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Mr. Leigh: As I said on Second Reading and in respect of new clause 1, many of us who take an interest in the future of the corporation are concerned about whether the unique work that it has carried out over the years can continue. Opposition Members are also concerned about
whether the articles of association that the Government tell us are adequate and the golden share are sufficient to ensure that.
As the articles of association make clear--it will be inevitable in what will be a privatised company--the corporation will have to put the shareholders' interests first. We receive assurances from the Government that by retaining the golden share the Government will be able to ensure that the corporation continues the valuable work that it has undertaken in the past, not only in difficult markets in countries where other investment institutions may be less than willing to take an interest but in helping smaller, struggling companies in those difficult markets.
We live in the real world and we all know that if the new clause is voted on in a few minutes from now, the Government will vote it down. However, I hope that it will crystallise some of the arguments. When the Secretary of State responds, we must try to get out of her more information about how the sale will be financed to ensure that the traditional work of the corporation is maintained and protected.
This privatisation is quite different from many others with which we were involved with in the past, which were fiercely opposed by the Labour party. They were often difficult privatisations. There was considerable public interest. We were concerned with British Gas and British Telecom, for example. They were difficult but at least we were dealing with companies that were fundamentally commercial. They were engaged in what would become, once they were privatised, very profitable work.
We are now undertaking a different sort of privatisation and not one that the previous Conservative Government were prepared to undertake because of the unique difficulties that would be faced. When we were dealing with large monopolies in the highly successful market that appertains in this country, it was easy to obtain a good price. There was argument about whether the best price was obtained, but let us not go back over all that.
Mr. Deputy Speaker (Sir Alan Haselhurst):
Order. Indeed, let us not go back on all that, nor on the hon. Gentleman's speech during an earlier part of the proceedings on the Bill. I must ask him to direct his remarks specifically to the duty of the Secretary of State to obtain the best price in the commercial interests of the corporation. That is the point that is under consideration.
Mr. Leigh:
That is the point, Mr. Deputy Speaker. It would be easy for the Secretary of State to obtain a very good price if it became generally known that the Government were watering down their commitment to maintain the traditional work of the corporation. I do not think that we have received adequate reassurances so far that the Government are prepared to sell the corporation for rather less than they might otherwise hope because they are determined to maintain the traditional work of the corporation.
It would be easy for the Government to obtain an extremely good price for the corporation. Will they do that, or are they prepared in the marketplace to remind people in the most forceful terms possible of the articles of association, of the existence of the golden share and of their determination to maintain the corporation's work in very difficult markets? If they do all that, the price that they obtain may be very different from what it would be in the open marketplace.
The Government cannot have it both ways. They must be honest with the House and with others who take an interest in these matters. They must make clear their aim. If it is to maintain the corporation in its present form following a pseudo-privatisation and to maintain its ethos--[Interruption.] The Under-Secretary is shaking his head. If the Government adopt that approach, they will not get a very good price. They will find that investors fight shy. I suspect that investors will see through what the Government are saying. They will see through the sham reassurances that have been given. They will realise that the golden share and the articles of association mean very little. Previous privatisations have always started with a golden share--
Mr. Deputy Speaker:
Order. The hon. Gentleman is repeating himself, in territory where I suggested that he should not be treading.
Mr. Leigh:
I am coming to the end of my remarks, Mr. Deputy Speaker.
Clare Short:
This is a rather depressing set of events. We all agree that it is an important principle of democracy, and the tradition of the House, that it is the duty of the Opposition to oppose, but that does not mean that it is the duty of the Opposition not to understand anything that is discussed on Second Reading or in Committee. There is either a complete incapacity on their part to understand, or a necessity continually to repeat mantras, which means that none of our proceedings have created any understanding on the part of those on the Opposition Front Bench. That is regrettable and disappointing.
All parties claim--I believe that it is the position of the Liberal party--that the Commonwealth Development Corporation is a precious asset, and that the creation of a public-private partnership would enable its development interests to be entrenched. That could not be achieved by a privatisation, but through the change that we are making, we can get more private sector involvement into very poor countries which are not attracting much private sector investment, thereby enhancing their economic growth and demonstrating that a good rate of return can be gained by the private sector in those countries. Everyone agrees that that would be a success, and that it is a shared objective, but much of the discussion proceeds as though we had not previously agreed on that principle.
The hon. Member for Somerton and Frome (Mr. Heath) made clear the purpose of the new clause. The official Opposition are trying to impose on the Secretary of State a duty, when disposing of shares,
Two absolutely contradictory new clauses have been moved tonight, but it is the duty of the Opposition to oppose and not to be coherent or intelligent or to
understand the purpose of the Bill. They have argued for two entirely contradictory sets of objectives. That is interesting and notable.
Mrs. Gillan:
The hour is late.
Clare Short:
That partly explains it.
We agree with the Opposition that the CDC needs a strong balance sheet that will equip it for the challenges under the new structure. Both the Government and the CDC have a strong interest in the partnership leading to the CDC's long-term success. We agree that that should be achieved through financial restructuring, and that that should not be dependent on the proceeds from the sale. Those proceeds are important, but they are no substitute for the effectiveness of the financial restructuring and the track record created by it.
Restructuring is likely to involve the conversion of existing Government debt into equity or commercial debt with an appropriate repayment profile. We need a track record so that any private-sector interest considering investing in the new partnership CDC can see the likely rate of return. The purpose of the restructuring is to give the CDC a capital structure that balances the needs of the business, the capacity for future growth and financial prudence.
Opposition Members are game-playing for purely ideological reasons and pretending that this is a privatisation, and that they are against the outcome of a privatisation. As we said repeatedly in Committee, a straightforward privatisation would mean that, within a short time, the CDC would move out of the poorest countries and into investment in countries with a safer rate of return. It would cease to be a development instrument. Conservative Members claim to be opposed to that, but the new clause requires that--the biggest and fastest rate of commercial return on the sale, although that is not the objective of the exercise.
Mr. Hogg:
Will the right hon. Lady give way?
Clare Short:
I will, but I shall come to what the right hon. and learned Gentleman had to say. He is quite clever, and thinks that he is enormously clever, but what he said today showed that he had not attended to the Bill's detail and the arrangements that are being made for the partnership, or to previous proceedings, so what he said did not make sense.
Mr. Hogg:
The right hon. Lady does not advance her case by insulting her opponents. I suggest that she addresses new clause 3, which deals with the realisation of the equity. That is different in kind from the fashioning of the investment policy. She may well be right to say that, in the structuring of the investment policy, there is a case for having regard to the broad developmental considerations, to which she has referred, but, in realising the equity, does she not understand that she has the same kind of duty that the board of directors has to ordinary equity holders?
"to ensure that the price obtained for those shares or other securities is in the best commercial interests of the corporation."
However, on new clause 1, the official Opposition stated that they were anxious to retain the development objectives of the corporation, and therefore that commercial objectives must not be primary.
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