House of Commons Hansard Debates for 6 Jun 1995

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He describes the procurement business as "our engine room" and he points out that Crown Agents is "also becoming a catalyst" for change.

Without doubt, the name "Crown Agents" is synonymous with the highest standards of impartiality and probity. Crown Agents is justifiably anxious to maintain that good will and credibility which have been so carefully built up over the years--an anxiety shared by many of its clients. The tradition of service to Britain and to other countries is now under threat, not from within the organisation, but from the Government, and it is all so very unnecessary.

The Minister paints a picture of an organisation that is unable to respond to the commercial challenges presented by a changing world because it is in some way tied by its historic structure. I believe that it is important to have fixed points in a rapidly changing environment, especially if they provide not only stability but a guaranteed quality of service, as Crown Agents does. There is, however, a strong case for allowing the Crown Agents to take on additional functions and to operate in new markets. I shall address that point in greater detail a little later.

What I cannot accept--this is the only choice put to us--is that we have either to privatise the organisation or leave it exactly as it is; I cannot accept that there is no third way. Let us make no mistake. However it is put, we are talking about privatisation, even though some Ministers have been remarkably reluctant to use the P-word. In the light of recent bungled attempts in other sectors, the House will understand that reluctance. Both in the other place and here, Ministers have talked of transfer to an independent foundation or of "a suitably formed foundation", whatever that may mean. Neither we nor the Government know exactly what that means.

We have heard about the Government's intention that Crown Agents will move into the private sector. We have heard that a successor company, wholly owned by the Crown, will be established, and will therefore still be in the public sector. We have heard that "the Bill gives the Secretary of State, with the consent of the Treasury, the power to dispose of the successor company to a new owner."

Baroness Chalker had to admit, however, that

"the terms of this future transfer are not specifically addressed in the Bill".--[ Official Report, House of Lords , 28 February 1995; Vol. 561, c. 1410.]

The Minister partly confirmed that in his speech.

As a result of this legislation, this public sector organisation will be redefined as being in the private sector. Its assets will be transferred to a company limited by guarantee. Is that not privatisation? There are many reasons why the Government have chosen this bizarre route to privatisation. I am given to understand that some Treasury Ministers favoured straight privatisation--sale to the highest bidder--which would have yielded a positive financial consideration and provided the clean break from Government which is so popular in Whitehall circles. There were, however, substantial snags in that option.

For some time, strong rumours have been circulating that some of the major clients of Crown Agents, especially the Japanese Government who are its second largest client, were sensitive about a possible future

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takeover. They have questioned whether the high standards of probity and impartiality associated with Crown Agents could be maintained if the organisation became part of an international conglomerate. The possibility of the Japanese and others taking their custom elsewhere--that is a big part of the work of Crown Agents--could have jeopardised the sale. Concern has also been expressed about the grossly high salaries and share options that we have come to associate so clearly with British privatisation programmes. It was as a direct result of those concerns that the Government decided to go for the unusual route of establishing a foundation which would have developmental objectives. It was not an easy decision for Ministers to take, although they now would have us believe that it is the only and obvious choice.

Once again, expensive City consultancies have been wheeled in to chew over the pros and cons. Coopers and Lybrand produced an extensive report in 1992 which has still not been made public. I understand, however, that Coopers and Lybrand recommended a straight trade sale. "They would, wouldn't they?" one might say. Since then, the Government have been dithering over the options--or considering them deeply, depending which phrase one wants to use.

I am sure that the President of the Board of Trade, for example, must have pointed out what a significant ally Crown Agents is in the effort to increase British exports. Crown Agents knows United Kingdom suppliers well and it is, in turn, accessible to them. Some 35 per cent. of aid procurement handled by the United Kingdom is sourced in the United Kingdom. The link with British industry is worth tens of millions of pounds a year, and let us hope that it can continue. Straight privatisation would have put that relationship in jeopardy. The choice of a foundation is unusual. Comparisons have been drawn with other organisations: the Wellcome Foundation is a prominent example which bears closer scrutiny. Like Wellcome, the Crown Agents foundation would have twin objectives, trading and development, which would be kept entirely separate. However, Wellcome has been in the news recently because of a takeover battle, and there are interesting parallels with the proposals for Crown Agents, which we should pursue.

The Wellcome Foundation is a registered charity. A trust owned all the shares in the associated drug company until 1986, when a quarter were sold. A further third were put on the market five years later. Each sale required High Court approval, because the will that set up the trust left the trustees in ownership of the company, but without the power to dispose of that ownership. As a result, the trustees had to obtain a scheme from the charity commissioners to override the will. However, it was the clear intention of Sir Henry Wellcome when drafting his will that control of the company should remain with the trustees.

The recent Glaxo bid for Wellcome shares shows how important it is to have specific provision in the articles of association to safeguard the welfare of the company and its staff, to which the Minister has referred. We must ensure that a future Crown Agents foundation is not left vulnerable as the Wellcome Foundation, which has been held up as such a good example, has been.

At the heart of our concern about the Bill is the fact that so many details about the foundation have been left hanging in the air. Despite the Minister's assurances--I

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am sure that they are given in good faith; but he has greater faith than I have--I am not satisfied, and I do not believe that anyone else is who is concerned about the organisation's future.

The Government still have not made up their mind about the board or the structure of the foundation. The Minister for Overseas Development has said that membership of the foundation will reflect the international character of Crown Agents' activities, and will include representatives from the corporate sector. We can do no more than speculate what that means. I presume that the Japanese national aid agency could reasonably expect an invitation to take up membership.

It is conceivable that Treasury Ministers have suggested that, whichever body assumes responsibility for overseeing the trading activities-- presumably it will be the board of directors--it should be composed mainly of hard-nosed business men and women with no direct interest in, let alone commitment to, the developmental aspects of Crown Agents' work. Other Minister have expressed concern that the foundation's objectives may be changed by its members. Indeed, the Bill does not make it clear what safeguards there will be to ensure that membership of the foundation will not eventually pass into the hands of people with radically different ideas about how it should operate.

I understand that the Bill will give the Secretary of State limited reserve powers, possibly for five years, to rein in any attempt to change the fundamental purpose of the foundation. But, as my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) has already asked: what will happen after that? If we need a five-year guaranteed reserve power for the Secretary of State to stop any change in the fundamental purpose of the foundation, there must be the possibility that attempts will be made to change that fundamental purpose. Why else are the reserve powers there? As I read the Bill, it says that, although we shall watch the situation carefully for five years, after that, open season will be declared.

Mr. Forman: Does not the hon. Lady understand that the Crown Agents' strengths lie precisely in the technical, procurement and related activities that support the developmental objective? She must know that. So what possible reason could there be for Crown Agents in the private sector, with greater commercial freedom, not to play to its strengths?

Miss Lestor: The hon. Gentleman is making the same point as I. In other words, it is all a matter of faith. There is no guarantee in the Bill that what he wants and expects is likely to happen. As I have already asked, why suggest the five years' reserve powers if everything is bound to be all right? If it were certain that nobody would go in a different direction because everyone is committed, we would not need the five years reserve powers.

Baroness Chalker said in another place that members would not be appointed by the Minister, and the Minister repeated that today. However, in Baroness Chalker's words, Crown Agents is

"in touch with a . . . range of institutions including finance and trading companies, professional and trade organisations, charities and other development aid bodies."

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How can Ministers give a firm assurance that the proper balance between those different interests will be achieved if there is not control over the composition of the membership?

Lady Olga Maitland (Sutton and Cheam): I have listened with great interest to the hon. Lady's hostility to the whole idea of the private sector's having any role to play in the future of Crown Agents. Does she not accept that the purpose of the transfer is to enable Crown Agents to prosper, flourish and develop? She seems to suggest that it will be incapable of maintaining the integrity that it has shown so far. Will she set the record straight and say where she stands? Does she not trust Crown Agents?

Miss Lestor: The hon. Lady has slightly misunderstood my argument. Privatisation is not the same thing as encouraging the private sector in certain areas. [Interruption.] With respect, those two things are not the same. One can privatise an organisation so that it is completely private, or one can have an organisation with elements that make it a public organisation, although the private sector is encouraged to participate up to a certain point. The second alternative is not privatisation.

It is the Government, not the Opposition, who do not trust Crown Agents. I trust Crown Agents and believe that its contribution has been unusual and welcome, and that it still has a long way to develop further. But I do not want the purposes for which Crown Agents was set up to be undermined because the Government are opting out of any control or management of it.

The Government have not set the terms for the transfer of the powers and assets to the operating company. We are told that that can be left to discussions with future foundation members, whoever they may be, once the structure is established in whatever form. Apparently the members might decide to apply for charitable status at some time in the future.

Such a lack of information is not acceptable when we are being asked to allow a Bill of such importance through the House. It shows a disregard for Parliament and a clear intention to thwart the accountability that is achieved through the system of parliamentary debate.

We know that the new company will be limited by guarantee, but we are still waiting for sight of the memorandum and articles of association that their lordships were assured would

"reflect . . . and . . . build on, the social, ethical and developmental principles on which Crown Agents' business is based."--[ Official Report, House of Lords , 28 February 1995; Vol. 561, c. 1410.]

I hope that that is true, but why could such detail not have been included on the face of the Bill? The Minister said that it would not add anything, but its absence suggests to me that something is being hidden. Including the detail would have gone a long way towards addressing the real concerns of people who value the Crown Agents and want it to continue to provide the highest quality of service. The Bill will have little effect on the working of Crown Agents in the short and medium term. It already operates in a highly commercial way, and there is no suggestion that the developmental objectives will be jettisoned at this stage. However, after privatisation there will be two obvious changes.

First, any future borrowing by Crown Agents will not count against the public sector borrowing requirement. Secondly, Crown Agents will no longer be limited to

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serving aid agencies and other public bodies in the developing world. That is another of my concerns. In effect, Crown Agents' services will become available to a much wider range of organisations, including health authorities and local government bodies in the United Kingdom-- [Hon. Members:-- "Why not?"]

Conservative Members should not get too excited; nobody is saying that that should not happen--but I trust that the enthusiasm for new markets will not lead to too drastic a shift in market focus, and that the developmental aspects of Crown Agents' work will continue to be central to future corporate plans.

The hon. Member for Carshalton and Wallington (Mr. Forman) asked earlier about the welfare of Crown Agents' existing staff, which I understand is giving rise to some concern in his constituency. We must have assurances that there are no plans to make any staff redundant, because we have seen that sort of thing before. Similarly, it is not unreasonable to require cast-iron guarantees that the pension rights of current and past employees will be safeguarded. I was not sure whether the Minister dealt with that question; perhaps it will come up again later. Not too long ago, Crown Agents gave itself a pension fund contributions holiday in order to break even. The rights of its pensioners must be upheld. In another place, Lord Judd tried, with the tenacity that those who know him would expect, but sadly without success, to persuade the Government, as we are trying now, to put some flesh on the skeleton Bill. I have great admiration for my noble Friend's political skills; I have known him a long time, and he is an expert at eliciting information from the most reluctant Minister. But even he had to admit that he was up against a brick wall and getting nowhere. We cannot but conclude that Ministers themselves are still so much in the dark about the details of this unique privatisation that they are not only unwilling but unable to give the reasonable assurances for which we ask. I found it disturbing when the Minister said that he could not guarantee that the memorandum and articles of association would be available for the Committee stage.

Surely, in Committee, it is time to probe deeper, to ask more questions and to put more flesh on the bones. Yet the Minister said that he could not guarantee that the details would be available. We are being asked to pass a measure with little knowledge of how it will work.

In my efforts to understand the thinking behind the Bill, I compared it to another Bill now proceeding through Parliament--the Commonwealth Development Corporation (No.2) Bill.

Ministers have argued that Crown Agents' business has changed so much over the decades that it has become necessary to transform the legal and financial structures in response to changing needs. That is precisely the same argument as Baroness Chalker made yesterday in the other place during a debate on the Commonwealth Development Corporation, an organisation operating in the commercial sector but from within the state sector--like Crown Agents.

Like Crown Agents, the CDC is seeking greater commercial freedom to pursue new markets and undertake additional services. Like Crown Agents, the CDC plays an important role in developmental programmes. But unlike

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Crown Agents, the CDC is believed by Ministers to be able to develop in the way it has suggested, without resorting to privatisation.

In the same debate, Lord Trefgarne spelt it out clearly: "it is safe to assume that CDC, following the enactment of the Bill with its amendments, will be pursuing the same objectives by substantially the same means but with important new powers to do better more effectively, at an earlier stage and in a more fundamental way."--[ Official Report, House of Lords , 5 June 1995; Vol. 564, c. 1226.]

During the debate, Baroness Chalker completely rejected the suggestion that the CDC could be privatised at some future date. That is the same argument, but a completely different conclusion. If the Government believe that such freedom would work for CDC, why not for Crown Agents? Why have they gone totally for privatisation? We oppose this privatisation. [Interruption.] Did the hon. Member for Gravesham (Mr. Arnold) wish to make a comment? No, he just wants to sit and moan. The Government have so far not succeeded in persuading us that the proposed foundation will successfully maintain at its core a development purpose.

The Foreign Secretary's view appears to be pessimistic, if a recent report in The Daily Telegraph was accurate. The right hon. Gentleman is quoted as saying:

"The Crown Agents are buyers and sellers for the Government overseas. But the aid budget is falling. They do a lot of foreign business and need to be free of public sector constraints. It is privatising in order to preserve."

If Crown Agents' trading fails to be sufficiently profitable, where will the funds come from to meet the developmental purpose of the foundation? That question has not been answered. The Bill is as flimsy as it is evasive, and it leaves far too much to private discretion and far too little to public scrutiny and accountability to this House. Privatisation is not the only course unless one has a slavish addiction to the dogma of privatisation, however unnecessary.

Mr. Jacques Arnold (Gravesham): The hon. Lady calls this measure a privatisation because it allows her to pigeonhole it. I find it fascinating that the hon. Lady says that she is opposed to this privatisation. In recent weeks, the Labour party has opposed what it calls the privatisation of the railways and the privatisation of the Atomic Energy Authority. The Leader of the Opposition said that the Labour party was not against privatisation, but time and time again it opposes each and every privatisation.

Miss Lestor: I am glad that the hon. Gentleman has been reading some of our literature, even if he has got it wrong. What I am saying--the hon. Gentleman knows this--is that the Government say that they can do all that they want for the CDC in the Bill, and that it is not necessary to go for privatisation. But they are going for privatisation in this Bill with none of the safeguards or limits which are required to allow the Crown Agents to operate in the way it has said.

We have been asked to take the Bill on trust, and we will not even have the details of the memorandum before we go into Committee. We oppose the Bill, for the reasons which I have given. The Opposition seek to protect the benefits which the Crown Agents has brought to the developing world. It is absolutely right that the Crown Agents should have greater commercial freedom, but

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privatisation will not generate the trading surpluses necessary if those developmental benefits are to continue to flow. Privatisation does not give that guarantee, and the Minister unfortunately has not put any flesh on the Bill to assure us that there will be accountability.

5.44 pm

Mr. Nigel Forman (Carshalton and Wallington): I shall be brief, Madam Deputy Speaker. I believe that the Opposition are unnecessarily concerned about the measure. The first point to make--from both a constituency and a general point of view--is that the management of Crown Agents, led ably by Peter Berry and his colleagues, very much want the measure to go through. The employees also wish it to go through, as they believe it to be the right approach for the future of Crown Agents.

Mr. Foulkes: It is important to correct that completely misleading impression right at the start. The Crown Agents and its board were opposed to the proposals. [Interruption.] If the hon. Gentleman reads the annual report of 1993, he will find that they were opposed to the proposals. It was only because the Government twisted their arms and threatened them with worse measures that they reluctantly went along with it.

Mr. Forman: The hon. Gentleman is out of date. I have had letters from Peter Berry, and I know that the organisation wishes the measure to proceed. Mr. Berry has confidence about the future of Crown Agents on its new basis.

The Bill is welcome because it provides a flexible and imaginative basis on which Crown Agents can go forward, prosper and broaden its markets in future. It strikes the appropriate balance between meeting the concerns of some of the principal clients--one thinks particularly of the Japanese, as mentioned by the hon. Member for Eccles (Miss Lestor)--that Crown Agents should not lose the honest broker status which it has built up over the years, and the wishes of management to obtain commercial freedom and flexibility that are beyond the scope of what is available in the Crown Agents Act 1979. Therefore, it gives a correct and appropriate balance for the next stage of development.

That balanced objective should be achieved with the proposed two-tier structure which my hon. Friend the Minister set out in his admirable speech. A controlling foundation with a wholly owned operating company acting along commercial lines beneath it is a sensible way forward, and it could give the flexibility and the advantages that are sought.

From a constituency point of view, my constituents will be glad to learn that there will be no redundancies among staff working at the headquarters in Sutton. I hope very much that the pension arrangements will be left undisturbed by the proposed change so that they can be of benefit to employees and to the company by helping to meet restructuring costs. I believe that my hon. Friend the Minister said that both points would be satisfactorily addressed by the Bill.

Mr. Baldry: Yes.

Mr. Forman: I am grateful for that response to an important point.

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This is a good Bill, which I support wholeheartedly. I have, however, two or three questions which I should like to raise now and to which my hon. Friend could perhaps reply at the end of debate, if he catches your eye, Madam Deputy Speaker. First, will the new legal framework give Crown Agents the ability to take on new clients such as health authorities and local authorities--in other words, to widen the scope of its client base? I hope very much that that will be the case, as it would be in the commercial interests of the organisation if it were.

Mr. Baldry: The answer to that question is yes. One of the reasons why we want Crown Agents to move to the private sector is that--under present Treasury rules--it cannot compete for public work with firms from the private sector while it remains in the public sector. That is one of the reasons why we want Crown Agents to have this freedom.

Mr. Forman: I am grateful to my hon. Friend. I am doing very well.

Secondly, how extensive will the powers of the foundation board be in relation to the operating company? I have in mind the principle of trust law, in which a trust document is drawn up which gives fairly general--but none the less prescriptive--guidance to operating companies and subsidiary organisations acting within that trust document. To what extent is it envisaged that the foundation board will have real operating influence over the operating company? Thirdly, will the Act, the trust document or the prospectus set out the Secretary of State's reserve powers? We have heard in the debate so far that the reserve powers will exist for five years or thereabouts. It would be interesting for the House to know in exactly what circumstances such powers might have to be used. That would go some way towards answering the fair concerns expressed by the hon. Member for Eccles.

I am grateful to my hon. Friend the Minister for already answering at least one and a half of those three queries. I bring my speech to a close by underlining the key points: this is a good measure; it is worthy of support; and the Opposition are unnecessarily worried by the prospect of what they regard as privatisation but which I regard as a common-sense measure to widen the commercial opportunities of an excellent and reputable organisation.

5.50 pm

Mr. Derek Enright (Hemsworth): May I join other hon. Members in praising the Crown Agents? When I worked in Africa, I worked with the Crown Agents, and saw the practical work that it did for the United Nations development programme. As I was a delegate for the European Commission there, I saw the work which the Crown Agents did for the European Union. It was extraordinarily effective, because it had a reputation as an honest broker. It proved that it was an honest broker in how it carried out purchases or advised various organisations. That extremely important reputation should not be put to the test.

As my hon. Friend the Member for Eccles (Miss Lestor) said, from the moment that Price Waterhouse was brought on to the scene, suspicions were naturally aroused. I do not blame Price Waterhouse for that. It is a perfectly reputable firm with reputable jobs to do, but advising on development and how the Crown Agents fits

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into development is not one of its prime concerns, nor its area of greatest experience. I challenge the Minister to tell me of its previous experience in such an area, as it does not seem to have the necessary expertise.

This measure is privatisation, no matter how the Government now try to mince their words. They announced it as privatisation at the beginning and were rightly open about it. The purpose of privatisation is to put an organisation into the private sector; the purpose of the private sector is not to develop but to make money. No matter how gradually privatisation is carried out, the root of this privatisation is eventually to put profits into the hands of individuals or companies, not over the first five years but later.

Mr. Nigel Evans (Ribble Valley): The hon. Gentleman seems to forget that new Labour has now moved on, supposedly. To listen to him speak, I would not believe that the Labour party had moved one at all. He spits out the word "profit" as if something were wrong with it and refuses to accept the fact that, with the new foundation in the Bill, the profit that is made will be reinvested. What is wrong with reinvesting profit for the benefit of the people whom the organisation serves?

Mr. Enright: There is absolutely nothing wrong with profit, nor did I suggest that there was. But there is a great deal wrong with profit that goes directly into the hands of greedy individuals rather than going into the wealth of the nation. It is extremely important to remember that. The Minister allayed none of our fears. He continually said that there was nothing in the Bill. There is nothing in the Bill and that is our complaint. He went on to say that that should not cause a scintilla of concern. That is an altogether splendid phrase, but what does it mean? What proof did he give us that the Bill has substance which we can trust? The Minister clearly trusts the general outline of the Bill, which is to ask for all the best in the best of all possible worlds. It is neatly and nicely expressed, but it does not spell out its intent in detail. The only thing that is spelt out in detail is that the Government will play no part in appointing the foundation. If they do not appoint the foundation, who will they leave it to? How will the judgment be made? Will it be a succession from those who presently govern the Crown Agents? They are perfectly worthy people who do their jobs extremely well, but that gives no guarantee of the quality of their successors. The Government say that they will hold reserve powers for five years to vet any successors who are appointed. How strange to say that we shall need those powers for five years because the Crown Agents may go astray. Are the Government saying that they do not trust the present governors, but, in five years' time, when other people whom we know not are in charge, we can trust them? The problem is that this whole exercise has been shrouded in secrecy. One has only to read Baroness Chalker's speech in another place to realise that she deliberately said that she could not reveal certain facts because that would infringe commercial confidentiality. She simply asked us to trust her. If there were one member of the Government whom I would trust, it would be Baroness Chalker. She is the most trustworthy of all the members of the Government with the exception of the Leader of the House. I do not trust the Treasury or the

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hard noses in the Cabinet who have not yet given up their fight. I congratulate Baroness Chalker on the fight that she has put up on a number of issues, although she is not in the Cabinet. She has pursued certain issues with great tenacity and I have nothing but admiration for her, but given the prevailing mood of the Cabinet, the Government will go for wholesale privatisation as soon as possible and nothing that has been said about the Bill so far, nor anything in the Bill, will convince me otherwise.

Mr. Foulkes: I share my hon. Friend's admiration for Baroness Chalker, but we keep hearing talk about Government reshuffles in July or September, and there is no guarantee that Baroness Chalker will be doing the same job next year. Let us suppose that the right hon. Member for Stirling (Mr. Forsyth), for example, were to take over the post of Minister for Overseas Development. We can imagine what he would have in mind for the Crown Agents. So I ask my hon. Friend not to be carried away by his enthusiasm for the delightful Baroness Chalker.

Mr. Enright: It is entirely possible that the Secretary of State for Wales might even take over with a place in the Cabinet, which would indeed give cause for concern.

The hon. Member for Gravesham (Mr. Arnold) said in one of his more fluent interventions--he managed to get up and say a bit instead of mumbling from the Back Benches as is his wont--that we were using the term "privatisation" in the wrong way. By doing so, he said we were accusing him of wanting to privatise the Crown Agents and he suggested that nothing had ever been further from his mind and that he hates privatisation. If the hon. Gentleman is trying to suggest that the Bill is not designed to initiate privatisation, let me quote from the first press release from the ODA, which stated:

"The Government has decided to privatise the Crown Agents by transferring them to a newly created independent foundation with a social purpose and developmental objectives."

Mr. Baldry: The hon. Gentleman has read that press release accurately. The hon. Member for Eccles made a bad point from the Opposition Front Bench when she suggested that Ministers have sought to disguise the Bill's intention. The purpose of the Bill is clear--it is about privatising the Crown Agents and moving it into the private sector. We have, however, made it clear, as way back as in the press release of 1993, that that process will be achieved through a "newly created independent foundation with a social purpose and development objectives."

The idea that Ministers are involved in some sinister, macabre plot does not fit with the facts.

Mr. Enright: The Minister is absolutely right--it is not a sinister, macabre plot, because there will be a five-year hold on full privatisation. That is spelt out in the Bill. The Minister said that the Government will ensure that the plans are tightly drawn. When I heard that, I scanned through the Bill once again. If it is tightly drawn, I shudder to think what a loosely drawn Bill would be like. Mr. Peter Berry is a most able managing director of the Crown Agents. If one reads his successive reports, as I did in preparation for the debate, it is clear that he has been whipped along a particular path. When he was interviewed by the Financial Times , his clinching

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argument for being whipped along the path that the Government had chosen was that the new way of doing things meant

"there will be no disincentive to be proactive."

What gobbledegook. That sounds like the old Thatcherite language which the Government are trying hard to ditch. If that is the one argument for opting for that particular form of privatisation, with the ultimate aim of total privatisation, the whole thing is an absolute shambles.

Lady Olga Maitland: Bearing in mind the total venom with which the hon. Gentleman talks about privatisation, can he give the House one assurance? In the event, heaven help us, of a Labour Government, would he press that Government to bring the Crown Agents back into the state sector, which would hamper its future prosperity?

Mr. Enright: When we take over government again, as the hon. Lady has virtually admitted that we will do very soon, we will start from a different place. As the Irishman said, "I wouldn't have started from here".

I will not start from where the hon. Lady would wish me to start. We will have to see what is happening at that time. I hope that the five-year estop, which has been imposed, will be most helpful in ensuring that we will be able to continue to run the Crown Agents properly.

Mr. Nigel Evans: Does the hon. Gentleman accept that his refusal to answer that question and the refusal of other Opposition Members to answer any questions about privatisation and renationalisation is the very reason why the Labour party will not win the next general election?

Mr. Enright: As the Prime Minister said earlier this afternoon, I am not going to answer questions in the way that hon. Members want me to answer them; I am going to answer the question as I see it. Let us consider the disincentives to proaction. The Minister will recall that the tighter rules, of which he now complains, were brought in in 1979 for a perfectly good reason. They were originally mooted by the Labour Government because in the late 1960s and early 1970s, the Crown Agents, given the amount of freedom it then had, managed to invest in Australian property and to make rather a muck of it. One of the great things about that episode was that it proved the Crown Agents' absolute integrity in public service, because it was examined closely as a result of the huge mess it had made in Australia among other places. One department was found to have made a muck of things by making investments it did not really understand. There was, however, no dishonesty involved.

Such is the unique reputation of that public service which works closely with the private sector. The state and the private sector working together represents new Labour. That is precisely what the Crown Agents does so well now. To tip over that balance so that the Crown Agents is transferred completely into the private sector will tip the balance too far. That will unsettle an institution with a delicate balance.

Mr. Peter Luff (Worcester): I wonder whether the hon. Gentleman recalls the visit that he and I made to Tunisia--a client of the Crown Agents--last September? We saw the enormous contribution that privatised British Gas is making to the development of the Tunisian economy. Would he have made the same speech as he is making now against the privatisation of British Gas?

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Would British Gas have been able to make that contribution to the Tunisian economy if he had had his way then? Does he not accept that the Crown Agents should be able to enjoy the same freedom now enjoyed by that fine British company?

Mr. Enright: That fine British company has just given us an example of democracy at work at the meeting of its shareholders. The former Prime Minister used to shout that small shareholders now control the world. British Gas gave us a recent example of how it controls its small shareholders, who were lured into giving up their money on the understanding that they would have some power over that company. The Crown Agents may well run amok in the same way as British Gas has done in part of its operations. That would be a shame.

I believe that one of the main factors in driving the Crown Agents into the private sector was the World bank--the bank of the old days rather than the new ones. It is a joy to know that GDZ has held out against the transfer and is likely to continue to do so.

Mr. Hugh Bayley (York): Does my hon. Friend agree that a certain contradiction is apparent from the three interventions from Conservative Members? The hon. Member for Ribble Valley (Mr. Evans) said that there was nothing wrong with profit-taking, but that, nevertheless, the Crown Agents will not be allowed to take profits but must redistribute them. At the same time, however, the hon. Member for Sutton and Cheam (Lady Olga Maitland) said that, if the Crown Agents was taken back into the public sector, its future prosperity would be put at risk. The hon. Member for Worcester (Mr. Luff) then drew a parallel between it and British Gas, which makes profits and takes profits. Does my hon. Friend agree that those Conservative Members must say clearly whether they see the Crown Agents as a privatised and profit-making business or as a public service working within the private sector. It is not clear which line the Government are taking and it seems that Conservative Members are split on it.

Mr. Enright: I agree entirely with my hon. Friend.

We can go further. The real problem of the Crown Agents is the disgracefully decreasing amount of aid that this country disburses. The Prime Minister and others are fond of comparing us with the rest of Europe. In fact, if we are compared with the rest of Europe in the amount of money, in the lack of increase in money, in our reduction in bilateral aid and in our attack on Lome , it is obvious that the home markets are shrinking for the Crown Agents, and that must be a factor.

Finally, I join the Minister in the tribute that he paid to the Crown Agents for what they did in Rwanda. I have heard personally of some of the work that they did from a friend who works there, and that work was very considerable. It did not require special effort. The Crown Agents is, if you like, a seed that has been tended and has grown to flower. It is extremely effective and can spring into action year after year, season after season; that it did to great effect in the case of Rwanda.

The destruction of the Crown Agents--for that is what it is, let us make no mistake about it--is another drain on the resources that we should be giving to the developing world. It may be a short drain, it may be a long drain, but a drain it assuredly is. It would be a tragedy if, as a result of feckless behaviour, even if it were postponed until five

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years' time, we were to lose the collection of expertise that exists in the Crown Agents, which I have seen working on the ground and whose headquarters, in the constituency of the hon. Member for Sutton and Cheam (Lady Olga Maitland), I visited several times when I worked in Africa.

I wish to draw a parallel. The Prime Minister was bleating, the other lunchtime, about the lack of competitive sports in schools. He failed to recognise that the impact on games was a direct result of naive and simplistic policies in other aspects of education. When I was professionally employed, teachers of Spanish, of physics and of classics would happily go out in the evening and coach teams of a variety of sports- -the hockey that he so loves, cricket, football, and rugby. The changes that have been made, naively, in schools have had an impact on school sports, as many of us said would happen at the time that the changes were made.

As the present Administration is set, if I read it aright, treating the Crown Agents in that way will have a similar impact on its effectiveness. The Minister and the Baroness must tread with care. 6.13 pm

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