HL Deb 03 July 1986 vol 477 cc1089-92

7.23 p.m.

Baroness Young

My Lords, I beg to move this Bill be now read a second time.

This Bill is a short and simple measure, amending the Crown Agents Act 1979. Its effect will be to extend until 1991 the period during which the Secretary of State has power to determine whether, and, if so, to what extent, the Crown Agents are required to pay interest on their commencing capital debt. Under existing legislation the power expires at the end of 1986.

The background to this Bill is as follows. The Crown Agents were founded more than 150 years ago, but it was not until 1st January 1980, following the Crown Agents Act 1979, that they were established as a statutory public corporation, controlled by a board appointed by the Secretary of State. The new corporation needed working capital, and the Act made provision for a commencing capital debt to be assumed by it. The amount of the debt, which was originally set at £30 million, has now through repayment been reduced to £17.8 million.

The Act requires that this debt be serviced, but Section 17 also empowered the Secretary of State to determine the amount, if any, of the interest paid, for an initial period of five years which would be extended to seven years by means of an order. The order was made and its effect expires on 31st December of the present year.

The Crown Agents paid some interest on the debt in the four years 1980 to 1983. In the latter year the loss of their Brunei business posed a major financial problem. The Board of Crown Agents took a hard look at the future of Crown Agents, both as regards its organisation and its finances. They drew up a comprehensive reorganisation plan, which involved substantial staff reductions and the sale of their headquarters offices in Westminster, followed by removal to Sutton. The Government endorsed these proposals in February 1984, with a view to privatisation in due course. In these circumstances we have agreed that no interest on the capital debt should be paid in 1984, 1985 and 1986.

The Crown Agents have carried out the reorganisation plan efficiently. They have moved their headquarters and reduced staff numbers from 1,200 to about 850. They continue to move towards privatisation, but no timetable has been set; enabling legislation would be required. We therefore need to continue the power to determine the extent to which Crown Agents should pay interest for a further limited period, until 1991. This is effective in Clause 1(a) of this short Bill. Clause 1(b) merely removes the necessity for any further order to be made to extend the power to waive interest, because the matter is fully covered by Clause 1 (a), where the limits are laid down.

I believe it to be to the general advantage that Crown Agents should continue to provide the services which it now provides both to its clients overseas and to this country, since very much of its business involves the export of British goods and services. This Bill will help to enable it to do so and I commend it to your Lordships.

Moved, That the Bill be now read a second time.—(Baroness Young.)

7.27 p.m.

Lord Oram

My Lords, I should like to thank the noble Baroness for explaining the Bill to us. As to its central purpose, there is nothing of a controversial nature, I think, between the two sides of the House. I notice that in another place when they reached the Committee stage they started at 10.30 in the morning and finished one minute later. I rather anticipate that when we reach the further stages in this House we can perhaps be even more expeditious.

We are this evening on the Second Reading and can therefore range somewhat wider in our consideration of the Bill. I should like to echo the words towards the end of the speech of the noble Baroness and the words which have been expressed in the other place commending the work that the Crown Agents do throughout the world. If one turns, for instance, to the last two pages of the annual report of the Crown Agents, one sees the great geographical spread and the great variety of activities as well as the very great number of the principals for which the Crown Agents act. One sees, too, earlier in the report the great variety and nature of the projects for which the Crown Agents offer their procurement services—all the way from postage stamps to equipment for power stations.

Clearly, therefore, it is in the interests of a great number of governments and a great proliferation of public and private institutions that this work should be facilitated. The noble Baroness has this evening explained that the financial progress of the organisation suffered a setback when Brunei decided no longer to use the services of the Crown Agents. They had been an important client of the Crown Agents. That, I understand, was, at least in part, the origin of this Bill and of the need to extend to 1991 the Government's power to waive interest on the Crown Agents' debt. We on this side acknowledge that that further facility is necessary.

I think that two more general observations are worth making, briefly. The chairman of the Crown Agents, in his report, pointed to the connection that there is between the business that his organisation achieves and the economic health of the developing countries which are its principals, many of them small and impoverished. It is clear that he would welcome an extended aid programme, which indirectly would bring greater business to the Crown Agents and to the many small firms in this country from which they make purchases on behalf of their clients.

My second observation is that I believe the confidence which so many governments place in the services of the Crown Agents is due in large part to the fact that they are dealing on a government-to-government basis. It is for that reason that we on these Benches view with apprehension the prospect which the noble Baroness has again repeated this evening: namely, the Government's proposal to privatise the Crown Agents. In my view, it will not benefit the organisation—it does not need privatisation—and it may well do it grave harm because of the breakdown in the confidence to which I have already referred.

The Minister for Overseas Development and the noble Baroness this evening have reiterated the Government's intention to privatise the Crown Agents, although we understand from the noble Baroness that no timetable has been set for that operation. I am not surprised, because the Crown Agents have been through a very difficult period. They are still building up their strength and, certainly from the market point of view, are not a prime apple to be picked. But that is for the future. One hopes we shall not get to that stage, but if and when the time does come we on this side will have a full opportunity for debating the matter and firmly resisting it. In the meantime, we are presented in this Bill with a much less provocative and significant proposition: the extension of the powers of the Government to waive interest if they think it appropriate. That is a proposition which we on our side can readily support.

7.32 p.m.

Baroness Young

My Lords, I should like to start by thanking the noble Lord, Lord Oram, for his support for the principle of this short, tactical Bill. I think the noble Lord accepts the point the Government have made, that this will be for the benefit of the Crown Agents. I was also glad to hear the tribute he paid to the work of the Crown Agents. I, too, looked at their last report; and what they have done in so many countries of the world is very impressive.

The noble Lord drew attention to a remark of the chairman of the Crown Agents on the connection between the amount of business achieved by British industries and the economic health of developing countries—the point being of course that the better off the developing country is the more likely it is to have more business with the United Kingdom—and to the chairman's statement that they would therefore welcome more aid.

As I think the noble Lord, Lord Oram, knows, there is increased provision for overseas aid, and this means that the real value of the aid programme should be more than maintained at its 1985–86 level, based on current estimates of inflation. It means in fact that aid will have maintained its real value since 1982–83. The planned increases over the 1985–86 level are by £57 million, £ 100 million and £ 140 million respectively in the next three financial years; so that the new total for 1986–87 will be £1,187 million.

The last point the noble Lord made was his concern about privatisation. He has noted the points made by my right honourable friend the Minister for Overseas Development in another place in regard to this Bill. I can do no more than reiterate the point he makes. I cannot anticipate the legislation that would bring about privatisation in due course. It is our intention that the Crown Agents should continue to move towards privatisation, but when we reach that point there would be legislation and of course there would be an opportunity for a full debate on the matter, as one would expect in respect of legislation. With those few remarks, I am very glad that the noble Lord, Lord Oram, has supported the principle of this short but useful Bill.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

Baroness Hooper

My Lords, I beg to move that this House do now adjourn during pleasure until eight o'clock.

[The Sitting was suspended from 7.36 to 8 p.m.]