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Earl Howe: My Lords, I think the noble Lord is suggesting that the UK should implement some kind of unilateral ban. I suggest to him that that idea is not a route which we should take up. The legal advice available to Ministers indicates that a unilateral ban on live exports, whether a blanket ban or indeed a selective ban relating only to calves, could not be reconciled with Community law; nor would it be feasible to make a unilateral ban stick. If we really want to improve animal welfare across the Community we need Community-wide legislation.

Lord Carter: My Lords, is the Minister aware that the furore over veal crates has managed to entangle three quite separate problems? The first is the problem for British dairy farmers of disposing of half a million calves each year; the second is the humane transport of live animals of all species; and the third is this detestable business of the use of veal crates which mainly occurs in France and Holland. Does the Minister agree that

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each of these problems needs to be dealt with separately? I must say that so far the Government have not had much success in dealing with any of them.

Earl Howe: My Lords, to pick up one of the points which the noble Lord made, our estimate is that of about 1.2 million male dairy calves born each year the majority—perhaps three-quarters of a million—are used for beef production.

I endorse the overall sentiment expressed by the noble Lord. There are three distinct issues, on all of which the Government are energetically engaged. But in everything we do we must bear in mind not only the welfare of farm animals in the UK, which is very important, but also the welfare of animals across the Community as a whole. That is why the UK is playing a leading part in bringing pressure to bear on the Commission and other member states.

Lord Pearson of Rannoch: My Lords, when my noble friend says that this country is not free to go its own way in this matter because of Community law, is he in fact confessing that once again we are the victim of the qualified majority vote?

Earl Howe: My Lords, my noble friend is always quick to advance arguments for subsidiarity. Subsidiarity does not mean that there is never a case for Community law. It is a question of actions being taken at the most appropriate level. The best interests of animals are not served by different rules in different member states.

Lord Bruce of Donington: My Lords, the noble Earl gives the House the impression that he wants to do something, notably the right thing, but European law prevents him. Why does he not go right into the heart of Europe and do exactly what other member states do? When it suits them they break European law and, indeed, they make their own laws. Why should we not follow their example?

Earl Howe: My Lords, because by acting unilaterally we would lose the leverage that we are building up in the Community negotiations, quite apart from the legal considerations I mentioned. We would also risk handing the whole trade to other countries, some outside the Community, with less stringent rules on welfare than our own. That would benefit neither farmers nor the cause of animal welfare.

Lord Gray: My Lords—

Noble Lords: Next Question!

Viscount Cranborne: My Lords, we are very short of time. If my noble friend will allow, we should move on to the next Question.

TECs: Funding

3.2 p.m.

Lord Rochester asked Her Majesty's Government:

    Whether they consider that training and enterprise councils are funded adequately.

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Lord Inglewood: My Lords, yes. The Government provide sufficient resources to training and enterprise councils annually to enable them to undertake the tasks they have contracted to deliver. In 1994-95 the Employment Department is providing £1.7 billion for training and vocational education programmes managed by TECs.

Lord Rochester: My Lords, is the noble Lord aware of the statement reported to have been made last month to the Employment Select Committee in another place by the director of the TECs national council that funding levels for the training for work programme, which is the main measure for the long-term adult unemployed, were inadequate to allow TECs to provide significant amounts of necessary higher level skills? Would not the country benefit much more from substantially increased investment in TECs than from what appears to be a 20 per cent. cut in their funding announced in last November's Budget?

Lord Inglewood: My Lords, it is important to be clear about exactly what is happening. It is the case that there will be a reduction in the number of places on the training for work programme, which is targeted at those who have been out of work for more than six months. Over the past 12 months there has been a drop of more than 400,000 in the number of unemployed, of whom just over 250,000 were long-term unemployed. We believe that against that background alone there is a case for looking at the matter. At the same time my right honourable friend the Secretary of State has set a tight target to increase the effectiveness of the training for work programme in getting people back to work.

We must also be aware that this is not the only programme which is managed by TECs. We are bringing in a variety of new measures, many of them associated with the competitiveness White Paper. If one compares the amount of money which TECs will be able to spend next year with what they are likely to spend this year, TECs will spend £19 million more next year. In other words, the level of expenditure they will be able to incur is the same.

Lord Gisborough: My Lords, is it not true that in future there will be an outcome payment system whereby trainers will be paid in relation to the success of their trainees in gaining qualifications? If that is so, will it not mean that trainers will adopt a selection process in order that people will pass and they will be paid, and therefore the people most in need of training and most unlikely to have qualifications will miss out?

Lord Inglewood: My Lords, the change in the funding of the training for work programme described by my noble friend is correct. That change was asked for by the TECs themselves. It has led to a considerable increase in the effectiveness of those TECs where there have been pilot studies. We believe that it will assist in creating jobs.

Baroness Seear: My Lords, does the noble Lord not realise that that system is bound to be extremely harmful to people with special needs? In the early days of the YTS there were special needs premiums. It is now

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increasingly difficult to obtain money for the training of people who need it desperately if they are ever to earn a living at all. Does the noble Lord agree that they will be a great charge on the community if they do not receive training?

Lord Inglewood: My Lords, the noble Baroness is absolutely right about the problems of those with special needs. It is for that reason that my right honourable friend the Secretary of State has agreed with the TECs that there should be extra money for people in that position.

Baroness Turner of Camden: My Lords, does the Minister recollect that on 6th February last I asked him a Question about South Thames TEC? Is he yet in a position to reassure the House about the position of the small training organisations awaiting payment and in which staff could well face redundancy unless funding is provided? Can he yet assure the House that the appropriate funds are being provided and that everything is in order?

Secondly, would it not be a good idea for local authorities to be directly represented on TECs, not merely as local authorities but as major employers in their own areas?

Lord Inglewood: My Lords, concerning the South Thames TEC I have nothing to add to what I explained to the House on the previous occasion to which the noble Baroness referred. So far as I know, no provider has gone bust by virtue of what has happened in the South Thames TEC.

Turning to the noble Baroness's question about the membership of the boards of TECs, currently they include about 700 directors from the private sector and 300 community leaders. In relation to the wider community interest, we believe that the presence of community leaders fulfils the function which the noble Baroness, Lady Turner, sees for local authorities.

Business of the House: Debate, 1st March

3.7 p.m.

Viscount Cranborne: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the debate on the Motion in the name of the Lord Eatwell set down for 1st March shall be limited to five hours.—(Viscount Cranborne.)

On Question, Motion agreed to.

Business

Lord Inglewood: My Lords, at a convenient moment after half-past three my noble friend Lord Goschen will, with the leave of the House, repeat a Statement to be made in another place on the Government's response to the Donaldson Report.

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Crown Agents Bill [H.L.]

3.8 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, I beg to move that this Bill be now read a second time. Today your Lordships are asked to agree another major step forward in the long history of the Crown Agents. Their business has greatly changed over the decades. It is now time to transform their legal and financial structure in response to those changing needs while retaining for their UK and international clients the essential characteristics and qualities for which they are rightly renowned worldwide.

Crown Agents were first appointed in 1833 as Crown Servants, acting under prerogative, for the procurement of goods and services for colonial administrations. They undertook this task on behalf of the Secretary of State for the Colonies for more than a century. In 1954 their full name was changed from Crown Agents for the Colonies to Crown Agents for Oversea Governments and Administration, as they are still called. In 1979 the present legislation was enacted. For the first time Crown Agents were given legal status as a public corporation, responsible to the Minister for Overseas Development and the Secretary of State for Foreign and Commonwealth Affairs. The Secretary of State appoints the chairman and board and has certain powers of direction over the work of the Crown Agents. The Act took care, however, to protect the traditional confidential nature of their relationship with their principals.

Crown Agents are now one of the world's largest international public sector purchasing organisations. They provide procurement, management and technical services to around 150 clients, serving 130 countries. They employ about 600 permanent staff plus 250 overseas and contract staff. Their clients include other bilateral aid donors such as Japan and the Netherlands and multilateral agencies, in particular the World Bank, the European Union and the United Nations. I shall say more about their work later.

In the 1990s it is no longer necessary, or indeed appropriate, for the Crown Agents to remain within the public sector. The present Act is increasingly outdated and no longer provides the right framework. Sixteen years ago Crown Agents provided the bulk of their services under funding provided through the British aid programme even though they served many other public sector clients around the world. Today Crown Agents obtain over 70 per cent. of their work from non-UK principals. The change in the pattern of British bilateral aid has also meant that ODA has less need of Crown Agents' traditional procurement services than in the past, although their use for humanitarian aid delivery has expanded enormously in recent years.

I announced in August 1993 that, subject to certain conditions, the Government would bring forward proposals which would allow the Crown Agents to be transferred to a suitably formed foundation. In his annual report for that year, laid before Parliament last

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summer, the chairman of Crown Agents, David Probert, recorded the board's welcome in principle for that decision. The present Bill will provide the powers to implement it.

The Bill before your Lordships' House provides for the transfer of the Crown Agents' business from the present statutory corporation to a successor company under the Companies Act, wholly owned by the Crown and therefore still in the public sector. The Bill gives the Secretary of State, with the consent of the Treasury, the power to dispose of the successor company to a new owner.

The Government intend to exercise these powers in order to secure the objective I set out in my letter of 13th August 1993 to the chairman of the Foreign Affairs Committee in another place; that is, to transfer the business to a new and independent foundation. This is the point at which Crown Agents will leave the public sector. I recognise that, although the terms of this further transfer are not specifically addressed in the Bill, your Lordships will have a considerable interest in it. I shall say something about the process now, and, as the Bill progresses, I shall explain more. The Government are presently considering proposals from the board of Crown Agents for the structure of the foundation. We shall also need, once Parliament has agreed the arrangements set out in the Bill, to settle the terms of the transfer to the operating company. Those discussions will need to involve members of the foundation once it has been established. With those reservations, let me explain what we envisage, and why this interesting and unusual route has been chosen.

We envisage that the foundation will be established as a company limited by guarantee. Its memorandum and articles will be tightly drawn to reflect, and to build on, the social, ethical and developmental principles on which Crown Agents' business is based. These are set out in detail at the front of Crown Agents annual report. The foundation will be the sole shareholder in the new company. The company will operate the Crown Agents' business along normal commercial lines. It will not distribute dividends but will use any profits from the Crown Agents' business in pursuit of its overall objectives. Foundation members will wish to consider registration as a charity, or other possibilities open to companies limited by guarantee. The Government too will wish to be assured that the future structure will be fully satisfactory. We are taking expert advice on the implications of each of the options.

Members of the foundation will not receive dividends and will not be appointed by Ministers. Some of them may serve on the board. In order to help ensure continuity of experience the existing members of Crown Agents' board would be among the founder members of the foundation. In addition Crown Agents are in touch with a number of potential founder members drawn from a range of institutions including finance and trading companies, professional and trade organisations, charities and other development aid bodies. Additional new members would be nominated and selected by existing members in accordance with the foundation's articles of association. Also, for a restricted period, extending probably for up to five years, we intend that

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the Secretary of State should have limited reserve powers. These would not permit the Secretary of State to have any role in the management of the foundation, still less of the operating company; but they would enable him to ensure that no changes could be made to its fundamental purpose. The intention behind the proposal is that we recognise the unusual nature of the foundation route. We want to ensure that it settles down successfully. We also want to provide full assurances to the international clients of Crown Agents that the foundation will maintain a continuity of principles and purpose with those of the existing corporation.

Although ownership will change, the Government have taken care in preparing the Bill to allow for fair treatment for Crown Agents' staff. I understand from Crown Agents that they have no plans for redundancies as a result of the proposed change of status. We anticipate that the provisions of the Transfer of Undertakings (Protection of Employment) Regulations 1981 will apply. The Crown Agents' pension funds are held in trust. The funds are a matter for the trustees and Crown Agents. I understand that Crown Agents have no plans to alter their present pensions arrangements. The security of trust-based schemes will be further protected by the provisions of the Pensions Bill currently being considered by your Lordships' House. We do not envisage any change in the assets and liabilities of the funds when the business transfers.

The trust's current assets are more than sufficient to meet current and future pension requirements. The Crown Agents' business projections show no need to make a pensions contribution during the current funding period. This contributions holiday has substantial value for the business and will be taken fully into account in our decision to ensure value for money for the taxpayer in the transfer.

I now want to say something more about the financial implications of the proposals. We are also concerned to ensure that a viable business is passed to the new owner, the foundation. It is a business which will continue to make a substantial contribution to the success of the British bilateral aid programme as well as serving Britain's wider commercial objectives. As the annual report and accounts show, Crown Agents are a modestly profitable business. Since incorporation in 1979 they have not received any subsidy by way of new cash payments from the Government. The value of the business lies mainly in the quality of its staff and the good will attaching to its reputation. Physical assets are modest. However, because we think so well of them, we are doing all we can to make sure that no one has any doubt about the real assets that they have, which are as I described, their quality, and their quality product for all who buy from them. We are taking independent advice, but I should warn that there is little prospect of substantial receipts for government from the transfer of this business. The Bill, however, requires the Crown Agents' outstanding debt of £2 million to the National Loans Fund to be repaid.

The Bill is designed to allow the Crown Agents to fulfil all existing and new contractual obligations exactly as if they had remained a statutory corporation. It is clearly of considerable importance to the Crown

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Agents and to their clients to know that that is the case. During the process of transfer, it is the Government's intention, and that of the Crown Agents, that there will be no difference in the quality and range of services that they currently enjoy and that thereafter the programme of internal restructuring and investment which Crown Agents have in hand will allow for further steady improvements. The confidential nature of client dealings with the Crown Agents will also continue to be fully respected and will be further protected by the articles of association of the new company.

I expect ODA's long-established client-supplier relationship with Crown Agents to continue. They provide valuable procurement, legal, financial and technical services to ODA at a competitive price. In common with their other international clients we will continue to benefit from the high ethical standards Crown Agents uphold in managing their business activities.

Noble Lords will notice that the Bill also contains provisions for the future of the Crown Agents Holding and Realisation Board (CAHRB). This is a separate legal entity created under the 1979 Act to manage and wind up the assets and liabilities of the business previously undertaken by the unincorporated Crown Agents on their own account. At present it shares the same board as the public corporation. While the bulk of its work is complete, we envisage that there will still be some residual duties to be undertaken for some time. The Bill makes provisions for separate arrangements for CAHRB in future. I shall say more on this in due course.

I recognise that many of your Lordships have had contact with the work of Crown Agents in one part of the world or another. But your Lordships may not be aware of their extensive range of activity. Over the past year, I am proud that 11 employees of Crown Agents have received honours for delivering British and other emergency aid in Rwanda and the former Yugoslavia. Many more lives would have been lost had Crown Agents not been there, alongside our own ODA staff, to do the work.

Most of Crown Agents' business is less dramatic than that. It ranges from advising the national state bank of Kazakhstan on a 200 million dollar programme of procurement financed by the World Bank, one of many similar contracts in the former Soviet Union since the Know-How fund first introduced them to Moscow in 1991, to the totally different pursuit of providing philatelic services through their stamp bureau to nearly one-quarter of the world's postal administrations. The group includes an assets management arm regulated by IMRO and a financial services company which has applied for supervision, once the Bill is passed, by the Bank of England. A wholly-owned subsidiary, Resource, is helping the standards organisations of over 30 newly industrialised countries to establish standards for product testing and inspection—an essential basis for lowering technical barriers to trade. But the heart of the business is, and is likely to remain, the provision of procurement services to Crown Agents' clients in the public and private sectors, both in the UK and around

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the world. In delivering those services Crown Agents' commitment to their present high ethical standards will remain unchanged.

The purpose of the Bill is to enable the Crown Agents to have a strong and stable structure within which to carry forward their business into the 21st century on a viable and sustainable basis. I commend the Bill to the House and trust that your Lordships will be content to give it a Second Reading. I beg to move.

Moved, That the Bill be now read a second time.—(Baroness Chalker of Wallasey.)

3.24 p.m.

Lord Judd: My Lords, there is a real responsibility on all of us to act as trustees of our national assets. It is in that spirit that we on this side of the House wish to consider the proposals before us today. We share with the Minister a recognition of the valuable work of the Crown Agents—I thought she described it splendidly in her speech. We fully understand the arguments that have been made for removing the constraints on their ability to take the kind of commercial opportunities which would further strengthen their business. We are not, however, convinced by the means which the noble Baroness has put forward to meet that objective. We are certainly not satisfied with the form of the legislation which has been presented today.

Let me begin with the arguments for change and some of the areas of agreement. The Crown Agents were, until 15 years ago, servants as well as agents of the Crown, directly accountable to Ministers for what they had to do. At one period, as the House will be aware, some of what was done turned out to be most unfortunate and unwise. Those of us who were in office when that became evident had to move speedily to call them to account. We then determined, in the light of that, to establish a new statutory basis for the Crown Agents to improve both their accountability and efficiency.

The current legislation covering the Crown Agents was drafted by Labour Ministers and implemented, interestingly, by a Conservative Government. The Minister and I agree, I think, that the 1979 Act met the needs of the time. It established the Crown Agents as a public sector corporation and set up a legislative and regulatory framework that was designed to guard against a repetition of the unfortunate events which had prompted that reform.

The Minister and I also certainly agree that the framework established in the 1979 Act is in need of review. The Crown Agents themselves, as the Minister described, have greatly diversified their interests and sources of business. The ODA remains a major client, accounting for about 30 per cent. of the business done. But, as the Minister told us, in the course of the past 15 years the Crown Agents have steadily increased the range and scale of business done on behalf of other agencies and other governments. We on this side of the House would certainly not wish to inhibit their ability to continue on that course.

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Indeed, it is precisely because of the value we put on the work of the Crown Agents that we have serious reservations about the form and content of the Bill. The agency provide important services to clients around the world and contribute to the development objectives of many of the world's poorer countries and to the work of aid donors. We do not wish that role to be jeopardised, any more than we wish to see their capacity to generate business needlessly constrained.

Essentially, what we seek is the provision of greater commercial freedom for the Crown Agents, while at the same time maintaining their active involvement in promoting development by, for example, providing impartial advice and services which allow their clients to make the best use possible of available resources. Here again, it is clear that the Minister and we share common objectives.

Where I fear we part company is on the means for achieving those ends. The Minister appears to take the view that greater commercial freedom can be achieved only by removing the Crown Agents from the public sector. It is, of course, an argument that we have heard before. The President of the Board of Trade took a similar view in the case of the Post Office. Now, having failed to win the argument for privatisation, he obstinately continues to refuse such freedom within the public sector—a slavish and dogmatic commitment to ideological nonsense at the expense of common sense and the national interest, if ever I saw one!

Of course, the case of the Crown Agents is not exactly the same as that of the Royal Mail, any more than the objectives of the Minister for Overseas Development are the same as those of the President of the Board of Trade. In both cases, however, we must remember that we are considering the responsible disposal of the nation's assets. What would be totally unforgivable in either Government or Opposition would be to decide the future of the Crown Agents for party political reasons alone. I am, therefore, sorry to have to remind noble Lords that sources close to the Conservative Party have suggested that that may be just what is going on.

On 12th November last year, just before the Queen's Speech, Arthur Leathley in The Times claimed that plans for privatisation had been shelved by the Cabinet earlier in the year. He described revival of those plans as "a surprising U-turn", which followed the failure of plans to privatise the Post Office. George Jones had made the same connection in the Daily Telegraph of the previous day, saying that,


    "a scheme to privatise the Crown Agents has been revived by the Government after the collapse of the plans to sell the Royal Mail".

These stories were no doubt inspired by government spin-doctors seeking to cover their retreat on the Post Office by producing the Crown Agents as a fig leaf. Here, after all, was a substitute sacrificial lamb to assuage the doctrinaire demands of the high priest of the Conservative Right. The disturbing notion that this privatisation is merely to compensate for dropping others that proved too difficult will be dispelled only if the Minister can show beyond reasonable doubt that privatisation is the best route for the Crown Agents to take. With the greatest possible respect, this she has so

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far failed to do. I suspect that that is because neither her considerable intellect nor her enviable heart are really in the exercise at all.

I recognise that the Crown Agents, like the Royal Mail, are a public sector corporation, and it is because of that that the Government argue that they are consequently subject to similar constraints on their freedom to borrow and to engage in joint enterprises with private sector partners.

Such constraints are not an inevitable consequence of public ownership. They are the result of the application of government policy dressed up as Treasury rules. They are, in other words, constraints which are deliberately imposed by the Government. There is no reason that I know why the Government should not change those rules.

Crown Agents are also constrained from providing services to private sector clients. Since the 1979 Act was passed, many enterprises that were once in public ownership in developing countries and in Eastern Europe have passed into private hands. Some of those privatisations may have been wise and some may have been foolish. But in this context it is absolutely right and proper that Parliament should consider whether Crown Agents should be free to provide services to privatised enterprises which still contribute to developmental objectives.

The same is true of the constraints which prevent the Crown Agents from seeking business in the domestic market in this country, not least in the realm of public services and utilities. That constraint also derives from the 1979 Act, and again it is a legitimate matter to bring before Parliament at this time.

Again, the case for removing constraints is not in itself a case for privatising the Crown Agents. The constraints in the 1979 Act can be modified or removed simply by amending that Act. A Crown Agents Bill might well have been brought before this House for just that purpose; but it was not. Instead of sensibly modifying the existing legislative framework, the Government extravagantly propose to sweep it entirely away.

It is our firm conviction that the Crown Agents could be given greater commercial freedom within the public sector if only the Government had the will to make that happen. Privatisation is not the only possible course. And that is not our view alone. After the review of their status to which the Minister referred had been announced by her to the House in December 1992, Mr. David Probert, Chairman of the Crown Agents, said in his 1993 annual report:


    "The Board of the Crown Agents, after consulting with its advisers, Price Waterhouse and S G Warburg & Co, recommended to the Minister for Overseas Development, Baroness Chalker of Wallasey, that the interests of clients, aid programmes and employees would be well served if the organisation were to remain as part of the UK public sector, but with greater freedom of operation than its 1979 Act of Parliament permits".

That was their preferred option. It is also ours.

The Crown Agents, like the Royal Mail, operate successfully at no cost to the taxpayer, providing the useful and valuable services as a public sector enterprise that the Minister described. They manage very

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considerable funds for organisations such as the United Nations, the European Commission and the World Bank, but also on behalf of the Government of this country and the governments of many other countries. There is no obvious reason why they should not remain in the public sector. Indeed, for this kind of operation, it is surely the proper place for them to be. As the extraordinary financial happenings of the past few days have once more illustrated, there is much to be said for the highest traditions of accountable public service. I repeat: the constraints that exist under the present legislation and Treasury rules can be amended by the Government if they so choose. And such amendments would attract widespread support, certainly from this side of the House.

It is fair to note that the chairman of the Crown Agents also expressed a second preference. He suggested that if the agency could not remain in the public sector, the best alternative would be to transfer the business and assets of the Crown Agents,


    "to a specially formed Foundation, the profits of which would not be distributed but retained for the development of the organisation and its services to clients".

That is the course of which the Minister spoke today. She has made plain that she herself wishes to establish a foundation governed by social and developmental objectives as sole owners of the business operation, which would be run on commercial lines but which would hand over its surplus to the foundation. Such a foundation might operate as a company limited by guarantee.

The option of charitable status has also been raised by the Minister—although the constraint that prevents a charity from trading must raise questions about how the relationship between a charitable foundation and a business venture operating under its authority should be effectively regulated; how the hard-nosed businessmen whom we know the Government will want in the business operation will be meaningfully accountable to their trustees with wider social responsibilities; and how the potential conflicts between some—not all—trading opportunities and development priorities will be resolved.

I have no doubt that less desirable options than a foundation have been considered within government. Arguments were doubtless made that a trade sale of Crown Agents might yield a profitable financial consideration for the Treasury; that the agency would then be expected to earn a profit; and that as a result it would—if I may use the kind of language beloved of the ideological wing of the present Government—


    "be exposed to the full rigours of the competitive, free market environment".

It seems that, so far, such arguments have been rejected, at least by the Minister. And if that proves to be a final victory over the wilder voices within her own party, then the Minister will have earned considerable credit. If Crown Agents were to be sold off to the highest bidder and were to become the marketing arm of a multinational conglomerate, they would certainly lose much of their current reputation for impartiality in advising clients. Important aid donors such as the Japanese Government could not be expected to continue

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to bring their business to Britain under such circumstances. No doubt it was in fact the concern of precisely such clients which proved vital in helping the Minister to resist those who would prefer to sell the Crown Agents on the open market.

The Minister would, I think, agree with me that the value of the Crown Agents goes far beyond the fixed assets that they possess and any trading surplus that they might make. A procurement agency which sets high standards in global markets, and which generates international business for private sector British companies worth tens of millions of pounds a year, is of immense value to this country. It is an asset in itself because of that; and no Minister committed to British export efforts or to the general good name of this country would wish to jeopardise the Crown Agents in order to pursue an ideological commitment to free market forces. By the same token, we must not allow all that the title "Crown Agents" has come to represent to be threatened by the prospect that that title could at some future date be passed on without any accountability. But that is what the Bill as drafted would make possible.

We believe the Minister when she insists that she wishes to pursue the foundation strategy. But I am sure she will agree that, unfortunately, the Bill before the House today is not a Bill to establish such a foundation. In the Minister's own words when she wrote to me and to other noble Lords last week:


    "The Bill provides enabling powers for the Secretary of State to vest the Corporation's assets, rights and liabilities in a Government-owned share company. This company will be transferred to a new owner. The present statutory corporation will be dissolved once its remaining functions have been satisfactorily discharged".

That is all there is in this Bill. The Minister's letter goes on to detail the foundation proposal, but only as "the Government's preferred option". I am certain that it is the Minister's preferred option, but I think we are entitled to ask for a clear indication in the proposed legislation itself that the Government will indeed follow that course.

Preferred options come and go, just as Ministers come and go. It is a fact of political life. Because we have a Minister at the ODA who believes in social purpose and developmental objectives, we cannot take for granted that those priorities will continue to guide government policy. Recent sad experiences with the aid and trade provision have underlined the dangers. We should think long and hard before we consent to enabling legislation that gives the Government a free hand to do whatever they wish. Legislation by intent is not a good principle.

Another Minister for Overseas Development may have another preferred option. Another department of state may press in due course for another type of successor company. We know, for example, that the Treasury takes a close interest in such matters. We can anticipate that in reality Treasury Ministers will insist that it must be the hard-nosed business men who make all the real commercial decisions and that wider considerations should not get in the way.

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There is nothing—nothing—in this Bill to guarantee that the new owners of the Crown Agents will be a foundation such as the Minister described. There is no mention of developmental objectives, social purposes or a non-profit company limited by guarantee. There is nothing in the Bill to ensure that another Minister will not be able to change course and sell Crown Agents to the highest bidder.

Parliament is entitled to such guarantees. If the approval of this House is sought for the concept of a foundation, we must have as part of the Bill, at least in its schedules, the memorandum and articles of association under which it would operate. The Minister may take the view that there are legal reasons why that cannot be done. If so, she should explain to the House the legal advice that she has received, as others, frankly, may take a different view.

If the constitution of the eventual successor company does not appear in the Bill, I hope that the Minister will accept that Parliament must be entitled to consider this matter again before Crown Agents pass out of public ownership. Indeed, we on this side believe that as a minimum the Bill needs to be so amended that the Secretary of State may not act upon it until the detailed provisions for the new foundation have been subject to affirmative resolution of both Houses of Parliament.

There is also no mention in the Bill of those who should, as the Minister herself tellingly said today, take much of the credit for the successes of the Crown Agents: those who have been employed by them. Their loyalty, courage and service should be recognised. Those are qualities which will be indispensable to future success. The 1979 Act devoted a significant part of its first schedule to the employment and pension rights of Crown Agents' staff. By contrast, there is no mention whatsoever of those in the Bill before us today. I believe that that is a serious and grave omission. Again, I believe that detailed provisions for the rights of employees and pensioners of the Crown Agents should at least be subject to affirmative resolution before any change is carried into force.

My concern here is not only that existing staff should be given assurances about their terms and conditions under new ownership and about their right to trade union representation. I am also concerned that there should be no ambiguity at all about the future of the pension funds accumulated by contributions from Crown Agents and their staff. Parliament is entitled to know a good deal more about the plans for initial capitalisation of the successor company. Staff and pensioners of the Crown Agents are entitled to guarantees, not just well meaning assurances, that their pension funds will be protected.

In seeking to protect the benefits that the Crown Agents have brought to the developing world, it is surely right to protect the well-being of those who, as the Minister herself so powerfully described today, have served them so faithfully and well in the past. The Crown Agents have become a credit to this country. With greater commercial freedom in the public sector, they could be set fair to achieve a substantial trading surplus on a regular basis. Let us not go down the road indicated by this inadequate Bill until we can be certain

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of the final destination and until we can be quite sure that the direction that we are being invited to take is convincingly, in every sense, the right one for the Crown Agents, their clients and their beneficiaries, for development and for all their dedicated staff.

3.45 p.m.

Lord Redesdale: My Lords, I believe that the reason the Crown Agents were mentioned in the gracious Speech was because this Government failed to bring the Post Office privatisation to this House. Perhaps on that point I share the cynical beliefs of the noble Lord, Lord Judd. It is ironic that the economic freedoms that are given as one of the main reasons for the Bill are denied to the Post Office. However, I digress.

The Bill aims to move the Crown Agents to the private sector. Indeed—if the words of the Foreign Secretary as reported in the Daily Telegraph are to be accepted—he said:


    "The Crown Agents are buyers and sellers for the Government overseas. But the aid budget is falling. They do a lot of foreign business and need to be free of public sector constraints. It is privatising in order to preserve".

That is perhaps a pessimistic view of the future of the Crown Agents.

The move to the private sector will be advantageous for the Crown Agents in as much as they are to be given greater financial independence than under the 1979 Act of Parliament. The Minister, in his reply to the gracious Speech, implied that they would receive that freedom. Considering that the vast amount of work that the Crown Agents undertake is for clients other than the ODA—indeed, only 27 per cent. of their income is generated from the United Kingdom—the removal of constraints might not only preserve their position but allow them to expand their activities.

The Crown Agents have been involved in much excellent work in recent years, including organising aid convoys to Bosnia, as the Minister mentioned, providing technical assistance to sub-Saharan Africa and promoting institutional development and capacity building in the developing world. The Crown Agents' work has shifted with the rapid new developments in aid policies and they have had to adapt to falling ODA budgets by changing the way that public funds are generated. They now play an important and growing role in promoting private sector enterprises and developing trade. Such work suggests that the value of the Crown Agents can hardly be in doubt. However, the future of the Crown Agents through this Bill is not clear.

I realise that the Minister said that the Crown Agents will become a foundation, with any profits being reinvested in the activities of the successor to the Crown Agents—a foundation that, under Clause 7, may well be called the Crown Agents. One effect of the Bill is that the Crown Agents will be required to repay what is left of their commencing capital debt. Although the Crown Agents have been squeezed of resources through falling aid budgets and have not received any subsidy from the Government since their incorporation, they are being asked to repay capital debts of some £2 million. With

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capital and reserves amounting to no more than £15 million, that represents a sizeable chunk of the assets available to the successor company.

The Bill indicates that the repayment of that money to the Consolidated Loan Fund will be directed by the Secretary of State. He may also determine full repayments of the principal or interest on such deemed debt to be paid into the Consolidated Fund. Considering that at present the £2 million is being repaid over the long term at low interest rates, will the Minister indicate the terms and conditions of the repayments set out in the Bill?

The House may in fact regard the Bill as a skeleton Bill. It is a crude enabling piece of legislation which allows the Secretary of State to form a foundation in any form that he thinks fit. Although the Minister has indicated that a foundation is to be set up, there is no mention at all of such a body in the Bill. It is questionable even whether the notion of a foundation is a suitable means of transferring the Crown Agents, given that they are limited by guarantee. Nor is there any mention of pensions for staff. The Crown Agents employ some 800 people. What security are they offered in the Bill as a result of this transfer?

The Government insist that the transfer of ownership is appropriate in view of the Crown Agents' international character. But where in the Bill is the guarantee that an independent foundation will be formed of representatives of the different sectors with which it deals and will not become a quango?

The Bill seeks to change primary legislation by secondary legislation. It is not a privatisation because it only places the Crown Agents into a body that has yet to be appointed by the Secretary of State. All further changes to the Crown Agents will be covered by subordinate legislation as set out in Clause 1. I hope that the Minister will consider redrafting Clause 1 to make clear the exact status of the successor company of the Crown Agents. Perhaps the word "foundation" could be added to the Bill.


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