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Mr. Rowe: I hope that my hon. Friend will include in his encomium evidence given by the CDC that, to the largest extent practicable, it has upheld a non-corrupt form of trading for 50 years. In response to a question from us, it claimed that one of its biggest single assets was the fact that its reputation enabled it to browbeat those who tried to corrupt it, and to refuse to be corrupted.
Mr. Streeter: I pay tribute to my hon. Friend, who is second to none in his understanding of the word "encomium".
I agree with my hon. Friend. We know that, sadly, corruption is a real issue in far too many countries. The integrity of the CDC, and the model that it has been able to provide over the years, have been an important part of the performance of this excellent corporation.
It is well known that, at the same time as nurturing the CDC's activities over the past 20 years, the Conservative party has been promoting privatisation and removing the dead hand of the state from many former nationalised industries. That is well known to the Secretary of State, who has opposed every one of our privatisations. Conservative Members believe in the private sector, and in marketplace solutions. I have worked as a lawyer in the private sector for 20 years and more, advising business people on, primarily, buying and selling private limited companies. I have also seen the public sector at close quarters, notably while I was a Minister in the last Government. The public sector is necessary, and can be excellent; but there are many things that the private sector can do better, and investing in businesses is an obvious target area.
For a large part of our 18 years in government, we examined ways of securing more private sector involvement in the CDC. We considered whether we could privatise it, in full or in part, and how we could harness and focus private sector energy and resources without hurting the people whom the CDC had been set up to support. The problem, of course, was finding a way in which to produce an attractive return for private sector
investors without letting go of the CDC's vital developmental nature. We could have done it easily if we had been prepared to risk hurting the poorest of the poor in the developing world, but we were not prepared to do that.
Meanwhile, while we were privatising and changing for ever the economic and industrial landscape of the United Kingdom, the Secretary of State, then in opposition, was roaming around attacking the evils of privatisation at every turn. What a delicious irony: the person who, at her core, opposes and despises privatisation and the private sector, should now be tasked with putting into effect new Labour's first privatisation.
Clare Short:
There is hardly anyone here, it is a serious matter and the hon. Gentleman still has to play silly infant school games. I have been a member of the Labour party since my youth and have always believed in the mixed economy. There is a role for the state and for markets. Under his Government, the market part of the role got way out of control.
My Department gives advice to the former Communist countries and to many developing countries about privatisation. I say to them, "Learn from our mistakes. Do not give big windfall gains to the private sector. Do it fairly and efficiently, so that you get good services. Learn from the mistakes of the British Tory Government." People worldwide are doing that.
Mr. Streeter:
I am delighted that the right hon. Lady has learned from her mistakes. None the less, she must accept the fact that, throughout the 1980s, she bitterly opposed every privatisation that was introduced by the then Conservative Government, who transformed our economic and political landscape.
When we heard the Prime Minister announce the privatisation, we all wondered how the Secretary of State would be able to come to terms with perhaps her greatest personal challenge to date: to privatise something that even Conservative Governments for 18 years could not find a way to privatise without hurting the people whom the CDC was set up to help.
We waited with bated breath. Surely even the Secretary of State would not be able to pull off such an amazing volte-face, but, when it emerged, the solution was a classic piece of new Labourism. We should have guessed. The solution was simply to change the name. The Secretary of State opposes privatisation, so do not call it that; call it "public-private partnership" instead. It is Orwellian double-speak at its best.
The Bill converts the Commonwealth Development Corporation into a Companies Act company, of which up to 75 per cent. will be sold in one tranche to the private sector, with provision for the remaining shareholding to be sold in due course. It is privatisation in all its glory. It may be a partial privatisation to start--up to 75 per cent.--but that is how many of our privatisation took place in the 1980s. It is privatisation. If it looks like a dog, walks like a dog and barks like a dog, it is probably a dog. The Bill will privatise the Commonwealth Development Corporation. I know it, the Secretary of State knows it, the whole House knows it.
Therein lies my concern at what the Secretary of State is trying to do with the CDC. It is not that introducing the private sector is, in itself, wrong; of course not. We of all
people would be hard pushed to argue that. It is that the Secretary of State is not owning up to the reality of what she is doing. If she does not face up to the reality of what she is doing, she will inevitably be blind to the dangers and pitfalls of taking the CDC down the path that is set out in the Bill. There is a real risk that the CDC will be sold cheaply, shareholder pressure will take it away from its developmental objectives, and the people whom the CDC was set up to help will be left behind.
During the passage of the Bill, our aim is to ensure that those dangers have been fully and properly considered and that, when we finally come to vote on Third Reading, every hon. Member can do so in the full knowledge of what they are doing. It is like that with the Government: if people want to know what they are doing, never mind the headlines, read the small print.
Dr. Jenny Tonge (Richmond Park):
I am sure that the hon. Gentleman speaks from great experience about selling things off cheaply, but, before he goes any further, can he make it absolutely clear that his party sees no other way: either the CDC is a Government-owned company, or it is privatised? He is saying that his party sees no middle road whatever. He has made a categoric statement this afternoon.
Mr. Streeter:
There is, of course, a case for retaining the CDC in the public sector while seeking to improve its performance. There is also a case for fully and properly privatising the CDC, and for at least obtaining a proper return for the Department for International Development budget. However, there is absolutely no case for selling the CDC off cheap--so that, over time, shareholders will inevitably and increasingly force its board to consider primarily the bottom line, thus moving the CDC away from its developmental objectives. That is the prospect staring us in the face as we consider the legislation, and that is my concern.
We shall not divide the House on Second Reading. However, in Committee, we shall want to explore in detail four key issues. First, have the CDC's developmental principles been adequately protected; or will the Bill destroy that heritage? Secondly, will the Department for International Development budget receive a fair price for our taxpayers' investment over the past 50 years? Thirdly, will the privatisation protect the poorest in the developing world--the very people whom the CDC was established to help? Fourthly, do the Government's proposals for the tax treatment of the new CDC deserve our support? Unless we are satisfied on those four key issues in Committee, we shall reserve our position on Third Reading.
Once private sector shareholders are involved, they will want to drive the company to increased profits and better returns on their investment. Such a development is inevitable, entirely natural and understandable. Therefore, the question is whether the Bill will secure the CDC adequately to its developmental moorings, to prevent it being driven out to the sea of commercial return, leaving behind the reason why it was established initially.
If the Bill is passed as drafted, the way forward is sadly clear. It is likely that, in a year or two, 75 per cent. of the company will be sold off, probably--as the CDC's financial track record in recent years has been so modest--at a bargain-basement price. Investors in the
company will be pension funds, which are able to bide their time and to see a long-term opportunity. After a few years of the CDC seeking to strike a balance between developmental objectives and making a return for its shareholders, the company will almost certainly fail.
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