HL Deb 05 June 1995 vol 564 cc1220-43

5.50 p.m.

Lord Trefgarne

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)

On Question, Motion agreed to

House in Committee accordingly.


Clause 1 [Powers of the Commonwealth Development Corporation]:

Lord Trefgarne moved Amendment No. 1:

Page 1, line 5, leave out ("Section 2 or).

The noble Lord said: In moving this amendment, I should like to speak to a number of other amendments. All of the amendments that I have tabled are in the nature of drafting amendments. They are in no case intended to change the substance of the Bill. On the contrary, they are intended simply to improve the drafting, wording and effect of the Bill. They are the result of widespread consultations between myself and the officials responsible for these things in various places.

Amendment No. 1 is a formal drafting amendment and I do not wish to detain the Committee on it. Moving then to Amendment No. 5, this amendment is intended to make no change to the substance of the Bill. As I explained on Second Reading, the purpose of Clauses 1, 2 and 3 of the Bill is to remove the limitation in the present CDC Act on the CDC purchasing existing shares, securities or assets, which severely inhibits the role which CDC will be playing to facilitate projects involving rehabilitation, buy-outs, buy-ins and similar "unbundling". I do not want to detain your Lordships on this extensive list of mere drafting amendments, and I therefore beg to move Amendment No. 1.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No.2:

Page 1, line 6, leave out ("as follows") and insert ("in accordance with subsections (2) to (5B) below.").

The noble Lord said: Again this is a straightforward drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Judd moved Amendment No. 3:

Page 1, line 6, at end insert: ("( ) After subsection (1) there shall be inserted— (1A) Up to 25 per cent of Corporation investment may be allocated to assisting overseas countries not currently in receipt of Corporation funds. (1B) When considering projects for investment, the Corporation shall have power to take cognisance of the 1994 Priority Objectives listed by the Overseas Development Administration in its Annual Report."").

The noble Lord said: The purpose of this amendment is to get on the record a cast-iron assurance from the Minister that she and the CDC are together firmly resolved to keep the corporation as an instrument of overall aid policy, with that policy's primary objective, as we understand it, of combating poverty by sustained development. It is also intended similarly to get equally firmly on the record art assurance that there will be no question of using the position of strength built up by the CDC, with its existing geographical involvements, as a base for speculating elsewhere where the glitter of short-term high returns may be attractive, thereby perhaps turning the corporation's back on at least some of those with whom it has co-operated successfully in the past or whose needs may be greater.

Whatever the arguments by CDC executives that the corporation has no intention of changing market focus from existing Commonwealth countries, page 11 of the corporate plan speaks of targeting, "turning-point countries" with their "high growth potential" and "comprehensive programmes of economic reform"—language which I take it is intended to refer to the prospects of privatisation.

If the CDC wants to be a bank, it has to realise that it is not a big bank. We shall therefore need to be convinced of, for example, the operational soundness of venturing into places like China, South-East Asia and Latin America. That is in addition to the importance of being absolutely clear about how greater involvement in countries like China can be reconciled with the Minister's repeated commitment to human rights and good governance.

On Second Reading the Minister underlined that at least 70 per cent. of new investment should be in poorer countries. That is reflected on page 20 of the corporation's current corporate plan. If we look carefully at the chart on page 20, however, we see interestingly that, although board approvals in the private sector are expected to rise from 90 per cent. in 1994 to 98 per cent. in 1997, board approvals in poor countries are expected to fall from 80 per cent. to 70 per cent. in the same period. It is imperative that the Minister addresses that point in her reply.

On page 7 of the corporate plan we are told in highlighted print that the fundamental objective of the corporation is, to contribute to economic development by investing in and supporting the operations of financially viable and developmentally sound business enterprises". No mention here of the Commonwealth or of poor countries.

Perhaps it is not surprising, therefore, that some sceptics have suggested that that would make CDC little different from Barclays International. They have asked why we need a CDC if it has no specific. Commonwealth commitment and no overriding criterion of seeking development in poorer countries. There is genuine anxiety that CDC is becoming over-ambitious about its rate of return on investment. According to the corporate plan, that is to go up from 8.4 per cent. in 1995 (which is already better than it could do in the long run by investing in UK blue-chip equities) to 9.9 per cent. in 1997. The fear is that in consequence CDC will increasingly have to look for isolated high return opportunities elsewhere. They are likely to be high risk. Is that really the way CDC wants to go? We need to know a good deal about the real rationale behind that policy.

The Minister and the board must surely be aware of the misgivings which are generated when everything to which I have referred is coupled with the reference on page 24 of the plan to "performance-related culture", with the inevitable deduction that performance in this context is above all about the return on financial investment rather than about a healthy balance between essential financial disciplines and social development as part of the aid and development programme.

The Minister is a consummate politician. If I may say so, she is a real charmer. At times I believe that she could be a masterful salesman of refrigerators to Eskimos, but we cannot let her get away without facing the analysis that this apparently innocuous little Bill of the noble Lord, Lord Trefgarne, is so warmly supported by the Government because with all its emphasis on achieving high rates of return—according to page 48 of the plan, there is the prospect of a net asset position of £1,309 million in 1996—CDC could be sold off quite easily to a major bank, allowing yet another nice little nest-egg for the Chancellor to add to a pre-election tax-cutting Budget. No, the Minister and, indeed, the noble Lord, Lord Trefgarne, still have a good deal of convincing to do. They must reassure us today as to how, well into the future, the proposed changes will fulfil the purpose of the corporation as enshrined in the 1978 Act; namely: to assist overseas countries … in the development of their economies". That is a very much bigger challenge than merely concentrating upon maximising rates of return.

By restraining any excesses in the: new financial enthusiasms, by retaining a significant commitment to spheres where CDC has an effective proven record, our amendment is intended to help deal with the uncertainties which have arisen. I fervently hope that by their specific undertakings today the Minister and the noble Lord, Lord Trefgarne, will render the amendment unnecessary. I beg to move.

6 p.m.

Lord Thurlow

The noble Lord, Lord Judd, has made our hair stand on end by painting a picture of possible changes in the administration and policies of the CDC, which would, in effect, transform it from the CDC to which we have become used over so many years and indeed whose purpose we have admired so much for so many years. I have some sympathy of course with the point that the noble Lord made: that if such a transformation were to take effect none of us in the House would welcome it, including, I am sure, those on the Government Benches and certainly not the noble Lord, Lord Trefgarne.

It seems to me that there are two large and substantial safeguards against such a transformation. First, there is the practice of close consultation between the CDC and the ODA. As I understand it, that has become an institutional convention, and I would find it difficult to believe that in the course of such periodical and renewed consultations changes of the kind that the noble Lord, Lord Judd, fears would not come to light and be disposed of.

The second safeguard is the track record. Those of us who have watched the work of the CDC over the years have great confidence in the way that its work has developed and the manner in which it has achieved its objectives. I for one retain confidence that in the future the objectives and principles will continue to determine how changes are handled, and, I believe, like the noble Lord, Lord Trefgarne, as was made clear on Second Reading, that those will contribute greatly to valuable further expansion to the great benefit of the recipient countries, including the poorer countries.

Baroness Chalker of Wallasey

It may be for the convenience of the Committee if I intervene at this stage. When the noble Lord, Lord Judd, was inviting me to think about selling fridges to Eskimos I wondered whether I should not just put him right. If an Eskimo really wanted a fridge and wanted to pay the right price for it, I would be willing to sell it to him, but my concern is to get fridges for drugs to hot countries; in other words, I look at the real situation and what is needed. That is when I begin my selling. I do not sell things to people who neither want them nor can afford to pay for them.

With that preamble, I say to the noble Lord, Lord Judd, that there is nothing in his amendment except that it is a probing amendment. He believes genuinely, as do the Government, that aid policy and indeed the CDC (the private investment arm of aid policy) are designed to combat poverty by sustainable development. That is the cast-iron assurance for which he asked me.

The amendments tabled by the noble Lord would prevent more than 25 per cent. of CDC funds going to countries in which the CDC does not currently invest, and would also give the CDC power to take account of ODA priorities. There is nothing in my noble friend's Bill as it stands that would change the spread of countries in which the CDC works. Rather, the provisions which are the result of the quinquennial review of the CDC will enable it to respond more effectively to the changing needs of those countries; in other words, to provide for the hot countries the fridges in which to keep their immunisation drugs. I return to the analogy.

We have always looked to the CDC to take a view on where it is best placed to deploy its particular skills. It needs specific ministerial permission to extend its activities to new countries, or indeed new ventures, which the noble Lord feared might take it down the path of suddenly turning itself into a bank. I can assure the noble Lord that that is not within its remit. We obviously consider carefully each application, looking at CDC's remit and wider aid policy interests. Nevertheless, it is right that additions are made from time to time. I am sure that the noble Lord, Lord Judd, welcomed the important recent extension of CDC's operations to South Africa, for instance.

The noble Lord mentioned China, Latin America, and other countries in South-East Asia in general terms. Investment in China is not an immediate prospect. The CDC has not asked to operate there. I realise that there will always be informal discussions between officials of the issues that might be addressed should it so ask, but it has not done so.

With regard to Latin America, I am not aware of any great interest on the part of CDC in extending its work into South America. It has some recent permissions to operate in a number of central American countries, but those are all countries which fit entirely within the remit which the noble Lord would give it: to combat poverty by sustainable development. I speak of Nicaragua in 1991, the Dominican Republic in 1992, Guatemala in 1993 and E1 Salvador last year. Those fit extremely well alongside the CDC's regional operations in the Caribbean and are certainly nothing to be afraid of. The same policy goes for other countries as well.

We realise that many countries do not have the respect for the rule of law and human rights that we would wish them to have, but we know that we persuade better through contact with them rather than eliminating prospects for change by isolating them still further.

Perhaps I may return to our present position. The main driver of the CDC's country coverage is the 70 per cent. target which I have set for poor countries. Although the noble Lord made play with the 1994 versus the 1997 figures in the CDC plan, the 70 per cent. target is reasonable when one looks at the per capita incomes of the poor countries and their proportion, in particular within the Commonwealth. I believe that that 70 per cent. target is as it should be and it certainly is not being changed. When I intervened on Second Reading, I said that there should be no diversion of activity to middle-income countries. The CDC is well aware of the fact that the ODA will watch that most carefully.

The CDC still has a large proportion of its investments in Commonwealth countries; it is now some 71 per cent. I am delighted that the majority of its offices are in Commonwealth countries, although that does not mean that it should operate only in Commonwealth countries—we have never restricted it to that. I understand that the CDC has set an internal target of putting not less than 30 per cent. of its new investments in sub-Saharan Africa. That is where there is a concentration of Commonwealth countries and of need. We welcome what the CDC is doing. It has more than half of its overseas offices in sub-Saharan Africa and it is constantly looking for new ways to stimulate the economies of those countries.

There is much that one could say about the role of the CDC and our objectives. Above all, using different instruments, we seek to address the individual objectives of countries. The CDC has a particular focus on the priority objectives of promoting economic reform and enhancing productive capacity, rather than the equally important objectives, which the ODA certainly has, of better education and health, children by choice and so forth. Therefore, the CDC is an important vehicle and I believe that through our established strategic planning system it already has clear regard to the objectives of the ODA. It is a public-sector body and as such it will continue to do so. In that regard, no change is envisaged either by my department or in the Bill brought forward by my noble friend Lord Trefgarne. That is why I do not believe that it would be appropriate to write into the Bill as specific a requirement as that proposed by the noble Lord, Lord Judd, in his amendment, and I urge the Committee to reject it.

6.15 p.m.

Lord Trefgarne

I wish to deal in more general terms with the anxieties expressed by the noble Lords, Lord Judd and Lord Rea, not only today but during the earlier stage of the Bill. In responding to the amendments tabled by both noble Lords, I propose to look beyond their texts, as did my noble friend Lady Chalker most eloquently and helpfully, and to direct my remarks to the anxieties which seem to underlie them. They were addressed by the noble Lord, Lord Judd, today and in his speech on Second Reading. He made clear the fact that what matters is not only the present situation, with the present human chemistry, but what might be opened up to a completely different set of players at some time in the future.

It is right that Members of the Committee should air their anxieties, many of which I have shared and would continue to share had I not had the benefit of receiving a great deal of information from the corporation about itself and its operations. I understand that recently the noble Lords, Lord Judd and Lord Rea, had discussions with the corporation. It is also right that the Committee stage of the Bill should provide an occasion on which Members should be more generally and publicly reassured on such issues. Therefore, I counsel against assigning to my Bill any greater importance than it has.

Neither the Bill as a whole nor any amendment which stands in my name is intended to change the CDC, its purpose or the long-standing principles on which it operates. All are centred on assisting overseas countries to achieve sustainable economic development. The CDC's sole statutory purpose under Section 2(1) of the 1978 Act is to assist overseas countries in the development of their economies. It has no separate or hidden agenda. Although, obviously, it seeks to invest in financially and economically viable projects, and thus to operate in surplus, it does not do that for its own sake but for the benefits of the countries in which it operates.

An enfeebled CDC is no good to anyone. The CDC has no shareholders; its surpluses are not distributed; and the greater the surplus the more development the CDC can undertake. Development is at the very centre of the CDC. That is reflected even in its logo, where the central D is printed much larger and in a more striking form than the Cs on either side. The CDC is and will remain first and foremost a development organisation.

The wording of Section 2 of the 1978 consolidating Act, which this Bill will amend, has been substantially unchanged since 1956. This Bill and the amendments seek to give the CDC means which are appropriate in this day and age, given the present economic order in the developing countries and the changing priorities in the host countries themselves. There is nothing sinister in the Bill. The amendments, which employ words such as "reorganisation", "rationalisation" and "reconstruction", seek to describe the possible means by which, among other things, productive capacity may ultimately be increased and solid economic development achieved.

Nor will the Bill and the amendments affect the CDC's commitment to pursue its targets; for instance, providing assistance predominantly to poor countries. In 1994, 82 per cent. of approvals were in poor countries, which is well above the target set by Ministers. Nor will the Bill affect the CDC's practice of assessing the economic rate of return as part of project appraisal and its consideration of other development criteria, such as environmental impact, health and safety and other social issues.

Therefore, it is safe to assume that the CDC, following the enactment of the Bill with its amendments, will be pursuing the same objectives by substantially the same means but with important new powers to do better more effectively, at an earlier stage and in a more fundamental way. For example, in a single southern African country there is at present a long list of projects which would manifestly benefit the economy of the country concerned but which are either outside the CDC's present powers or will severely challenge the lawyers to construct the project in such a way as to bring it within its present powers.

It cannot be in the CDC's interests—nor in the interests of those, including ultimately Parliament, whose task it is to monitor the CDC's operations—for the CDC to be operating at the margin of its powers. It has been given a mandate within the aid programme administered by the ODA to be the principal instrument of aid in the private sector. That reflects current economic thinking throughout the developed and developing world, as is evidenced by the IMF and World Bank-promoted economic recovery programmes. Sometimes following such a programme, economic conditions in a country may be more robust but simply not conducive to new investment. In some cases, the CDC as a development organisation is almost isolated in its willingness to stay with investment in a host country and to act as a vital catalyst in demonstrating that profitable investment can be made.

Given the widespread support for the work of the corporation which was expressed in all parts of the Chamber during the passage of the recent Government CDC Bill and during the Second Reading debate of this Bill, I believe that Parliament may be willing to give the CDC the tools that it needs to fulfil its mandate as efficiently and effectively as possible. My noble friend Lady Chalker touched on the question of the countries in which the CDC may be allowed to operate and therefore I do not need to dwell on that matter.

I turn now to the criticism that has been made that CDC is in some way duplicating the operations of other institutions. It is not. Members of the Committee will not need reminding of the size of the task in relation to development in the poorer countries. As CDC does not intend to operate in Eastern Europe, there is clearly no conflict with the operations of the European Bank for Reconstruction and Development, although even in its area of operation, the EBRD would presumably not do everything which is required. Other institutions are active there, including other bilateral institutions of European Union countries broadly comparable with CDC.

Although flows of private capital are increasing gratifyingly in global terms, they still tend to be concentrated in Asia and, to some extent, in Latin America. In the poorer countries—in particular in sub-Saharan Africa, where CDC concentrates its efforts—the task requires the efforts of more than one institution, although probably none offers quite the unique contribution which CDC has traditionally made and continues to make, particularly by offering management, especially in agri-business.

CDC has no intention of departing from its core activities and nothing in the Bill nor the amendments implies that. CDC's international reputation is built largely on its capacity to assist in making development happen. That frequently involves a hands-on approach which leads to corporate management. That area of CDC's activities has been strengthened recently by the creation of a managed business department which currently has responsibility for some 27 businesses, employing 44,000 people mainly in agri-business but also in industry. Fourteen of those businesses are in sub-Saharan Africa.

How then will the extended powers proposed in this Bill help? The most important proposed new power is that which, in the language of the amendments, will enable CDC to be involved in reorganisation, rationalisation and reconstruction of enterprises. At present CDC can be involved only in the promotion of new or the expansion of existing enterprises with the implication that CDC's funds can be applied normally only to funding the purchase of new shares, securities or assets so as to create some additionality.

As I outlined on Second Reading, that restriction has seriously inhibited CDC's role in a number of projects which are eminently worth while for the benefit of the economies of host countries. Whether an existing enterprise is in the private or public sector, it is frequently a change of ownership with the consequential change of management which is the key to transforming the enterprise for the benefit of the economy. That always involves an element of organisation, rationalisation or reconstruction, whether corporate or financial.

Expansion often follows at a significantly later stage in the process. If CDC is to be confined to investing in the expansion of the enterprise, it will be deprived of having influence at the vital formative stage. To require CDC to participate in the equity at a significantly more expensive stage when the enterprise is ready to undertake its expansion is unduly limiting. That confines the CDC to funding the expansion with loan only, with less opportunity to influence outcomes or share in any upside potential. If CDC shares in the risk of investing in poor developing countries, it seems reasonable that it should share also in the reward. The greater the reward, the greater the resource CDC has to undertake more development. Present limitations prevent many worthwhile projects even being considered. A number of CDC's representatives regard that as a serious obstacle to bringing forward new projects.

In the area of capital or other financial markets, CDC is not looking for powers to circulate by way of passive investment. It is looking to have positive development benefit directed less to investment activity than focusing on the promotion of successful funds which may attract private sector investors. There may be cases where the economic development of host countries is assisted by the promotion of funds which are able to invest in existing equities. It was the inability of CDC to fulfil its natural and expected role as primary UK investor in the Commonwealth Equity Fund, promoted by Commonwealth Finance Ministers and heads of government in 1988–89, that first prompted CDC, supported by the ODA, to seek this power. Even then there were proposals for a rapid enabling Bill but that had to be dropped because of pressures on the parliamentary timetable. Since then, CDC has had to decline invitations to participate in funds sponsored by IFC, the private sector affiliate of the World Bank designed to benefit the emerging economies of overseas countries.

The extended power is not intended to enable CDC to engage in derivatives or other more exotic markets. The Committee will remember that, before any investment decision is made by CDC, the corporation must be satisfied that it will contribute to its sole purpose of assisting the development of economies in host countries.

In regard to the extended power of consultancy, it is necessary only to facilitate the occasional positive response to a request for consultancy in or in relation to developing countries but which is unrelated to a project in which CDC might invest. It is likely to be in an area where CDC has particular knowledge and experience through its core activities, including financial intermediaries and institution-building.

I hope that I have dealt with the main anxieties expressed by the noble Lords, Lord Judd and Lord Rea, but, if I can give any further help or reassurance, I shall be happy to do so either now or in response to later amendments.

Lord Judd

I hope that the noble Lord, Lord Trefgarne, will forgive me if I do not deal with all the points that he raised at this stage, because I am sure that Members of the Committee will agree that, in a very useful intervention, he has dealt with some of the matters which arise under subsequent amendments.

First, I turn to what the noble Lord, Lord Thurlow, said, in what I thought was a very considered and helpful intervention. He emphasised the tremendous record of good working relationships between CDC and Ministers and the importance of consultation. That is certainly my experience. It is part of the fine tradition which we all applaud. That is why it has worked well. But that is a tradition based upon the reasonableness of Ministers and Ministers' understanding of the issues in relation to development and the needs of countries with which the noble Lord is so well acquainted.

My anxiety is that we cannot be absolutely certain, particularly in the times in which we live, that that balanced reasonableness will always exist. I am worried that inadvertently, we shall open the way for people who have very different approaches to CDC's task. None of us has any anxieties about the noble Baroness opposite. We all know that she masquerades on those Benches but she belongs to us. We have no difficulty about that. But the difficulty is that she cannot be expected to be there for ever. We know also that quite often she has problems and difficulties in seeing that her priorities prevail. There are others elsewhere in government who sometimes undermine her intentions. For those reasons, we have raised the anxieties behind these amendments.

The Minister spoke—I said that she is a charmer and I thought that she was at her best this evening—about her joy in selling people what they want. I do not doubt that she gets tremendous satisfaction from selling people what they want. But that is not the issue. Which people are we talking about? Are we talking about the impoverished millions still in the third world whom we wish to bring in to participate in the real economy? That is a task to which the CDC has lent itself with distinction in the past. Are we talking about the overwhelming desire of millions of people in Africa, Asia, and Latin America who wish for nothing more than to be able to become productive? Or are we talking about business people in the third world who may not share that priority and who see business as an opportunity to maximise personal advantage? We need to be reassured about that.

The Minister referred to South Africa. She knew that she would strike a chord when she did it because she and I have a strong mutual interest in South Africa and the well-being of that great country. But it is not just a question of ensuring that businessmen or business interests in South Africa are helped; it is which businessmen and which business interests are helped and how far those interests and those business people are committed to the people as a whole and to ensuring that their businesses contribute to social development. That of course brings us to the essence of what is behind so much of the anxiety about change in the role of the CDC.

While we have such admiration for CDC's record in the past, there must always be a tension. That tension is between business disciplines, which we all applaud—a belief that the private sector has a real contribution to make—again, that is something upon which we are all agreed—the desire to help the private sector make that contribution effectively, and at the same time, the need to ensure that all that is attuned to the strategy of social development for the people as a whole and maximising the number of those who are put in a position in which they can find their own way forward by participating in the processes of self-generating development.

When I refer to what I might describe as that "necessary tension", I must say that I could not help being a little confused by what the Minister said this afternoon. Again, the noble Baroness emphasised her commitment to 70 per cent. However, if she will forgive me for saying so, what the noble Baroness glossed over is the fact that in 1994 it was 80 per cent. in the poorer countries. Therefore, that is a decline in the proportionate sense in the period of the business plan. I see that the Minister wishes to intervene. I give way.

6.30 p.m.

Baroness Chalker of Wallasey

I am much obliged. I am sorry that the noble Lord, Lord Judd, either misheard me or I was perhaps indistinct; indeed, only the record of Hansard will show which is the case. However, perhaps I may remind the noble Lord that the CDC has to operate within the ministerial directives which I set out in my statement to the House last year following the quinquennial review. Those directives stress the following: at least 70 per cent. of new investment should be in poor countries; and there should be a rate of return on capital of at least 8 per cent. The CDC has to meet both those objectives. Therefore it is no good the noble Lord, Lord Judd, quoting selectively, as he did when speaking to an earlier amendment, from the corporate plan on the objectives without mentioning its work for the other sectors. Both those objectives have to be achieved. I hope that we are now clear that at least 70 per cent. of new investment must be in poor countries and that a rate of return on capital of at least 8 per cent. must be achieved.

Lord Judd

I am most grateful to the Minister for her intervention. However, it still leaves unanswered—if the noble Baroness will forgive me for saying so—the fact that in 1994 the figure was 80 per cent. in respect of poorer countries. The Minister also referred to the target of at least 8 per cent. return; indeed, the CDC prides itself on doing better. In its corporate plan, it has set itself the objective of moving to 9.9 per cent. as I said when introducing the amendment. That is where the anxieties begin to arise because, inevitably, people begin to feel that the balance between the business discipline and the social purpose is getting out of hand. In that sense, it is inevitable that people will look most closely at what is happening.

Before I conclude, perhaps I may deal with one or two of the points raised by the noble Lord, Lord Trefgarne. He said that his Bill was not about changing the role of the CDC. I find that a bit disingenuous; indeed, it seems to me that the legislation is very much about extending and thereby changing the role of the corporation. The noble Lord should be proud that he is introducing a Bill which has purpose. It is not just a cypher, it is a real Bill with a real purpose. All we are saying is that, as the change takes place, we must be quite certain not just about what happens now but also about what may happen down the road.

I was both interested and reassured by what the noble Lord said about the emphasis on the "hands-on" approach by the CDC and about the importance of the creation of the managed business department within the corporation. Those are all good things. However, we have listened to all the arguments. There is much meat and much good intent there. We shall want to take the matter away and ponder carefully upon it. As I said, I do not in any way question the commitment of the present Minister; nor, I think, do I challenge the present leadership of the CDC. However, we do not want the CDC inadvertently to desert the distinguished and effective role that it has played in development as it chases after a new, glittering temptation of becoming a kind of investment bank. Of course, we made such points on Second Reading. In the present circumstances, I believe that it is important to look most carefully at what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Trefgarne moved Amendment No. 4:

Page 1, line 7, after ("(2) (a)") insert ("of section 2 (purpose and powers of Corporation)").

The noble Lord said: When I spoke to Amendment No. 1 a few moments ago, I inadvertently jumbled the amendments to which I was also supposed to be speaking. I apologise to Members of the Committee for that fact. I should have said that I was speaking at the same time to Amendments Nos. 2, 4, 8, 12 and 16. We have of course now dealt with Amendment No. 2 and are currently dealing with Amendment No. 4. Moreover, in a moment or two we shall be dealing with Amendments Nos. 8, 12 and 16. However, the arguments are not the same. They are simple drafting amendments. The earlier amendments commended themselves to the Committee. I hope that that will be the case with Amendment No. 4. I beg to move.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 5:

Page 1, line 9, leave out from ("words") to ("in") in line 10 and insert (""creation, promotion, expansion, reorganisation or rationalisation").

The noble Lord said: Again, as I said earlier, the amendment is not one of substance. However, perhaps I may speak at the same time to Amendments Nos. 9 and 18, which are related. As I explained on Second Reading, the purpose of Clause 1(2) and (3) of my Bill is to remove the limitation in the present CDC Act on the corporation's purchasing of existing shares, securities or assets which severely inhibits the role that the corporation should be playing in facilitating projects involving rehabilitation, buy-outs, buy-ins or similar unbundling exercises which are likely to continue to constitute a significant part of CDC's new investment, particularly in Africa.

On further examination, it was felt that the words "regeneration" or "reconstruction" did not fully and clearly reflect the variety of projects which need to be covered. It was also felt to be neater and more consistent to the scheme of the present CDC Act not to include a definition of "reconstruction" within Section 2 of the 1978 Act, but rather to list it in a different style as one of the provisions supplemental to Section 2 along with the others in Section 4 of the Act.

The words, "promotion" and "expansion" are already contained in Section 2 of the legislation. The words added to my Bill are, "creation … reorganisation [and] rationalisation". The word "creation" was added because the Bill removes the present distinction between new and existing enterprises. The word "reorganisation" is defined as including corporate or financial reconstruction, while rationalisation recognises the variety of situations in which the CDC may be involved in different projects involving existing enterprises.

I repeat that the clause, with its proposed amendments, is intended to give CDC more flexibility, in particular to enable it to purchase existing shares, securities or assets. On the basis of that explanation, I hope that Members of the Committee will agree to Amendment No. 5 and those subsequent to it that I have mentioned. I beg to move.

On Question, amendment agreed to.

Lord Judd moved Amendment No. 6:

Page 1, line 10, after ("reconstruction)") insert ("where such reconstruction leads directly to increased investment in productive capacity").

The noble Lord said: In speaking to the above amendment, I should like to speak also to Amendments Nos. 7, 10 and 11; and, indeed, say a few words about Amendment No. 14 in that context. On page 8 of the CDC's corporate plan we read: Additionality is central to the rationale for CDC's existence as a public sector body". What is not clear, we suggest, from this Bill is precisely how the new powers of purchasing equity funds—tokens of ownership of existing assets, not the creation of new assets—meet this criterion.

I have been rereading our Second Reading debate. In that debate the noble Lord, Lord Trefgarne, drew attention to how Section 2 of the 1978 Act—indeed he has done it again today—envisages CDC's investment funds passing directly or indirectly to the project company for the promotion of new or the expansion of existing enterprises, and how CDC's funds should be applied primarily to additional assets or capacity. The noble Lord emphasised in the Second Reading debate—as I say, he has done it again this evening—the word "additional". He then spoke of what he perceived as the limitations and inhibitions of these arrangements. But why should CDC get involved in asset trading related to buy outs and the like—that is, of course, coded language for privatisation—if such activity leads to no new investment? There will, of course, be juicy commissions and merchant bank fees associated with such activity, but exactly what is its relevance to development?

The Minister really must demonstrate this relationship if we are to be reassured. Shares, securities and assets, to which the noble Lord referred, lead us into the realm of derivatives. Is this an aspect of western capital markets that would really help the third world? As the distinguished CDC board member, Sir William Ryrie, a director of Barings, knows all too well, Barings went broke through derivatives. It would be good to know what lesson from that he believes should be applied at CDC to guarantee protection against a similar fate for the corporation itself, or for those it aims to assist. It is salutary to note that the UK, as Europe's leading privatiser, has had the lowest average growth rate over the past 15 years. Where is the evidence of a demonstrable correlation between privatisation and economic growth?

As I have already argued, the 1978 Act firmly charges CDC with assisting overseas countries in the development of their economies as a whole. There was an interesting reference in our Second Reading deliberations on the part of the noble Viscount, Lord Waverley, to CDC's intention to shift from support for primary agricultural production to, more downstream processing and marketing". This, I would suggest, is precisely the wrong time to be disengaging from investment in food production. There is at last a prospect of a significant diminishing of food dumping by wealthier countries. When that happens, food prices will go up and developing countries can only benefit as a result. Just what is the CDC analysis that is leading it by contrast to concentrate at this very time on the frothy end of the economy, presumably including the service sector? Surely the priority remains to secure the basic infrastructure. It is our concern for the real economy of developing countries and the real people who make the real economies of developing countries, and for widening the base of both people involved in that real productive economy and the people benefiting from it, which leads us to table this amendment.

In the United Kingdom the poorest have become poorer in the age of privatisation. The overseas aid and development programme, of which CDC is a part, is about assisting the poor. How does the Minister square this circle? I very much hope she can reassure us today that the CDC mesmerisation with pump-priming privatisations is not being allowed to carry it away. I conclude by drawing attention to Amendments Nos. 7 and 11. In these amendments we are basically saying that, whatever the merits for the new investment which the Bill will make possible, it must not be allowed to create a situation in which new investment is conditional on privatisation, and that there will still be a very important need for investment in the public sector and indeed for investment in other aspects of social and economic infrastructure. Our amendments are intended to underline this. I beg to move.

6.45 p.m.

Lord Trefgarne

I hope that the noble Lord will allow me to say again that there is absolutely no intention within my Bill to drive CDC into the new areas of activity, many of which he considers undesirable and many of which I equally consider undesirable, and many of which—if not all of which—the CDC likewise considers undesirable. I dare say that my noble friend Lady Chalker also considers them undesirable. I believe that the noble Lord's fears are unfounded. His aspirations for CDC are, I believe, the same as mine. I hope therefore that on that basis he will consider his fears unfounded.

Lord Kindersley

I declare an interest as chairman of CDC during nine years of the 1980s. It was the most fulfilling time of my career and I have an enormous affection and admiration for the corporation and everything that it still does. I detect in the amendments being put forward a fear of privatisation and financial manipulation that may stem from this Bill. That distresses me enormously because during my time with CDC it was clear that the countries which had recently gained independence and had nationalised much of their prime assets, including their agricultural estates, had got themselves into a terrible mess, particularly in Africa.

Before I left just a few glimmers of light were appearing and even countries still devoted to government power in its many facets were beginning to hand back those estates to the likes of CDC and even private entrepreneurs to try to get them to replace the enormous void that had been opened up by the mismanagement of those affairs. That is a role that I am sure CDC is continuing to play, and will continue to play, and is certainly not prevented from playing by anything that I can see in this Bill.

The other fear seems to be that anything to do with finance is bad and anything to do with production, manufacturing, or production of agricultural goods, is good. Mention was made of Sir William Ryrie who happened to be permanent secretary at ODA for part of the time that I was chairman of CDC. He was a marvellous permanent secretary and he later became chief executive of the IFC where he performed another tremendous job in building up IFC and its role in the developing world. One of his targets was to set up stock exchanges in developing countries where people did not feel that there was any prospect of that sort of thing coming about. He succeeded, and by so doing he succeeded in attracting investors and private capital to those countries. That has made an enormous impact on those countries. That is just one example of the way in which the financial role that is being allowed to CDC by this Bill could provide CDC with a marvellous new dimension for CDC to continue to make its mark in the developing world.

There are two more points which I hope I shall be allowed to make. First, it seems to me that it is essential to allow CDC, which has had much consultation in the preparation of this Bill, to interpret how most effectively it can fulfil its developmental role. I am sure that Members of the Committee on both sides of the Chamber would agree that CDC is the most effectively placed to make that interpretation. The developing world does not stand still. Even the poorest countries move forward, and CDC has to keep in step with the movements in those countries. They include—thank goodness—a certain element of financial sophistication. It is that which CDC must encourage in order to make those countries of interest to private capital from all parts of the world, not just from this country.

Secondly, please do not hamstring CDC still further with amendments to the Bill. It is a simple Bill. It gives CDC the necessary powers. However, during my time at CDC I have seen that any amendment can be interpreted in a very negative way by those who wish so to interpret it. There are so many constraints on the activities of CDC. My enjoyment of my nine years was enormous, but to some degree it was spoilt by seeing how much time I and many other members of senior management had to take with specific and general reviews of its activities. The more amendments and the more complicated such Bills are, the more scope there is for the most well intentioned civil servants to waste the time and divert the efforts of management from development into very negative processes. So please let this Bill fulfil its intent: that is, to give CDC more powers. Do not litter the Bill with amendments which will be time consuming in their interpretation in the future.

Baroness Chalker of Wallasey

Perhaps I may respond in some way to the speech of the noble Lord, Lord Judd, on Amendment No. 6, which is grouped with Amendments Nos. 7, 10 and 11. It may be for the convenience of the Committee if I say at the outset that the amendments of the noble Lord, Lord Judd, would nullify the proposed changes to CDC's powers. They would result in denying the CDC the very powers which it seeks under the legislation before the Committee tonight.

The amendments may be probing. Perhaps they are put forward in order to examine the extent to which the amendments of the noble Lord, Lord Trefgarne, will affect what CDC does. However, as my noble friend Lord Kindersley said, in the remarks of the noble Lord, Lord Judd, one senses a rather deep dislike of anything to do with privatisation.

I remember well the time when my noble friend Lord Kindersley was chairman of CDC. He is absolutely right to say that those who sought to take into public ownership many of the previously profitable organisations in those countries did not look far ahead in what they were doing. The contrast between that time and now is this. Having realised that parastatals were wasteful and did not produce what their countries needed, country after country has begged help to denationalise (if I may use a British word). They have begged us to help with reform of their parastatals. The question that they ask is: "How do we put ourselves in a position where we can attract investment in order to get us out of this trough of zero—in some cases negative—growth"? In many countries areas of agriculture in particular have literally lain fallow because of the lack of investment and management.

Therefore the situation is not as the noble Lord, Lord Judd, sought to state: that privatisation has been a bad thing. Help for parastatal reform is a constant request to my department; and help with new investment is a constant request to CDC in the countries in which it operates. I cannot believe that the noble Lord's fears are based on anything except a misreading of the real situation.

When the noble Viscount, Lord Waverley, spoke at Second Reading—sadly, he is not present tonight—he talked about additionality, as did my noble friend Lord Trefgarne. Countries wish to add value to their basic production in order to obtain a greater growth in their agro-industries. They wish to widen the base of their agro-economies. That is one of the aspects on which CDC has been most successful in helping many developing countries: to widen the base of their operation in order to obtain growth. It is that very growth which will help those countries to have a sound indigenous private sector. In the long term the developing countries will reduce their dependence on foreign investment. I know that to be the ultimate aim of CDC: to assist successful businesses so that they can stand on their own feet and reduce dependence on foreign investment.

I turn back to the Bill and the amendments before us. There is nothing in my noble friend's Bill which fundamentally changes the way that CDC operates. It does not affect CDC's statutory purpose: to assist in the development of the economies of the developing countries. Everything that CDC does has to serve that purpose. What the Bill allows CDC to do is associate itself with the very necessary preliminary steps to develop those economies: to put businesses into a shape in which in due course they can be more productive.

I have made it quite clear to CDC, and I repeat it to the Committee tonight, that CDC should not engage in financial engineering for its own sake, either in relation to the reconstruction of businesses or the promotion of capital and other financial markets. Financial reconstruction should always be a means to an end, not an end in itself. Sometimes it may be a necessary precursor to further development. In such circumstances it would be wrong to prevent that being a condition, as the Opposition amendment would require.

CDC has no powers, nor does it have any intention, to become involved in derivatives. I wish to make that clear. CDC does not derive income from merchant banking activities such as advising on share placement. What it does and what it wants to do, by agreement with Government, is to help restore failed public companies in poor countries. Indeed, many ask for help and to rescue them often requires a financial reconstruction first, as I mentioned a moment ago, before one can undertake any new fiscal investment. That is what the Bill permits CDC to do. I give way to the noble Lord, Lord Judd.

Lord Judd

I am most grateful to the Minister for giving way. I find some of her remarks the most helpful and reassuring that we have heard today. However, I hope that she will go a little further. I hope that I do not anticipate what she had intended to do.

I detect a slight difference of emphasis—it may be more than slight—between her approach and, with great respect, what the noble Lord, Lord Trefgarne, appears to have said. At both Second Reading and tonight he expressed some anxiety about the inhibitions placed upon CDC with existing legislation because of its emphasis on additionality. I understand the Minister to say that she looks to anything which CDC does as a means to an end. By implication I hope that she means expansion, more production, and so on. Could she say a little more about that?

7 p.m.

Baroness Chalker of Wallasey

I am not entirely sure that I grasp what the noble Lord is getting at. I sought to be absolutely clear and I do not find my remarks to be at variance with anything that my noble friends Lord Trefgarne and Lord Kindersley have said in this House on the subject. The point about the needs of the developing countries which have businesses in a parlous state is that frequently those countries not only need the professional advice which CDC can give but also a high degree of financial restructuring where a business is no business at all, where it is in dire financial straits.

We have always felt that it is important to ensure that there is supervision over the CDC's statutory powers. But we have a well-established system for doing that. When CDC considers a parastatal to be in great trouble or that a public company could do far better and, for example, could bring back into production fields of sugar beet and arable areas which have been lying fallow because they have not received investment either in machinery or activity, sometimes that public company in a poor country has to give up an activity which it should not be engaged in. That requires a degree of financial restructuring. One could say that getting a country or business into an area in which it has not been engaged is an additional activity. That activity is usually a new physical investment, but other things can be done with existing production which may add value. That could also be an additional activity in another sense.

For example, there is no harm in helping a cocoa-producing country to add value to its product so that it can earn a higher return in overseas exports. If that kind of advice is being given, it makes good, sound common sense. I repeat that I see nothing in what my noble friends Lord Trefgarne and Lord Kindersley have said that differs from anything I have said.

Under my noble friend's Bill, we see no radical departure from the kind of projects that CDC undertakes. I should not expect that projects where previously CDC would have had carefully to consider its vires under the current legislation would make up more than about 15 per cent. of new board approvals each year. The point is that we have a well-established system of looking at areas which may be "new" in the terms of the noble Lord, Lord Judd, but I see no dramatic change in CDC's operations. What I do see is a greater flexibility being brought about by my noble friend's Bill and a greater means for CDC to help the developing countries with their public companies which badly need the expertise and investment which CDC can bring to them.

In view of what I have said and the fact that the amendments of the noble Lord, Lord Judd, would nullify the changes CDC wants for the benefit of developing countries, I hope that he will withdraw his amendment.

Lord Thurlow

First, I apologise to the Committee for my remarks on the first amendment, when I strayed into the field of later amendments. I was glad to hear the noble Lord express his reassurance about some of the noble Baroness's comments. I warmly support the amendments proposed by the noble Lord, Lord Trefgarne, but I cannot support those of the noble Lords, Lord Judd and Lord Rea.

I am sure that Members of the Committee were all much impressed by what the noble Lord, Lord Kindersley, said on the basis of his deep experience of the working of the CDC. I can see nothing but danger in adding in any way to the restrictions and constraints under which the CDC operates. As the noble Lord, Lord Kindersley, explained, if conditions are written into the statute, it is an invitation for nit-picking by over-zealous officials. Let us concentrate on the objective which all Members of the Committee supported at Second Reading of allowing the CDC to escape from śome of the existing constraints. Let us not return to qualifying that by writing new conditions and restraints, however well intentioned, into the Bill.

Lord Judd

I am grateful to those who have participated in the debate on my amendment. I am sure that other Members of the Committee will not take exception if I say that it has been particularly good to hear the noble Lord, Lord Kindersley. I wish he had been able to be with us in our earlier deliberations because the tributes to the CDC from all parts of the Chamber were consistent and warm. If we are paying those tributes, this is a good opportunity to look the noble Lord in the eye and thank him for the extraordinarily distinguished contribution he made in his role and leadership of the CDC. I assure him that everything that we are putting forward from this side of the Committee in our deliberations this evening is about preserving the best that he and his predecessors helped to build in the story of CDC. We do not want to see that inadvertently laid waste.

I quite understand the anxieties of people who want to get on with the job and not be encumbered with all kinds of qualifying legislation around which well-intentioned, zealous public servants might focus to the exclusion of the task. All we are trying to do in our minimal observations is to bring home the importance of keeping CDC firmly part of the overall overseas aid and development programme of the United Kingdom. Its unique contribution speaks for itself, because, so far in its history, it has in an exemplary fashion managed to get the balance right between financial disciplines and the importance of development, bringing people into participation in the economy.

I ask the Minister to read carefully the record of our debate today when it is published in Hansard. I am not aware of any arguments from this side of the Committee which suggest that the private sector does not have an important part to play in development; quite the reverse. I have been at pains to underline the significant role that the private sector has to play. However, what matters is which part of the private sector does this and how that role is being played, as well as how the role relates to the overall strategy of sustained economic and social development for the country as a whole. It would be a shame if, as the nation begins to emerge from what can in some ways be described as years of ideological preoccupation to a more mature, balanced approach to the management of our affairs, we should allow a hangover of a nightmarish decade or more adversely to influence the role of CDC in the future. Pragmatism is what matters and I am sure that the Minister agrees.

In some parts of the third world strengthening the private sector will be a real priority because there will be a dynamic contribution to be made, but in other parts, as indeed in our own society, the challenge will be to strengthen the public sector not to say that because the public sector has been badly or incompetently managed in the past that is a reason to get rid of it. It will be to say that, if the public sector is necessary and sensible in any sphere of national life, it should be strengthened and made more efficient. That is the challenge. Therefore we want to see in this context an approach to a mixed economy in the third world, with the balance falling as makes most pragmatic sense and the CDC able to help in this respect.

Before I sit down, I should like the Minister to understand the basis of some of the anxieties that are definitely there. One is that, with the tremendous emphasis on privatisation in our own society, we have had a sluggish overall average growth rate compared with our main partners in Europe. We need to ponder that, and to recognise that an ideological approach to privatisation is therefore not enough. Where privatisation makes pragmatic sense, let us go for it, and let CDC play a key part in achieving it. But let us not fall into the trap of saying that we must be in favour of privatisation above all.

The second anxiety that exists, one which is central to the mandate of the Minister and her department—and I know that there is no one more compassionate; she is genuinely committed to the poor—is that in our own society we have not seen the poor becoming better off automatically under the prevailing ideology. Coupled with that is the anxiety that, as privatisation goes ahead, with the tremendous emphasis on maximising the rate of return on investments, which the CDC underlined in its corporate plan with its objective of 9.9 per cent., there may be a temptation to go for short-term profit, for asset stripping and the rest, rather than building up the contribution and strength of industries in the future. These are real anxieties.

However, we have had a very good opportunity tonight to hear the Minister's ongoing commitment and her determination to see CDC fulfilling the social and economic objectives in her development programme. We may differ from time to time on specific parts of it, but we all know that in that general thrust no one is more sincere than the Minister. Therefore, on balance, as with the previous amendment, I want to go away and ponder carefully the arguments that she used. This would be the wrong time to pursue this amendment. I therefore beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

Lord Trefgarne moved Amendment No. 8:

Page 1, line 11, after ("(2) (b)") insert ("of that section").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 9:

Page 1, line 13, leave out from ("words") to ("in") in line 14 and insert (""creation, promotion, expansion, reorganisation or rationalisation").

The noble Lord said: Again, I spoke to this amendment with an earlier one. I beg to move.

On Question, amendment agreed to.

[Amendments Nos. 10 and 11 not moved.]

Lord Trefgarne moved Amendment No. 12:

Page 1, line 16, after ("(2) (b)") insert ("of that section").

The noble Lord said: I have spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 13:

Page 1, line 17, leave out from beginning to end of line 21 and insert: (""(ba) to investigate, formulate and carry out projects, or to make investments, for the encouragement, stimulation or development of capital or other financial markets in overseas countries; (bb) to provide consultancy services;".").

The noble Lord said: This amendment is slightly different from the ones that I moved earlier, but it touches on points that we have already debated at some length. I beg to move.

On Question, amendment agreed to.

[Amendment No. 14 not moved.]

7.15 p.m.

Lord Judd had given notice of his intention to move Amendment No. 15:

Page 1, line 21, at end insert ("where such consultancy is directly linked to new investment and enhanced economic activity in conjunction with application of Corporation funds"").

The noble Lord said: Perhaps I may just add a word on Amendment No. 15, as it does not sit precisely in all respects alongside the other amendments.

A real danger that we perceive is that CDC could perhaps inadvertently cross the dividing line between assistance to third world countries and exploitation of those countries. In our view, we must very carefully guard against CDC's being used as an umbrella by privatisation consultants who have made rich pickings in the United Kingdom and who now wish to get a toe-hold in other countries. We believe that CDC should stick to what it is good at and avoid being distracted by the lure of so-called dry consultancy—in other words, the raking in of fat fees without putting in a penny of investment. The purpose of this amendment is to prevent that obscenity from happening.

In relation to this amendment we were looking for reassurances from the Minister. She may not believe that I always listen, but I do listen very carefully to what she says. Tonight I was greatly cheered when I heard her, at an early stage in our proceedings, deal very specifically with this point, and say that she wanted to see consultancy and that kind of advice, service and support always related to assisting in the process of enhanced economic and social development. At least, that is what I thought I heard her say. I am sure that I did. Because I thought I heard the Minister say that, I shall not move this amendment.

[Amendment No. 15 not moved.]

Lord Trefgarne moved Amendment No. 16:

Page 1, line 22, after ("(2) (c)") insert ("of that section").

The noble Lord said: I spoke to this amendment earlier. I beg to move.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 17:

Page 1, line 25, leave out from ("words") to end of line 2 on page 2 and insert (""which are incidental to the performance of any functions which the Corporation is empowered to perform by virtue of any of paragraphs (a) to (bb) above and"; and

(b) for the words "that project or undertaking" there shall be substituted the words "the performance of any such functions".").

The noble Lord said: I spoke to this amendment before. It is purely a drafting amendment.

While I am on my feet, perhaps I may mention that, as noble Lords will have seen, the noble Viscount, Lord Waverley, was good enough to indicate that he supported my amendments and to attach his name to them. He has asked me to say that he is very sorry not to be able to be in the Committee this afternoon. I understand that he is abroad, in Africa, and that he has been visiting some CDC projects. That is the reason he is not able to be here tonight although he had hoped to be. I hope that Members of the Committee will understand. I beg to move Amendment No. 17.

On Question, amendment agreed to.

Lord Trefgarne moved Amendment No. 18:

Page 2, line 2, at end insert: ("(5A) In subsection (3) of section 4 (provisions supplemental to sections 2 and 3), for the words "promoting or expanding" there shall he substituted the words "creating, promoting, expanding, reorganising or rationalizing".

(5B) After subsection (5) (b) of that section there shall be inserted— and

(5C) In consequence of subsection (3) above, paragraph (a) of section 1(2) of the Commonwealth Development Corporation Act 1986 is hereby repealed.").

On Question, amendment agreed to.

Clause 1, as amended, agreed to.

Clause 2 [Short title and extent]:

Lord Trefgarne moved Amendment No. 19:

Page 2, line 4, at end insert: ("(1A) This Act shall come into force at the end of the period of two months beginning with the day on which it is passed.").

The noble Lord said: This amendment is intended solely to ensure that everything is correctly in place, administratively speaking, for the Act to be implemented once it has been passed. I hope that the Committee will agree with that honourable intention. I beg to move.

Lord Rea

My normal trusting and, I hope, rational self accepts completely what the noble Lord, Lord Trefgarne said. When a slightly more leisurely timetable is sometimes found between the passage of a Bill and its enactment, it may perhaps be reasonable to raise at least one eyebrow at this amendment. I wonder whether it could be that the powers given to the CDC by this Bill will make it, as my noble friend Lord Judd suggested, a slightly more attractive proposition for a subsequent privatisation. Is this rapid timetable possibly because this Government can, at the outside, last only another 21 months and may well be forced to go earlier? It does not leave much time to enact a Bill to privatise the CDC. I am quite sure that the noble Lord will scotch that thinking on my part.

I rise to speak to the amendment so that the noble Lord can say a few words perhaps to allay any problems that the Bill might have in another place. It will be quite a precarious Bill when it goes into the other place, as he must realise. It will be very much dependent on all-party support. I wonder whether he could say a few more words about why it will be only two months after the Bill's passage before it becomes an Act.

Lord Trefgarne

I have to confess that this amendment was proposed to me by experts. Experts within the parliamentary drafting world, if I am allowed to refer to them sotto voce, proposed the amendment. It is apparently more or less normal that a period of grace is given between the passage of a Bill and its coming into force as an Act. Two months was thought to be appropriate in this case. I hope that on reflection the noble Lord will agree that that is right. I can assure him that there are no plans whatever, so far as I know, to proceed in the dastardly way that he proposes. I dare say that my noble friend Lady Chalker will now be able to reassure him of that.

Baroness Chalker of Wallasey

It may be for the convenience of the Committee if I put to rest the suspicions of the noble Lord, Lord Rea. I can assure him that not only are these amendments formal and, as my noble friend said, were suggested by parliamentary counsel but also they are very normal.

I realise that adding up is not everybody's forte. Perhaps I may point out to the noble Lord, Lord Rea, that the present Government could run for another 23 months—not 21 months—there being 12 months in a year. I should also point out to him that the normal period between passing an Act and the day when it comes into force is in fact two months. So that is normal now. Therefore, I can lay to rest his suspicions once and for all. Certainly, there is no need for a more leisurely timetable. It would have been out of the ordinary and therefore suspicious in the other direction, if we had not kept to the normal timetable.

Such a lot of suspicion exists on those Benches about privatisation and whether the CDC will remain in the public sector. There will be no change in the policy. The reason were clearly given at Second Reading (col. 1520). With CDC being a key instrument of ODA assessment in the private sector, there is no way in which any sensible Minister for Overseas Development would want to give that up. I hope once and for all that, with the noble Lords, Lord Judd and Lord Rea, we can put to rest all the hares that they set running every time that we discuss the CDC. Both the amendments of my noble friend Lord Trefgarne—Amendment No. 19 and Amendment No. 20 which is grouped with it—are purely formal and there should not have been a debate.

Baroness Seear

Does the noble Baroness agree that it is a question not so much of hares as of leopards, which do not change their spots?

Baroness Chalker of Wallasey

I do not believe in chasing hares or leopards. I am all in favour of looking at them for the additions that they bring to the countryside and to wildlife. I feel that that is where we should leave both hares and leopards.

Lord Rea

The noble Baroness mentioned in a rather scathing way that the remarks that came from these Benches were to be classified as "suspicions". Is it not the function of an Opposition not to take things at face value but always to be suspicious? Would we not be failing in our duty if in fact we were not suspicious?

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

In the Title:

Lord Trefgarne moved Amendment No. 20:

Line 3, at end insert ("; and for connected purposes").

The noble Lord said: This is a short amendment to the Title. Amendments to the Title are not normally approved by the Chamber. I hope that, on this occasion, this special amendment, duly recommended by the authorities, will be agreed to. I beg to move.

On Question, amendment agreed to.

Title, as amended, agreed to.

House resumed: Bill reported with amendments.

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