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Consolidated Fund (No. 2) Bill

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, I beg to move that this Bill be now read a second time.

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Moved, That the Bill be now read a second time.—(Lord Mackay of Ardbrecknish.)

Lord Boyd-Carpenter: My Lords, I take it that my noble friend the Minister is still adhering to the ban on debating the Consolidated Fund (No. 2) Bill. If that is right, I draw his attention to a sentence in the Bill itself in which it states:

    "be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal".

I can understand that if we have a debate and pass the Bill our consent can be assumed. However, perhaps my noble friend will say how, if we are not allowed to make a debating speech on the Bill, we tender the advice which the Bill itself says we tender?

Lord Mackay of Ardbrecknish: My Lords, my noble friend answered his question by agreeing with me that the Lords spiritual and temporal will pass the Bill this afternoon. My noble friend returns to the subject regularly. Therefore he will not be surprised if I refer him to the Companion to the Standing Orders, which sets out the convention on the proceedings for the Consolidated Fund Bill. I remind him that that convention was endorsed by the Procedure Committee as recently as March 1994.

I appreciate that my noble friend is keen to discuss economic and industrial matters. I remind him that he will have such an opportunity next Wednesday on a Motion put down by my noble friend Lord Prior. In addition, there will be a full Second Reading of the Finance Bill before 5th April. My noble friend will get two bites at this particular cherry before the Easter break.

Lord Eatwell: My Lords, another small tradition connected with these Consolidated Fund Bills is that I usually rise to support the noble Lord, Lord Boyd-Carpenter, in his wish for greater time to debate economic matters. In this instance, as the party opposite has put down a debate for next Wednesday, when the weaknesses and shortcomings of the Government's economic policy will be fully exposed, I shall not make my traditional plea for more time.

Lord Campbell of Alloway: My Lords, surely the question is not what is in the Bill but what the House wants to do. My noble friend Lord Boyd-Carpenter wants to debate the Bill. Most of your Lordships do not want to debate the Bill. Is that not the end of the matter?

Lord Boyd-Carpenter: My Lords, if my noble friend is not going to answer that particularly silly intervention, will he answer the question that I asked; namely, how, if the Bill itself says that the consent and advice of the Lords spiritual and temporal has been given, that advice is to be given if we are not allowed to debate the Bill?

Lord Bruce of Donington: My Lords, I usually rise to support what my noble friend on the Front Bench has said on this matter. As one who profoundly disagrees with the uses to which the funds in the Consolidated Fund have been put, I view with some incredulity the ability of the noble Lord, Lord Campbell of Alloway, to conduct a canvass of opinion in this House as to whether your Lordships agree with him on this matter. I am quite sure

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that, with the aid of the noble Lord, Lord Cockfield, for example, and the noble and learned Lord, Lord Hailsham of Saint Marylebone, we could probably rustle up a majority in favour of a complete discussion of the Bill.

Will the Government think again about this matter in view of the pressure that is exercised from time to time and year by year and the eloquent phrases of the noble Lord, Lord Boyd-Carpenter?

Lord Hailsham of Saint Marylebone: My Lords, I have been referred to by name for some reason which I do not understand. Is it not the case that if the House passes the Motion now before it, it will be giving advice, whether after speeches by noble Lords or in the absence of speeches by noble Lords?

Lord Mackay of Ardbrecknish: My Lords, perhaps I may respond to this brief, interesting and totally unpredictable debate. My noble friend should bear in mind that the other place does not debate this Bill either, and that the matter has been referred, at his instance, to the Procedure Committee. As I mentioned in my original response to him, the Procedure Committee decided to make no change. If he wishes to carry on this discussion, the Procedure Committee is the right place to do that.

Lord Cockfield: My Lords, I believe that inadvertently my noble friend the Minister may not have given the House a full account of what happens in another place. The procedure there was changed many years ago. The Consolidated Fund Bill is now taken without debate; but it is immediately followed by a Motion for the adjournment of the House, on which extensive debate takes place.

Lord Simon of Glaisdale: My Lords, although as regards this particular Consolidated Fund Bill there is the opportunity for an economic debate next Wednesday and the debate on the Finance Bill shortly, that is not always so. For example, the next Consolidated Fund Bill will come to us at some time in the late summer. That is in the middle of a very long period when there is no debate on economic and financial matters. Perhaps I may venture to support what has been said by the noble Lord, Lord Boyd-Carpenter, and the noble Lord, Lord Bruce of Donington, that this matter should really be seriously considered again.

On Question, Bill read a second time.

Committee negatived; then, Standing Order 44 having been dispensed with (pursuant to Resolution of 22nd March), Bill read a third time, and passed.

Crown Agents Bill [H.L.]

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.

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[The DEPUTY CHAIRMAN OF COMMITTEES (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

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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

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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.

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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.

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