With your permission, Mr. Speaker, and that of the House, I would like to make a further statement on the Crown Agents. In my statement last year, I said that I welcomed the findings of Sir Matthew Stevenson's Committee, that the interests of the Crown Agents' principals and others would best be served by the continuation of the whole range of services which the Crown Agents provide. I also accepted recommendations that the status, structure and responsibility for the Crown Agents should be clearly defined, and that they should bear an appropriate liability to taxation.

The Crown Agents originally came into being primarily to provide certain financial and purchasing services in Britain for countries which were then dependent. The range of their services, conducted on a non-profit making basis and contributing to the development of the countries concerned, has been progressively made available to a large number of countries, most of them now independent. The scope of their activities has also been extended to cover a wide range of technical and financial services.

The Crown Agents have adapted their organisation and structure over the years in order to meet these widening requirements, and in particular have established certain of their services on the basis of fully-owned subsidiary companies staffed by Crown Agents' personnel. In the light of the Stevenson Report, I have agreed that this process should be extended by the establishment of further wholly-owned subsidiary companies to deal with the specialised financial services of the Crown Agents. The boards of management of those companies will include non-executive directors appointed after consultation with me, as well as executive directors drawn from the Crown Agents' staff. The Crown Agents intend that the investment policy pursued by these companies should be generally in accord with the trustee analogy and should be fully consistent with their name and standing. These subsidiary companies will be subject to taxation in the normal way, and arrangements are also being made to bring any profits which may be made by the headquarters' organisation itself within the scope of normal taxation.

The Crown Agents will, as in the past, be appointed by the Secretary of State, or by myself acting on his behalf, for the purpose of carrying out the various services on behalf of the overseas principals. They will thus remain answerable finally to Ministers, but it is neither my intention nor my desire to disturb the traditional practice under which the operations of the Crown Agents on behalf of their overseas principals have been discharged on a basis of non-Intervention by Ministers.

In the future, as in the past, the scale and scope of the Crown Agents' operations will depend on the confidence which overseas governments and authorities repose in the organisation. That confidence is fully reflected in the present scale of operations, and I am particularly anxious that the arrangements I have mentioned, which are designed to produce a more readily comprehensible structure and to define the various functions more clearly, should in no way disturb that confidence. I have made this clear to the main overseas principals when I told them the outline of the new arrangements.

Finally, I should once again like to take this opportunity of thanking Sir Matthew Stevenson and his Committee for its report, and of sincerely endorsing the tributes which it paid to the work of the Crown Agents.

I thank the right hon. Gentleman for his statement. As he knows, we have waited for it for a long time. First, I endorse what he said about the confidence which principals may continue to have in the work of the Crown Agents. It is important to say that that is endorsed by both sides of the House.

The Opposition are aware that the present financial operations of the Crown Agents involve them in at least £50 million worth of investment in equities and that some of the equities had rather unfortunate results last year. It seems from his statement that he is proposing not to change basically the relationship between himself and the Crown Agents. The right hon. Gentleman will continue to appoint but, as he knows, one of the great problems this was my opinion when I was his predecessor in office—is that the power to appoint Crown Agents has no corresponding responsibility on the part of the Crown Agents to report to Government. Will there be any change in that respect?

The right hon. Gentleman said that the Crown Agents will remain answerable finally. In what way will they be answerable? Will they report to him? Will the report be published? Will it be available to hon. Members? Will it be subjected to parliamentary questioning?

The right hon. Gentleman says that in the new extended financial operations of the Crown Agents there will be non-executive directors appointed after consultation with him. What precisely will be their non-executive functions? He says that the companies will have to act, will be expected to act or will be intended to act in accord with the trustee analogy. Will he tell us precisely what he means? Does he mean that they are not to have equity shares or equity shares of a speculative character? How does he propose to prevent that happening? Will they no longer invest in property companies?

Depending on the right hon. Gentleman's answers, it may well be that we shall wish to explore the matter in greater depth.

The suggestion which I have made to the Chairman of the Crown Agents is that he should be willing—and he agrees—to discuss with me any important developments or changes in the policy of Crown Agents.

The function of non-executive directors will be similar to the functions of such directors of other companies of all kinds-namely, to give advice and to help in the taking of decisions by the companies with which they are connected.

The investment policy pursued by the companies should be carried out in accord with the trustee analogy and should be fully consistent with the Crown Agent's name and standing. That means that they will be guided largely by the trustee analogy but not prevented from making investment outside that analogy if the companies so decide.

Is my right hon. Friend aware that his statement will be welcomed by all who recognise the importance of the Crown Agents' work, who have been concerned about critical comment which has recently appeared in the Press? So that we may get the matter into perspective, will he confirm that the success of the Crown Agents' investment policy on behalf of the governments of many developed countries has contributed to those governments placing additional funds and additional orders with Great Britain?

I entirely agree with my hon. Friend. The confidence that is shown by the principals in the Crown Agents is unmistakeable. I believe that as a result of my statement the principals will take the view that the Crown Agents are strengthened to do the job for the principals which they have been doing and which they will continue to do.

While the right hon. Gentleman's statement may strengthen the Crown Agents, will he answer the question posed by the right hon. Member for Lanark (Mrs. Hart) about parliamentary answerability and the link between the Crown Agents' work and the Minister's rôle?

I do not think that it would be right for discussions between myself and the Crown Agents about the development of their policy to be reported to parliament. I do not believe that that would be in the interests of the relationship between the Crown Agents and the principals. To an extent that must be a confidential relationship. It would be wrong for such matters to be discussed in Parliament because this relationship between the Crown Agents and the principals would be gravely undermined.

Will the right hon. Gentleman acknowledge that nothing in his statement reflects the fact that, apart from the operations which the Crown Agents have undertaken on behalf of principals overseas, they have raised on the market £34 million and invested that as they pleased without being answerable to their own chief principals? Will the right hon. Gentleman acknowledge that there will be amazement in the Press and elsewhere that he has made his statement without mentioning that the director of finance of the Crown Agents until a few weeks ago has been appointed the deputy chairman of First National Finance Corporation, a company in which the Crown Agents have an 8½ per cent. ordinary share holding, 6 per cent. of it being held on behalf of overseas principals?

Does the right hon. Gentleman intend to say nothing about the fact that Crown Agents' money has gone into the notorious property empire of John Chalk and Timothy Gwyn-Jones? Will he recognise that there is a scandal which is waiting to blow? Unless we investigate the matter fully with sufficient openness but with confidentiality to reflect the circumstances, the traditional work of the Crown Agents, which is of enormous value throughout the world, will inevitably be prejudiced.

The purpose of the Crown Agents indulging in the activities to which the hon. Gentleman refers is largely to build up the reserves of the Crown Agents, which are largely to the benefit of the principals themselves, and the principals have shown their confidence in this policy. I understand that the hon. Gentleman has a Question to put to me next week about the appointment of Mr. Challis, but, having made this statement today, I should tell the hon. Gentleman that the Chairman of the Crown Agents, when the appointment was mooted, considered Mr. Challis in the way in which a civil servant would be considered. He consulted me, and I consulted others. I therefore share the responsibility for it. I had no reason to object to this appointment because I believed that it was in line with the rules that apply to the Civil Service.

Is my right hon. Friend satisfied that he has the consent and approval of the Crown Agents' principals to these proposals? Would he agree that nothing should be done that could impair the close confidence which the Crown Agents' principals of various Commonwealth countries have in the operation of the Crown Agents' themselves? Would he also accept that the Commonwealth countries are perfectly capable of deciding who should look after their own affairs?

I am entirely in agreement with my hon. Friend. I believe that the assent of the principals to these arrangements is of immense importance, and that is the reason why I took the opportunity to tell them what was happening. I believe that my statement will do nothing to damage the confidence that exists between the principals and the Crown Agents.

In relation to the trustee analogy, may I confirm that the Minister used the phrase "if the companies so decide"? Does this mean that speculative investment can go on without his Department being told?

It means purely that the trustee analogy will not be wholly restrictive, that the Crown Agents can make investments, if they so choose, outside the trustee analogy, and would be guided in doing so not only by the executives of the Crown Agents' staff themselves but by the non-executives, who would be appointed after consultation with me.

Would the right hon. Gentleman go even further and issue an instruction to the Crown Agents to stop any investment in these slum property speculations?

No, Sir.

Does my right hon. Friend see any different relationship between the Crown Agents and Millbank Services?

No, Sir. There is no connection.

The Minister gave a scandalous answer to my hon. Friend the Member for Bolsover (Mr. Skinner), who asked whether any instruction would be given by the right hon. Gentleman to the Crown Agents to cease investments in slum property. Is the right hon. Gentleman aware that there is critical concern about activities in this direction? Is he further aware that in such a matter there is a balance of responsibility and confidence between the principals overseas and this House and this country? Surely any decision he takes should reflect that as well? Will he think again about his answer to my hon. Friend?

I said, "No" to that question because the Crown Agents have neither made nor contemplated making such investments.

Nonsense.

I will elucidate. I think the hon. Member for Islington, South-West (Mr. George Cunningham), with his great interest in this matter, has in mind certain investments made in the First National Finance Corporation. This is a company in which the Crown Agents have a limited financial interest. The Crown Agents have not made investments in slum property. There were investments made by the First National Finance Corporation. I have no doubt, and never have had any doubt, about the integrity of the Crown Agents. We can all have our judgment of their judgment. The hon. Gentleman has his judgment about their judgment. The principals also have their judgment about the Crown Agents' judgment and have expressed their confidence clearly.

Amongst the investment subsidiaries of the Crown Agents have been a 51 per cent. controlling interest in the English and Continental Property Company and substantial interests in Metropolitan Properties Limited, and many of the property companies they have invested in during the last few years have certainly been speculative. The right hon. Gentleman says that the trustee arrangements are proposed to hold good, and the question is whether he proposes that those arrangements will or will not exclude property dealings. [HON. MEMBERS: "Oh."] I think hon. Members opposite are a little less informed about this matter than are some of my hon. Friends.

What matters here is whether the right hon. Gentleman is prepared to say to the Crown Agents that these new arrangements on the trustee analogy should exclude investments in speculative property developments. This is the point about which the Opposition are rightly concerned. The right hon. Gentleman has said that the Crown Agents will finally be answerable to him, but he is, of course, answerable to this House. What is to be the relationship between his answerability and their answerability to him, because the situation is profoundly unsatisfactory? Finally, what is to be the position about the personal shareholdings of nominee directors?

I hope I can remember all the right hon. Lady's questions. The question of answerability is dealt with in the fact that the Crown Agents are appointed by the Secretary of State or by myself and therefore they are answerable to us in the final analysis.

I am sorry, but I cannot remember the right hon. Lady's next question.

How is the right hon. Gentleman to be answerable to Parliament for them?

I am answerable to Parliament. That is obvious at the moment, when I am being asked so many questions.

The first time in three years.

It is not the first time in three years. I have been bombarded by questions and I have done my best to give as full answers as possible. That deals with the question on answerability.

Perhaps the right hon. Lady will remind me of her other questions. I am afraid that I did not write them down.

There were two other questions. The first was whether trustee shareholdings should exclude speculative property investment, and the other concerned the position of personal shareholdings of nominee directors.

On the question of trustee shareholdings, I said that the policy should be carried out … in accord with the trustee analogy and should be fully consistent with their name and standing. I think the right hon. Lady would be wrong to get this matter entirely out of perspective. The percentage of the Crown Agents' investment at the present time in property is 1 per cent. and therefore—

How much money?

Not very much. As I was saying, the right hon. Lady is over-estimating the problem.

I made a fairly full statement about the personal holdings of the Crown Agents in the investment companies concerned on a previous occasion, and I do not think I can add to what I said then.