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Mr. Gray: May I clarify that point? I was not saying that the Government were not green. I wholeheartedly support a number of the things that the Government have done: for example, some of their policies following the Kyoto negotiations. The point that I made was specific: it is the first and only environmental legislation. I was criticising not what the Government have done, but the amount of legislation that they have introduced.
Mr. Meale: If the hon. Gentleman looks at some of the joined-up government that has been undertaken, and some of the decisions that have been made, he will see that environment policy is having an effect across the board. I remind him--the right hon. Member for Suffolk, Coastal will agree because he attended some of the conferences--that the Prime Minister and Deputy Prime Minister, with others from all parties, supported all the efforts at the world conferences in Rio and Kyoto, where we reached a level of agreement, and Buenos Aires.
Mr. Gummer: I agree with the hon. Gentleman that the Deputy Prime Minister has been commendable in his fight on climate change, particularly in Kyoto and Buenos Aires. The thing that my hon. Friend the Member for North Wiltshire (Mr. Gray) was pointing out was that many of us have been waiting for legislation to implement the necessary actions that the conferences recommended. We keep asking for that; it has been two and a half years. I hope that the Minister will be able to find time for such
legislation. It is not his fault; it is the Chancellor's fault--we know whose fault it is. The Minister is very green. It is just that the Chancellor is not.
Mr. Meale: All I can say is that we are gaining some momentum in trying to achieve our policies. We are a little quicker in our resolve in relation to the environment than the previous Government, who were in power for 18 years.
The hon. Member for Ashford said that more small business would be controlled under the Bill. That is because of the coverage of the integrated pollution prevention and control directive, which the previous Government accepted.
The hon. Member for North Wiltshire asked various questions, the first of which was on the National Farmers Union. The Ministry of Agriculture, Fisheries and Food has held extensive discussions with the NFU and raised the issue that the hon. Gentleman raised today--on outdoor pigs, and the Bill's effects on that type of farming. Outdoor pigs will not be controlled under the Bill's provisions.
The hon. Gentleman also asked about the Small Business Federation and the Country Landowners Association. The Small Business Federation was consulted on the Bill on three occasions, on each of which it was very constructive. I am not quite sure how many times similar contact has been made with the CLA, but departmental officials regularly contact that organisation. However, I shall write to the hon. Gentleman and provide some details on the matter.
I tell the hon. Member for Ashford that the Bill was not withdrawn, but recommitted because of some fairly substantial Government amendments to it, which we tabled to meet the points made by the House of Lords Delegated Powers and Deregulation Committee. I should also tell him that the previous Government, in the Environment Act 1995, conferred powers on the Secretary of State to create criminal offences by regulation. I am sure that the right hon. Member for Suffolk, Coastal will remember that Act.
As for claims that the Bill will confer too much power on the Government, we have ensured that proper parliamentary control will be retained. The regulations
will be subject to affirmative procedure when they are first made, and thereafter for certain important amendments. The Delegated Powers and Deregulation Committee thought that such provision would be adequate when it considered the Bill. We have also given an undertaking that any future amendments to the regulations that change their provisions and that were previously included in the Environmental Protection Act 1990 will be brought before Parliament for consideration under the affirmative procedure.
There are, moreover, instances in which it is right to replace primary legislation with regulations, as a set of regulations is a much more flexible instrument than primary legislation. It is also clearly in the interests of those being regulated that any problems can be resolved.
As for claims that the directive is being gold-plated, the Government think that the situation is quite the opposite. We have repeatedly made it clear that the Bill's purpose is to allow coherent implementation of the IPPC directive. Industry would clearly suffer extra costs if it had to continue with two separate pollution-control systems.
Claims have also been made in the debate that business is worried about additional VAT costs. Labour Members believe that it is a complete myth--it is scaremongering to say--that the directive's use of the term "best available techniques" entails less regard for cost-effectiveness. The United Kingdom's use of the term "best available techniques" includes "not entailing excessive costs". Hon. Members who served in the previous Government, who negotiated that particular directive, should know that.
The directive clearly states that "available techniques" should mean those developed on a scale allowing implementation in the relevant industrial sector under economically and technically viable conditions, taking into consideration costs and, of course, advantages. Moreover--as the right hon. Member for Suffolk, Coastal will be aware--if we do not implement the directive, in legally identical terms, we would be subject to infraction proceedings.
Question put and agreed to.
Bill accordingly read the Third time, and passed, with amendments.
As amended in the Standing Committee, considered.
Brought up, and read the First time.
Mr. Gary Streeter (South-West Devon):
I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker (Mr. Michael J. Martin):
With this, it will be convenient to discuss amendment No. 1, in clause 18, page 8, line 23, leave out from 'association' to 'unless' in line 24 and insert
Mr. Streeter:
Conservative Members wish the Commonwealth Development Corporation to succeed. We believe in the CDC and, for most of the past 50 years, the CDC has flourished under Conservative leadership. Our concern--which is reflected in the new clause--is that, after the Bill is passed by the House and the CDC becomes a partially privatised company, gradually, it will move away from its developmental objectives. We expressed that concern in Committee; it is our greatest concern about the Bill; and we now return to it.
It has been established that, after the company is privatised, it will have to increase its return on capital invested from the current 7 to 8 per cent. to about 18 per cent. per annum, so that investors will receive a return on their investment. The company will be under pressure to deliver after the Bill has been passed. Indeed, managers are already making changes--on the ground, in the field, in sub-Saharan Africa--looking for different types of investment to make.
We also know that the Secretary of State is keen for a switch from loan to equity-based investment--but that is not the only change; the type of company in which the CDC is investing is changing. The CDC is increasingly looking for more high-yielding, profitable companies, regardless of whether those companies employ large numbers of people in the developing world or particularly benefit local economies in sub-Saharan Africa or Asia. The CDC is looking for yield and return to shareholders.
Although that is a terrific incentive, which we support for companies around the world, the CDC is a different type of company. For 50 years, the CDC has received taxpayers' investment. The company was established to invest in pre-emerging markets--to go where no other investor would go. We simply do not want that important niche activity to be blown away by the Bill.
Therefore, the question that we ask--which is dealt with in the amendments--is whether the Government have adequately protected and safeguarded the new CDC's developmental objectives. New clause 1, and other
suggestions that I shall make later in my speech, are intended simply to build another line of defence to ensure that such important safeguarding is provided.
It would be sacrilege if all the careful foundations laid over the years by the many people who have worked for that excellent company were destroyed. It would be more than tragic if, in future, the CDC's high reputation for helping thousands of people in the developing world were to be wasted as the company moves away from its developmental objectives and all that it has held dear as shareholders apply pressure on the board of directors to increase returns.
I should make it clear that I am not talking about this Secretary of State, the current board of directors, or the board of directors that will be appointed after the Bill is passed--no one in their right mind would think that any of those people would deflect the CDC from its developmental objectives--but about a CDC that, at some point, after shareholder pressure builds and a board of directors accedes to it, goes in a direction that everyone concerned with the Bill does not want.
We want to ensure that the entrenchment about which the Secretary of State boasts so loudly is watertight.
In Committee, the Minister made some interesting comments on that matter, putting in a nutshell what the Government feel that they have done to safeguard and entrench the company's developmental objectives. He said:
The Minister has--fair enough--identified six safeguards; that could not be clearer. I should like briefly to examine each of them in turn, to ensure that the Government have done enough.
We have been told that the first safeguard of the CDC's developmental objectives is the 25 per cent. shareholding. However, it is worthless as a safeguard. It does not prevent 75 per cent. of the shareholders passing the special resolution that is needed to change the memorandum and articles of association. It cannot prevent a change in the investment policy. The fact that the Government will retain 25 per cent. of the company is utterly worthless as a safeguard; that one did not come up to the mark.
Secondly, we were told that two of the directors would be appointed by the Department for International Development. However, at another time in Committee, we were told that the board would probably consist of 11 people, two of whom would be appointed by the DIFD. Of course, some of the investors would want their own representatives on the board, and those representatives will be the most susceptible to succumbing to pressure to shift the company away from its developmental objectives.
In the Secretary of State's terminology, two out of 11 may be a majority. I can imagine meetings in the Department for International Development. Ten or 11 people might be present, and all might oppose the motion except the Secretary of State, but the motion would be carried. I can understand that that might happen in the Department for International Development, but she must realise that two directors can easily be outvoted in a board of 11. Those two placed directors cannot protect or safeguard the developmental objectives on their own. Therefore, I am afraid that, as a safeguard, the presence of two such directors is utterly worthless.
Thirdly, we come to the statement of business principles, which we embrace and support. I quoted it extensively at Second Reading; I do not intend to do so again. It is a very worthy document. Who could disagree with the principles set forth in relation to business integrity, the environment, health and safety and social issues? However, that statement of business principles does not differ significantly from the business principles that any major multinational corporation would adopt. I have looked at business principles adopted by BP, Shell and Marks and Spencer, and they are all rather similar. There is nothing in those business principles that would cause the company to adhere to its investment policy or to its developmental objectives. That was the third safeguard that the Minister set out, and it also is a damp squib.
Fourthly, the Minister said that the memorandum and articles of association were part of the safeguard; but there is no general protection in the memorandum and articles as a whole. I assume that the Minister was referring to article 51, which relates to investment policy. I believe that it is worth reading. Article 51(A) says:
Article 51(B) says:
Article 51(C) says:
Finally, article 51(D) says:
Therefore, the memorandum and articles of association--the fourth safeguard--are not in themselves a safeguard. They simply point to the investment policy.
'.--(1) The Corporation shall at the end of each complete financial year after registration make a report to the Secretary of State on its investments during that twelve month period and on its policy on future investments.
(2) The Secretary of State shall as soon as practicable lay a report under subsection (1) before Parliament.'.--[Mr. Streeter.]
6.4 pm
', investment policy and statement of business principles'.
"It is important to have not just a belt and braces approach"--
looking at him, I suspect that that applies to his personal life, too--
"but other safeguards."
My remark was unkind, and I withdraw it instantly. He went on to say:
"We have the golden share, the 25 per cent. shareholding, the two directors, the statement of investment policy, the statement of business principles and the memorandum and articles of association. We therefore have six elements tying the CDC."--[Official Report, Standing Committee D, 17 June 1999; c. 23.]
"CDC will have an investment policy to cover the conduct of CDC's investment business. The policy must be designed to achieve CDC's objective of maximising the creation and long-term growth of viable businesses in developing countries and achieving attractive returns for shareholders."
Those words are more or less now contained in the mission statement. However, that paragraph merely points us towards the investment policy.
"The policy must include a particular focus in the conduct of CDC's investment business on benefiting poorer countries, especially those in sub-Saharan Africa and South Asia."
Who could disagree with that? However, it simply points us towards the investment policy; it does not add to it or buttress it.
"The directors will conduct the investment business of CDC in line with the investment policy. They will establish procedures which enable them to see whether the investment policy is being complied with by CDC and, to the extent relevant, its subsidiary undertakings."
We already know that the company is to be run, according to this piece of paper, in line with the investment policy; but, as I shall show, that investment policy is not watertight. That policy, the only safeguard in relation to the conduct of the company, does not contain the necessary safeguards.
"The directors will report each year in CDC's annual report on CDC's compliance with the investment policy. This report will contain sufficient information to allow a reader to make an informed assessment of the investment business of CDC and its subsidiary undertakings as against the requirements of the investment policy."
14 Jul 1999 : Column 450
That is a very welcome statement. No doubt, the company's annual report will contain information about the investment policy and whether the directors are complying with it. We welcome all that, but it merely points us towards the investment policy, which I shall consider in a moment.
The report referred to in article 51(D) is simply a report by the directors, not to Members of Parliament or to some compliance committee, but to the shareholders--the very people who, in future, might put the directors under pressure not to comply with the investment policy.
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