THE COLONIAL DEVELOPMENT CORPORATION

HL Deb 27 June 1961 vol 232 cc979-1016

5.8 p.m.

LORD WALSTON rose to call attention to the Report and Accounts of the Colonial Development Corporation for 1960; and to move for Papers. The noble Lord said: My Lords, as part of the preparation to which I subjected myself for this debate I read the OFFICIAL REPORT of the debate in your Lordships' House on this same subject nearly a year ago. I may say that it was not an onerous task that I set myself; it was full of interest. One of the things which struck me as being of particular interest was the remark made by the noble Lord, Lord Twining, who I am sorry to see is not in his place to-day, as I had hoped he might be taking part in this debate again this year, in which he (to use his own words) looked "into the crystal ball to see what is going to happen next year". Well, we are now in "next year", and it is rather sad and rather significant to find how very accurate the noble Lord was in his crystal-gazing.

He said, if I might remind your Lordships, without quoting his exact words, that he believed we should still be deploring the fact that the Government had not yet acted upon the recommendations of the Sinclair Committee. Secondly, he said we should still be urging upon the Government the need for greater funds for the Colonial Development Corporation; and, thirdly, he could see in his crystal ball the fact that we should once more be urging upon the Government the need to enable the Colonial Development Corporation to extend its activities to cover, in his words, "those countries which had already received their independence". I strongly suspect, not only so far as I am concerned but so far as other noble Lords who will be following me will be concerned, that the debate will run regrettably true to that prognostication. Nevertheless, in spite of the fact that we may still be saying very much the same things that your Lordships heard twelve months ago, I believe it is well worth while and important to have an opportunity now to discuss the last twelve months' activities of the Colonial Development Corporation.

It is a vast concern, a concern dealing with a very large amount of Government money, taxpayers' money. It is a concern which not only is huge financially but is huge geographically, going actively into many parts of the world and carrying with it a very large degree of prestige and a very large degree of influence for good which can only redound to the credit of this country. So even though much of this debate may be a repetition of what has already taken place it certainly, in my opinion, will not be time wasted.

Perhaps I may turn for a short while to the actual Report of the Corporation for the calendar year 1960, which I am sure all of your Lordships who are here at the moment will have read and studied There are one or two points which I think it is worth bringing out and drawing to your attention. In the first place, it is a Report which shows progress. It shows that there are now 91 projects in active being, compared with 88 last year. It shows that there is now nearly £110 million committed, although of course not by any means all spent. compared with last year's figure of £96 million. So the Corporation was not idle in that respect either. Ten new projects have been started—certainly some of the other ones have now run their course—and the cost of those new projects is estimated to be somewhat over £11 million. All these are big, rather frightening figures for private individuals, and should be possibly rather frightening figures, even for Government expenditure. But the fact that they are frightening does not mean they are bad figures; they are essentially important and good figures, showing that the Corporation are active and do not just sit down and let things go quietly on their normal way.

It has, of course, been a relatively profitable undertaking. I say "relatively", not with any intent to disparage: I should be far more critical of the Corporation if it had been extraordinarily profitable. It was not set up originally to make a large profit. It was set up with the instruction that, taking one year with another, it should show a fair and reasonable return on capital. I think it has succeeded in doing that. Its accounts show that it made a net operating profit in 1960 of £2.4 million. Out of that, of course, has to go payment to the Government for interest and annuities, payment of £1. million. The £2.4 million, incidentally, is an improvement on the previous year, when the figure was just under £2 million, £1.9 million. So it has succeeded financially in doing what it was instructed to do originally. It has covered its expenses; it has paid an appropriate rate of interest—in some cases, in my opinion, rather unduly high interest. But it has paid that interest and it has come out with a small amount on the credit side.

But there are one or two parts of the financial result which I think are somewhat disquieting. The profits from what are called direct projects undertaken by the Corporation, never very large, have shrunk. They have shrunk from £190,000 in the previous year, to £145,000 in 1960, while, on the other hand, interest from investments has risen from £1.7 million to £2 million. We cannot complain that the Corporation is making less profit, but I should be happier and more confident that it really was doing the job it was set up to do if it had a larger amount of money invested in the direct projects and a smaller amount in what, in the accounts, come under the heading of "Investments". Perhaps your Lordships will allow me to return to that point a little later.

While I am dealing with these actual figures, there is one other point, though not directly concerned with the Corporation, which I think is of interest and worth bringing out. Many of us feel—and I have on occasion mentioned it in your Lordships' House already—that in the present state of the world the actual production of wealth, particularly from the land, is something which does not bring in a sufficient amount of profit, does not give to those who practice it a sufficient margin of profit compared with other somewhat less productive enterprises. I think that the Accounts of the Corporation bear out this contention. It is interesting to see that of their direct projects, of the enterprises which are agricultural enterprises—and there are eight of them altogether—only two of those made profits and the other six showed losses, whereas, of their seven non-agricultural enterprises in their direct projects, all of those finished up by making a profit.

I want to emphasise that I am not saying that by any way of criticism of the way the Corporation runs its agricultural enterprises; I have no criticism of them, but it does make it very clear that the primary producers, and in particular the agriculturists and farmers and peasants, whether they be on the very large scale of the Colonial Development Corporation or on the very small scale of peasant farmers and smallholders, must look forward to a very much lower margin of profit, and very frequently substantial losses, compared with people operating in similar circumstances in similar countries who are not actually producing the wealth from the soil.

There are many good points in this Report of the Corporation which has been produced for last year, and I would pick out only two of them. One that I was particularly glad to see was the fact that the Corporation are now making available—they admit that it is in small quantities—scholarships for promising students in the areas in which they operate, to send them to universities, to training institutes or colleges, and in that way give incentive and encouragement to young men who otherwise would be unable to get the education which they deserve and from which they can profit. I believe that that is an admirable thing for the Corporation to have done, and I very much hope that in future Reports we shall find that they have been able to extend and increase these scholarships and grants.

Another thing which I find extremely interesting, and for which I think they deserve much credit, is the efforts that they are making in areas where they operate to encourage co-operation and assist the small farmers to get some of the benefits of large-scale operation. There is, in particular, a scheme to encourage and assist tea-growing among the African peasants in Kenya, which is very much worthy of praise. I hope we shall hear a lot more about it in following years, and that it may become a model for many more developments of that particular kind.

I would now turn to a few criticisms of some of the matters to be found in that Report, though in the main these criticisms are directed against the Government and Government policy, rather than against the Corporation itself. I hope that, as a result of some of them, the Government may modify some of their views. One of these is an age-old and probably inevitable criticism: the criticism of delays in Government Departments; the slowness in receiving answers to questions which have to be put up for approval which has to be obtained. This is, I may remind your Lordships, something which was mentioned in the Sinclair Report also, now several years old.

Just as one specific example of this, you will read in the Report of the activities in the Carribbean, of a scheme in Castle Bruce, a small estate in the Island of Dominica. Application was made to the appropriate Government Department for capital expenditure on December 9, 1959, and by the time the Report was published on December 31, 1960, no authority had yet been received from the Government Department—one year and three weeks.

LORD HAWKE

My Lords, could the noble Lord tell us a little more about that? What sort of crop is it proposed to grow? The Government might have been aware that there was a world surplus of that crop, or something like that.

LORD WALSTON

I could not say with authority what crop it was. From my knowledge of the locality I should expect that it might well be bananas; it could also be cocoa, or it could have been copra. Certainly, if it were bananas, I am glad to say that there is no surplus. The growing of cocoa is something which the Government is encouraging in this island. But whether or not it was something which should have been encouraged or discouraged, my contention is that it is only fair to the people who want to do the job to make up your mind in less than twelve months whether you want to discourage it. In fact, I am informed that permission has now been given and the project can now start; but that is only in the last few months. I suggest to the noble Earl that he should ask his Department firmly to do its best to see that delays of this kind do not arise, because, quite apart from any inefficiencies from the business point of view, it can be extremely frustrating for the people, not only in head office but actually on the spot, who want to get on with the job, to be told month after month, "We are still awaiting ministerial approval."

Another and more serious criticism, again of Government policy, is that which is referred to in the Report itself. May I first read what is set out at page 51 of this beautifully produced, but rather gaudily coloured Report, discussing what is going on in North Borneo. It is there written: In North Borneo, U.K. Government's attitude towards C.D.C. undertaking projects without a partner has inhibited progress on several agricultural schemes which could have been handled by extension from the secured base of C.D.C.'s successful Borneo Abaca project. At this stage I do not want to go into too much detail as to the advisability or otherwise of schemes in partnership with other people. But whether you think it is a good idea that C.D.C. should, in the main, operate with partners or not, it is surely going against the laid down objectives of the Corporation that they should be prevented from undertaking works which are admittedly of use in an area where they should be operating, and which they believe not only should be carried out but can conveniently and efficiently be carried out from their existing sources of administration—that they should be forbidden on what appears to be purely doctrinaire grounds to undertake any new projects unless there can be found a suitable private enterprise partner. I hope that the noble Earl will be able to tell us categorically that that is in fact not the policy of his Department; that he is prepared, provided the case that is made out is a good one, to authorise without undue delay entirely independent projects by C.D.C., whether they are able to get a partner or not.

Perhaps I may say a few words now on this question of partnership—how much there should be partnership and how much C.D.C. should act as an entirely independent body. My own view is that there is no reason whatsoever why C.D.C. should have to operate independently or why it should have to operate in partnership; each case should be taken on its own merits. Undoubtedly, where suitable partners exist, and in particular where there are local partners, people who are already engaged in some form of activity in the particular area, people whose livelihood depends on that particular area, every encouragement should be given to entering into partnership with such people or such groups.

I further feel that there is much to be said for working in partnership with people who are not already in that area —bringing in outside people who would not otherwise have come, and who either have money that they are prepared to invest or have a particular type of expertise which is going to make a joint project far more valuable to the area than it would be without that expertise. As an example of that, it seems to me that it is an admirable arrangement which the Corporation has entered into with Courtauld's in Swaziland, where the Corporation developed the forestry and has grown the raw material. To enter into co-operation with a firm which is well experienced in the use of that raw material and in producing from it something of value and giving employment, is an admirable form of partnership. It is one which I hope will continue and of which we shall see more in the years to come.

On the other hand, there seem to be a growing number of partnerships about which I am not quite so happy. For instance, three, if not four—I think it is three—cement partnerships have been entered into. The production of cement in all of these countries is of enormous importance. A cheap supply of durable building material is essential for the development of all these hitherto underdeveloped countries, and such new enterprises should be encouraged. But I cannot help feeling that the cement industry in this country is so vast and has such resources at its disposal that in fact, if it were left to itself, given encouragement, but no more, it should be able to finance these undertakings, without making use of the capital and resources, which are already close to becoming strained, of the C.D.C. The same argument applies to housing finance. There, again, a great deal of housing is needed, and we should be extremely grateful for any action that is taken to see that more and better houses are produced in every single one of these territories. But I cannot help feeling that the Eagle Star Insurance Company, into partnership with which the C.D.C. has entered in Jamaica, could have found, somewhere from among its own friends in the City sufficient funds, if it did not already possess them itself, to enable it to start a housing finance scheme without calling on the C.D.C. to provide some of the capital.

The same remarks apply to hotels in the West Indies. They are valuable; they bring in tourists and foreign exchange. All of this is desirable. But there are many hotels already going up without any help whatsoever from C.D.C. and it appears to be sufficiently profitable as an industry to enable finance to be found, in most cases without C.D.C. help. Once again, I do not see why it is necessary for C.D.C. to go out of its way to provide money for these projects. It should provide help, facilities, the advice and experience of its staff, but keep its money, of which it has far too little, for those things which cannot be financed from outside sources.

There is one further activity in regard to this question of partnership where I have doubts. I will not say anything stronger than that, because my mind is still open on the matter. It concerns the fertiliser project in Trinidad,in co-operation with the Grace Industries of the United States. Throughout the whole of the West Indies fertiliser is essential. At the moment it is being imported almost entirely from this side of the Atlantic, and obviously it has to stand high freight charges. Undoubtedly, it would be greatly to the advantage of agriculture in the Caribbean area if fertiliser were produced in one of the islands, and Trinidad is probably the most suitable place for that. So I am not in any way against fertiliser being produced there, nor against C.D.C. assisting in some way. But I foresee there can be some very difficult problems arising to the management of the Colonial Development Corporation if it is too closely involved in the manufacture of fertiliser.

It is an industry which has to face very hot competition from abroad. It is an industry which, I understand. in Trinidad now is trying to obtain from the Government of Trinidad protection by way of tariffs against imported fertilizers—and it may well be that it is right for it to have that protection in an infant industry—in order to build up for the eventual benefit of the island and the users of fertilisers. But I can see that it would be extremely embarrassing for the Colonial Development Corporation, with its very wide interest throughout the whole Caribbean area—and the same would apply to other areas if it decided to assist the manufacture of fertiliser in them—if it were to be associated in the eyes of the users of fertilisers with the pressure on the Government to raise the cost, albeit only temporarily.

As one of the deeply interested parties in the manufacture and, on the other hand, as a user, of fertilisers, and as an encourager of their use, it should be looked on as the friend of the cultivator, even in the short term. For that reason I should feel happier if the Corporation had been able to give all forms of assistance short of investment to this American company in starting this fertiliser industry in Trinidad, rather than becoming actually financially involved in it. So much, my Lords, for the Report and what is contained therein.

May I now turn once more to Lord Twining's "crystal ball"? The Sinclair Report, which was the subject of so much discussion last time your Lordships debated this subject, has now not only appeared—it appeared before last July—but it has been studied by the Government, and they have made up their mind on what action they should take. But the short answer is that the Government have decided to reject the Sinclair Report. The main proposal, the main recommendation, of the Sinclair Report was, in effect, that the Government should become a shareholder in the Colonial Development Corporation; that they should not be simply the provider of money at fixed rates of interest, but should have a share in the risk and in any profits that might accrue and, at the same time obviously, carry any losses.

I do not want to weary your Lordships with a long argument as to why the Sinclair Report seems to be on the right lines. It would be presumptuous of me to do so in any case, because I am not qualified to advise or have opinions on the right structure of a vast financial company. But it seems to me, in the first place, that this Report was brought out by three wise and experienced men in whom the Government presumably have confidence. In spite of producing a relatively long Report, they made clear-cut recommendations which certainly can not be turned down on any grounds of running counter to Government policy or national policy. Therefore, it is at least unfortunate that those recommendations have not been acted on.

Further, from the purely common-sense point of view, one cannot get away from the fact that the C.D.C. is, financially speaking, the Government. It operates solely on Government money. Therefore, there can be nothing other than administrative convenience, tidiness of accounting, to make it advisable to present its accounts in one form or another. If the C.D.C. went bankrupt to-morrow the Government would lose the money. If the C.D.C. were able by some means to double the capital value of their investments to-morrow it would be the Government that would benefit. It seems to me that the recommendations of the Sinclair Report would have undoubtedly made this position clearer, simpler, and would have been far more convenient from the point of view of the Government and, above all, from the point of view of those running the C.D.C. So I am sorry to see that those recommendations have not been accepted but that, instead, some scheme which is of assistance—though somewhat complicated, and not a clear-cut straightforward scheme—though only minor assistance, has been adopted in place of these much more sensible and rational proposals which the Sinclair Committee put forward.

The second point Lord Twining foresaw we should be discussing after the Sinclair Committee had reported was the need for more cash: greater facilities for the Colonial Development Corporation to obtain capital for its undertakings. My Lords, I do not think there is any need to labour that point. We have had many debates, even within the last few months, which make it very clear how necessary it is for us in this country to invest as much as we conceivably can in underdeveloped areas, and, in particular, in the Colonies and in the Commonwealth.

It is true that the Corporation still have approximately 40 million on which to call. That may seem a very large amount of money. It is a large amount of money. But we hope they will—I will not say spend that money rapidly, but not be slow in investing that money; because, as the noble Lord, Lord Casey, last week and many other noble Lords on other occasions (in the technical cooperation discussion, and so on) have pointed out, the need for it is great and the need for it is becoming increasingly urgent. So I hope it will not be very long before the Corporation are in the position of saying, "We have exhausted our borrowing facilities and if we are to do any more we must have greater borrowing facilities."

But we cannot afford to wait for that time, because if the Government take fifteen months to decide whether Castle Bruce in Dominica should have spent £15,000 on a new project, they will undoubtedly take many months, if not years, to decide whether the Corporation's borrowing powers should be extended from their present limit by another £25 million or £50 million. That is a matter which requires deep thought and much consultation with many other Government Departments, and for that reason I hope that the noble Earl will tell us in his reply that his Department have already started to give thought—and sympathetic thought—to this, and that negotiations with the Treasury and the other interested bodies are already well advanced.

I may perhaps remind noble Lords that on the last occasion when this matter was being debated the noble Lord, Lord Hastings, was very urgently concerned that borrowing powers should be increased. He went so far as to suggest that the Government might well restrict expenditure on the National Health Service at home in order to provide money for extending possibly not only national health services but many other services of which those underdeveloped countries overseas are in need. I entirely agree with the second part of his contention, though I would not agree with the means by which he suggested the money should be raised. Unfortunately, the Government listened to the first part of his recommendations, and have cut the National Health Service; but the money so obtained (much, I am sure, to the disappointment of the noble Lord, Lord Hastings) has not been made available to the Colonial Development Corporation, but has been made available to the payers of surtax in this country.

The third point of Lord Twining's "crystal ball "concerned the Commonwealth and whether the Colonial Development Corporation should continue to be restricted in its activities to the Colonies or should extend its scope to the Commonwealth. I find it very hard to argue this point because I find it very hard to see what arguments there may be against it. It seems to me unanswerable that we must have more investment throughout the whole of the Commonwealth, and it seems to me unanswerable that the Colonial Development Corporation, by its past record, by the contacts that it has, by the staff that it has and by the achievements that it has to its credit, is the appropriate and the only sensible body to undertake these further investments and this development throughout the whole of the Commonwealth. Even if the fact that in many of those areas where they have operated so successfully they are now debarred from carrying out further work because of the change from Colonial status to being an independent member of the Commonwealth did not reinforce this argument, it seems to me that they have proved their ability to do this; and that, with these contacts, with this local knowledge and with this experience, they should be entrusted with this further and wider responsibility of helping in the development of the whole Commonwealth.

On top of that, a further argument, surely—and it is not an insignificant one —is the argument of the morale of the people who are at present working, and working so admirably and so devotedly, with the Corporation. How would any of us enjoy being part of an organisation which we knew full well in another two or three years—in fact, year by year; every twelve months—would have a smaller scope for activities? Possibly, if we were near retiring age we might say, "We will carry on; it will just about see us through". But there are many who are not near retiring age; who are young, active and full of enthusiasm for this job. They cannot be expected to remain with the Corporation and to give of their best if they do not have the hope, even if not the confidence, that their scope is going to be enlarged to cover the whole of the Commonwealth. Even Government Departments know that they cannot really fulfil their functions properly if they are static. Every organisation must either go forward or backwards. It is interesting to see that the Government Departments, almost without exception, go forward at least in so far as increasing the scope of their activities is concerned—and where they are unable to do that they invoke Parkinson's law and increase the area of their office space and the number of people employed in it. The Colonial Development Corporation have resisted that way out, but I think we owe it to them, as well as to the Commonwealth as a whole, to ensure that, in the years to come, these activities will have an even wider field than they have at the present time.

My Lords, my final words are on the development of this idea—not an original idea by any means. There is the proposal which I think the noble Earl, Lord Lucan, made last year of a Commonwealth Bank. Would it not be an advantage, not only to the receivers of this help but also to this country and to the idea of the Commonwealth which was so ably put forward by the noble Lord, Lord Casey, last week, if the Colonial Development Corporation were not only to change its name to the Commonwealth Development Corporation, not only to extend its scope to cover the whole of the Commonwealth, but also to bring in, as givers as well as receivers, all members of the Commonwealth, where we can find a great deal of ability and experience of just the sort that is needed for continuing this work on a wider scale? I once more ask the noble Earl to give serious consideration to extending the scope of the C.D.C. It is useful that there is no need to change the initials or even the emblem on its writing paper or its documents, in changing its name to the Commonwealth Development Corporation. It would be able to give great help to the members of the Commonwealth; and, at the same time, it could absorb from the members of the Commonwealth the experience, the "know-how" and the expertise that they have to offer us.

The members of this Corporation, by the figures that they have produced, have done what can be done. I think it is a very great tribute to all of them, from the top to the bottom, that, with the difficulties and the uncertainties that are facing them, they have been able to achieve such remarkable results, not only during the last twelve months but over the years which have passed. Credit goes to those who started it; to those who had the original concept; to those who worked with it in the early days; and, above all, to those who are working with it to-day. I hope that your Lordships will give every encouragement and support to the Corporation in the future. I beg to move for Papers.

5.46 p.m.

LORD AMULREE

My Lords, it is always a great pleasure, when the Report of the Colonial Development Corporation comes out, to be able to look at this very well-presented document and to read the fascinating and interesting story which it has to tell. Therefore I should like to associate myself with what has been said by the noble Lord who has moved this Motion in paying a great tribute to those who work for the Corporation, for the work they have done and for the work they are going to do in the future, which we see very well before us.

I do not intend at the moment to follow the noble Lord into the great detail into which he has gone in dealing with this Report. That would be inappropriate at this hour. Besides, it would merely be repeating what has already been said, and said much better than I could say it myself. However, I should like to emphasise what a very remarkable body the Colonial Development Corporation is, and the great pleasure it gives one to be able, in one's limited capacity, to make this work known better to the world. If there were more bodies like this working in other countries, I think the future of the emerging countries would be much better and more secure than it is now. Their extraordinary structure—being, as I think they call themselves, the mixture of an equity-type investment company and a loan organiser or supplier—seems to work very well, although one might have thought, when such an idea was mooted, that it would not do very well.

There was one thing which I read with great interest, and that was paragraph (2) on page 9, which begins with the words: The development of smallholder farming can contribute powerfully to the stability of a country". That seems to me such a sane and sensible thing to say, and one is pleased to observe that that policy is being carried on in encouraging smallholders, by means of loans, to work and found these small farms, from which they will learn a great deal and from which they will be able to teach other people when the moment comes.

There are two very important things in this Report. The first is this new policy of founding a number of scholarships for training people by their coming over to this country; and, although the Report says that the numbers are at present very small, one hopes that in time they may increase, because I am sure that that is one of the ways to encourage people and to make sure that the money which is going to be invested in the Corporation will not be wasted. The second thing, which the noble Lord, Lord Walston, referred to, was the fact that the C.D.C. wants more funds. I am sure no one would doubt that, but certainly I trust it will not come from the National Health Service. That would be a catastrophic thing. When one thinks of the enormous number of bombs which are made, which are comparatively valueless, surely the cost of one of them might possibly be turned to the Colonial Development Corporation, with great mutual advantage to the people of this country and to the people who are getting the benefits from the Corporation.

Another point on which I should like to support the noble Lord is that it seems sad and tragic that when a country becomes independent within the Commonwealth the Colonial Development Corporation cannot continue its full work there. I was pleased to see in the Report that Malaya and Nigeria had managed to come to some agreement whereby the people there could continue their work; but it seems a tragic thing that at the moment when a country want3 every possible support it can get an experienced, valuable body like the C.D.C. can no longer work there. One would very much like to see some encouragement given to the idea, as the noble Lord suggested, of a Commonwealth Development Corporation, so that it could work in far more countries than it does at the present time.

My Lords, that is really all I want to say on the subject, and I am afraid I have merely followed the noble Lord, who was himself, as was the noble Lord, Lord Twining, looking into his crystal ball; and we find that what the noble Lord, Lord Twining, said a year ago is unfortunately true at the present time. I trust that when we talk about this question next year there may be some kind of change, so that we shall not disappoint Lord Twining for the second time.

5.51 p.m.

LORD MACDONALD OF GWAENYSGOR

My Lords, a number of my noble friends have already told me that they have other engagements, and asked if I would mind if they were not able to be present. I told them that I was over half an hour late for my engagement, and that I would be very brief, because I, too, have to go. In the first place, may I compliment my noble friend behind me? His contribution, like all the contributions he has made since he entered your Lordships' House, was marked with clarity, cogency and thoroughness, with the result that he has left us with very little to say without repeating what he said. But that is not only true of us in this debate. If it were, we could not repeat what we said in our last debate. I was privileged to spend seven years as Director of the C.D.C. and therefore I know the C.D.C. pretty well inside out. Its Reports cannot vary very much. They may vary in figures, but otherwise they cannot vary very much.

To-night I shall confine myself entirely to the two points raised by My noble friend—namely, the Report by Mr. Sinclair and his colleagues, and also to the countries which have become independent. I did not go back to last year's debate; I went to the first debate we had, way back in 1947-48, which laid the foundations of this Corporation. There are those present who took part in that debate; I am pleased to see that some of them will take part in this debate. I was anxious to find out how far the C.D.C. had lived up to the expectations of those days. If the noble Lords will read the reports in Hansard of what was said in the House of Commons and in this Chamber they will see very clearly what the expectations were. It was thought that after a war which had exhausted our resources very much indeed, we ought to put up what our resources could afford, with the result that this organisation was set up.

I notice that the heading in the 1960 Report, on page 7, "C.D.C.'s task," says this. Here I am going to repeat what was looked upon as the task in 1947-48, and I will read two sentences: Very great public attention has been given during 1960 to the political changes and problems in Africa and elsewhere. Never, therefore, has it been more important to help the economic life of the people of the countries where these events are taking place and to maintain the flow of investment. For several reasons C.D.C. can make an important contribution. I thought to myself: what are the other changes which have taken place since 1948? In 1948, we had a Labour Government. I am sorry to say that we have not one to-day. We shall have one shortly, but not to-day. That is one big change. I am pleased to say that, though we have a different Government with a different outlook on this problem (and we should not expect a Conservative Government to have the same outlook as a Labour Government on a problem of this kind), we are united in our desire to see the C.D.C. doing a good job of work and living up to the expectations formed thirteen years ago. In those days—dealing with overseas problems, and with Africa in particular—the late Mr. Ernest Bevin, as Foreign Secretary, intervened in another place. At the time, I was overseas. I looked up his speech in Hansard, and I am anxious to quote what he said, which gives us a pretty good picture of what he saw for us overseas in the future. These are his words: We intend to develop the resources of the territories with which we are associated, to build them a system of priorities which will produce the quickest, most effective and most lasting results for the whole world. And then he added these words—and very significant words they are to-day: We hope that other countries will do the same in association with us. Well, we know that the reason for the situation in North Africa to-day is largely that other countries have not adopted a policy similar to ours in dealing with Colonial territories.

For myself, I do not quite understand why the Government shy at this idea of allowing schemes to continue in territories which become independent. They have, in the one breath, said: "Well. if a scheme has started, no matter how much of the scheme is incomplete, it can go on." I should like to give a hint to the present Chairman of the C.D.C. Countries emerge very quickly to-day from being colonial territories to independence. We may feel critical at a small minority of the natives who have had an education in this country, and have then gone back to disturb the vast majority. It is the activities of the small minority which account for the demand for political independence—I do not for one moment doubt that there is a lot of truth in that. But, after all, if we said to them now: "We will help you all we can, so long as you are colonial territories, but if you demand, and receive, political independence, don't forget that this source of income will be cut off," that is bound to create suspicion and distrust. So I very much hope that the Government will see their way clear to give further consideration to this point.

I thought that the Chairman of the Board gave a good example—I would say the best example I have ever known—of persuasiveness. He is obviously anxious, in view of the Government's statement on Lord Sinclair's Report, not to cause offence to the Government. And rightly so. His problem was how to express disagreement without causing offence, and I think he has done it wonderfully well. I should like to read a paragraph of what the Chairman of the C.D.C. said: It is essential for the Corporation to maintain the morale of its staff, its credit in London, its reputation in the regions in which it operates, and its regional organizations. The present decisions of the Government go a long way"— listen to the persuasiveness here— to make it possible to do this, though it is hoped that reconsideration will be given in the future to the area in which the Corporation can operate, so as to enable it to undertake new projects in at least some former colonies which have become independent, or will become independent, and who may wish to continue in partnership with the C.D.C. as in the past. My Lords, if that is not a good example of persuasion, I do not know what is; and if that does not bring the Government a little nearer to this conception, I do not know what will. I support my noble friend wholeheartedly in his plea for consideration of this question.

As regards the Report, I find my feelings expressed in an unexpected quarter, as we all sometimes do. All I need to do is to give your Lordships a quotation from the Economist of May 6, 1961, commenting on the Government's decision on the Sinclair Report. Here it is: It seems odd at a time when increasing amounts of money are being made available for overseas that the Government should continue to take a paltry attitude towards the Colonial Development Corporation. The article goes on to criticise severely and concludes in this way: Just what has the Government got against C.D.C.? I wonder whether the noble Earl, Lord Perth, will give us the answer. May I repeat the quotation so that he will know what the question is. Just what has the Government got against C.D.C. I cannot answer the question, but I am sure that the noble Earl can, and I hope that he will do so in this debate.

There is another question I want to mention, and with this I conclude. The Communists and the Communist countries are far more active now than they were thirteen years ago. They are seeking every opportunity they can find to try to influence policy in any country in the world, but especially at the moment in Africa. I am most anxious that we should do all we can to save the people of those countries from the misery that will ensue if they show the slightest indication of taking the help offered from some countries because help from this country is threatened. Yesterday, the Guardian had a good-leading article entitled "The southern neighbours", dealing mainly with Mr. Adlai Stevenson's tour of Latin America but including one or two general observations which I think we had better keep in mind, because we are in danger of thinking that putting money into a country is one way of keeping out Communism. Here is a very timely warning. It is by no means true, as the more ardent supporters of foreign aid sometimes seem to believe, that the economic development of a backward country necessarily weakens communism in the country concerned. On the contrary, it may strengthen communism. It goes on: The economic development of a backward nation calls for self-sacrifice, discipline, and national unity: qualities which are hard to generate in any society, let alone a backward one, … If I have any criticism of the Corporation at all, it is on the lines of my noble friend's criticism of the attitude of the Government to the C.D.C. As to the work of the Corporation, we have to realise that there is some difficulty. From the Chairman and board of directors downwards to the lowest worker we have inside the Corporation, all are dependent to a large degree on the Corporation. They have done very fine work in the past. The board of directors are advisers to the Government on behalf of the Corporation, but we also have civil servants advising on the same problems, and sometimes their views are different. I know of questions—and the noble Earl knows that I know—on which we have felt that the civil servants were getting more attention from the Government and the Minister in charge than were the board of directors, who claim to know these problems, if not better than, certainly as well as, the civil servants. I know from my own experience that the Chairman arid Vice-Chairman of the Corporation were often consulted by the noble Earl and the then Secretary of State, but still I felt at the time that we did not count so much as we ought to count. I hope that the Government will realise that they cannot get better advice than that which they can get from the Board of Directors of the Colonial Development Corporation and will not rely only on the advice of civil servants inside the Colonial Office.

6.6 p.m.

THE EARL OF LISTOWEL

My Lords, my noble friend, with his inside knowledge of the Corporation, and my noble friend Lord Walston, who has made a most careful study of the matter, have said so much and with so much truth about the essential and urgent financial requirements of the Corporation that I shall add nothing on that subject. I would only ask the Government to give the House the fullest possible information about the future financial structure of the Corporation. In paragraph 3 of the Annual Report there is found the sentence: Consultations with the Government continue. I understand that those consultations are now concluded and that agreement has been reached between the Government and the Corporation, but no full statement has yet been made in either House. I apologise to the noble Earl if a full statement has been made, but I do not think that a debate has taken place in either House on this subject, and it may be possible for him to amplify what I have no doubt he regards with justification as a full statement of policy about the financial structure and financial future of the Corporation.

I have nothing new to say, but I should like to drive home what I regard as far the most important point of broad policy in connection with the future of the Corporation. I think that it is vitally important and for that reason can bear repetition. The most important change in policy which we ask the Government to make is to give permission to the Corporation to operate in independent Commonwealth countries as well as in colonies and protectorates of the United Kingdom. No one who has lived and worked overseas can doubt the imperative need for capital investment in these new Commonwealth countries. It is just at the moment of independence that the need is greatest, because the fear of political instability prevents investments from other countries and the need for justifying independence urges these new Governments to go in for expenditure on social services and economic development on a bigger scale.

There is no alternative in the field to the Colonial Development Corporation. The Colonial Development Finance Company, of course, does excellent work but it cannot fill the bill, because its business is limited to lending money; and it cannot, like the Corporation, provide the managerial and technical skills which are needed and which cannot be provided locally for operating development projects. The reasons for extending the scope of the Corporation are twofold. They are the welfare of the Commonwealth and the welfare of the Corporation itself. The Commonwealth would benefit because most of the countries now on the verge of independence (leaving aside for the moment those that have obtained independence), are much poorer than their predecessors and those who have already got there, and are therefore in even greater need of the public capital which they require for developing their economic resources.

It is interesting to note from the last Annual Report that the two regions in which the Corporation has invested the largest amount of its capital are East and Central Africa. But, as we know, Tanganyika will be independent in December, and Kenya and Uganda are moving rapidly towards the same goal. It will be very serious for Tanganyika and Kenya if they are cut off from the Corporation as soon as they became independent. It may, of course, take Central Africa rather longer to reach the same distinction, but these territories in Central Africa will also be badly hit, as one sees from looking at the list of projects in the Corporation's Report, if they are cut off from the work of the Corporation, apart, of course, from the projects which have already been begun. Exactly the same argument applies, with equal force, in the West Indies, which we know will be independent in the course of the coming year. These are all poverty areas in the Commonwealth, and in all of them there is urgent need for a body like the Corporation which can put in capital for which private enterprise cannot take responsibility because the risk is too great.

Let us look now for a moment at the question from the point of view of the Corporation and the shrinking field of investment ever since our Colonies have become independent in succession, as they have done in the last four years. This shrinking, field will be progressively more harmful to the Corporation as more dependencies of the United Kingdom achieve independence. It will be increasingly difficult for the Corporation to show a profit. The field of its activity narrows and it finds itself limited to smaller and smaller numbers of small territories—strategic dependencies, island dependencies and other territories—which, for one reason or another, are not obtaining independence as speedily as are other dependencies.

The prosperity of the Corporation depends on the size and scope of its field of investment, and I believe the Corporation's staff is already alarmed by the prospect. It it likely to lose numbers of its staff if they become sufficiently frightened about their future. If the Government decide to alter their policy, as I hope they will and that we shall hear the welcome decision in the near future to allow the Corporation to go into the Commonwealth countries, it is no less important, although it seems a triviality, to change the name of the Corporation, so that it becomes the Commonwealth Development Corporation. Again, this may be seen most clearly from the receiving end. Having worked in Africa, I know how sensitive African countries are to the word "Colonial" and it might indeed happen that the Commonwealth countries would refuse the help of the Corporation unless it was dissociated, verbally and in title, from what they would regard as the imperial connection.

I think this debate has shown two things. One is the immense goodwill towards the Corporation from all Parties in your Lordships' House, and the second is that all Parties are asking the Government to do more to help the Corporation to carry on its good work. This, I think, is the first debate since Lord Howick of Glendale became Chairman of the Corporation, and I am sure your Lordships would wish him the utmost success in the immensely important work he has undertaken.

6.16 p.m.

THE EARL OF LUCAN

My Lords, I do not propose to repeat any of the points made by other noble Lords. The expected points were made about the financing and scope in the independent countries. Lord Walston said the case was unanswerable. The noble Lord was not here last year or the year before, and he for the first time will hear the noble Earl, Lord Perth, give the final answer, which we know is: if a country is worthy of political independence it is therefore automatically economically independent, whether it likes it or not, and therefore the Government are not going to give any help. I hope I may be wrong in that forecast. But Lord Walston may be sure there is a reply—we have heard it only too often.

I should like to refer to just one part of the Report, and that is the regional report of the High Commission, Territories. I have not given the noble Earl notice of this point, but the events of the last year have changed the position of the High Commission Territories. I think we have to face the fact that it is more important than ever that these Territories should be a shop window where we can display the best goods of the developing colonial territories before the eyes of South Africa. We should like to see economic developments going ahead in these Territories. The Corporation have certainly done a good job up to a point. In Swaziland I think their enterprise in the past has been fully justified. They have carried out basic developments which ought more properly to have come from Colonial Development and Welfare Funds. The water development produced an enormous irrigated area and the planting of forests—all this was done years ago—but now the benefit is being reaped, and we read, too, of the sugar mill operated in conjunction with the well-known Natal sugar firm of Sir John Hulett and Sons which has already begun a large output of sugar.

Wood from the forests has already begun to find its way to the pulp mill which is going to produce a large quantity of pulp. In Swaziland steps are being taken to establish the association of the Swazi people with these projects, and steps are being taken to facilitate the setting up of small holdings to improve agriculture. All this seems, at this distance, to one who has not been there, almost a model history of enlightened development. There the resources were to hand: the water and the population were there, and the climate was favourable. Bechuanaland and Basutoland are rather different. I think that the Bechuanaland story is good. The establishment of the ranch industry shows great promise in various parts of the South end of the territory. A large amount of money is involved. Of course, it has the ups and downs inseparable from an uncertain climate such as that of Bechuanaland, but it seems to be doing well.

Basutoland is the problem territory. However, it is extremely hopeful to read this year, for the first time, of some new initiative by the C.D.C. They have, I believe, proposed to the Basutoland Government the formation of a factory estate development company, to be jointly owned by the Government and the C.D.C. That is a most heartening development, which we hope to see grow. The water investigation—what I call the Oxbow Lake project—is continuing, but it is a long-term affair and it will be some time before it can come to anything.

It is often said that the C.D.C. would like to do much more in these High Commission Territories but that the resources are just not there. So far as minerals and other resources go, that is, of course, true. But we have had the Morse Report, which was published last year and to which I should like to draw the attention of the Government and, indeed, of the Corporation. There is in that Report a clear indication that the Colonial Development Corporation could help considerably. In the case of Swaziland the Report says that what is wanted is development to help create conditions in which the known resources can be exploited to the best advantage of the territory". In the other countries there is basic development and investigation still to be done. I agree with my noble friend Lord Walston when he says that if there is capital to be spent in association with other interests, why spend it on hotels in the Caribbean and housing developments in Malaya or elsewhere, where no doubt other interests would be ready to step in and provide these facilities. These territories are places where the money is most urgently required, and they are countries which we have to admit are backward economically. We have not in past years developed them in the way that we should.

We read in the Morse Report that in regard to Basutoland they strongly recommend that measures be taken to provide one or more factory areas in which industrialists can be given legal title to leasehold sites at favourable rates". They also point out that the rivers and electric power could be a big factor in improving the economy of Basutoland. Both water and electric power, rising or generated in Basutoland, would find a sale in the Union; and this is the type of project that has been carried out successfully by the C.D.C. before now. I would strongly recommend to the Corporation, in spite of what we have been told over the years, that there is scope for just those things, as is mentioned in the Morse Report. To my mind, this is the area of the world where it is most urgent that we should show results.

6.26 p.m.

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

My Lords, we undoubtely owe a debt of gratitude to the noble Lord, Lord Walston, for introducing this debate this evening on the 1960 Report of the Colonial Development Corporation. The noble Lord said much that is of great value, but also much with which I do not agree; and that is both to be expected and valuable in a debate. Then, I recall the noble Lord, Lord Macdonald of Gwaenysgor, who said: "What have the Government got against C.D.C.?" I hope to show in my speech as I go along that the Government have nothing against C.D.C. Far from it: the Government believe in the C.D.C. and do all they can to help them forward in their work.

The noble Lord, Lord Walston, referred to the noble Lord, Lord Twining, and his crystal ball. I am not sure that Lord Twining was a very good soothsayer, or whoever it is who looks into crystal balls. I will endeavour to show that what the noble Lord said about the Sinclair Report—namely, that we had not got on with their recommendations—is just not the case. We have done so. The noble Earl, Lord Listowel, asked that I should go into some detail on this question, and I should have been glad to. But the fact is that a full statement of Government policy in regard to the Sinclair recommendations through the C.D.C. was made in another place, on a Monday when this House was not sitting, and I would refer the noble Earl to that statement of April 27, 1961.

THE EARL OF LISTOWEL

My Lords, I am quite satisfied with the suggestion of the noble Earl. I should not wish him to weary the House with a statement that can easily be read in the Hansard Report of another place.

THE EARL OF PERTH

I thank the noble Earl. I was not intending to go into great detail, but I think it is useful to take up the point of the noble Lord, Lord Walston, that we have not followed out the Sinclair Report in any of its main points. As I shall try to show, this is just not the case. What was the essence of the Sinclair Report? In paragraph 59 they made three proposals. The first was that there should be "A" stock representing loans advanced for "finance house" business. That we have agreed to. There is to be "A" stock with matching terms for capital repayments for all types of loans. They wished it only for Government loans. In regard to the "C" stock, they.suggested that there should be "C" stock helping certain losses and a certain measure of fructification interest. At that time the figure was about £15 million, and by the time we made our recommendations it was up to £20 million. We have followed the recommendation for "C" stock, both for the abandoned schemes and for fructification interest. We have laid down that repayments for "C" stock should take a slightly different form. It should take the form of repayment in the event of the Corporation, after its various obligations, having a profit over £250,000.

I am going to touch for a moment on this word "profit", because I think the noble Lord, Lord Macdonald of Gwaenysgor, seemed to indicate that at times in the past, anyhow, there had not been a very good relationship between the Government and the Corporation. Historically, and in some degree, that was perhaps true, but I certainly think that the advice that the civil servants, as he put it, had been able to give from time to time has been of the greatest value. I think nobody would say that they have all the wisdom, but if they get advice from various civil servants who have done great work on these things that, I am sure, adds to the whole.

The point I want to make is this. There was obviously some query in our minds about who should determine what were profits. We all know how easily you can dispute or arrange things so that profits may be bigger or less. This question naturally arose. We took the line with the Corporation: "Look here, we know that you do the thing in the right kind of way, and we leave it to you. We will have a look at it in three years, but in the meantime it is for the Board of the Corporation by and large, to decide." I mention that as an example of the good relationship there is to-day between the Government and the Colonial Office.

The third recommendation was that there should be "B" Stock—and here there is a variation—which had no fixed rate of interest, with a maximum of 5 per cent. That, we felt, we just could not follow. The reason was that that meant there would in fact be a fluctuating subsidy—and I stress the words "subsidy" and "fluctuating" o the Corporation, year in and year out, over which Parliament would have no control. Surely, one of the important things is that Parliament should have control over the funds it votes. If there were this form of fluctuating subsidy, there would be no control. Therefore, we accepted the idea of the "B", stock but we said, "No, you must continue to pay whatever the rate is for 'B' stock, but as those investments will be for equity investment we are ready to continue with the fructification period for seven years for those investments". That was the only variation from the Sinclair Report.

There was one other suggestion—namely, that there should be a reserve or an allowance for exploration, and that sort of thing. We have covered that in a different way, in that the Corporation is allowed the first £250,000 of its true profits for whatever purpose it likes, which obviously would include such things as exploration. I want to say once again how greatly indebted we are to Lord Sinclair and his colleagues for the Report which they put out quite a long time ago. It was of the greatest value to us, and I have endeavoured to show your Lordships that we have largely followed the advice that they gave. I will make just one other point. We were doubtful whether we should have to have legislation to give effect to the recommendations. But we shall not have to do that.

Now we come to the second point of the crystal ball—that there will continue to be a demand for more funds. It is true that various noble Lords have said that perhaps the Corporation needs more funds, or should not be starved of funds. But the fact is that at the moment the Corporation is not in need of funds. I must be quite frank with your Lordships: even if it were, there would be the greatest difficulty for two reasons. One is that we have always visualised this as a revolving fund. If you have a figure of £150 million, then so much is made in every year from the various loans that have been made. One hopes that the Corporation from time to time, in its successful ventures, will sell them off. So there is no reason why, from that angle, one should worry. Then there is the other angle, that we are to-day in great trouble on our balance of payments, and we simply cannot afford to go beyond a certain point in what we can make available. Here I think I might quote the words of the Chairman when talking about this aspect. He said: It is not the immediate problem which is 'needling' us to-day. Then we come to the third question, which is that of the independent countries. To that extent, the crystal ball was right. We have had this debate, and one noble Lord after the other has raised the question of our extending our operations in the independent territories. I deliberately use the word, "extending" because I think noble Lords are apt to forget the extent to which paragraph 6 of the Report shows how the Corporation is to-day operating in the independent countries. As your Lordships know, it can, and does, continue in the ventures in which it invested before these countries became independent. Indeed, it can put in more money if it is needed for an exceptional extension, and, of course, it is always possible (noble Lords seem to forget this) for an investment to grow on its own. There is nothing to stop them putting some of that money back into the normal development of whatever the venture may be.

Apart from doing it in particular projects, they have recently set up various development corporations. If your Lordships look at paragraph (6) of the Report, you will see that brought out. There are development corporations in the three regions of Nigeria. They take a part in the Federal Development Corporation of Nigeria. There is a Development Corporation in Sierra Leone, and also one recently set up in Malaya.

The reason I mention this is because with these Development Corporations they are still able to play a part, maybe at times limited, although at this moment they still have in several cases a good deal of money left. Perhaps the important thing is that the staff which are there can take their part in the Development Corporation and, furthermore, as your Lordships know, it is always open, if anybody wants it, for the staff to be made available on an agency basis. Therefore, on this question of extending the operations, my first point is that there is already a considerable activity in these various territories. I am not going to give the answer which the noble Earl, Lord Lucan, said I generally give on this question. I have thought out some other and, I think, convincing reasons apart from this one.

There is one further point—namely, the point about the demands of the remaining colonial territories. Given our balance-of-payments difficulties, this is a very real point. The noble Earl, Lord Lucan, spoke importantly about the High Commission Territories and the Morse Report. There is one more example of the pressing needs of the remaining territories for help. I am quite sure that the Chairman of the Colonial Development Corporation, Lord Howick of Glendale, who is here to-night, will not only have listened, but will have carefully noted what the noble Earl has been saying, more particularly, if my memory is right, because he was at one time High Commissioner to those territories, and therefore, if I may put it this way, he has a natural bias in their favour. I think it is a valuable thing to have brought it up, and I am quite sure the words will not go unheeded.

Having said this, I recognise that the Colonies are happily—if that is the right word to use—shrinking in their numbers. Shortly, we are to have Tanganyikan independence, and my hope and expectation is that we shall see the West Indies achieve independence next year. There will one day arise the fact that there are not perhaps the number of territories left which give sufficient scope. While I am quite clear that the present arrangements are right for the time being, as my right honourable friend said in the debate on April 27, these arrangements will have to be reviewed in the future. That, if I may put it, is one point to remember. The other one is this: that we intend—

THE EARL OF LISTOWEL

My Lords, may I ask the noble Earl, before he goes from that point, whether, when he speaks of the future, he means the near future or the foreseeable future? Because that word can have a very remote connotation.

THE EARL OF PERTH

I think it has to be related to the time when the various colonial territories which are left are small in scope or in number.

THE EARL OF LISTOWEL

I am sure the noble Earl appreciates that we should like him to convey to the Secretary of State, in regard to this matter, that we hope that it will be reviewed urgently. We do not think the Corporation can carry on until its field of operations has dwindled to a small number of very poor Colonies.

THE EARL OF PERTH

I understand the point, but I am endeavouring to show that we do not think it right to worry too much over it at the present time. The arrangements will have to be reviewed in the future. Another point which I would make is that we know that the Corporation should go on—the point which the noble Earl made. Clearly, if it were a dying body, that would be bad from a staff point of view, and generally one could not allow such a situation to develop. But, having said that., I think there is a certain amount of misunderstanding about this point—that because there may be less scope, therefore the staff is going to disappear. I remember last year raising the same point. For the staff to remain it is not necessary for there to be new ventures all the time. The fact is that when you start ventures, very important ventures, and you have just to look at the outline in the Report to see how many ventures there are, you must have staff to deal with them. The idea that because you are not necessarily going to widen the scope therefore the staff will have to go is not well-founded. As 1 say, the problem is not an easy one.

We have the problem of balance of payments to-day, the fact that the Colonies themselves are still very hungry and that there is lots of work for the Corporation to do. Then one runs into the problem which the noble Earl, Lord Listowel, in a sense touched on when he said we must change the name, because other Governments may not like it. I think one has to go further back than that and look behind the name. There may be problems, and there will be problems, at times when the British Government, disguised or not, is in fact running something which is of great importance to an independent territory, and which really affects its well-being; something like an electricity undertaking or other public utility. I am not saying that this difficulty is insoluble; I am saying there are problems. It is not just a question of changing a name in relationship to a British-owned venture in an independent territory which may have particular importance to the territory's well-being. Let me leave it at that. There are, if I may repeat them, two proposals: that one day arrangements will have to be made to review the situation, and that we clearly would wish that the Corporation should go on. My last thought to-day is that I am quite clear that it is right to do what we are doing and to concentrate on the remaining colonial territories.

I have tried to cover the various points in the crystal ball and I will now very briefly touch on one or two points in the Report itself. I, with the noble Lord, Lord Walston, rejoice in the progress that is shown in the Report and in the results, which are, I think, fully satisfactory. So far as one can judge on these things, they are very much the same as those of last year, when one takes into account that there is a bigger profit but also a larger amount of money invested and a greater need to pay interest on what was borrowed from the Government. So that, really, very much like last year, they broke even; and I think that is a very satisfactory result. It is quite true, as the noble Lord, Lord Walston, said, that apparently the direct ventures they have gone into have not done quite so well this year as last, but if he would look at the Report he would see that the main reason was that one of the ventures in which they had a direct interest last year, namely, the Lobatsi Abattoirs, is no longer part of the Corporation's direct activities and is not fully owned. I am quite sure the noble Lord will welcome the reason why it does not appear as a direct participation. It has been taken over by the Bechuana Protectorate and the Bechuana Livestock Producers Trust, those who are primarily interested in producing beef.

One has to look carefully at these figures. When we come to the question which he raised, whether we like direct or solo projects and what is the Government's attitude on them, I think my answer is that on the whole we do not like them. We do not like them for the reason that we think it is much better that the Corporation should go into partnership with some other interests. There are various reasons for that. For example, if you can get a partnership you are bringing more money into the development of the territory. But we certainly have no hard and fast rule which would lead us to say, "Because it is solo, therefore you cannot do it." I think we have to look at each case; but there is, I must be frank, a bias against solo operations unless there is good reason for it, if I might put it that way.

I will take up one particular point which the noble Lord, Lord Walston, made and I think it was repeated by the noble Earl, Lord Lucan about the Corporation's going into hotels or houses. In many of these territories an hotel is an absolutely vital thing for its wellbeing and for its development. If there are no hotels, people will not go. Again, the Corporation have found that, without their taking if not the whole at any rate the leading part in financing the construction of hotels, nobody will go and do it. So I can assure your Lordships that many of these colonial territories welcome, and are most anxious to see, the Corporation doing it, because nobody else will do it; and the same has been true of financing the building of houses. The Corporation has particular expertise on houses. As you know, building societies from here are not permitted to invest overseas, but the Corporation are, and they have done a great deal to help housing schemes. And when they can, for example, bring in some big insurance company, that is good. Very often what one finds is that these big companies say: "We do not know the territory well, but if you come along with us with you local knowledge and so forth, that is fine." That is also why we find them in the cement business and even the fertiliser business, which the noble Lord mentioned.

What else is there on the Report? I think it is very satisfactory. It shows fairly well-spread investments through the different regions. A new feature in the Report which I personally welcome very much is that of showing the results in the sense of the return that they get on their investment in each one of the regions. It is noticeable that, except for one of them, I think the one in the Far East, they are not making a return today in any one of them which matches the amount they have to pay for the money that has been advanced to them.

One has always to bear this in mind: that while the Corporation has done very good work—invaluable work, the Report says, and we all know we must not lose sight of the fact—to date it has been a costly performance. That is to say, £20 million has been put into C stock. One day let us hope all of that will be regained. But I think that we ought not to lose sight of the fact that there is a minus side to it all, and that while it is doing fairly well on the task of breaking even one year with another, it is not all honey.

Looking at one or two other things in the Report, I think it is very welcome to see the cases of participation with outside interests. The outstanding example is the Kilombero Sugar Company in Tanganyika, in which you get the International Finance Corporation of Washington, which is connected with the World Bank, two Dutch companies and a bank all having an interest. It is an excellent thing when one finds them arranging a scheme and getting local farmers and local participants in it. All of that is extremely good.

The noble Lord, Lord Walston, picked out one sentence about delays. I am not sure of the facts, but I am quite confident that if there is delay there is good reason for it. If you look at the Report, you will find there the thanks given to the Colonial Office for all the help they have given the Corporation this year, and I can assure you that the number of cases of delays are very few indeed.

Noble Lords very rightly drew attention to the scholarships and local training. I am all for that. But I think we must be a little careful of our enthusiasm and not look on this as a way of teaching, when the right way of teaching in many instances is, of course, through the Technical Aid Department which is being set up. I should not be at all happy if I saw a large number of scholarships, because it is not appropriate; it is not the job of the Corporation. It is its job to give training and an occasional scholarship for particular people who are going to work on their particular projects.

Before I close I might say one personal word. I was recently in both Sierra Leone and Gambia. When I was in Sierra Leone I did not stay but I had meals in the most excellent hotel, the Freetown Hotel, which is the new hotel, the pride of Freetown. We had the State banquet there; it was remarkably well done. If it had not been for the Corporation I do not know what the Government would have done. The other thing that struck me was the considerable shortage of water. Just before independence, a scheme for the Guma Valley Waterworks was announced and the Corporation is playing a leading part in finding some of the money, as is what I call the sister Corporation, the Commonwealth Development Finance Company, which is private enterprise. Then I went on to Gambia. In the Gambia is one of the saddest stories, or at least one that is always quoted—the Gambia egg scheme. That was a very unhappy affair, but the people of Gambia have in fact put it to very good use, because although the thing is finished as an egg scheme there were a lot of very fine buildings left, and those buildings have been converted into a teacher training college at Yundum, so that good has come out of the egg.

Again I went over the big rice scheme they had there, which was a very ambitious scheme with irrigation for getting two crops a year, and so forth, and on that scale it did not work. But they did a lot of work in building the bunds, and training staff and clearing the ground. One saw a good deal of rice being grown, not on the highly developed basis originally planned, but the scheme continues with the help of one or two people who had originally come out for the work. There again something they left behind has proved of great value.

This Report is in a sense the record of the work of the last Chairman until Lord Howick of Glendale took over, Sir Nutcombe Hume, and I think it is appropriate for me to pay a special tribute to him. He was an original member of the Corporation, one of the first members of the Board in 1948; then in 1953 he became Deputy Chairman and in 1959 he was Chairman. He brought with him his great experience from the City, both on financial matters and on management. I think his particular concern was management; he knew that this was the key to success. Of course, management means the well-being of the staff, and I know that he and Lady Hume, in the many travels they undertook to the various countries to see the schemes or Projects of the Corporation, used to do a great deal from the staff point of view to encourage them and to build them up. As I say, I think we all owe a great debt to him. Now we have the new Chairman, the noble Lord, Lord Howick of Glendale, who happily is of this House, and I know and you know the Corporation will continue in its successful way. It has done very well this year. One's hope is that with the new organisation, largely on the lines of the Sinclair Report, it will get new encouragement and will be able to do even better things than heretofore.

6.57 p.m.

LORD WALSTON

My Lords, I am glad that there have been those other noble Lords who have spoken and shown their interest in the affairs of the Corporation, and I am most grateful to them for the part they have taken, as well as to the noble Earl for his very comprehensive, if not always entirely convincing, answers. My regret is that the speeches, for some reason or another, have all come from this side of the House; and while I know that there are some people more willing to respond to blandishments by beckoning from ahead there are others who respond more readily to proddings from behind. It might have been as well if we had a few more proddings from behind as well as beckonings from ahead.

I would associate myself with what the noble Earl said about Sir Nutcombe Hume. It is clear that the success of the Corporation is in very large measure due to his leadership and work. It is not, fortunately for your Lordships, as well as for myself, the custom for me to reply in any detail to what has taken place during this debate, so I will forgo that temptation—and a very strong temptation, I must say, it is. I might diffidently suggest that perhaps the noble Earl and I might continue under the Chairmanship of the noble Lord, Lord Howick of Glendale, the discussion as to whether the Sinclair Report has been implemented or not. He would undoubtedly be a very independent chairman and I should be quite confident and happy to submit myself to his ruling.

The noble Earl spoke of the need for extra capital and said this was meant to be a revolving fund and therefore there should be no need for more capital. There are only one or two points I would make. The first is that shortly afterwards he referred to the pressing need of money on the existing projects, which suggests that he himself is not entirely happy about the money available. If the Corporation cannot do two or three things but must choose to do one, it is clear that money must be short.

THE EARL OF PERTH

Might I just make clear that it is not because of money shortage to-day that things aye not going forward. Quoting from what the Chairman said about this, I said it is not their immediate and pressing problem.

LORD WALSTON

I accept that. I know that there is still available £35 million. I was quoting the noble Earl's reply to my noble friend Lord Lucan, when he suggested that things were not to be done to implement it, because of the pressing financial need of other projects that could not be undertaken. But I would ask him to remember that the figure of £150 million was arrived at a good many years ago. Since then we have had quite a degree of inflation. If £150 million in terms of those days was the correct amount, surely there is an argument for increasing it at least by the amount by which the. £ has been devalued since then. At a rough guess, another £30 million or £40 million would bring it up to the figure originally intended.

I fully appreciate what the noble Lord said about the setting up of development corporations in former Colonies. I think that that is a fairly good "wangle" —quite a reasonable way of getting round a difficulty. It is rather like joining a club so that you can get a drink after hours, because you are not allowed to go to a pub; or, if you want to ply for hire with a taxi but are not licensed by the Metropolitan Police to do so, you invent the minicab. These are ingenious ways of getting round things; but I do not think it is quite in keeping with good government and the desire to help in this important matter, that the Colonial Development Corporation should be forced into these somewhat devious though perfectly respectable ways of getting round the difficulty, when there is a so much simpler and more effective way of doing it.

I am most grateful to the noble Earl for the faint ray of hope that he gave in not replying in the terms in which my noble friend Lord Lucan suggested that he might in regard to the suggestion of changing the name "Commonwealth" and extending activities to the Commonwealth. I am grateful for the ray of hope that he gave that this was being considered. We hope that when he speaks of calls in the future for review of the arrangement, that that will be in the relatively near future, especially in view of the points that have been raised by noble Lords in the debate.

Finally, I should like to take up the noble Lord on his remarks about the costliness of this undertaking—he told us that £20 million has been lost. It has not been irrevocably lost, even in financial terms. As he himself gave as an example, good may yet come even out of the Gambia experiment. But even if it has been lost, surely with the achievements of the Colonial Development Corporation over these years, if the cost to the country was no more than £20 million, I think that we should willingly pay that for the results that have been achieved. In addition to that, we have the sound investments which are in fact paying interest. In those circumstances, I think it is misleading to say that this has been a costly experiment. I am most grateful to all noble Lords for taking part in the debate, and I now beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.