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Baroness Faithfull: My Lords, I am still the Minister's friend.

Lord Mackay of Ardbrecknish: My Lords, I shall not split hairs about that. I hope that the rest of my noble friends will support me in the Lobby and that the House will give this Bill a Second Reading.

5.40 p.m.

Lord Simon of Glaisdale: My Lords, I am extremely grateful to noble Lords who have participated in this debate. Of those who spoke only the noble Lord, Lord McIntosh, and the Minister did not participate in 1991. We are very grateful for the thoughtful way in which the noble Lord, Lord McIntosh, put this question in its wider social context. As for the Minister, I presume to say that he did valiantly. Of course, he has to defend his department, but I respectfully join with the noble Earl in expressing sympathy with the Minister about the case that he has to meet.

I believe that the noble Baroness misunderstood—I am sure that it was my fault—as to the rule of law. I did not say that erecting a child support agency as a statutory agency in place of the jurisdiction of the magistrates' court was in itself an infringement of the rule of law. But I adopt what the noble Lord, Lord Houghton of Sowerby, said. It is a monstrous arrogation and proliferation of bureaucracy. It is an aggrandisement of bureaucracy at the expense of the judiciary. What I did say was contrary to the rule of law was based on what I cited from Dicey; namely, that it is a fundamental part of the rule of law that

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you do not put officials in an exceptional position; that they should be like their fellow citizens, amenable to the ordinary law of the land.

I indicated four respects in which that was infringed in 1991, and this Act does nothing to remedy the situation. The first was to give officials the right to enter private premises and, if they were denied, they were denied on the threat of a penalty. The second was to interrogate employers of fellow employees as to the circumstances of the person they were investigating. That again is an exceptional power. I am bound to ask from the Cross-Benches this question: what are a Conservative Government doing introducing such a power?

The third point I indicated was not referred to at all, even obliquely, by the Minister—that is to say, the exceptional power of distress. As your Lordships know, that is a self-remedy to recover a debt. It is a very harsh process. The common law has fringed it around with safeguards. All those safeguards are swept away in the case of officials. It is that, with the other matters, which are contrary to the rule of law. I ask again: what are a Conservative Government doing about that?

The fourth matter is one to which the noble Lord, Lord Houghton of Sowerby, referred so robustly; that is the power to infringe the confidentiality of the Inland Revenue. The Minister said that it is a limited power. Even so, it is a grotesque power to put into the hands of officials. The Minister said that as regards some of those matters there are precedents. So be it. That is the way in which bureaucracy works. It encroaches from precedent to precedent. In the last century it was said that freedom goes from precedent to precedent. Under this regime it is bureaucracy that goes from precedent to precedent. It is a major matter that these four points are not faced at all in this Bill and are barely defended by the Minister in his very able speeches.

Contrary to what the noble Earl has advocated, the noble Baroness wants to keep the Child Support Agency. I am afraid that she has contaminated the noble Lord, Lord McIntosh of Haringey. I am afraid that she has allowed a cloven Fabian foot to escape from her elegant footwear. I entirely agree with the noble Earl. We want to return to a judicial system. Naturally, it was not perfect, but magistrates are human beings, as are, dare I say, the officials who put forward these two Bills. Of course the magistrates' courts system could be improved. It could have been greatly improved at a tenth of the effort which has been put into the Child Support Agency if that effort had been devoted to trying to improve the system of the magistrates' matrimonial jurisdiction.

The noble Earl invited me to divide the House on this issue. I am most grateful to him for saying that he will support me, as did the noble Baroness, Lady Faithfull, and, I believe, the noble Lord, Lord Houghton of Sowerby. But during the speech of the Minister I have been conscious of the way in which the Benches on my left have been filling up. I am also conscious of absent friends who may be lurking outside the Chamber. To divide the House, realistically looking at it, would at least show that there are more just men in your Lordships' House than were found in the cities of the plain. But the result in the end would be the same. The noble Lord, Lord

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Strathclyde, would emerge as flagella intacta as he has proved to date. I shall not withdraw the amendment because that might seem to be an admission that the Government have vindicated their arguments and I do not think that anybody listening to the debate could really claim that to be so, so I shall simply go as far as a collection of voices and shall not ask your Lordships to divide on the matter.

The Deputy Speaker (Viscount Allenby of Megiddo): My Lords, the original Question was that the Bill be now read a second time, since when an amendment has been moved at the end to insert the words set out on the Order Paper. The Question is that the amendment be agreed to. As many as are of that opinion shall say, "Content". To the contrary, "Not-Content".

Noble Lords: Not-Content.

The Deputy Speaker: The Not-Contents have it. The amendment is therefore negatived.

On Question, Bill read a second time and committed to a Committee of the Whole House.

Commonwealth Development Corporation (No. 2) Bill [H.L.]

5.50 p.m.

Lord Trefgarne: 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.—(Lord Trefgarne.)

On Question, Motion agreed to.

House in Committee accordingly.


Clause 1 [Powers of the Commonwealth Development Corporation]:

Lord Trefgarne moved Amendment No. 1:

Page 1, line 5, leave out ("Section 2 of").

The noble Lord said: In moving this amendment, I should like to speak to a number of other amendments. All of the amendments that I have tabled are in the nature of drafting amendments. They are in no case intended to change the substance of the Bill. On the contrary, they are intended simply to improve the drafting, wording and effect of the Bill. They are the result of widespread consultations between myself and the officials responsible for these things in various places.

Amendment No. 1 is a formal drafting amendment and I do not wish to detain the Committee on it. Moving then to Amendment No. 5, this amendment is intended to make no change to the substance of the Bill. As I explained on Second Reading, the purpose of Clauses 1, 2 and 3 of the Bill is to remove the limitation in the present CDC Act on the CDC purchasing existing shares, securities or assets, which severely inhibits the role which CDC will be playing to facilitate projects involving rehabilitation, buy-outs, buy-ins and similar "unbundling". I do not want to detain your Lordships on this extensive list of mere drafting amendments, and I therefore beg to move Amendment No. 1.

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On Question, amendment agreed to.

Lord Trefgarne moved Amendment No.2:

Page 1, line 6, leave out ("as follows") and insert ("in accordance with subsections (2) to (5B) below.").

The noble Lord said: Again this is a straightforward drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Judd moved Amendment No. 3:

Page 1, line 6, at end insert:
("( ) After subsection (1) there shall be inserted—
"(1A) Up to 25 per cent of Corporation investment may be allocated to assisting overseas countries not currently in receipt of Corporation funds.
(1B) When considering projects for investment, the Corporation shall have power to take cognisance of the 1994 Priority Objectives listed by the Overseas Development Administration in its Annual Report."").

The noble Lord said: The purpose of this amendment is to get on the record a cast-iron assurance from the Minister that she and the CDC are together firmly resolved to keep the corporation as an instrument of overall aid policy, with that policy's primary objective, as we understand it, of combating poverty by sustained development. It is also intended similarly to get equally firmly on the record an assurance that there will be no question of using the position of strength built up by the CDC, with its existing geographical involvements, as a base for speculating elsewhere where the glitter of short-term high returns may be attractive, thereby perhaps turning the corporation's back on at least some of those with whom it has co-operated successfully in the past or whose needs may be greater.

Whatever the arguments by CDC executives that the corporation has no intention of changing market focus from existing Commonwealth countries, page 11 of the corporate plan speaks of targeting, "turning-point countries" with their "high growth potential" and "comprehensive programmes of economic reform"—language which I take it is intended to refer to the prospects of privatisation.

If the CDC wants to be a bank, it has to realise that it is not a big bank. We shall therefore need to be convinced of, for example, the operational soundness of venturing into places like China, South-East Asia and Latin America. That is in addition to the importance of being absolutely clear about how greater involvement in countries like China can be reconciled with the Minister's repeated commitment to human rights and good governance.

On Second Reading the Minister underlined that at least 70 per cent. of new investment should be in poorer countries. That is reflected on page 20 of the corporation's current corporate plan. If we look carefully at the chart on page 20, however, we see interestingly that, although board approvals in the private sector are expected to rise from 90 per cent. in 1994 to 98 per cent. in 1997, board approvals in poor countries are expected to fall from 80 per cent. to 70 per cent. in the same period. It is imperative that the Minister addresses that point in her reply.

On page 7 of the corporate plan we are told in highlighted print that the fundamental objective of the corporation is,

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    "to contribute to economic development by investing in and supporting the operations of financially viable and developmentally sound business enterprises".

No mention here of the Commonwealth or of poor countries.

Perhaps it is not surprising, therefore, that some sceptics have suggested that that would make CDC little different from Barclays International. They have asked why we need a CDC if it has no specific Commonwealth commitment and no overriding criterion of seeking development in poorer countries. There is genuine anxiety that CDC is becoming over-ambitious about its rate of return on investment. According to the corporate plan, that is to go up from 8.4 per cent. in 1995 (which is already better than it could do in the long run by investing in UK blue-chip equities) to 9.9 per cent. in 1997. The fear is that in consequence CDC will increasingly have to look for isolated high return opportunities elsewhere. They are likely to be high risk. Is that really the way CDC wants to go? We need to know a good deal about the real rationale behind that policy.

The Minister and the board must surely be aware of the misgivings which are generated when everything to which I have referred is coupled with the reference on page 24 of the plan to "performance-related culture", with the inevitable deduction that performance in this context is above all about the return on financial investment rather than about a healthy balance between essential financial disciplines and social development as part of the aid and development programme.

The Minister is a consummate politician. If I may say so, she is a real charmer. At times I believe that she could be a masterful salesman of refrigerators to Eskimos, but we cannot let her get away without facing the analysis that this apparently innocuous little Bill of the noble Lord, Lord Trefgarne, is so warmly supported by the Government because with all its emphasis on achieving high rates of return—according to page 48 of the plan, there is the prospect of a net asset position of £1,309 million in 1996—CDC could be sold off quite easily to a major bank, allowing yet another nice little nest-egg for the Chancellor to add to a pre-election tax-cutting Budget. No, the Minister and, indeed, the noble Lord, Lord Trefgarne, still have a good deal of convincing to do. They must reassure us today as to how, well into the future, the proposed changes will fulfil the purpose of the corporation as enshrined in the 1978 Act; namely:

    "to assist overseas countries ... in the development of their economies".

That is a very much bigger challenge than merely concentrating upon maximising rates of return.

By restraining any excesses in the new financial enthusiasms, by retaining a significant commitment to spheres where CDC has an effective proven record, our amendment is intended to help deal with the uncertainties which have arisen. I fervently hope that by their specific undertakings today the Minister and the noble Lord, Lord Trefgarne, will render the amendment unnecessary. I beg to move.

6 p.m.

Lord Thurlow: The noble Lord, Lord Judd, has made our hair stand on end by painting a picture of possible

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changes in the administration and policies of the CDC, which would, in effect, transform it from the CDC to which we have become used over so many years and indeed whose purpose we have admired so much for so many years. I have some sympathy of course with the point that the noble Lord made: that if such a transformation were to take effect none of us in the House would welcome it, including, I am sure, those on the Government Benches and certainly not the noble Lord, Lord Trefgarne.

It seems to me that there are two large and substantial safeguards against such a transformation. First, there is the practice of close consultation between the CDC and the ODA. As I understand it, that has become an institutional convention, and I would find it difficult to believe that in the course of such periodical and renewed consultations changes of the kind that the noble Lord, Lord Judd, fears would not come to light and be disposed of.

The second safeguard is the track record. Those of us who have watched the work of the CDC over the years have great confidence in the way that its work has developed and the manner in which it has achieved its objectives. I for one retain confidence that in the future the objectives and principles will continue to determine how changes are handled, and, I believe, like the noble Lord, Lord Trefgarne, as was made clear on Second Reading, that those will contribute greatly to valuable further expansion to the great benefit of the recipient countries, including the poorer countries.

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