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Lord Judd: I am most grateful to the Minister for giving way. I find some of her remarks the most helpful and reassuring that we have heard today. However, I hope that she will go a little further. I hope that I do not anticipate what she had intended to do.

I detect a slight difference of emphasis—it may be more than slight—between her approach and, with great respect, what the noble Lord, Lord Trefgarne, appears to have said. At both Second Reading and tonight he expressed some anxiety about the inhibitions placed upon CDC with existing legislation because of its emphasis on additionality. I understand the Minister to say that she looks to anything which CDC does as a means to an end. By implication I hope that she means expansion, more production, and so on. Could she say a little more about that?

7 p.m.

Baroness Chalker of Wallasey: I am not entirely sure that I grasp what the noble Lord is getting at. I sought to be absolutely clear and I do not find my remarks to be at variance with anything that my noble friends Lord Trefgarne and Lord Kindersley have said in this House on the subject. The point about the needs of the developing countries which have businesses in a parlous state is that frequently those countries not only need the professional advice which CDC can give but also a high degree of financial restructuring where a business is no business at all, where it is in dire financial straits.

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We have always felt that it is important to ensure that there is supervision over the CDC's statutory powers. But we have a well-established system for doing that. When CDC considers a parastatal to be in great trouble or that a public company could do far better and, for example, could bring back into production fields of sugar beet and arable areas which have been lying fallow because they have not received investment either in machinery or activity, sometimes that public company in a poor country has to give up an activity which it should not be engaged in. That requires a degree of financial restructuring. One could say that getting a country or business into an area in which it has not been engaged is an additional activity. That activity is usually a new physical investment, but other things can be done with existing production which may add value. That could also be an additional activity in another sense.

For example, there is no harm in helping a cocoa-producing country to add value to its product so that it can earn a higher return in overseas exports. If that kind of advice is being given, it makes good, sound common sense. I repeat that I see nothing in what my noble friends Lord Trefgarne and Lord Kindersley have said that differs from anything I have said.

Under my noble friend's Bill, we see no radical departure from the kind of projects that CDC undertakes. I should not expect that projects where previously CDC would have had carefully to consider its vires under the current legislation would make up more than about 15 per cent. of new board approvals each year. The point is that we have a well-established system of looking at areas which may be "new" in the terms of the noble Lord, Lord Judd, but I see no dramatic change in CDC's operations. What I do see is a greater flexibility being brought about by my noble friend's Bill and a greater means for CDC to help the developing countries with their public companies which badly need the expertise and investment which CDC can bring to them.

In view of what I have said and the fact that the amendments of the noble Lord, Lord Judd, would nullify the changes CDC wants for the benefit of developing countries, I hope that he will withdraw his amendment.

Lord Thurlow: First, I apologise to the Committee for my remarks on the first amendment, when I strayed into the field of later amendments. I was glad to hear the noble Lord express his reassurance about some of the noble Baroness's comments. I warmly support the amendments proposed by the noble Lord, Lord Trefgarne, but I cannot support those of the noble Lords, Lord Judd and Lord Rea.

I am sure that Members of the Committee were all much impressed by what the noble Lord, Lord Kindersley, said on the basis of his deep experience of the working of the CDC. I can see nothing but danger in adding in any way to the restrictions and constraints under which the CDC operates. As the noble Lord, Lord Kindersley, explained, if conditions are written into the statute, it is an invitation for nit-picking by over-zealous officials. Let us concentrate on the objective which all Members of the Committee supported at Second Reading of allowing the CDC to escape from some of

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the existing constraints. Let us not return to qualifying that by writing new conditions and restraints, however well intentioned, into the Bill.

Lord Judd: I am grateful to those who have participated in the debate on my amendment. I am sure that other Members of the Committee will not take exception if I say that it has been particularly good to hear the noble Lord, Lord Kindersley. I wish he had been able to be with us in our earlier deliberations because the tributes to the CDC from all parts of the Chamber were consistent and warm. If we are paying those tributes, this is a good opportunity to look the noble Lord in the eye and thank him for the extraordinarily distinguished contribution he made in his role and leadership of the CDC. I assure him that everything that we are putting forward from this side of the Committee in our deliberations this evening is about preserving the best that he and his predecessors helped to build in the story of CDC. We do not want to see that inadvertently laid waste.

I quite understand the anxieties of people who want to get on with the job and not be encumbered with all kinds of qualifying legislation around which well-intentioned, zealous public servants might focus to the exclusion of the task. All we are trying to do in our minimal observations is to bring home the importance of keeping CDC firmly part of the overall overseas aid and development programme of the United Kingdom. Its unique contribution speaks for itself, because, so far in its history, it has in an exemplary fashion managed to get the balance right between financial disciplines and the importance of development, bringing people into participation in the economy.

I ask the Minister to read carefully the record of our debate today when it is published in Hansard. I am not aware of any arguments from this side of the Committee which suggest that the private sector does not have an important part to play in development; quite the reverse. I have been at pains to underline the significant role that the private sector has to play. However, what matters is which part of the private sector does this and how that role is being played, as well as how the role relates to the overall strategy of sustained economic and social development for the country as a whole. It would be a shame if, as the nation begins to emerge from what can in some ways be described as years of ideological preoccupation to a more mature, balanced approach to the management of our affairs, we should allow a hangover of a nightmarish decade or more adversely to influence the role of CDC in the future. Pragmatism is what matters and I am sure that the Minister agrees.

In some parts of the third world strengthening the private sector will be a real priority because there will be a dynamic contribution to be made, but in other parts, as indeed in our own society, the challenge will be to strengthen the public sector not to say that because the public sector has been badly or incompetently managed in the past that is a reason to get rid of it. It will be to say that, if the public sector is necessary and sensible in any sphere of national life, it should be strengthened and made more efficient. That is the challenge. Therefore we want to see in this context an approach to a mixed

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economy in the third world, with the balance falling as makes most pragmatic sense and the CDC able to help in this respect.

Before I sit down, I should like the Minister to understand the basis of some of the anxieties that are definitely there. One is that, with the tremendous emphasis on privatisation in our own society, we have had a sluggish overall average growth rate compared with our main partners in Europe. We need to ponder that, and to recognise that an ideological approach to privatisation is therefore not enough. Where privatisation makes pragmatic sense, let us go for it, and let CDC play a key part in achieving it. But let us not fall into the trap of saying that we must be in favour of privatisation above all.

The second anxiety that exists, one which is central to the mandate of the Minister and her department—and I know that there is no one more compassionate; she is genuinely committed to the poor—is that in our own society we have not seen the poor becoming better off automatically under the prevailing ideology. Coupled with that is the anxiety that, as privatisation goes ahead, with the tremendous emphasis on maximising the rate of return on investments, which the CDC underlined in its corporate plan with its objective of 9.9 per cent., there may be a temptation to go for short-term profit, for asset stripping and the rest, rather than building up the contribution and strength of industries in the future. These are real anxieties.

However, we have had a very good opportunity tonight to hear the Minister's ongoing commitment and her determination to see CDC fulfilling the social and economic objectives in her development programme. We may differ from time to time on specific parts of it, but we all know that in that general thrust no one is more sincere than the Minister. Therefore, on balance, as with the previous amendment, I want to go away and ponder carefully the arguments that she used. This would be the wrong time to pursue this amendment. I therefore beg leave to withdraw it.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

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