty quickly in the requests, bearing in mind that so much money and important questions are involved.

There are, in fact, only two cases of special difficulty. These are mentioned again and again in the Report. They are Lake Kariba and the Nigerian Development Corporation. In both cases there were very difficult issues raised. I do not think I will bother your Lordships with the considerations that did arise, but in both cases, happily, we have been able to give the answer the Corporation wanted. The noble Lord, Lord Shepherd, asked whether I can confirm that we are carrying out the procedure which is laid down in the 1950 Circular, as to the need to insulate the Corporation from the complex and many-sided internal procedures upon which Government policy is founded. My answer to that is: Yes, and the Corporation does work entirely through or with the Colonial Office. So much for the facts.

I am also the more distressed at the criticism that runs through this Report when I remember that about the summer of last year I suggested to Lord Reith that we should revive a procedure which had been carried out in the early days and then dropped—namely, that if there were any difficult questions, questions of friction, the best method would be to have what we called "summit meetings", meetings between the Chairman of the Corporation, one of the Ministers at the Colonial Office and a Minister of the Treasury to see whether we could not smooth them out. That was a suggestion which lay on the table for the last six months of last year and was not availed of. Instead, we found what was in this Report. Since that time it has been availed of, and we have had some meetings; and I think I am safe in saying that everything is now going smoothly and there are no causes of complaint on one side or the other. So much for the facts on the delays in regard to applications.

In the Report, however, we find with them a possible other cause for the irritations, for the dismay—namely, in the words of the Report, "no capital reconstruction". I believe that this is really the heart of the matter. I believe that this is why the Corporation has been distressed. Your Lordships will remember that Parliament gave the Corporation the task to break even, one year with another, and to pay interest and repay capital. It is clear from the Sinclair Report that that has become an intolerable burden, and I think that if we look in the Report we shall see it says that that burden has so far been sensed rather than felt or shown clearly by the accounts. I think we are really beginning to get down to what is the heart of the matter.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I feel that we must say from the Opposition Benches that we have pointed out the general sense of this lack of being able to get on for the last three or four years. We have referred to it almost every year.

THE EARL OF PERTH

My Lords, that may be, but the effect of the present instruction which Parliament gave to the Corporation—an instruction originally laid down by the Labour Party when they were in office, and which we have been trying to operate—has, I think, only recently become completely clear, and has been sensed, rather than made clear in the Accounts until now. But what do we find? We find in the Sinclair Report that this trend—that is, an increasing annual cash deficit— indicates the hopelessness of the outlook as regards repayment of the outstanding debt within the terms of repayment attaching to the loans from Her Majesty's Government"; and again, that a point will ultimately be reached when there will be no prospect of its"— that is the Corporation's— being able to discharge its obligations. What has the Corporation been doing? The Corporation has sensed this and suggested palliatives to try to meet the point.

It is suggested we should have lower interest rates for the Corporation. But I must say to your Lordships that, if the Corporation should have lower interest rates, let us be quite clear what we should be doing. We should be subsidising the Corporation in a way that no other national institution has been subsidised in respect of any loan. I think it is much better that, instead of giving a subsidy of a disguised kind—and that is what it would amount to—one should come out into the open and put it in another form.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, I doubt whether the argument of the noble Earl would stand up. If we consider the loan, the very large loan, of £50 million to a private steel firm in this country to be on the best borrowing rates of the Government at any time, and compare that with the statement which has just been made, I do not think the argument stands up.

THE EARL OF PERTH

My Lords, I would assure your Lordships that the terms on which the Corporation borrows are exactly similar; that is to say, the best terms the Government could give, whatever may be the going rate. Again, in regard to palliatives, the suggestion has been made that interest should be waived or losses written off. The noble Lord, Lord Winster, made a very interesting speech on this question of losses and their being written off. I do not want to follow him on that, for this reason. This is only one factor in the problem with which we are faced—namely, of the Corporation being given the task of trying to break even one year with another, and it comes clearly from the Sinclair Report that this just is not being done. Among the various palliatives, there is a suggestion that the Corporation should in some way work in with the Colonial Development and Welfare Funds—funds which are, of course, grants; but if they did work in with them, that would again mean a form of hidden subsidy.

Lastly, another palliative which has been suggested is that of finance house loans on a large scale. I should like to clear up what I think is a misunderstanding in the use of the words "finance house", in inverted commas as it appears, I think, in the Report. It is a term of art which is used to describe those loans which were not in the normal course loans to promote a particular venture but rather a fixed-interest loan which was devised as a way of trying to show improved earnings for the Corporation. I do not want your Lordships to think there was anything wrong in that, but I recall that noble Lords opposite, or certainly honourable Members in another place, were the first to say: "This is getting out of balance. This is not the purpose for which the Corporation was wanted," and that the number should be very much less. Over the last few years that course has been followed. So I feel, although there are these various palliatives, we cannot agree to them or would wish to check them. That, I think, is the basic reason why we have found in the Report of the Colonial Development Corporation this year so much mention of irritations and so on. But, as I say, the Sinclair Report has done us all a very great service in that it has brought out very clearly for the first time what is the Corporation's true position—and, after all, that is the first step towards being able to get things right. If we know what are the facts then we can get at the solutions. I am not going—and I am sure none of your Lordships would expect me to to-day—to tell you what is going to be done. After all, I saw the Report for the first time on Friday, and we have had no chance to consult among ourselves or with anybody else.

I would now for a moment turn to the Corporation's Report for 1958 and look at one or two things. I will not go into great detail, but I think it is important to look at the profit for the year, to which so many noble Lords have referred. They have referred to the profit in relation to 1957. I would just make these two observations. In 1957 there was not what I think one might justly call a "windfall", in the shape of a profit on realisation of land investments of some £380,000. Furthermore, in the 1957 Report there was written off before the result was shown some £400,000 which was not done this year. I am not saying that it should have been done, but it was written off on that occasion, and so comparison is difficult. This year, when there was a very big write-off, that was written off in the Special Losses Account.

I think I should make this one other comment on the results of the year. As, again, the Sinclair Report shows, the Corporation will continue to show a surplus on profit and loss account, but only by excluding the accumulating liability for interest, postponed during the so-called fructification period. As the noble Lord, Lord Shepherd, pointed out, this figure is to-day around £8 million. In this one year alone, the obligation here has risen either by £1,400,000 or by £1,800,000, depending on what rate of interest, compound or simple, may be charged. And, of course, this problem gets worse. If you again look at the Report, for the coming years you will find that, on the figures—which must necessarily be tentative and are a conjecture—this fructification of interest will accumulate to some £18 million before not very long. That is one more case where we shall have to think very seriously as to what is to be done.

Turning to other things, I would agree very much with the noble Lord, Lord Hastings, that it is a welcome thing to find an American partner in one of the schemes. He says he hopes a Canadian partner will take part, too. I think I can say that; the Corporation will be only too happy if a Canadian partner can be found who is ready to do it. I am sure I am speaking for them when I say that they are very ready to go into partnership with any reliable people, wherever they may come from, who can help them in their task of developing the Colonies.

I personally have had the good fortune to visit two of the Corporation's ventures this year during my travels. I saw the tea plantation in Tanganyika which is being operated in conjunction with Bird and Company. That is a very remarkable venture, and I feel confident that it will have success. But what perhaps will interest your Lordships more than whether or not it is a success on its own is the fact that it is planned to work in at the same time with a large growing of tea by the local peasants: that is to say, there is the main area which is run by the company, but the factory which has been set up is large enough also to take growings from local peasants who are being taught how to grow tea. I think that that is the best kind of development you can have, bringing the local native inhabitants into the work. The other project which I visited was that of the Kilembe Mine in Uganda. That is a very exciting project. One day it may prove to be a great copper mine. It is showing a profit at the present time. It is situated in a most romantic place. I had forgotten that that is a venture with the Canadians—Frobisher, I think it is —and that project is something which may well one day prove of great value to Uganda.

Now the question was raised in the Report about the emergent territories. Part of paragraph 13 reads: CDC regrets that the restrictions imposed upon its future activities in these areas will deny them full use of its unique facilities and managerial experience at the critical transitional stage in their development. My Lords, I do not quite understand that, because it was specifically announced some little while ago in Parliament—I think at the time we were discussing the Overseas Resources Development Act, and the increase in capital under it—that the Corporation was to be allowed to operate in the emergent territories if the Governments of those territories wished to use their managerial skill in one capacity or another.

LORD SHEPHERD

But the noble Earl will agree that there was no question of the Corporation putting fresh capital into the territory.

THE EARL OF PERTH

That is quite true; no fresh capital for new developments, but they can carry on with some of the old ones. But I am reading what it says in paragraph 13 of the report: …the restrictions imposed upon its future activities in these areas will deny them full use of its unique facilities and managerial experience.… I do not quite understand that in relation to what is in fact allowed to them at the present time.

My Lords, I have referred to the Sinclair Report earlier in my speech, but probably it is appropriate for me to make one or two preliminary—and I would stress the word, preliminary—comments on it. I would not wish to go into any detail on the scheme—as to whether it should be "B" stock or "C" stock or "A" stock. The noble Lord, Lord Hastings, asked me whether the Report meant that the overall earnings would have to be paid into the "B" stock. I am afraid I have not the certain answer, but I am practically sure the answer would be, "Yes", if that scheme was to be followed. Again, I should like to say how grateful we are to the Committee for their work. Anything which has to do with figures and capital set-up is always a tricky job; and the first thought that came to me was how skilful the Committee have been in setting out clearly the state of affairs; the problems, and the possible solutions of them.

The first and most important finding is that, on the basis of the present structure of operations, the Corporation cannot hope fully to meet its obligations in the longer term, with the present system of financing by means of fixed interest advances from the Government. It also shows that a number of commercial ventures which the Corporation has undertaken give the prospect of only a very low rate of return on the capital invested. On that point, the noble Lord, Lord Twining, raised the question whether Parliament's: intentions had been fulfilled: and, of course, it is a very difficult matter.

On the detailed recommendations I am not going to comment. There are clearly many ways of dealing with the question, and we have in mind consultation not only with the Treasury but also with the Colonial Development Corporation itself, and very probably—and I think most naturally—with the members of the Committee, who have such a wealth of experience on these matters and who have given so much time to the affairs of the Corporation. But of one thing I am quite certain, and that is that the Corporation's position, its earnings or its losses each year, should be crystal clear in any subsequent set-up and capital reconstruction. Further, it is, I think, essential, as public funds are being invested, that we should have the right balance between the various activities of the Corporation, and that investments of a risk-bearing kind should be on the most appropriate basis.

My Lords, the task of the Corporation is a formidable one. It has to undertake itself, or contribute to, Colonial development in addition to that carried out by the Governments or private concerns is the Colonial territories. It has invested to this end in a great number of Colonies, over one half of the total, ranging from Tristan da Cunha to Nigeria, and it has undertaken many types of activity. The value of additional development of this kind to the well-being of the Colonies was recognised in the Overseas Resources Development Act, 1958, when the Corporation's capital was increased to £150 million; and I want to leave the House in no doubt of the importance which the Government continues to attach to the improvement of the economic and social life in Colonial territories, which the Colonial Development Corporation has been, and is, assisting in a number of ways.

4.58 p.m.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

My Lords, first may I again thank the noble Lords who have taken part in this debate which I initiated this afternoon for the very helpful way in which they have participated. I should like to share with the noble Earl the pleasure of congratulating the noble Lord, Lord Twining, on his maiden speech this afternoon. I wish he were here, but he has left. Nevertheless, he will be able to read to-morrow that we congratulate him upon it.

I do not wish to add in any way to the length of the discussion that we have already had on this subject. I was not very impressed by the noble Earl's answer to the criticisms contained in the Report itself. Some of the statements that he made to us I thought savoured very much of the Civil Service answer; and I should like to have another look at it before I form a final judgment upon whether the criticism in the Report was justified or not. Certainly I join in the last wish that the noble Earl has expressed. I hope and pray that the work of the Colonial Development Corporation will be allowed to go on smoothly and without handicap, and that it will have such beneficial results that it will be a consolidating factor, not only in the life of the Commonwealth but also in the economic progress of the whole world with which the Commonwealth deals. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.