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Mr. Leigh: The Government are retaining less of a share in the new company than the Conservative Government retained in a privatised British Telecom; and we retained a golden share for many years. I am also worried by the fact that, as the corporation is keeping 39 per cent. of its return on capital
employed--£468 million--it could be a target for predators. It will be a private company and there is nothing in the golden share to deter predatory interest.
Mr. Streeter: My hon. Friend makes an extremely important point. There are real concerns and fears. That is why I say that the enshrinement and entrenchment that the Secretary of State thinks that she has achieved may not be in place. That is why we need line-by-line scrutiny of the Bill. I warn the Minister that we will spend a long time in Committee. There is an awful lot to consider. I hope that the Secretary of State will be there, too, because decisions will have to be made. We intend to table sensible amendments that the Government will want to consider and, probably, accept.
My hon. Friend is right to say that this partial privatisation is extremely dangerous and could well hurt the very people whom the corporation was set up in 1948 to support. The way that the Secretary of State has chosen is self-deluding and potentially dangerous. I know that she does not like criticism, but I urge her to consider carefully what I have said. There are real dangers. I urge her to be flexible enough to allow the Bill to be strengthened in Committee.
Angela Smith (Basildon):
I have listened with great interest to the debate this afternoon. It seems to me that the hon. Member for South-West Devon (Mr. Streeter) has missed some crucial and fundamental points. It is worth reminding the House that it was a Labour Government who established the Commonwealth Development Corporation in 1948. Then, as now, Labour Members recognised our wide responsibilities throughout the Commonwealth and the world. The object, which we will continue to stick to, is to invest in the world's poorest countries.
Since 1948, the corporation has become one of the world's leading providers of development finance. I am loth to cite statistics, as one can lose what is behind the figures, but it is worth noting that £1.6 billion is being invested in more than 400 enterprises in 54 countries. That is practical aid and support, especially for those smaller enterprises that would not attract major international finance.
We can note with interest some of the investments that have been made. I was surprised to learn that £4 million was invested in the largest poultry farmer in Nicaragua; £4 million in the Ugandan textile industry; and £13 million in the Philippines cement industry. Those investments would not have been gained from large international financial companies, but they are absolutely crucial to the companies and communities involved, bringing local sustainable development. The finance and support has gone to those countries that have the most underdeveloped private capital markets and the least capital. By contrast, the majority of private investment has gone straight to the wealthiest developing countries.
It is worth reminding the House of the statistics, although they cannot show the real pain that lies behind them. One in four people lives on less than $1 a day. The scale and depth of poverty cannot be conveyed by statistics. They do not convey the individual suffering and misery. When people can die from poverty, not just from starvation, we have an obligation to help those on the margins of life. Extra ethical investment can be of great help and, for some people, is a matter of life and death.
Both sides of the House can agree that we can be proud of the work that the CDC has undertaken. Given that success, any change would be viewed with caution. However, we have to seek ways to build on that success. Many of us believe that there should be more private investment in those areas of greatest need. The Bill and the new arrangements for the CDC can help to bring that about.
First, the Bill will enable the CDC to raise private sector capital to increase private investment in the poorest countries. In addition, it aims for long-term partnerships between the private and public sectors to bring about the sustainable development that is so crucial. Perhaps most importantly, it will also ensure that we use the CDC's commitment to ethical business practice to enhance ethical, social and environmental awareness and to encourage private investment to sign up to those concerns. Enhanced business investment is good if it helps poor people and if the social elements and environmental policy are good.
If the Bill is successful, it could be a model for other countries that want to work with private business to encourage ethical overseas investment. We have in the CDC a unique asset, with unique experience. We have a duty to use that and to do what we can to extend it. What distinguishes the CDC from other investments is its ethical stance, and I welcome the assurance from my right hon. Friend the Secretary of State today that that is foremost in her mind. The Bill could open up new opportunities for investment and development. More importantly, it will build on the important work that has already been undertaken. The CDC will use the experience of staff in offices in 27 countries to continue its work.
Today, we seek to improve and extend business investment by offering the support and advice of the CDC to target finance where the need is greatest. That is where the challenge lies--to ensure that the focus continues on the poorest countries and communities. Because of the success of the CDC, we should view any change with caution, but I welcome the Department's consultations and discussions with the NGOs. It is essential that they are involved because their expertise is key.
It may be a couple of years before market conditions are right for establishing the partnership. I ask my right hon. Friend the Secretary of State to consult widely on the composition of the board. Business and commercial interests are essential, but she will need to satisfy herself and those who have an interest in the partnership that the board and board members have the knowledge, experience and--especially--the commitment to undertake that vital role. It is also crucial that board reports should be available for scrutiny by Members of Parliament, because we will wish to review and examine the successes. Those will need to be open to public debate. Where the structure works well, other countries may follow. It is more difficult--but necessary in the interests
of transparency and accountability--to allow Parliament the responsibility and the opportunity to review areas that may fail. We need to ensure that we can discuss those openly and to learn any lessons necessary. If we wish to use the partnership as a model, we must ensure that other countries also have the opportunity to learn from our mistakes as well as our successes.
I welcome the fact that the Government will hold the golden share. Unlike Conservative Members, I believe that to be crucial and I welcome the Government's commitment to it. Even when 100 per cent. of ordinary shares have been sold to the public, the Government will still have that golden share. It does not give voting rights, but it allows a member of the Government--preferably the Secretary of State--to attend meetings and to speak at them. That is important, as it ensures that development remains at the heart of the CDC and the reason for its existence. That will ensure that the Government's ethical policy remains in place.
Dr. Jenny Tonge (Richmond Park):
Liberal Democrat Members welcome the concept of the Commonwealth Development Corporation becoming a public-private partnership. We do not agree with the Conservatives that there is no middle way. Of course we do not: we believe that there has to be, or we would not be Liberal Democrats. The Bill offers the potential that more money and investment will go to developing countries. We appreciate that, although good development practice must emphasise education--especially for girls--and health issues, which must be accompanied by economic development.
I am a member of the Select Committee on International Development and, from the countries that I have visited and the Government officials to whom I have spoken, it is clear that there is a desperate need and desire for investment and development. However, I regret to say that, so desperate are they for growth in their economies, they tend to dismiss questions to do with the environment, labour standards or sustainability. I shall return to that later.
We have no objection to the concept of a public-private partnership in this context. We support it, provided that it really is the best way forward, and provided that the Government guarantee that it will not mean that, ultimately, there is less money in the development aid budget. If the public-private partnership fails--I shall express many reservations about it--will the Government ensure that the promised increase in funding for developing countries will continue and eventually reach 0.7 per cent. of gross domestic product?
The problems of the poorest countries are legion. They include bad governance--which is not helped by those countries' colonial past--environmental disasters, civil wars continuing and breaking out all the time, and the AIDS pandemic. In some areas, the disease affects up to
25 per cent. of the population and, sadly, many of those affected are the economically active. All those factors, and others, make investment in those countries risky and unattractive.
However, the past record of the CDC bears examination. We have heard a lot about the CDC's virtues from the hon. Member for South-West Devon (Mr. Streeter). The CDC has been able to take risks that the private sector could not take. Funded by Government loans, it has not had to achieve high financial returns: its target has been a three-year average return of 8 per cent, and it has been able to receive UK Government backing to access markets closed to private investors.
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