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Lord Redesdale: I rise to support the amendments, the spirit of which is quite clear. However, I should like to ask one brief and specific question of the Government with regard to Amendment No. 5. At column 1410 of Hansard, the Minister said on Second Reading:

I know that the amendments are broad in their aims, but I should like to ask the specific question: will the Government bring forward an amendment to add the words, "The successor company should be a company limited by guarantee"?

5 p.m.

Baroness Elles: In the light of what was said by the noble Lord, Lord Rea, perhaps I may ask my noble friend a question. As I read the Second Reading speech of my noble friend the Minister the way in which the structure would be set up and the relationship between the Government, the foundation and the operating company were clear. Will my noble friend confirm that for a considerable time the Government will be a shareholder in and a member of the foundation? Will the foundation be the sole shareholder in the operating company?

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I believe that all the anxieties expressed by the noble Lord, Lord Rea, in his speech and in the amendment were catered for by my noble friend when she explained the statutory framework.

Lord Judd: Before the noble Baroness sits down, will she respond to the point that has been made? If the proposals are so evidently sensible, in the name of open government, why on earth not put them on the face of the Bill?

Baroness Elles: We have heard many speeches from many noble and learned Lords about the unreasonable length of endless Bills, statutory instruments and every kind of legal instrument. I believe that anything that can shorten a Bill, and taking the word of the Government as stated in this Chamber, is sufficient. I am all for as short a Bill as possible and I accept the word and undertakings of my noble friend on behalf of the Government.

Baroness Chalker of Wallasey: I understand the Committee's anxiety to know more about the details of the proposed foundation. I explained on Second Reading that the foundation will be independent of government and that its members will not be appointed by Ministers. Therefore, the premise on which the noble Lord, Lord Rea, moved the amendment was not entirely right. I had made the point on Second Reading. I also said that the foundation will own all the shares in the company which will operate the Crown Agents' business. I further said that it is likely to take the form of a company limited by guarantee. In response to the noble Lord, Lord Redesdale, I do not see the need for an amendment on the matter.

I further said on Second Reading that the foundation will not distribute dividends to its members and that its objectives will encompass the social, ethical and developmental principles on which the Crown Agents' business is based. I went on to say that the members of the foundation will need to discuss and agree with government the terms of transfer of the business once Parliament has agreed to the arrangements set out in the Bill.

Since Second Reading we have received significant expressions of interest about the membership of the foundation. The Crown Agents board and I envisage that the core of the membership of the foundation will be a group of what I would term "enduring institutions". Those could include, for example, the British Consultants Bureau, the British and international chambers of commerce and various chartered institutes as well as a range of non-governmental organisations which are concerned with developing countries and overseas aid. There may also be a number of companies which have no conflict of interest with the Crown Agents' business. However, it is too soon to name individuals. In saying that, I am trying to give the noble Lord, Lord Rea, a feel of what has happened since Second Reading.

Although this is not, and will not be, a trade sale, it is essential to ensure that full confidentiality for Crown Agents' clients is maintained throughout the process of transfer and thereafter. It would be quite wrong and

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unfair for the Crown Agents foundation were that not to be so. However, I shall continue to provide information to the House as the Bill progresses and as more information comes forward. The proposed memorandum and articles of association will be made available to Parliament, as will the information memorandum which is to be provided for prospective members of the foundation.

We have already discussed why it is not appropriate to introduce an affirmative resolution procedure into the Bill. It is for essentially the same reason that putting the foundation on the face of the Bill is unnecessary and, I believe, the wrong approach. It would be unprecedented and would add nothing of substance to the Government's proposals.

There is, however, a new provision in the proposed new clause which I was surprised to see. Subsection (3) would have the effect of creating a new quango. It is a different situation for the Opposition to be proposing an amendment which creates a new quango. Therefore, I was most gratified to note the confidence that the noble Lord, Lord Rea, has in the judgment of the Secretary of State in selecting foundation members. Of course, I tease, but it is worth teasing the noble Lord on that point.

That is not how the Government propose to proceed. I have said many times that this will be an independent foundation. I have greater confidence than the noble Lord, Lord Rea, in the integrity and judgment of the initial foundation members to organise themselves and to manage the Crown Agents' affairs without government intervention. But time will tell.

The noble Lord spoke also to Amendments Nos. 10 and 11. We agree that the Crown Agents' name is a most valuable asset and should be preserved for use by the ultimate owner of the successor company in the private sector. It is well known that it is our intention that this shall be a foundation. But the reasons why it is inappropriate to put the foundation on the face of the Bill in this way have been well rehearsed.

I have said that the foundation will be a company limited by guarantee. I also said that the memorandum and articles of association will commit the company to a clear social and developmental purpose. A few moments ago I said we would make those available to Parliament. Therefore, the foundation's membership will be entirely tied up on the basis of preserving the Crown Agents' developmental role.

I know that a number of Members of the Committee would like us to consider further the means to protect the nature of the foundation, including possible charitable status and government membership of the foundation. Were that to be so it would be only for a limited period of time.

The name "Crown Agents" does not necessarily imply a connection with the Government or the Crown, any more than having a nightly tipple at the Rose and Crown means that it has anything to do with someone called Rose or the Crown. The name "Crown Agents" embodies the traditional virtues of probity, impartiality and integrity, and is recognised worldwide. It is right that the name can be used by the ultimate owner of the successor company.

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I am at one with the noble Lord in having at heart the best interests of the Crown Agents. However, I hope that I can satisfy the Committee that the unique ethos of the Crown Agents will be preserved and enhanced by the route that the Government propose. Like my noble friend Baroness Elles, I do not believe that the provisions in Amendments Nos. 10 and 11 are necessary in legislation of this kind.

Perhaps I may say with regard to Amendment No. 13 that it was very interesting to read the Opposition's thoughts about what should be in the memorandum and articles of association, as set out in the proposed new schedule. Certainly, that will give us food for thought. But in view of all that I said on Second Reading and with what I have wearied your Lordships today, I really do not believe that we need paragraph (a) because I have said already that there will be no distribution of dividends to shareholders.

That also links up with the question of how surpluses would be used. I made it clear on Second Reading that they will be used solely in pursuit of the social and developmental objectives of the foundation. Those will be drawn up tightly in the memorandum of association. Therefore, I hope that the Committee will agree that Amendment No. 13 is really not necessary.

It will be for the members of the foundation to make sure that the objectives of which we have spoken are strictly observed. But to give a little more comfort to the noble Lord opposite, I should tell him that it is our intention to ensure that the objectives cannot be changed for a period of perhaps five years. I am open to suggestions about the length of time but I believe that that is the right way to start off the Crown Agents foundation.

It will not surprise the Committee to know that the provisions of paragraph (b) of Amendment No. 13 are not acceptable because they go too far by proposing that the sale of the successor company should be subject to parliamentary control for an undefined period in the future. That really is a classic example of the nanny state at work. The reason for the Bill is to give Crown Agents more freedom to exercise their commercial judgment and not to provide more apron strings. I am certainly not going to agree that they should have more apron strings.

With regard to paragraph (d), the successor company and its subsidiaries will be required to pay over the surpluses to the foundation appropriately, and the foundation will distribute them in accordance with the objectives. Therefore, any surpluses will be distributed by the foundation, and not the successor company.

I realise that the noble Lords, Lord Rea and Lord Redesdale, and in particular the noble Lord, Lord Judd, will be disappointed but I do not believe that this group of amendments is necessary at all and I urge the Committee to reject it.

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