HL Deb 23 March 1995 vol 562 cc1322-56

3.40 p.m.

Baroness Chalker of Wallasey

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.—(Baroness Chalker of Wallasey.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTFES (Lord Ampthill) in the Chair.]

Clause 1 [Vesting of property, &c. of Crown Agents in a successor company]:

Lord Judd moved Amendment No. 1:

Page 1, line 16, after ("day"), insert (", and for a period of not less than five years following the appointed day,").

The noble Lord said: In moving Amendment No. 1, I hope that it will be convenient if I speak also to Amendment No. 3.

We have tabled several amendments on the Marshalled List today and I should therefore begin by setting out our intentions clearly so that the Committee is in no doubt about the choices before us. However, first, I must draw attention to the scrutiny committee report on the Bill. It makes for sober reading, raising as it does again anxieties about still more erosion of our parliamentary democracy.

I have yet to hear any satisfactory case made by the Government for removing the Crown Agents from the public sector. The Crown Agents are a classic example of the best kind of public enterprise, combining commercial success with public service in a way in which so many British institutions have done so well. Like the World Service of the BBC, the Commonwealth Development Corporation and the Royal Mail, the Crown Agents have set standards of integrity, efficiency and ethical business practice which do this country proud in the eyes of the rest of the world.

At the behest, I suspect, of her colleagues rather than by her own much respected judgment, the Minister has put before the Committee a misleading choice: to leave matters as they are or to privatise the Crown Agents. That misses the opportunity to follow what we believe to be the best course available for Crown Agents and indeed for other public sector corporations: to provide greater commercial freedom to do business without removing the security of public ownership or the advantages to the public interest of retaining such valuable assets as part of our national heritage.

That is why we have put down the amendments to Clause 1, the effect of which would be to insist that Crown Agents should remain as a public asset for a minimum period of five years after the passage of this Bill and that they should not be alienated even after that time without the positive assent of both Houses of Parliament. If the amendments are approved by the Committee, I believe that the worst aspects of the Bill will be dealt with in one fell swoop.

We have, of course, also indicated our support for other amendments to the Bill which at first sight may appear to have quite different effects. Some of those amendments provide explicitly for the transfer of ownership of the Crown Agents to a non-profit foundation operating within the private sector, while others provide only for greater parliamentary scrutiny of whatever the Foreign Secretary chooses to do.

The course that we favour is clearly to retain the Crown Agents within the public sector for a minimum of five years. However, as a backstop for that position, we believe that the foundation which the Minister herself has said is the Government's preferred option should be firmly written into the Bill as the organisational objective. In the cause of open government, and for the record, that will make plain how the Government want to privatise. Ministerial background briefings are no substitute for such a step.

Our third line of defence of the public interest is to insist that, however the Foreign Secretary disposes of the Crown Agents, he should have to obtain the consent of Parliament when his plans are finally revealed.

It is instructive to read again the Hansard report of the Second Reading debate. The Minister was pressed by a number of noble Lords to explain why Crown Agents should not be retained and given greater commercial freedom within the public sector. If I may say so, she went to extraordinary lengths to avoid answering that question. The Minister conceded our point that the chairman of the Crown Agents had himself expressed a preference for remaining in the public sector in the Crown Agents' annual report for 1993. That report was submitted to Parliament nearly a year after the Minister had announced the Government's own preference for privatisation, so it would be reasonable to expect the Minister to explain why the Crown Agents' advice has been ignored. We waited for such an explanation in the Minister's closing remarks during Second Reading, but none was forthcoming.

The Minister did say some things about the problems with Crown Agents operating as a public sector corporation. She said that the problem was that "Ministers interfere". But she failed to provide a single example of interference by herself or by the Foreign Secretary that has led to Crown Agents failing to take advantage of a business opportunity. On the contrary, she explained that other governments and aid agencies are very happy with the relationship between Crown Agents and Government Ministers and indeed are anxious that this should not change.

The Minister stated that Crown Agents: have always been the agents of what are now independent governments and, increasingly, aid agencies. In my discussions with other governments it has been clear that that is how it should be. Governments of all parties have also been careful not to interfere"—

the Committee may note those words— with the work that Crown Agents do for other independent governments".—[Official Report, 28/2/95; col. 1440.]

The Minister told the House that the Government could not stand back from detailed control if they continued to bear the ultimate financial responsibility. I frankly fail to see why not. The fact that the Government bear ultimate financial responsibility provides enormous reassurance to Crown Agents' overseas clients. It underpins a business which the Minister herself said possesses only modest assets and achieves only a modest profit which is largely made possible by the good management of their pension fund. Without government underwriting, there can be no guarantee of Crown Agents' success and ultimate survival in the open market. But that underwriting does not impose an obligation on Ministers to interfere unless they perceive that Crown Agents are incapable of managing their own affairs without cost to the public purse. All the evidence of the past 15 years is that Crown Agents are more than capable of doing their job without government subsidy or detailed control.

This House will consider next week a further Bill in the Minister's name to give greater commercial freedom within the public sector to the Commonwealth Development Corporation. We shall welcome that measure. It has met no opposition in another place. It sets out a formula to allow the CDC to do business with private sector clients in developing countries, free of unnecessary constraints by Ministers on its ability to borrow and invest.

When that Bill was debated in another place, the Minister responsible said that the Government had considered privatisation of the CDC, but having regard to the particular work that CDC does, they concluded that it would be better for it to remain in the public sector. The Minister refused to say why, of course, because the arguments for keeping CDC in public ownership would apply with equal force to Crown Agents. The Minister in this House will not say what is wrong with public ownership for Crown Agents; the Minister in another place will not say why public ownership is best for the CDC.

But wait. A Conservative Member in another place wanted to know whether the Minister was satisfied that the CDC would be, every bit as rigorous and aggressive", in doing business in developing countries, as a genuine private sector investor would be when shareholders' money was at stake".

"Yes", said the Minister, no problem. The CDC is an extremely businesslike organisation, just like the Crown Agents, operating within the public sector. Unlike the Crown Agents, it is to continue to do so and its future is assured.

The Minister has not said so in the House, but perhaps the reason that she will not amend the 1979 Act to allow Crown Agents more freedom within the public sector is fear of Treasury rules. Indeed, it is hard to think of any other possible explanation.

The Minister does not dispute that a number of undertakings have been required by foreign governments, such as not to go for a trade sale, guarantees of continuing client confidentiality and, full assurances to the international clients of Crown Agents that the new owners, will maintain a continuity of principles and purpose with those of the existing corporation".—[Official Report, 28/2/95; col. 141.]

A privatisation hedged about with so many necessary precautions seems hardly worth the effort. The international clients of Crown Agents, like Crown Agents themselves, would no doubt be much happier if the Government left well alone and allowed the Crown Agents to continue as a public sector corporation with increased commercial freedom to do the job they already do so well. The five years we propose before a further transfer of ownership should allow Ministers to find the necessary formula to let that happen. After all, the Treasury rules which Ministers treat as sacrosanct may well have changed in five years' time.

If the Committee approves our amendments, the Government will have time to go away and think again. I earnestly hope that they will do so. I beg to move.

Lord Redesdale

I wish to speak in favour of Amendments Nos. 1 and 3, not because we on these Benches think that the Crown Agents' natural position should be in the public sector or the private sector, but because we are keen to ensure that the Crown Agents are in a position to act in the best interests of those whom they serve.

However, the problem we face with the Bill is that it seems to have been brought forward in a hasty manner and there is little to it. It is just a crude enabling Bill with little safeguard that Parliament would be able to see the final results of the changes and agree to them.

Amendment No. 3 is another amendment which follows the Delegated Powers Scrutiny Committee's resolutions on which I shall speak later. I support the amendments.

Baroness Elles

I regret that the noble Lord, Lord Judd, is still fighting his rearguard action for retaining the Crown Agents in the public sector. I thought that the overwhelming feeling during the Second Reading debate—certainly on this side of the House—was that we should support the Government in releasing the Crown Agents from the public sector. They should be privatised and be able to carry out full commercial activities for the benefit of both their own company, which would be formed, and of their clients as they increased throughout the world.

I suggest that Amendment No. 1 is a damper on any possibility of the Crown Agents benefiting from the Bill in order to carry on their new task as a privatised commercial company. I strongly urge my noble friend totally to reject Amendment No. 1, as I am sure she will.

I have some sympathy with Amendment No. 3. We shall wait during the proceedings on the Bill to hear more about the future status and framework under which the Crown Agents will operate. During the course of the Second Reading debate, the Minister undertook that through the proceedings of the Committee and Report stages and Third Reading we would be informed of further details about the future of the Crown Agents and their statutory framework. If we are not so informed, at some stage we must look for further debate in Parliament. I have always held that a vast amount of secondary legislation—whether it be European or British legislation—goes by without any democratic or parliamentary scrutiny. Thus I have a certain sympathy for the principle expressed in Amendment No. 3. I shall look to the Minister to give us the information that is required so that the amendment will have no justification, nor will it be needed in any way.

Lord Elton

There are two levels of parliamentary scrutiny for delegated legislation: the affirmative and the negative procedures. The affirmative procedure is more stringent than the negative procedure because with it matters have to be debated, whereas with the negative procedure a matter is only debated if required. I merely intervene to say that it seems odd that the noble Lord, Lord Judd, should rest so much weight on the report of the Delegated Powers Scrutiny Committee, of which I have the honour to be a member. He then put down Amendment No. 3 which attracts to a transfer of ownership—a lesser decision than the construction of the new company—a higher order of scrutiny for the initial formation than is proposed, even in Amendment No. 4 which, oddly, is not grouped with these two. It seems to me that, because he lays such weight on the report, he would have followed the advice of the Committee. I hope that my noble friend will bear that in mind.

Baroness Chalker of Wallasey

In responding to the proposal in Amendment No. 1 by the noble Lord, Lord Judd, my noble friend Lady Elles was absolutely right. The amendment strikes right at the heart of the Bill. I thought I explained carefully at Second Reading why I believe that it would be wrong for the Government to retain ownership of the Crown Agents. The Crown Agents' main work—of which we are all rightly proud—has always been as agents of the now independent governments and increasingly the aid agencies. The noble Lord, Lord Judd, used a quotation from one of my Second Reading speeches.

Governments of all parties have been careful not to interfere in Crown Agents, and I have been most careful as a Minister not to interfere, but to keep a watchful eye on what they are doing. Because they knew that I was keeping a watchful eye, I did not need to interfere, However, there was always the risk that one day I might interfere with Crown Agents.

The noble Lord, Lord Judd, made some play of the discussion at Second Reading and subsequent stages of the CDC Bill in another place. He sought to put CDC and Crown Agents in exactly the same category. Perhaps I may explain to him why I do not believe that the same situation applies. The Crown Agents and CDC have different histories. Their roles are very different. Legislation recognises the distinctive identity and purpose and provides for continued growth into the future for each of them. The job of CDC is to act as a catalyst for private sector investment in developing countries, showing others that they can invest profitably in poorer countries so as to energise the private sector to follow and make investments of its own.

The private sector CDC would be bound to take a very different attitude to profit and risk which would be incompatible with developmental objectives which the Government have set for it. So in that sense, if in no other, I think that I have explained the difference. As I said, Crown Agents' main work is as agents of now independent governments. The present Act still requires us—and would do, if the noble Lord had his way—to involve ourselves in business decisions. Therefore we have proposed the transfer to the private sector in order to strengthen Crown Agents' ability to meet the needs of their customers by removing unnecessary restrictions.

Crown Agents have spent a relatively brief period as a public corporation. I shall not go back to the pre-1979 situation—though I can if noble Lords require it. The regulatory framework of the 1979 Act was established to meet the problems and circumstances that were specific at that time. Things have now changed, and there is no reason why Crown Agents should continue to be owned by government.

I made it quite clear at Second Reading that the most appropriate framework of control would be provided by a foundation in the private sector. That would give Crown Agents' international clients the assurances that they require. So long as the Government continue to bear ultimate financial responsibility, Crown Agents would continue to be subject to those unnecessary constraints of one sort or another. Therefore we seek to give Crown Agents the power to make their own business decisions, including borrowing in the future. Without such a freedom, that relationship, the ability to decide on their own borrowing, would be limited.

The noble Lord, Lord Judd, seems to think that the Bill is driven by ideology, given the way in which he phrased his amendment. It is not. It is a measured and practical response to the changing business needs of Crown Agents. That is why, to keep up with the times, we have suggested the transfer to the foundation. That would give the Crown Agents a complete, modern and constitutional framework in which we can all have confidence.

I have to say that Amendment No. I, which makes the nomination of the company in which the assets of Crown Agents will vest on the appointed day subject to a delay of at least five years, really is an unsatisfactory and wrecking measure. I am surprised that the noble Lord has pursued it in this way. It would leave Crown Agents in limbo. They would not know what decisions they would be able to take at the five-year point or at some point thereafter, because the wording is "not less than five years". If the transfer of Crown Agents to the private sector is to be delayed for at least five years, as the noble Lord's amendment proposes, then we might as well not have the "not less than five years"; we might as well not have the Bill. That is of course exactly what the noble Lord wants.

I know that in the past Parliament has expressed concern about the control that can be exercised over companies in the public sector. But control over companies is less direct than the specific controls provided for by the 1979 legislation over the statutory corporation that the Crown Agents now is. That control, as the noble Lord, Lord Judd, rightly said, has to be exercised by the Minister through his shareholding and the other arrangements with the company.

All this is at one remove from Parliament and is less transparent. The same degree of control would be necessary while the company remained in public ownership, but the direct parliamentary control which Parliament normally thinks desirable just would not be there. Certainly, the provision of Amendment No. 1 would not give important customers like the Japanese Government the reassurance that they seek, and the reassurance which the foundation most clearly would offer, I cannot believe that this state of affairs is what the noble Lord had in mind when he tabled the amendment. But one never knows with the noble Lord. I join with my noble friends Lady Elles and Lord Elton: we should indeed oppose this amendment.

Turning to Amendment No. 3, to which the noble Lord, Lord Redesdale, spoke in the main, and my noble friend Lady Elles, I understand the concern of noble Lords that we give Crown Agents the right start for a successful future while retaining their traditional standards of probity and impartiality. That is a common objective.

I also understand the desire to allow Parliament to look again at the details of the proposals for transfer. I have noted very carefully the report of the Scrutiny Committee on Delegated Powers. But as my noble friend Lord Elton said, it would have been much more logical had the proposals referred to the future foundation rather than the transfer in what is an enabling Bill.

I have considered very carefully whether an affirmative resolution procedure would be appropriate under Clause 1 of the Bill, but I do not believe that that is the right approach. We have taken the advice of government legal advisers, and they assure me that it would be quite unprecedented to proceed in that way. The Bill before us follows established precedents. The normal practice is to take enabling legislation when transferring organisations to the private sector. That approach is well tried and tested. It has been accepted by this House and the other place on every previous occasion. I do not believe that any of the arguments that have been put forward today convinced me that an exception should be made in this case. I shall be very open with noble Lords, as will the Government, throughout this procedure. Indeed, I can assure my noble friend Lady Elles that much more information about the intended ultimate owner will be available than would normally be the case with, for example, a trade sale, because there will be less commercial confidentiality.

As to the practical effects of the amendment, I believe that the practical effect of introducing an affirmative resolution procedure would be damaging to Crown Agents' interest. I believe it to be unnecessary. I have already assured the Committee that I shall keep Members fully informed, as indeed I shall Parliament as a whole, of our plans as we go forward. It is only fair to point out that privatisation negotiations are complex. Much of the information is normally commercially confidential and would not be disclosed in the way that has been suggested. But, because of pressures of other business, we know that obtaining parliamentary approval can be a long drawn out process. That could seriously hamper the proposed transfer. I would not want to put the future Crown Agents foundation in any jeopardy from that.

The main concern about this transfer of Crown Agents to the private sector was fully debated at Second Reading, and today we shall go through the amendments that are on the Marshalled List. I will consider the substance of the points during our negotiations on the transfer. But I am quite certain that it is not in Crown Agents' commercial interest for this House to sow the seeds of doubt or uncertainty about the Government's plans or the timing of when the transfer would take place. It is for those reasons that I urge noble Lords to reject Amendment No. 1 and, with it, Amendment No. 3.

Lord Judd

I always find the Minister personally irresistible. If irresistible charm were the basis of good government, we should have a very strong Government. Unfortunately, there is much more to the issues that are before us than the personality, and indeed the integrity, of the Minister, which we all greatly admire on this side of the Chamber.

That is the problem with this Bill. We have a skeleton Bill, an enabling Bill, which spells out absolutely nothing about what will happen. It invites us to buy a pig in a poke. And we have a lot of very well-intended and convincing arguments—indeed some on paper—and background briefings from a Minister whom we all love and admire. The problem is that the Minister may not always be there. Some of us who have worked for much of our lives in the realm of third world issues and development might sometimes wish in some ways that, if only she could somehow free herself of political allegiances, she could always be there in one sense, and that would be a wonderful element of continuity in government. But that is not, I think, likely to happen. The noble Baroness will forgive my saying that I sometimes wonder whether she does not toy with the idea herself. I cannot believe that, in the environment in which she lives, she does not. But I do not believe that it is likely to happen. Our function therefore, as responsible parliamentarians, is to ensure that whatever is being done is done in the interests of the nation as a whole, that it is preserving the assets of the nation, and that the dedicated work and effectiveness of the Crown Agents and their staff, to whom the Minister paid such fulsome tribute in the Second Reading debate, is not lightly thrown away or sold down the river.

It is for those reasons that some of us on this side of the Committee are a little perplexed. There is absolutely nothing in any of our amendments that does anything but write into the Bill all that the Minister said in her background briefings. We are trying to strengthen her position and want to reassure everyone that what she says is her objective and what she wants to see done can be properly done.

Let me deal very briefly with one or two of the points that she made. She said that CDC is different because it is a catalyst for development. I am sure she will agree that, as she herself emphasised—she has been at pains to underline the point—the Crown Agents' role is about supporting economic and social development. So that is a complementary function. It does not seem to me so self-evident as she seems to want to persuade herself that it is that they are in two completely different categories. It does not seem so at all. If the one is right in the public sector, the other sits naturally alongside it in the public sector.

The Minister has also emphasised that the main work of the Crown Agents is with foreign governments. That is obviously the case. I have not seen any evidence at all that foreign governments favour that change. All the indications are that foreign governments would rather things were left exactly as they are. She also made some play about her watchful eye. I repeat that if I were to have any watchful eye upon me, I cannot think of any other that I would prefer to have. The implication in saying that there is a watchful eye which provides discipline is that that watchful eye is necessary. The persuasive way in which she made the point underlines it. She cannot have it both ways. If this activity is to become at arm's length and still further removed from potential ministerial control, she will be removing the force of the watchful eye that she implied was necessary.

I noted the comments of the noble Baroness, Lady Elles, about her impression of Second Reading. That is her impression. My own antennae do not suggest to me that there is a militant feeling of commitment among her noble friends that this is a Bill that must happen at all costs. At best there is passive acquiescence in what is proposed. Certainly, it may be my own failing in this respect, but quite frankly I am mystified by the intervention of the noble Lord, Lord Elton. I do not see how the transfer of ownership is an issue of less importance than the structure of the company. It seems to me that the ownership is crucial to the future.

Lord Elton

I rise merely to point out that they were of equal importance. The noble Lord relied on the advice of the Committee, and the advice of the Committee was to have the negative procedure. He had proposed the affirmative procedure.

Lord Judd

On that point I did as the noble Lord said. I was grateful to the Committee for having alerted me. The more I looked at the issue, the Committee having alerted me, the more I felt that it was in the spirit of parliamentary control that the proper discharging of parliamentary responsibility to this fine and proven asset was to take the affirmative road.

No, I am afraid that I am as convinced as ever that the Bill has more to do with political manoeuvrings within the Government. It was some kind of ideological sop to the Right wing of the party opposite because they were denied seeing the Post Office moving into private hands. I do not believe that there is any pressure for this Bill within the Crown Agents or any pressure within the Government in terms of the Overseas Development Administration. It would be irresponsible of this House to pursue it. If we do so, we shall do our utmost in subsequent amendments to make the best of a bad job. The Minister says that the amendments that we are now debating are pointed at the heart of the Bill. It is a charge that I willingly accept. I am afraid that we must push this matter to a Division.

4.15 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 79; Not-Contents, 138.

Division No. 1
Addington, L. Bottomley, L.
Airedale, L. Bruce of Donington, L.
Archer of Sandwell, L. Callaghan of Cardiff, L.
Barnett, L. Carmichael of Kelvingrove, L.
Beaumont of Whitley, L. Carter, L.
Birk, B. Castle of Blackburn, B.
Blackstone, B. Chandos, V.
Cledwyn of Penrhos, L. Kilbracken, L.
Clinton-Davis, L. Kirkhill, L.
Cocks of Hartcliffe, L. Lovell-Davis, L.
David, B. Mackie of Benshie, L.
Dean of Thornton-le-Fylde, B. Mayhew, L.
Desai, L. McIntosh of Haringey, L.
Diamond, L. McNair, L.
Donaldson of Kingsbridge, L. Merlyn-Rees, L.
Dormand of Essington, L. Milner of Leeds, L.
Dubs, L. [Teller.] Molloy, L.
Falkland, V. Monkswell, L.
Farrington of Ribbleton, B. Morris of Castle Morris, L.
Fisher of Rednal, B. Nicol, B.
Gallacher, L. Peston, L.
Gladwin of Clee, L. Plant of Highfield, L.
Gould of Potternewton, B. Prys-Davies, L.
Graham of Edmonton, L. Rea, L.
Haskel, L. Redesdale, L.[Teller.]
Hilton of Eggardon, B. Richard, L.
Hollis of Heigham, B. Ritchie of Dundee, L.
Holme of Cheltenham, L. Sainsbury, L.
Houghton of Sowerby, L. Seear, B.
Howie of Troon, L. Serota, B.
Hughes, L. Shepherd, L.
Irvine of Lairg, L. Stallard, L.
Jacques, L. Strabolgi, L.
Jay of Paddington, B. Tope, L.
Jeger, B. Tordoff, L.
Jenkins of Hillhead, L. Turner of Camden, B.
Jenkins of Putney, L. Wallace of Coslany, L.
Judd, L. White, B.
Kennet, L. Williams of Elvel, L.
Williams of Mostyn, L.
Aberdare, L. Denham, L.
Ailesbury, M. Dixon-Smith, L.
Ailsa, M. Downshire, M.
Alexander of Tunis, E. Dudley, E.
Allenby of Megiddo, V. Eden of Winton, L.
Ampthill, L. Effingham, E.
Annaly, L. Ellenborough, L.
Archer of Weston-Super-Mare, L. Elles, B.
Elton, L.
Ashbourne, L. Faithfull, B.
Astor, V. Ferrers, E.
Blake, L. Finsberg, L.
Blaker, L. Gage, V.
Blatch, B. Gainford, L.
Blyth, L. Gardner of Parkes, B.
Boyd-Carpenter, L. Gisborough, L.
Brabazon of Tara, L. Goschen, V.
Bridges, L. Gridley, L.
Brougham and Vaux, L. Haddington, E.
Burnham, L. Hailsham of Saint Marylebone, L.
Butterworth, L.
Cadman, L. Halsbury, E.
Caithness, E. Hanworth, V.
Caldecote, V. Harding of Petherton, L.
Campbell of Alloway, L. Hayhoe, L.
Campbell of Croy, L. Henley, L.
Carnock, L. Hogg, B.
Cart of Hadley, L. Howe, E.
Chalker of Wallasey, B. Hylton-Foster, B.
Chelmsford, V. Inglewood, L. [Teller.]
Chesham, L. Kinnoull, E.
Clanwilliam, E. Knollys, V.
Clark of Kempston, L. Lauderdale, E.
Constantine of Stanmore, L. Lindsay, E.
Cranborne, V. [Lord Privy Seal.] Lindsey and Abingdon, E.
Liverpool, E.
Crathorne, L. Long, V.
Cullen of Ashbourne, L. Lucas, L.
Cumberlege, B. Lyell, L.
Dacre of Glanton, L. Mackay of Ardbrecknish, L.
Davidson, V.
Mackay of Clashfern, L. [Lord Chancellor.] Rankeillour, L.
Rawlings, B.
McColl of Dulwich, L. Renwick, L.
Merrivale, L. Rodger of Earlsferry, L.
Mersey, V. Roskill, L.
Middleton, L. Saltoun of Abernethy, Ly.
Miller of Hendon, B. Seccombe, B.
Milverton, L. Shannon, E.
Monteagle of Brandon, L. Sharples, B.
Montgomery of Alamein, V. Shaughnessy, L.
Morris, L. Shaw of Northstead, L.
Mottistone, L. Simon of Glaisdale, L.
Mountevans, L. Skelmersdale, L.
Mountgarret, V. Soulsby of Swaffham Prior, L.
Mowbray and Stourton, L. St. Davids, V.
Munster, E. Strathcarron, L.
Murton of Lindisfarne, L. Strathclyde, L. [Teller.]
Nathan, L. Sudeley, L.
Nelson, E. Terrington, L.
Noel-Buxton, L. Teviot, L.
Norrie, L. Thomas of Gwydir, L.
Northesk, E. Trumpington, B.
O'Cathain, B. Ullswater, V.
Orkney, E. Vivian, L.
Orr-Ewing, L. Wade of Chorlton, L.
Oxfuird, V. Whitelaw, V.
Park of Monmouth, B. Willoughby de Broke, L.
Plummer of St. Marylebone, L. Wilson of Tillyorn, L.
Poole, L. Wise, L.
Pym, L. Young, B.
Quinton, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.22 p.m.

Lord Redesdale had given notice of his intention to move Amendment No. 2:

Page 1, line 10, at end insert ("and must be a company limited by guarantee").

The noble Lord said: I must apologise to the Committee. On looking at the amendment on the Marshalled List I see that there is a drafting error. Instead of reading "Page 1, line 18", it should read "Page 1, line 10". It does not change the substantive issue on the Bill.

The aim of the amendment is to find out why the Minister will not put on the face of the Bill the fact that it should be a company limited by guarantee.

The Deputy Chairman of Committees (Lord Brougham and Vaux)

I am advised by the Clerk that Amendment No. 2 cannot be taken now; it should have been taken before Amendment No. 1. The noble Lord therefore will have to bring it back at Report stage.

[Amendment No. 2 not moved.]

[Amendment No. 3 not moved.]

Lord Redesdale moved Amendment No. 4:

Page 2, line 6, at end insert: ("() Any order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble Lord said: In moving Amendment No. 4 I shall speak also to Amendment No. 12 which is grouped with it. The two amendments seek to ensure that Parliament has the ability to scrutinise the eventual form of the successor company. They follow closely the recommendations put forward by the scrutiny committee which, in relation to Amendment No. 4, reads:

The Committee therefore draws the power in Clause 1 to the attention of the House as the House may wish to consider whether the order nominating the successor company should be subject to the negative procedure to give the House an opportunity to debate the order should any member wish to do so".

In relation to Amendment No. 12 the committee said:

The Committee notes that it is intended to use the power only once. However, it can be used to displace existing orders that are themselves subject to the affirmative procedure. The House may therefore wish to consider whether the affirmative procedure might be more appropriate for the exercise of this power".

I believe that the Minister covered some of the points as to why objection will be taken to the amendment. However, in raising the issue, the noble Baroness said that in previous enabling Bills the suggestions that I am putting forward were not seen to be appropriate. Perhaps she can advise us which former enabling Bills dealt with the issue. The successor company will be moved from the public to the private sector, but it will not be a trade sell-off; there will be no buyer of the company. This appears to be, therefore, a new form of enabling Bill. Perhaps the Minister can give us earlier examples if that is not so.

The Minister said that the Bill is being introduced for the good of the Crown Agents. The amendments seek to ensure that Parliament is given the right to scrutinise the orders. In the Second Reading debate the Minister said that it was not necessary to dot the "i"s and cross the "t"s. The amendment was tabled to enable us to see what the successor company will look like and what form it will take. We do not believe that the words are present in the Bill to enable us to dot the "i"s and cross the "t"s. I beg to move.

Lord Judd

I am happy to support the noble Lord on Amendment No. 4 on the grounds that I mentioned earlier this afternoon. I am convinced that simply because of the value of the asset, the commitment that has gone into it and its significance not only for the work the Crown Agents do themselves but also for the whole standing of the United Kingdom throughout the world, this is not something to be handled lightly behind the filing cabinets of Whitehall. It is something to be done openly; to be demonstrably well done and to be debated and scrutinised in this Chamber. Therefore I warmly applaud the amendment.

Baroness Elles

I wish to speak to Amendment No. 13 concerning the negative resolution on Clause 12(2).

Baroness Trumpington

I wonder whether my noble friend has made a mistake. Does she wish to speak to Amendment No. 12? My noble friend said Amendment No. 13, but that does not come within this group.

Baroness Elles

I apologise to the Committee. I wish to speak to Amendment No. 12 which is to be taken in conjunction with Amendment No. 4. I wish to refer the Committee to the Third Report from the Delegated Powers Scrutiny Committee which specifically says: Orders are not subject to Parliamentary control although they are statutory instruments by virtue of Clause 12(2). The House may consider that the propose to be achieved by orders under Clause 12(1) is sufficiently defined to make the absence of Parliamentary control acceptable".

One would think therefore that the forceful arguments made by the noble Lord, Lord Redesdale, are inappropriate in this case.

Lord Simon of Glaisdale

We must realise that officials have to go on administering this Bill and other affairs, and that parliamentary control is an appalling nuisance to them. For centuries there has been tension between the Executive and the legislature and the officials are by no means to be blamed. A Bill is the worst thing from their point of view, with three Readings or more in each House with the possibility of amendments which are generally, in the view of Whitehall, ill considered, throwing them off their course. That is the worst thing. The affirmative resolution is next worst; the negative resolution follows after; and no parliamentary control is just heaven.

We have been through all this time and again. In the end, the opinion in your Lordships' House was so strong that the Jellicoe Committee advised the setting up of a scrutiny committee. That was the one proposal of the Jellicoe Committee as to which the Government expressed reservation. The reservation was a typical Whitehall reservation. It was quite understandable, as I said, but there is no reason why your Lordships should put up with it. We now have the scrutiny committee and it is most important that we should insist that when it draws a matter to the attention of your Lordships' House, in terms that are now significant in the signals it emits, your Lordships should follow the guidance of the scrutiny committee.

I respectfully agree with the noble Baroness, Lady Elles, that there is a distinction here, reading the scrutiny committee report, between the two amendments. However, in my respectful opinion we should certainly follow implicitly where the scrutiny committee disapproves of the absence of sufficient parliamentary control. I certainly support the second amendment.

4.30 p.m.

Baroness Chalker of Wallasey

In moving Amendment No. 4, with which Amendment No. 12 to Clause 13 is grouped, the noble Lord, Lord Redesdale, said that this was an unusual privatisation—I paraphrase his words—and that because there would be no trade sell-off there would perhaps need to be some further provision for examination. The very opposite may be true, because there are precedents in the field of privatisation legislation in which the Minister has been given power to amend primary and secondary legislation for consequential purposes by means of negative procedure orders. However, this is not one of those.

I understand very well what the noble and learned Lord, Lord Simon of Glaisdale, and my noble friend Lady Elles are saying and I have taken great care to note the recommendations of the Delegated Powers Scrutiny Committee in its third report. The concern which they have expressed by inviting your Lordships to consider whether the order nominating the successor company should be subject to the negative procedure is reflected in the noble Lord's amendment. But during this debate the case has been put under Amendment No. 4 for introducing the affirmative resolution procedure under Clause 1 of the Bill. In speaking to Amendment No. 1, with which Amendment No. 3 was grouped, I explained why I did not feel able to accept that. So the same considerations, needless to say, apply to Amendment No. 4. I think it would be inappropriate and unnecessary to accept that amendment. Although Amendment No. 12 goes less far in proposing the negative procedure, the principle is still the same.

Perhaps I may now focus my remarks on the comments of my noble friend Lady Elles and the noble and learned Lord, Lord Simon of Glaisdale. I understood well the report from the Delegated Powers Scrutiny Committee but I feel I should emphasise to the Committee that these are consequential matters. The power is there so that references to the Crown Agents in subordinate legislation can be removed or altered in so far as is necessary in consequence of the Bill—that is to say, in consequence of the fact that the Crown Agents will no longer exist as a public body. I can accept that at least one of the statutory instruments needing amendment was made by the affirmative resolution procedure. There may be others. But in these cases the amendments or the revocations are likely to be very minor indeed. Precedent on Bills such as this does not require the affirmative procedure for consequential matters even where a Minister is given the power to deal with primary legislation, as I cited at the beginning of my remarks to the noble Lord, Lord Redesdale.

There is sympathy for the principle that there should be appropriate parliamentary control over subordinate regulation-making powers. However, I am not convinced that a requirement for a debate in both Houses to approve the kinds of amendments and revocations which may be made by the power under Clause 13 would be appropriate. Your Lordships know that I am always happy to debate these matters and I shall be happy indeed to attend on a Friday to do so. I imagine that that is when such matters would be tabled in this House. But I foresee that there would be a need for a special introduction of Friday business if we were to have such debates on all the legislation—for if the procedure is carried out for this Bill, it will need to be carried out for a number of other Bills.

My problem is this. I do not know what more we would be saying than we were actually saying in our Second Reading debate. The order before us would be an order whose sole purpose would be to tidy up provisions of other statutory instruments referring to Crown Agents, the statutory corporation. Once the transfer under this Bill takes place those provisions would become ineffective because there would no longer be Crown Agents as such. Therefore, I have some real difficulty in deciding what might be then discussed.

Lord Simon of Glaisdale

Is not the noble Baroness being rather cavalier in referring to tidying up primary legislation when one considers the role of Parliament?

Baroness Chalker of Wallasey

I hesitate to differ from the noble and learned Lord, as he well knows, but in this case we are talking about the residual matters from other statutory instruments which would no longer have any force because the Crown Agents would not be there as such. That is why, worthy as the intention is that we have proper debate—with that I firmly agree—I do not think that debating all over again the issue of whether there should be a statutory corporation Crown Agents in the public sector, which is all I can see would be discussed if such an order came forward, would be appropriate. The decision would already have taken place by the passing of the Bill. We might have a lot of long silences.

Lord Judd

I am grateful to the noble Baroness for giving way. Perhaps I may probe two of the observations which she has made in her contribution. She earlier indicated that this is an enabling Bill. The Crown Agents are not any organisation. What we are saying is that before the final consequences of the Bill are clinched it is important that there should be proper parliamentary scrutiny and debate.

The second matter is related to what the noble Baroness has just said. I shall be fascinated to hear more from her about it. I could hardly believe it when she argued that it was because of the pressure on parliamentary business and the possibility that we might have to meet on a Friday that we could not take a particular course. Surely, it is the significance of the issue and not the convenience of the House which is important.

Baroness Chalker of Wallasey

I am very happy to meet on a Friday. I spent 18 happy years meeting on Fridays in another place. Therefore, while I know it will not please some Members of the Committee, I am very happy to meet on a Friday. That is not the reason I would give against this particular amendment.

The third report of the Delegated Powers Scrutiny Committee makes clear that Clause 13(3), with which Amendment No. 12 deals, allows the Secretary of State to make such amendments or revocations of any subordinate legislation as appear to him to be necessary or expedient in consequence of the Bill. That of itself may seem to be a subject for further investigation in the mind of the noble Lord, Lord Judd, as regards what is happening to the Bill. But that is not the procedure. This matter relates to subordinate legislation related to the Crown Agents Act 1979; it is not dealing with the transfer of the Crown Agents to a foundation. If the noble Lord were making the case on that I would understand him better. I do not believe that that is the point.

I return to what I was saying earlier in trying to address the proposal of the scrutiny committee. It suggests that affirmative procedures may be appropriate to the order-making power. That suggestion is based on the proposition that the instruments being amended may have been subject to the affirmative procedure themselves. Indeed they may have been. At least one, but I believe not many, of the orders which we shall need to amend was subject to the affirmative procedure. It was the second banking co-ordination directive, as I am sure the noble Lord, Lord Judd, will probably remember from his own personal experience.

The reference to the Crown Agents was included in that directive expressly as a minor or consequential amendment. It was hardly the reason why the order was subject to affirmative procedure. In short, I believe it is fair to say that the fact that the order to be amended was subject to a particular procedure does not mean that an amending order should be subject to precisely the same procedure. We should be looking at what procedure is appropriate for the amending order.

Let us suppose that the order we make under Clause 13 would give us something to debate on a Friday or on any other day, although I find it hard to think of an example—

Lord Judd

I am grateful to the Minister for giving way. I am certain that she is one of those in the Government most in favour of transparent and open government. I ask her to read very carefully in the Official Report the past three or four minutes of her contribution. Having read it, I ask her to persuade herself that that is a contribution which the wider public, of whose assets we are the trustees, would see as a good example of open and clear government as regards what is being done.

Lord Elton

Perhaps I may helpfully extend the interruption to give a personal view on Clause 13. The Select Committee's recommendation, as my noble friend said, was that where an affirmative order was about to be rescinded the House would wish to consider whether that order was appropriate for that procedure. The House has considered it. My noble friend has been extraordinarily helpful and has made the question transparent by indicating the solitary order which has been through the affirmative process and which would be swept up in the future procedure. That seems to answer a good deal of the Committee's concerns, but I can only speak for myself. I am a great deal happier to take part in this debate in the light of my noble friend's assurance than I was earlier. I find what she said very reassuring.

Baroness Chalker of Wallasey

I am delighted that I have satisfied one out of three customers on this matter. Although I do not know, I suspect that I may not yet have satisfied the noble and learned Lord, Lord Simon of Glaisdale.

Perhaps I may make one further point about Clause 13(3). It provides only that the Secretary of State, as I said just now, has power by order to amend or revoke subordinate legislation if it appears to him to be necessary or expedient in consequence of the Bill. I am sure that the noble and learned Lord, Lord Simon of Glaisdale, knows far better than I that the subordinate legislation has the meaning given in Section 21 of the Interpretation Act 1978 which is, Orders in council, orders, rules, regulations, schemes, warrants, byelaws and other instruments made or to be made under any Act".

So the Bill we are debating today in Committee includes already provisions to deal with consequential modifications of statute law where these have been identified as necessary. But, following precedent in other legislation, this provision provides the necessary safeguard which will allow the Secretary of State to amend or revoke the subordinate legislation where that might be necessary as a consequence of this Bill.

Therefore, any order made under this subsection by the Secretary of State would be subject anyway to the negative resolution procedure. As I have managed to identify for my noble friend Lord Elton the one piece of secondary legislation that could be covered by this matter, I hope that I may have satisfied the Committee that Amendments Nos. 4 and 12 are really not necessary and that they should be rejected.

4.45 p.m.

Lord Redesdale

I thank the Minister for her reply. Considering the complex nature of the argument and also the clear recommendations from the scrutiny committee, I hope that the noble Baroness understands that we may come back to this matter at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Lord Rea moved Amendment No. 5:

After Clause I, insert the following new clause:

("Transfer of ownership of the successor company .—(1) The Secretary of State may by order transfer ownership of the successor company only to a foundation, which shall be constituted as a company limited by guarantee.

(2) The Memorandum and Articles of Association of a foundation formed under subsection (1) above shall be contained in any order which may he issued under that subsection, and Schedule (Memorandum and Articles of Association) has effect for the purpose of supplementing the provisions of this section.

(3) Shares in the foundation formed under subsection (I) above shall be issued only to members of the said foundation, who shall be appointed by order by the Secretary of State.

(4) No order shall be made under this section unless a draft of the statutory instrument containing the order has been laid before Parliament and approved by a resolution of each House.").

The noble Lord said: In moving this amendment I should also like to speak to Amendment No. 13 which is consequential. I shall also speak to Amendments Nos. 10 and 11 which refer to the title of the Crown Agents and are dependent in part on Amendments Nos. 5 and 13.

Amendments Nos. 5 and 13 have three effects. The first is to seek to encapsulate the type of non-profit, development-oriented foundation which the Minister has described as the Government's own preferred option and to write the intended new owner of the Crown Agents, which is the foundation, on to the face of the Bill. In other words, it is to put heart into the legislation. The amendments also have the effect of subjecting the process of transfer to such new owners to further parliamentary scrutiny so that both Houses shall be satisfied that the terms of the transfer protect the public interest and the work of the Crown Agents. They also have the effect of insisting that the initial members of the foundation should be appointed by Ministers accountable to Parliament rather than by the present Crown Agents who hold their posts only by courtesy of ministerial appointment.

As regards the first of those effects, we who are moving the amendment are seeking to do only what we feel should properly have been done by Ministers themselves. As I said on Second Reading—and a number of noble Lords said the same—I still do not fully understand why that has not been done. There are different views in the House about whether the privatisation of the Crown Agents is necessary or appropriate—we have had that debate—but I believe that noble Lords will have given a widespread welcome to the Minister's categorical assurance on Second Reading that the Government have rejected the option of a trade sale of the Crown Agents. There will also be general agreement that, if the Crown Agents are to be privatised, the new owners should be the type of the foundation which the Minister has described.

However, we do not believe that it is enough for the Minister simply to indicate her intentions in such a general way. There appears to be no good reason why the Government should not spell out their intentions in detail and include some definition of the proposed foundation on the face of the Bill. They have not done so. We have not attempted to do so in full in the amendments, but they lay down some minimum requirements which we believe should be included in the Bill at this stage. I hope that if the amendments are passed, the Minister will come back to the House with further amendments that will put meat on the bones which the amendments offer.

The Bill as it stands at present takes a public sector corporation, which is accountable to Ministers and to Parliament, and replaces it with a company wholly owned by the Crown and entirely at the disposal of the Foreign Secretary and the Chancellor of the Exchequer. The Bill also provides the means for Ministers to dispose of the successor company without further reference to Parliament, If the Government should have a change of heart about their preferred option after the passage of the Bill but before the appointed day, as the Bill stands at the moment, there is nothing that Parliament can do to hold the Government to the preference which the Minister stated on Second Reading.

If the Bill is to be passed, it should cover not only the initial transfer from the existing corporation to the Foreign Secretary, but also the next stage of the transfer from the Foreign Secretary to the new owners in the private sector. It should spell out that the new owners should be a foundation and committed to developmental objectives. It should require the constitution and membership of the foundation to be approved by Parliament before the transfer takes place. We have already discussed that point to some extent and I am sure that we shall continue to do so.

We are also concerned that the new foundation should continue to operate on the terms, and with the purposes, set for it at the outset. The Minister has spoken of the Foreign Secretary retaining reserve powers for an initial five-year period to ensure that the principles and purposes of the foundation are not changed within that time. That implies some degree of continuing accountability to a Minister who is accountable to Parliament, and is therefore welcome. But we should go further and insist that the assets acquired by the foundation should not then be disposed of to another body without explicit parliamentary consent.

Likewise, the amendments seek to clarify the position as regards the appointment of members of the foundation. It appears at present that the Government's intention is that the initial members should include the current Crown Agents. That is right because they have done a good job, and should continue to do so with our support. However, it also appears that other members are to be appointed by the Crown Agents, who are ministerial appointees, rather than by Ministers themselves which, to say the least, is an odd way of doing things.

We therefore propose that the appointments should be the clear responsibility of Ministers, who are accountable to Parliament. If the Minister is prepared to take responsibility for appointing the present Crown Agents to the new foundation, there is no good reason why the Government should not equally be responsible for the other members also. The Government's proposals appear to create two classes of foundation member: the first to be appointed by Ministers, with the second group being appointed by the first group. That is illogical, inconsistent and, we feel, unwise. It would be much simpler and clearer if all members of the new foundation were appointed in the same way and by the same people. The amendments will give effect to the Government's preferred option while improving accountability.

Amendments Nos. 10 and 11 refer to the name "Crown Agents". As it stands, the Bill offers any potential purchaser of the Crown Agents not only the property, rights and assets of the existing public sector corporation, but also its name and everything that goes with it. Of course, plenty of private sector companies use the word "Crown" or something of the sort in their name. There are some excellent establishments which I and, I am sure, other Members of the Committee visit on occasion which boast titles which include the word "Crown" or something of that sort, such as "The Rose and Crown" or "The King's Head". Perhaps noble Lords on this side of the Committee should be the ones to use "The Rose and Crown". We know the Conservative Party to be deeply in debt to the Royal Bank of Scotland, its major creditor, but we know—at least we hope—that the Royal Bank of Scotland does not claim other than a commercial relationship with Her Majesty's Government.

The Government are right to recognise that the name "Crown Agents" falls into a different category. The good name and reputation of the Crown Agents are universally agreed to be their major assets, and the fact that their good name specifically asserts a close connection with Her Majesty's Government is of vital importance.

The very fact that provision for the transfer of the name is spelled out in the Bill, when provision for the transfer of everything else is not, affirms the Government's recognition of that reality. Ministers know as well as anyone else that the Crown is seen as the ultimate guarantor of the integrity and financial security of the corporation, and that that is part of the reason why so many overseas governments and aid agencies trust the Crown Agents to look after their precious funds.

The Crown Agents should keep their name, even if they go into the private sector, as long as there remains a real connection with the Crown. That is why we want to make the continued use of the name conditional on a continued link with Her Majesty's Government, as spelled out in our new clause and schedule, through the requirement to adhere to the purpose and principles approved by Parliament and the requirement to seek parliamentary approval for any further transfer of ownership.

We do not want to see the good name of the Crown of the United Kingdom put up for sale to the highest bidder. We do not want to see that good name become a tradable commodity. Furthermore, we do not believe that it would be right for the Crown Agents to continue to call themselves such if they were to desert the developmental objectives and the non-profit constitution to which they are now dedicated in order to go into the private sector.

We therefore propose in the amendments that the name "Crown Agents" should be available to the successor company as long as it remains wholly owned by the Crown. It should be available to the foundation which we and the Minister have described, and to any subsidiary company, but it should not be available to any other buyer in the event that the foundation proposal does not come to fruition. It should not be available to any multinational conglomerate which might obtain the assets of the foundation at any future stage. It should continue in use only so long as the successor company and the foundation adhere to the purpose and principles which govern the work of the Crown Agents. I beg to move.

Lord Redesdale

I rise to support the amendments, the spirit of which is quite clear. However, I should like to ask one brief and specific question of the Government with regard to Amendment No. 5. At column 1410 of Hansard, the Minister said on Second Reading: We envisage that the foundation will be established as a company limited by guarantee".—[Official Report. 28/2/95; col. 1410]

I know that the amendments are broad in their aims, but I should like to ask the specific question: will the Government bring forward an amendment to add the words, "The successor company should be a company limited by guarantee"?

5 p.m.

Baroness Elles

In the light of what was said by the noble Lord, Lord Rea, perhaps I may ask my noble friend a question. As I read the Second Reading speech of my noble friend the Minister the way in which the structure would be set up and the relationship between the Government, the foundation and the operating company were clear. Will my noble friend confirm that for a considerable time the Government will be a shareholder in and a member of the foundation? Will the foundation he the sole shareholder in the operating company?

I believe that all the anxieties expressed by the noble Lord, Lord Rea, in his speech and in the amendment were catered for by my noble friend when she explained the statutory framework.

Lord Judd

Before the noble Baroness sits down, will she respond to the point that has been made? If the proposals are so evidently sensible, in the name of open government, why on earth not put them on the face of the Bill?

Baroness Elles

We have heard many speeches from many noble and learned Lords about the unreasonable length of endless Bills, statutory instruments and every kind of legal instrument. I believe that anything that can shorten a Bill, and taking the word of the Government as stated in this Chamber, is sufficient. I am all for as short a Bill as possible and I accept the word and undertakings of my noble friend on behalf of the Government.

Baroness Chalker of Wallasey

I understand the Committee's anxiety to know more about the details of the proposed foundation. I explained on Second Reading that the foundation will be independent of government and that its members will not be appointed by Ministers. Therefore, the premise on which the noble Lord, Lord Rea, moved the amendment was not entirely right. I had made the point on Second Reading. I also said that the foundation will own all the shares in the company which will operate the Crown Agents' business. I further said that it is likely to take the form of a company limited by guarantee. In response to the noble Lord, Lord Redesdale, I do not see the need for an amendment on the matter.

I further said on Second Reading that the foundation will not distribute dividends to its members and that its objectives will encompass the social, ethical and developmental principles on which the Crown Agents' business is based. I went on to say that the members of the foundation will need to discuss and agree with government the terms of transfer of the business once Parliament has agreed to the arrangements set out in the Bill.

Since Second Reading we have received significant expressions of interest about the membership of the foundation. The Crown Agents board and I envisage that the core of the membership of the foundation will be a group of what I would term "enduring institutions". Those could include, for example, the British Consultants Bureau, the British and international chambers of commerce and various chartered institutes as well as a range of non-governmental organisations which are concerned with developing countries and overseas aid. There may also be a number of companies which have no conflict of interest with the Crown Agents' business. However, it is too soon to name individuals. In saying that, I am trying to give the noble Lord, Lord Rea, a feel of what has happened since Second Reading.

Although this is not, and will not be, a trade sale, it is essential to ensure that full confidentiality for Crown Agents' clients is maintained throughout the process of transfer and thereafter. It would be quite wrong and unfair for the Crown Agents foundation were that not to be so. However, I shall continue to provide information to the House as the Bill progresses and as more information comes forward. The proposed memorandum and articles of association will be made available to Parliament, as will the information memorandum which is to be provided for prospective members of the foundation.

We have already discussed why it is not appropriate to introduce an affirmative resolution procedure into the Bill. It is for essentially the same reason that putting the foundation on the face of the Bill is unnecessary and, I believe, the wrong approach. It would be unprecedented and would add nothing of substance to the Government's proposals.

There is, however, a new provision in the proposed new clause which I was surprised to see. Subsection (3) would have the effect of creating a new quango. It is a different situation for the Opposition to be proposing an amendment which creates a new quango. Therefore, I was most gratified to note the confidence that the noble Lord, Lord Rea, has in the judgment of the Secretary of State in selecting foundation members. Of course, I tease, but it is worth teasing the noble Lord on that point.

That is not how the Government propose to proceed. I have said many times that this will be an independent foundation. I have greater confidence than the noble Lord, Lord Rea, in the integrity and judgment of the initial foundation members to organise themselves and to manage the Crown Agents' affairs without government intervention. But time will tell.

The noble Lord spoke also to Amendments Nos. 10 and 11. We agree that the Crown Agents' name is a most valuable asset and should be preserved for use by the ultimate owner of the successor company in the private sector. It is well known that it is our intention that this shall be a foundation. But the reasons why it is inappropriate to put the foundation on the face of the Bill in this way have been well rehearsed.

I have said that the foundation will be a company limited by guarantee. I also said that the memorandum and articles of association will commit the company to a clear social and developmental purpose. A few moments ago I said we would make those available to Parliament. Therefore, the foundation's membership will be entirely tied up on the basis of preserving the Crown Agents' developmental role.

I know that a number of Members of the Committee would like us to consider further the means to protect the nature of the foundation, including possible charitable status and government membership of the foundation. Were that to be so it would be only for a limited period of time.

The name "Crown Agents" does not necessarily imply a connection with the Government or the Crown, any more than having a nightly tipple at the Rose and Crown means that it has anything to do with someone called Rose or the Crown. The name "Crown Agents" embodies the traditional virtues of probity, impartiality and integrity, and is recognised worldwide. It is right that the name can be used by the ultimate owner of the successor company.

I am at one with the noble Lord in having at heart the best interests of the Crown Agents. However, I hope that I can satisfy the Committee that the unique ethos of the Crown Agents will be preserved and enhanced by the route that the Government propose. Like my noble friend Baroness Elles, I do not believe that the provisions in Amendments Nos. 10 and 11 are necessary in legislation of this kind.

Perhaps I may say with regard to Amendment No. 13 that it was very interesting to read the Opposition's thoughts about what should be in the memorandum and articles of association, as set out in the proposed new schedule. Certainly, that will give us food for thought. But in view of all that I said on Second Reading and with what I have wearied your Lordships today, I really do not believe that we need paragraph (a) because I have said already that there will be no distribution of dividends to shareholders.

That also links up with the question of how surpluses would be used. I made it clear on Second Reading that they will be used solely in pursuit of the social and developmental objectives of the foundation. Those will be drawn up tightly in the memorandum of association. Therefore, I hope that the Committee will agree that Amendment No. 13 is really not necessary.

It will be for the members of the foundation to make sure that the objectives of which we have spoken are strictly observed. But to give a little more comfort to the noble Lord opposite, I should tell him that it is our intention to ensure that the objectives cannot be changed for a period of perhaps five years. I am open to suggestions about the length of time but I believe that that is the right way to start off the Crown Agents foundation.

It will not surprise the Committee to know that the provisions of paragraph (b) of Amendment No. 13 are not acceptable because they go too far by proposing that the sale of the successor company should be subject to parliamentary control for an undefined period in the future. That really is a classic example of the nanny state at work. The reason for the Bill is to give Crown Agents more freedom to exercise their commercial judgment and not to provide more apron strings. I am certainly not going to agree that they should have more apron strings.

With regard to paragraph (d), the successor company and its subsidiaries will be required to pay over the surpluses to the foundation appropriately, and the foundation will distribute them in accordance with the objectives. Therefore, any surpluses will be distributed by the foundation, and not the successor company.

I realise that the noble Lords, Lord Rea and Lord Redesdale, and in particular the noble Lord, Lord Judd, will be disappointed but I do not believe that this group of amendments is necessary at all and I urge the Committee to reject it.

Lord Rea

As always, the noble Baroness is very persuasive but she has not persuaded me or other Members on this side of the Committee that our amendments are not the way forward.

It is not necessarily the intention that these amendments should be the final version of how the foundation should be described. They were put forward as an encouragement to the noble Baroness to come forward with what she believes to be better proposals which are more acceptable to the Government. In tabling the amendments, we were trying to demonstrate that these matters are not dealt with in the Bill as it stands.

When speaking to the first amendment the noble Baroness, Lady Elles, said—at least as we understood it—that the further elaboration of the Government's future intentions in that regard should come before Parliament. The passage of this Bill provides a golden opportunity for the Government to describe their future intentions either by agreeing to an amendment similar to that which we propose or by tabling their own amendments.

I do not believe that the noble Baroness is being logical when she describes what is to happen next but refuses to put that on the face of the Bill. She said that it is not intended to alter the objectives of the foundation for three years. But where do we see that on the face of the Bill? It may be that there will be a change and a less sympathetic Minister takes her place. That may mean that the Crown Agents will go in a very different direction indeed.

We shall not divide the Committee on this amendment. However, I ask the Minister earnestly to make proposals before Report stage so that we can have more than just a feel, as she said, for what is in her mind. We need to have evidence written on the face of the Bill which will provide some substance rather than statements which we have to take on trust. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Clause 2 [Provisions with respect to capital structure]:

Lord Judd moved Amendment No. 6:

Page 2, line 13, leave out subsection (2).

The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 8 and 9. The purpose of these amendments is to obtain a clearer indication of the Government's intentions than is presently contained in the Bill.

I am sure that the Minister will understand that on these Benches, we are not altogether convinced that there is a clear unanimity of view in the Government about the future of the Crown Agents. We believe that there are different schools of thought which are pursued quite actively. The Minister knows that we identify with her objectives. We have no doubts as to her good will and intentions. But we are worried about those who may not share those intentions. We beg her to see that everything for which we are arguing today aims to strengthen rather than undermine her position.

Our proposed amendments to Clause 2 remove all reference to Ministers imposing an assumed debt on the successor company. The Government are already claiming immediate repayment of the remainder of the debt which the Crown Agents assumed on their incorporation. We believe that Ministers should not saddle a new company with a further initial debt unless they can justify it and specify the sums involved at an early stage. This would be the appropriate time for them to do so.

Members of the Committee on all sides have already made clear their anxieties about the initial capital structure of the new company. They have also expressed deep anxieties about the security of the Crown Agents' staff and the pensions of past and present employees. When I re-read the Second Reading debate I was struck by the Minister's forceful proclamations of intention. One of the most moving and powerful passages in her remarks was about the courageous, loyal and outstanding service of Crown Agents' staff in the past. Therefore, that is not something that we should treat lightly. The anxiety which we wish to highlight in the amendments is in relation to the connection between pension funds and the capitalisation of the new company.

The most recent figures in the 1993 annual report value the assets of Crown Agents at just under £16 million. The same report gives the market value of the pension scheme's assets in March 1990 as nearly three times that figure; the surplus value today after pension liabilities are taken into account may be as much as twice the value of the Crown Agents themselves.

So we are bound to wonder which privatisation represents the greatest loss to the public purse, that of the Crown Agents' business or that of the Crown Agents' pension funds? I want to ask the Minister this direct question: is the provision for imposing an assumed debt intended to recoup the loss to the public purse of the value of the pension fund by extracting interest payments equivalent to the savings made by Crown Agents by virtue of their continuing pension contributions holiday? Indeed, if we want to give a fair wind to the enterprise in its new form—something in the interests of all parties—we must consider the implications of resources for necessary restructuring to meet the challenges ahead. I would be grateful if the Minister could answer my question in her reply. I would ask the Committee to consider whether that amounts to funding privatisation of Crown Agents from the pensions surplus that rightly belongs to the past and present staff of Crown Agents, in spite of the tightening up of pensions rules currently being considered by Parliament.

At the end of the day, what matters is this: the financial viability of the Crown Agents if they are removed from the public sector. While I fully appreciate the tremendous work being done by Crown Agents and their capacity to make the most of fresh, commercial opportunities, I am not as sanguine as the Minister about the certainty of the business making great profits in the private sector at the same time as adhering to the social and developmental objectives which the Minister so rightly underlined. We should not saddle them with any extra debt burdens if we are to oblige them to venture on to the risky path of operating in the open market with a well-defined social purpose.

There is one other related point which the Minister may wish to address while we are considering the question of initial capitalisation. At present, part of the remit of the Crown Agents is to obtain the best possible deal for clients in the use of their funds. That is the attraction of working through them. It is no doubt why this highly efficient business returns only a very modest profit and would not break even at all without the benefit of the pension contributions holiday to which I referred.

How will that change the foundation that the Minister envisages? Will the foundation she intends to create still be free to obtain the best available return for itself, or will it be obliged to obtain the best possible deal for its clients? I suggest that it cannot do both. Will the purpose and principles to be enshrined in its constitution include a duty to make only sufficient profit to fund its ongoing work, or will it be free to maximise its profits at the expense of those governments and agencies that it currently serves?

The amendment I wish to move to Clause 3 removes subsection (2) which prohibits the Foreign Secretary from directing the successor company to issue securities in the company to him once the company has ceased to be wholly owned by the Crown. The intention of the amendment is to explore just how the Government intend to maintain reserve powers in the foundation for a five-year period after privatisation of the successor company.

The Minister said that that is the Government's intention in order to ensure that the foundation continues to adhere over that short period to its initial commitment to developmental purposes and principles. Indeed, the noble Baroness re-emphasised that point during today's deliberations. The most obvious formula for doing so is for the Secretary of State to hold some type of golden share in the foundation and to be able to increase his shareholding if the foundation strays from the agreed path. Yet the subsection that we are considering appears to rule out that option. If the Government's intention is not to hold a golden share and retain the option of increasing it, how will they exercise the reserve powers to which the Minister referred?

Again, I should be grateful if the Minister would address that point in her reply. In another context, bearing in mind the firm strictures of the scrutiny committee, I hope that Members of the Committee will agree that the Bill should not refer to the point at which the successor company has ceased to be wholly owned by the Crown without first spelling out the details of how that transfer of ownership is to be conducted. I beg to move.

Lord Redesdale

I should like to speak to Amendment No. 7 which is really a probing amendment. I admit that the way the amendment is phrased would not suit legislation, but the aim is to raise a few questions that I hope the Minister will be able to answer. In fact, all the amendments in the group deal with the debt that the Crown Agents will inherit. Before we reach the next stage of the Bill's proceedings, could the Minister give an indication of the amount of interest to be paid by the Crown Agents as part of their penalty for realising their debt too early? It is rather unusual that the Crown Agents, which are being put into the private sector by the Government, should then suffer a penalty clause for actually having to repay the loan; indeed, they have to do so by law. That is the aim behind the suggested removal of lines 16 to 18 in Clause 2.

The amendment also puts forward the question of how the Crown Agents will pay the outstanding debt to the Consolidated Loans Fund. Is it the Minister's intention that the pension contributions paid by the Crown Agents, which are now being used for restructuring the company (as regards the pension contributions holiday) should be used to pay off the outstanding debt to the loans fund?

Is it the Minister's intention—and this is the heart of the amendment—that the successor company to the Crown Agents should have a financially firm basis? Does the noble Baroness envisage that money will flow from the Crown Agents over a long period of time to the Treasury, as I believe will most likely happen, or, most unusually, will money actually flow from the Treasury to the Crown Agents to start it up? I return to the point that was raised earlier; namely, that we are dealing with a slightly strange enabling Bill. I believe that it is an unusual enabling Bill. We are privatising a company which will produce no dividends for shareholders.

I have one further question to ask the Minister which is raised by the amendment. The Minister mentioned that the holding company may have charitable status. Can he give some indication of whether the members of the foundation—that is, those who are now keen to become such members—would also be keen to become charitable trustees? I believe, although perhaps the Minister will be able to give me some indication in this respect, that charitable trustees should manage their money in the way that would give the best return on the assets of the charity. That could come into conflict with the set aims of the foundation. I realise that I have asked the Minister many questions. However, that was the purpose behind the amendment. Unless those questions are answered, I fear that we may have to bring forward many more amendments at the next stage to clarify the position.

5.30 p.m.

The Viscount of Oxfuird

I, too, wish to speak to Amendment No. 7. During the Second Reading debate I referred to the remarks of my right honourable friend the Foreign Secretary, who described the Bill as "privatisation to preserve", and extended them to describe it as privatisation to preserve and enhance. I believe that emphasises that this is a rather special form of privatisation.

The new body created will not be the property of private shareholders like British Telecom or British Airways, with full commercial freedom to go to the market to seek additional equity or funding, but a foundation—a company limited by guarantee—which will be unable to distribute profits or assets to guarantee members, but equally—I repeat and re-emphasise this— will have no access to further equity capital. That is why we must be so careful to ensure that the new body starts off with an adequate balance sheet to see it through the many uncertainties which will inevitably lie ahead.

It is my view, however—which I should like to urge upon my noble friend—that the Bill should not demand the repayment of the commencing capital debt but should reinforce the balance sheet of the new body by converting that debt into permanent capital. If early repayment of the outstanding debt is forced upon the new body, and if further debt is imposed upon it, then that would weaken the balance sheet significantly. In transferring the Crown Agents' activities to an independent foundation we are doing nothing to alter their fundamental nature and should therefore not expect any dramatic changes in the level of profitability that the new body is likely to achieve. In making these points I realise that the Treasury has a real responsibility to protect the interests of the taxpayer.

In any organisation the Treasury role is usually a difficult and an unpopular one. But the role of the Treasury is only one of the factors that we in Parliament must consider and support. Very often there are wider issues that must also be considered. It is therefore vital that we should ensure that the new body is born with financial muscle, in the tangible form of a strong balance sheet, to be commercially viable.

It was Walter Bagehot who said in the 19th century, The Crown is, according to the saying, the `Fountain of Honour': but the Treasury is the 'Spring of Business"".

If we can achieve a strong financial base for the new foundation I am sure that it will succeed. If not, we risk seeing our fledgling body swept away and destroyed early in its young life. I very much hope that commercial reality will overcome the problems of short-term expediency and that we shall finish up with a new foundation with the strength and financial viability to sustain itself for the years to come. May the Treasury act as a spring.

Baroness Chalker of Wallasey

This is an interesting debate. I hope that I can set at rest the fears, worries and conjecture of the noble Lord, Lord Judd. I understand that he must probe these matters. However, I have made it quite clear on all occasions when we have discussed this—both privately and at Second Reading —how important the pension arrangements are to the Crown Agents' pensioners. I have told many who have asked that the past contribution made by the Crown Agents' pensioners is safe. The pension funds are held in trust and there is no way in which I believe there should be any reduction in the assets that are held by the trustees when the business transfers. What I think is perhaps being overlooked in the debate on these issues is that the Bill already provides for continuity of treatment of employment for pension purposes. That is most important and I am delighted that it is there on the face of the Bill. The Crown Agents have no plans to alter their present pension arrangements. The security of the trust-based schemes will be further protected by the provisions of the Pensions Bill which has now completed its passage through this Chamber.

The other matter that the noble Lord was concerned about was the value of the pension surplus to the business in allowing a contributions holiday. Of course that will be taken into account in our decision to ensure value for money for the taxpayer from the transfer. But that does not mean that there will be some great raid on a pensions fund, as the noble Lord seemed to think. Of course he has at the back of his mind—as I well know from Second Reading and other exchanges—the situation that obtained towards the end of the 1970s before the Crown Agents Bill was made law in this country. Of course there were lessons that we learnt from that inappropriate capital structure. I can assure the noble Lord, Lord Redesdale, and my noble friend Lord Oxfuird that we are determined to give the new Crown Agents a fair start. That is most important. I would not be standing here today if I thought that this Bill would do anything different. I can agree with the noble Lord, Lord Judd, that the Crown Agents should not begin their new life overburdened by debt. We want the new company to have the capacity to invest, to grow and to produce benefits for the foundation. I would say to the noble Lord, Lord Redesdale, that I do not think that if the foundation decides to become a charity there would be any conflict of interest. We have already discussed the memorandum and articles of association that are likely to be those of the foundation, although they are not finalised yet, as the Committee is aware. But there is no way, given that the social and developmental purposes of this foundation will be written into the memorandum and articles, that that would be at variance with what charity trustees would expect from the foundation were it to be made a charity.

When looking at this question of dealing with debt, of course all governments have to consider questions of value for money for the taxpayer. But it would be premature to take a decision now on what the right balance would be. I certainly would not be in favour of enshrining this in legislation. As my noble friend Lord Oxfuird said, we want a strong balance sheet. We want to reinforce the position of the Crown Agents. Therefore I can see no worries such as have been alluded to by Members of the Committee in this short debate.

Certainly there are no arguments of principle as to why Crown Agents should not have debt in the balance sheet. Very few companies would be in that position. But the decision about all of this must really turn on the needs of the business. We are taking professional advice on this and indeed on the make-up of the new Crown Agents' capital. We shall certainly take the views of the current board fully into account in arriving at this decision. I think the Committee will have realised that the board has an influential voice already. Its members are certainly the closest to the business. While the Government as the owner would have to have the final say, there is no way that I shall not listen with the greatest of care to, and probably take the advice of, the Crown Agents.

A number of other detailed questions were asked. Perhaps I may say to the noble Lord, Lord Judd, in answer to his question about how the government would keep reserve powers, that in a sense he has misunderstood the clause. If it were thought necessary for there to be a golden share, it would be a government share in the foundation. The foundation is not dealt with in the Bill. The successor company is referred to in Clause 3; but that issue is not dealt with in detail. I shall look again at the point that the noble Lord made, and at my answer to him. I want to be sure that the foundation will have the right balance when it takes over from the Crown Agents. To make sure that that balance is right and the foundation gets a good start, we have to ensure that the issue is dealt with properly.

The noble Lord, Lord Redesdale, asked me some detailed questions. He asked what penalty there would be on the repayment of the National Loans Fund debt. I said at Second Reading that that would be at a fixed rate of interest. Certainly, the loan that remained in Crown Agents in 1989 was understood to be then and remains now at that fixed level of repayment. However, the actual amount will depend on the difference between the interest rate on Crown Agents' debt to the National Loans Fund and the National Loans Fund's lending rate on the day appointed for the vesting of the new company. Therefore I cannot be as definite as the noble Lord would like me to be at this point because I do not know when the vesting day will be. I shall not speculate on interest rate movements between now and the appointed day. However, I can say that if the vesting day was now, the penalty repayment would be approximately £200,000. I am advised that that is a rough indication of what the penalty would be.

I spoke at Second Reading about the possibility of charitable status. Nothing has changed since we discussed the issue at Second Reading. It is not a matter solely for the Government. It will be a matter for the foundation. I made that clear at that time. If the foundation wishes to seek registration as a charity, it must look very carefully at forms of regulation. That is a matter that we are looking into with advisers at present. However, nothing has changed since we last discussed the matter some weeks ago.

There are still plenty of answers to be sought. I shall certainly keep noble Lords advised on this particular issue as we proceed with the Bill.

In moving the amendment, the noble Lord said something which struck me as strange. Perhaps I misunderstood him. I do not believe that we could transfer the successor company or find new owners in the form of a foundation unless it were financially viable in the broadest sense. That is why I can give the assurance that my noble friend Lord Oxfuird sought. However, that is not something for which one can legislate. I believe that on reflection noble Lords will understand that. Obviously, viability will depend on the efforts of the management in taking advantage of the new opportunities which the change of status offers. That is a matter on which we shall have further discussions between now and Report stage.

Regarding Amendment No. 9, I have already said in answer to earlier debates that the period of government ownership of the successor company will be limited. That is why, as we have already discussed, the Secretary of State needs special powers over the company in connection with the vesting which takes place on the appointed day. It is not right that those powers should continue longer than necessary for the simple purpose of setting up the opening balance sheet of the company in a way which matches the assets and liabilities of Crown Agents. Therefore, I do not believe that Amendment No. 9 is necessary in any sense.

I do not believe that the Government should retain ownership of the successor company. The setting up of the foundation is a means to an end. We have already been over the arguments earlier today, and we certainly did so at Second Reading.

Members of the Committee may wonder why I am unwilling to accept their amendments; but they have said that they are probing amendments. I believe that Amendment No. 9 is intended to give the Secretary of State special rights in the successor company, even when it is not wholly owned by the Crown. I am not sure what that would achieve or what it was intended that it should achieve. It is unlikely to be acceptable to the new owners such as the foundation, which will have a wide range of membership.

I hope that I have quietened the fears and answered the questions of the Committee. I shall consider again the comments made by Members of the Committee. However, I do not believe that Amendments Nos. 6, 7 and 9 are necessary. Amendment No. 8 is of course consequential on Amendment No. 6.

I repeat that we are determined to give the new Crown Agents a fair start and to give the foundation a good start in order to produce benefits for the work that it does in line with its social and developmental purpose. I hope that in the light of what I have said the noble Lord, Lord Judd, will not press his amendment.

5.45 p.m.

Lord Judd

Of course I am grateful for the characteristically considerate way in which the Minister responded to the amendments. At the risk of tedious repetition—although I do not believe that this is a matter on which we can be tedious—I say again that on this side of the Chamber we have no doubts about the intentions and good will of the Minister. We take at face value all that she says she wants to see the Crown Agents go on to achieve and the role she wants to see them fulfil. However, as I have said in other debates today, that is not the point. The point is that we are not discussing the Minister; we are discussing the Government and the arrangements that are laid down in legislation concerning the future of the Crown Agents.

Perhaps I may deal briefly with some of the points that have been raised in this interesting exchange. First, all the members of staff will be immensely reassured and will place great weight on the categoric assurance that their pension fund is safe and there is no question of it being interfered with in any way. That is certainly reassuring news for them, although it could be argued that that could not have happened anyway because of new legislation. It was good to hear the Minister emphasise that point.

On the question of the golden share and the foundation, I hope that the Minister will consider not only the discussion on this particular set of amendments but the discussion in general before Report stage. She is a very fair-minded person and will accept that there is at least some room for misunderstanding. There may be, however unintentional, some ambiguity about what she has said today. On the one hand, what she said today will be taken as an attempt on her part to reassure everyone that for the next five years the Government will keep a very firm controlling hand on the tiller, or at least will be ready to take the tiller, to ensure that matters are going in the direction intended. However, she seems to have said that that reassurance is regarding the successor company while arrangements are made for the foundation to take over. That is not quite the same message. From the Minister's other observations, people may have received the message that the Government are intending to ensure that those five years—

Baroness Chalker of Wallasey

I apologise to the noble Lord for intervening but I wish to make sure that he and I understand exactly the same point.

My comment about the following five years concerns the fact that there should be no change in the memorandum and articles of the foundation—the objectives. That may be the area in which the Government should have that reserve, But I do not believe that any foundation would be terribly happy, having taken the successor company into the foundation, to have the Government watching over it at every turn. That would not be much better than the current situation which we seek to improve.

When we spoke of a five-year watching brief over the memorandum and articles of association of the foundation, or indeed the specific social and developmental objectives, that was the bottom line. I do not believe that it would be right for the Government to interfere with the work of the foundation, even though they may be one of the members of the foundation in the future. However, I shall consider carefully all our debates and make sure that that factor is clear beyond peradventure.

Lord Judd

I thank the Minister for that observation. However, perhaps I may ask again. It is always good for all of us to read what we said in Hansard, albeit somewhat inhibiting. However, to read what she said will increase anxiety. She states, on the one hand, this and, on the other hand, that. She states that, on the one hand, the Government will keep an eye on things and make sure that everything goes the intended way for at least five years; but, on the other hand, the Government are anxious not to spell out or reveal any specific arrangements to ensure that that is so. We who are unashamedly doubting Thomases want not only to hear the intention but to see the mechanism that will be available. The Minister has said nothing that has reassured us on that.

Regarding the pension fund and the contributions holiday, the Minister skirted round a problem which causes anxiety. In my informal contacts with Crown Agents, I find it interesting that at all levels of senior management and staff there is a shared view that they want a strong future together. There seems to be an enlightened, shared view that one of the advantages of the contributions holiday is that resources were available which could put the enterprise in a strong position to face the future with regard to finance, necessary restructuring, and so on. The anxiety is that any undue financial obligations which the new arrangements inherit will be at the expense of such essential operation. Therefore it is important for the Crown Agents—I am sure that the Minister will consider the issue; I hope that she will come back with convincing observations at Report stage—to have strong reassurance on that point. I detect that there is real anxiety on that score.

My last point relates to the issue of charitable status. The Minister said today that that would be up to the foundation to decide. I am sure that the Committee realises that that factor is central to what disturbs us. There is a big difference between being a charity and not being a charity. If we wish to know what we are making possible for the future of the Crown Agents, this is the time at which we should be clear as to whether the body will be a charity. It has tremendous bearing on what we do now.

To state that the Government will have available a guiding hand on the tiller if things begin to go off course but also that it will be up to the foundation to decide whether it will be a charity seems to be having all things all ways. Some clarification on the point at Report stage will be immensely helpful.

I conclude by saying that it is always good to have exchanges with the Minister. I enjoy them more when they relate to issues on which we broadly see eye to eye—the challenges of humanitarian assistance and development, and so on. I find it uncomfortable when I am not reassured by the position that she takes. In a complex way, I find myself more uncomfortable because I am usually reassured by her. In the exchanges between the noble Lord, Lord Rea, and the Minister, I felt that the strange element in the relationship was that she was very persuasive yet she did not persuade. It was an interesting contrast between style and substance. That aspect slightly worries us on this side of the House. We hope that we can help to persuade the Minister by putting forward arguments and suggestions regarding arrangements which underwrite the observations that she makes.

I hope that some way down the road we shall not be saying, "Here we are with another Minister and a foundation that we did not envisage in those exchanges in March 1995. And if only we and the Minister, who shared so much, had at that stage buttoned up the position, we would not be in this situation". I hope that we shall not face such a predicament.

I have heard what the Minister said; we shall consider it hard. I hope that she will consider carefully what we said. We may return to some of the issues at Report stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 7 and 8 not moved.]

Clause 2 agreed to.

Clause 3 [Initial Government holding in the successor company]:

[Amendment No. 9 not moved.]

Clause 3 agreed to.

Clauses 4 and 5 agreed to.

Clause 6 [Use of "Crown Agents" as part of company name]:

[Amendments Nos. 10 and 11 not moved.]

Clause 6 agreed to.

Clauses 7 to 12 agreed to.

Clause 13 [Consequential amendments and repeals]:

[Amendment No. 12 not moved.]

Clause 13 agreed to.

Remaining clauses agreed to.

Schedule 1 agreed to.

[Amendment No. 13 not moved.]

Remaining schedule agreed to.

House resumed: Bill reported without amendment.

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