§ Order for Second Reading read.
§ 4.2 p.m.
§ The Minister of Supply (Mr. Duncan Sandys)
I beg to move, "That the Bill be now read a Second time."
The Government proposals for the future of the iron and steel industry were set out in the White Paper which was published last July, and I explained them very fully in the debate which we had upon it a few weeks ago. I am sure, therefore, that the House would not wish me to go over the same ground in detail today. I propose, therefore, to concentrate my remarks upon the broad aims, objectives and principles of the Bill and to show the advantages it will offer over the present system.
This Bill has two main objectives. The first is to establish a comprehensive system of public supervision embracing the whole iron and steel industry, and so bring to an end the extremely harmful split created by the 1949 Act. The second is to restore independence, initiative and financial responsibility to the companies and so ensure that they have the strongest incentives to produce as cheaply and efficiently as possible.
In short, we seek to preserve the stimulus of private enterprise, subject to the safeguards of public supervision. This policy has been consistently advocated by the Conservative Party for years past. Our outlook was very well summed up by my right hon. Friend the Colonial Secretary in a debate in this House as far back as 1946, when he said that the companies should be allowed to spend their own money, run their own business and take their own risks, but should be subject to such amount of Government supervision as will secure that the national interest and that of the steel industry march together in harmony. That is precisely what this Bill sets out to do.
267 Even hon. Members opposite have at times felt obliged to recognise that free enterprise has a contribution to make to the vitality and efficiency of industry. In fact, the right hon. Member for Vauxhall (Mr. G. R. Strauss), when he was commending his steel nationalisation Bill to the House on Second Reading, claimed as a point in its favour that it wouldcombine all that is best in private enterprise with public ownership.What he did not seem to appreciate was that you cannot combine private enterprise with monopolistic public ownership any more than you can mix fire with water. By removing from the individual companies real financial responsibility and incentives, State ownership quenches the very spirit of private initiative.
On the same occasion the right hon. Gentleman went on to say rather ingenuously:we propose to keep intact the identity of the individual concerns. … Indeed, on the morning of Vesting Day the only difference for them will be that the ownership of the securities has changed hands."—[OFFICIAL REPORT, 15th November, 1948; Vol. 458, c. 60–63.]But of course it makes all the difference in the world for the ownership of the companies to change from the hands of thousands of separate shareholders into the single hand of a State monopoly. By retaining the brass nameplates of the companies, it may be possible to keep up the appearance but not the reality of private enterprise. The facade of separate management may for a while be preserved, but let us make no mistake: financial control by the State Corporation carries with it control of the policy of the companies and must progressively stifle their individual initiative and their sense of responsibility.
I think it is common ground between us, on both sides of the House, that some measure of public supervision and control is necessary in the iron and steel industry. The main question is whether that necessary supervision and control can be obtained without State ownership.
§ Mr. Sandys
If we are agreed, I do not propose to pursue the matter. In the debate on the White Paper the other day, the advocates of nationalisation invariably started from the assumption that it is impossible to protect the public interest except through public ownership. We on this side of the House challenge that assumption. We maintain that the effectiveness of public supervision has nothing whatever to do with the question of ownership. It can be made equally, if not more, effective under conditions of private enterprise.
§ Mr. Sandys
The hon. Gentleman says "Nonsense"; if hon. Members opposite question what I have said, I ask them to compare the safeguards for the public interest provided under the 1949 Act with those provided by this Bill and to consider quite objectively which are the more effective.
§ Mr. Fienburgh
In that case, why is the right hon. Gentleman proposing in his Bill to do away altogether with the Iron and Steel Consumers' Council?
§ Mr. Sandys
I was going on to compare the two systems, and perhaps the hon. Gentleman will give me the opportunity to do so.
There are three fields in which some measure of public supervision is necessary: prices, development, and raw materials. Let us take prices first. Can it really be said that it is necessary for the State to own the steel works in order to prevent excessive prices from being charged? The history of the industry itself provides the answer. Nationalisation has been operating for about 20 months, yet iron and steel prices have been under effective public supervision for no less than 20 years. I would say that of all the various methods of control adopted at different times, the one provided by the 1949 Act is by far the least efficient.
If prices are to be controlled, it is quite obvious that the control must apply to all products of the same kind irrespective of who makes them. But that is just what the Corporation cannot do; for it has no power to control the prices charged by any company that it does not own. In order to control iron and steel prices effectively through ownership, one would have to nationalise hundreds more 269 companies in many other industries. This, in turn, would no doubt create further anomalies and a call for further nationalisation until, step by step, one had nationalised almost the whole of our economy.
Public ownership, is, I submit to the House, the most unpractical and the most cumbersome method of exercising public control that has ever been devised. How much simpler and how much more straightforward it is to entrust this task to a Board such as we now propose whose authority is defined in terms of a list of specific products, irrespective of the ownership of the companies that make them.
Much the same difficulty arises over raw materials. Here again, we see the grave disadvantages of the split in the industry created by the 1949 Act, and, above all, the absence of any co-ordinating machinery. Problems of material supplies inevitably raise issues which affect both the nationalised and the privately-owned companies. These require to be dealt with by a body which is able to take an objective view over the whole industry. Since the Corporation is not in a position to do that, the task of co-ordination falls upon the Government.
For example, it was necessary for me a few months ago to reconcile differences between steel makers and founders on the question of the distribution of pig iron and coke. This type of industrial problem should, in our opinion, not have to be referred in the first instance to the Government. However, this will, I am glad to say, be to a large extent remedied when the new Board is set up.
I turn now to the question of development. The right hon. Member for Lewisham, South (Mr. H. Morrison)—I am sorry to see he is not in his place today—complained that we were giving the Board negative, destructive bureaucratic powers of veto. One hon. Member opposite said that the steel industry was being put into the clammy clasp of my dead hand. That was the charming expression used by the hon. and learned Member for Brigg (Mr. E. L. Mallalieu).
But these arguments and criticisms come strangely from the party opposite, who were responsible for the 1949 Act, which gave to the Corporation, as the sole shareholder, unrestricted control over the affairs of every nationalised company. We, on the other hand, are deliberately 270 limiting the powers of the intervention of the Board to cases in which a major scheme might seriously prejudice the balanced development of the industry.
In addition, we are providing two important safeguards. The first is that the Board must consult the trade associations representing the branch of the industry concerned before exercising its powers—even before exercising its powers to call for the submission of schemes. The second is the right of appeal from the Board's decision to the Government. In short, my reply to the charge of bureaucracy is that the carefully defined powers with which we are providing the Board are the bare minimum necessary to ensure balanced development of the industry and to avoid waste of national resources on a large scale.
The party opposite have also criticised this Bill for not providing adequate positive powers of development. The right hon. Gentleman the Member for Vauxhall said that we were providing a brake but no accelerator. In my opinion, too much emphasis has been put on this question of positive powers. The real power of the Board will depend not on its right to give orders, but on its ability to lead and to persuade. The Board will have the duty of keeping itself informed about the industry's plans for expansion and modernisation, and of satisfying itself that they are adequate.
Personally, I have little doubt that normally the plans prepared by the companies on their own initiative will be sufficient to meet any forseeable demands for iron and steel. But should the Board, at any time, consider that more is required, it will, under Clause 4 of the Bill, discuss the matter with the industry. I believe that those discussions, to which we attach the greatest importance, will almost always result either in the Board's persuading the industry to carry out the desired expansion or in the industry's convincing the Board that its existing development plans are adequate.
It is, of course, true that, in the rare case where a difference of opinion persists, the Board will have no power to order the carrying out of a development scheme which the industry considers to be economically unsound. The Board will, however, have the right to report the matter to the Government, who are, by this Bill, given the power which does not exist at present, to provide 271 additional capacity if the national interest requires it.
One would think, by the way hon. Members opposite talk, that nationalisation had somehow ensured that the steel industry could be compelled to carry out uneconomic and unprofitable development schemes. The Corporation, as the sole shareholder, can, of course, order its companies to carry out any unprofitable developments if it so wishes; but is it likely to do so? It is, in my opinion, highly improbable that the Corporation would be prepared to invest large sums of money—and we are talking in terms of schemes involving tens of millions of pounds—in development projects and expansions which are expected to show a loss. Nor must we forget that the 1949 Act laid upon the Corporation an obligation to pay its way. Losses incurred on unprofitable ventures would, therefore, have to be passed on to the consumer in the form of higher prices.
Now, I am not suggesting that the Corporation would be restrictive in its outlook; but merely that, with its heavy responsibility for the finances of this great industry, it is bound in practice to judge issues of this kind from the standpoint of sound business. That is why I do not believe that in practice the Corporation would to any greater extent than private industry be prepared to embark on uneconomic schemes of expansion, and the 1949 Act provides no power whatsoever to compel the Corporation to do so.
As I have said, I am confident that the industry, in consultation with the Board, can be relied upon to provide the capacity that is needed. I know that is not the view of the party opposite. The right hon. Member for Lewisham, South, in the debate the other day, told us that the late Labour Government had nationalised the steel industry because it was too cautious in its development policy. As evidence of this he quoted figures to show that, between 1937 and 1951, the steel industry in Britain had expanded less rapidly than in America.
I am sure that the last thing the right hon. Gentleman would have wished to do would have been to be unfair to the record of the steel industry under private enterprise. But by including the war years in the period which he chose for his comparison he gave the House, I am 272 sure inadvertently, a most misleading impression. During the war, when we were cut off from three-quarters of our supplies of iron ore, the expansion of the British steel industry was virtually stopped completely. On the other hand, in the United States the war did not hold up the expansion of the steel industry. In fact, it actively stimulated it—with great advantage to the allied countries.
If then, as I think the House will agree is only fair, we exclude the period of hostilities from the calculation, the British steel industry has no reason to fear comparison with America. In the 20 years between the two wars, the capacity of the American steel industry expanded by about 12 per cent. In Britain, during that same period it increased by no less than 35 per cent.—three times the rate in America. Since the war, despite the inevitable delays in starting again, our rate of expansion has once more been quicker.
§ Mr. Sandys
Incidentally, a most misleading statement was made in the party political broadcast the other night. Between 1945 and 1951, the American steelmaking capacity increased rather less than 20 per cent. During the same period the British steel industry expanded over 25 per cent.
§ Mr. Sandys
I am glad to hear that the hon. Member for Rotherham (Mr. Jack Jones) agrees with me. Perhaps he will tell his hon. Friend.
§ Mr. Sandys
As I was saying, the Americans expanded 20 per cent. and we expanded 25 per cent. since the war.
§ Mr. Sandys
It has not stopped there. Thanks to the expansion which was planned and set on foot at the end of the war under private enterprise, new coke ovens and blast furnaces are now coming into operation, and I am glad to be able to tell the House that the industry confidently expects that next year's steel output will be about one million ingot tons higher than it has ever been before.
§ Mr. Sandys
I do not think the hon. Gentleman will claim that that is the result of nationalisation. The reason for the output of the industry increasing at this moment is that the plans made and started long before nationalisation are now coming to fruition.
§ Mr. Sandys
The House will, I think, agree that this record of continuous expansion and progress does not fit in very well with the right hon. Gentleman's story that the steel industry had to be nationalised because it was dragging its feet so badly under private enterprise. That was an unfair and an altogether unconvincing excuse to cover up the real reason. As I think we all know, the decision to nationalise the steel industry was taken against the better judgment of many in the Labour Party and in the trade union movement.
§ Mr. Sandys
As an act of political appeasement it turned out to be an even greater flop than it has been as an act of industrial policy.
274 As I have already emphasised, the comprehensive scope of the Board's supervision is, in our opinion, one of the great advantages which the proposals embodied in this Bill offer over the present system.
§ Mr. Mikardo
The right hon. Gentleman has just spent quite a lot of time describing the powers of the Board over the companies in selling prices, in raw material supplies and in development. How does he reconcile that with his having said earlier that the object of the Bill is to restore independence to the private companies?
§ Mr. Sandys
What I said was that we were trying to restore the stimulus of private enterprise coupled with the safeguards of public supervision; that has been our policy throughout.
§ Mr. Sandys
I was emphasising the importance we attach to the comprehensive scope of the Board's supervision. Instead of public ownership of one part of the industry, there will now be public supervision of the whole. That is why we cannot accept the suggestion which has been made in some quarters that founders should be excluded from the scheme.
§ Mr. Sandys
I will explain, if I may. The foundries are an important part of the iron and steel industry. During the war they came under the Iron and Steel Control, and after the war they came under the supervision of the Iron and Steel Board. The founders use the same raw materials as the steel makers; in fact they consume about one-quarter of the total supplies of the country of pig iron and scrap. To ensure that they get their fair share of available materials, it is essential that the founders should be in the club, and, when we come to appoint the new Board, it is our intention to include at least one Member who has foundry experience.
275 The Council of Iron Foundry Associations, the principal trade association in this industry, whose members together account for about 75 per cent. of the iron foundry production of this country, has throughout expressed its agreement with the Government's policy. Recently, this Council took a vote amongst its members on this question. Although there was not unanimity, the attitude of the Council was endorsed by 11 out of the 15 constituent associations, representing a very large majority, whether we measure it by firms or by output. That was a most decisive vote. Incidentally, it may interest hon. Members opposite to know that the voting system did not have to be altered to produce this result.
I am, of course, aware that misgivings have been expressed by a certain number of firms about the Board's powers over prices and development. There is really nothing new about price control of foundry products. A limited number of them have been price-controlled for over a decade. It is certainly not our object to extend the field. Nor is there any reason to suppose that the new Board would wish to do so. But I understand the anxieties which exist, and if we can remove them, we shall be glad to do so. We are, therefore, prepared to consider, during the Committee stage, methods by which we can restrict the Board's powers to extend the area of price control. In other words, to restrict the Board's price-control powers to the very limited range of products which are at present price-controlled. I think that may allay the anxieties of many who have misgivings on this score.
As for development, the Board will, of course, have a general duty to keep the progress of the industry under review. I should like to emphasise, as it does not seem to be generally understood, that its consent to development plans has to be obtained only in the case of schemes of such magnitude as to affect the balance of the industry. What we have in mind are big expansion schemes in the heavy end of the industry, costing many millions of pounds. It is extremely unlikely that any foundry development scheme will ever be big enough to bring it within the scope of the Board's powers, which are defined by Clause 5 (2 and 3).
276 I was, therefore, rather surprised to see in a newspaper the other day a letter from an industrialist, whose firm has a tied foundry, in which he said that, if the Bill went through, no founder would be able to put up so much as a wooden bench without first filling in a form. He and others who are so busily mobilising opposition on this question would, I think, be very greatly reassured if they could find time to read the Bill.
I am convinced that the majority of the founders are right in thinking that it is in their best interest to be included in the scheme. On the other hand, I sympathise with those who are anxious to be protected against the gentleman in Whitehall. It is the very essence of this Bill that companies should be free to manage their own affairs with the minimum of control necessary to safeguard the public interest—[An HON. MEMBER: "And their profits."] Therefore, provided that they do not impair the comprehensive scope of the Board's supervision, to which, as I have said, we attach great importance, we shall be glad to consider in Committee Amendments designed to remove genuine doubts or to stop unintended loopholes for bureaucracy.
§ Mr. George Chetwynd (Stockton-on-Tees)
Can the right hon. Gentleman say whether these firms are to be liable to the general levy procedure, and how, if we are to have the Guillotine in the Committee stage, can he guarantee that we shall have adequate discussion of this matter?
§ Mr. Sandys
I have not heard any announcement about Time-table resolutions.
I come now to the problems involved in returning the companies to private ownership. As the Bill makes clear, we intend to give to the Realisation Agency, subject to Treasury approval, as much latitude as possible to carry out its selling operations as and when it thinks best. It would be wrong for me to say anything this afternoon which might appear to prejudge the decisions of the Agency. There are, however, a number of misunderstandings which I should like to clear up.
The party opposite have repeatedly said that the Agency will only be able to find buyers for the more up-to-date and profitable plants, and that the State will be left holding all the obsolescent works. In 277 fact, they say that private enterprise will just skim off the cream. But, in the same breath, they accuse us of intending to sell off the steel industry at knockdown prices, regardless of the loss of public money.
These two lines of argument largely cancel one another out. [HON. MEMBERS: "No."] They do. If we were really prepared to sell the industry for a song, there would be no difficulty in finding buyers for the whole lot at once. If we have any difficulty in finding buyers, it will be because we shall insist on fair prices—fair to the State and fair to the investors.
The right hon. Gentleman the Member for Vauxhall complained that, until the selling operations were completed, the industry would be divided into two classes of companies—State-owned and privately-owned. This is an extraordinary complaint to come from the right hon. Gentleman, considering that his Government were responsible for the 1949 Act, which split the industry in two and that we are trying to unify it again. Supposing that, for a while, a certain number of companies remain in the hands of the Agency, there will be no great harm in that.
The most important and urgent thing, as we see it, is not the sale of the last company but the ending of the present State monopoly in the basic sector of the industry. This will be achieved as soon as a substantial proportion of the companies have been sold and diverse ownership has thus been re-established.
What is more, the split in the industry will become much less marked when the Board has been set up. All iron and steel production, whether carried on by State-owned or privately-owned companies, will then come under the supervision of the Board. This will at once remove one of the more serious weaknesses of the present system, namely, the absence of any co-ordinating machinery embracing the iron and steel industry as a whole.
Another suggestion made by the party opposite is that there will be no money for development. While the companies continue to be owned by the State, it is very probable that there will be difficulty in raising money from outside to finance them. That is why the Bill empowers the 278 Agency to provide finance for companies whose shares it holds. But we are told—I think an hon. Member opposite told us—that this would be using public funds to create future private profit. All I would say is that any money provided will be on terms satisfactory to the Chancellor of the Exchequer—who is usually able to look after himself—and that the prices at which those shares will eventually be sold will take into account any increased value which may have been created.
The most important consideration as we see it, is that development should not be held up. If we were to neglect any steps, including the necessary financial measures, to ensure the smooth and continuous progress of development, the Opposition would be the first to condemn us, and rightly so.
When the companies are returned to private ownership they will, of course, have to find finance for themselves, as they did before nationalisation. It is estimated that between £50 million and £60 million a year will be needed over the next few years for maintenance and development. A substantial part of this will come from depreciation and ploughed back profits. The balance will have to be found from outside. But I really do not see that this will present an insuperable problem. The steel industry—I take up a point made by an hon. Member earlier—financed its great post-war development and expansion, costing about £320 million, without help from the Government.
§ Mr. Mikardo
Surely the right hon. Gentleman will not pretend that the steel industry stood on its own feet for capital development when the £50 million issue of the Steel Company of Wales had to be underwritten to the extent of £35 million by a semi-public financial agency?
§ Mr. Sandys
Not at all; there was no Government money involved in it. If the hon. Gentleman is referring to the Finance Corporation for Industry, that still exists and will continue to do so. Other great industries are able to find large sums of money for their development schemes, and there is absolutely no reason why the steel industry should not be able to do the same.
Finally, I should like to say that, in framing this Bill, we have deliberately 279 adopted a moderate, middle course, not as a compromise solution to a political controversy but as a common sense solution to an industrial problem. The Bill, unlike the 1949 Act, is not based on a political theory but on industrial experience and practice. Our plan is to give statutory form to methods of co-operation between the industry and the Government which have been progressively evolved over the last 20 years. That is a firm foundation on which to build; and it gives us confidence that when the smoke of Parliamentary battle has blown away this Bill will be seen to offer a sound basis for a lasting settlement.
§ 4.46 p.m.
§ Mr. G. R. Strauss (Vauxhall)
We have listened to an interesting and clearly delivered speech from the Minister of Supply. I think that the House, or at all events a large section of it, will agree with me that his speech was characterised less by argument than by assertion. He made a number of statements in support of his proposals which he did not support with fact or argument. I propose, in the course of my remarks, to deal with some of those assertions.
Many Members of the House will also agree that the Minister's speech was really not a very convincing one. He was labouring a great deal in order to try to make a case, to try to show why the proposals contained in the Bill, which are so obviously subject to criticism from every angle, should be acceptable to this House. The most extraordinary statement he made was at the end of his speech, when he suggested that the proposals in the Bill presented a middle course, after having told us, as is correct, that the purpose of the Bill and its result will be to return this industry to private ownership; and that the Board which is to control it will have as little authority or powers as possible.
§ Mr. Strauss
The hon. Member says "As necessary." As I hope to show, these powers will be negligible.
This is not a middle course. This is a return to the status before nationalisation. It is putting this basic industry back under private ownership and control, and, from our point of view, is wholly objectionable.
280 Before entering into the details of the Bill and the principle involved, I wish to make one other comment about the Minister's speech. He told us with some pride that the industry was next year to produce, it is hoped, one million tons more than this year. We are all delighted to know that that is so, but it is really ridiculous for him to suggest that that is because of some virtue inherent in private ownership. It is nothing of the sort.
After the war, when the industry had been unable to develop and extend, a big scheme of development was put forward, was accepted by the Government, and the Government saw to it that priority of national resources should be given to the industry to enable it to expand according to that programme. As we know, the whole of that programme was not completed or even started. It did progress and we did everything we could to help it. It is true that today the industry is expanding, in output and profits, and we are told that it will expand still more next year.
Surely the point is that all this is happening under nationalisation. We do not for a moment claim that this great expansion is due to changes brought about by nationalisation, although I claim that many changes have been brought about which are beneficial. Nevertheless, an industry which is expanding in this remarkable way—a way which justifies the right hon. Gentleman speaking about it with pride—is doing very well. An industry which is doing so very well should not be tinkered about with and upset because of the political views and prejudices of the party in power.
§ Mr. Sandys
Since the right hon. Gentleman is now joining in the praise of the industry, does he support the view expressed by his right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) that the industry was doing so badly two years ago that it had to be nationalised?
§ Mr. Strauss
I do not think my right hon. Friend said that at all. I think he said—and I endorse it—that the record of the industry is such, and its importance to our national economy is such, that it is essential to bring it under full public control and authority.
281 Before I come to the details of the Bill, I want to make quite clear—although I think it is already quite clear—that we on this side of the House are opposed to the Bill in principle because we believe it is contrary to the national interest to transfer this iron and steel industry from public to private ownership. This principle has been argued in the House so often before that I do not intend to take up any time arguing it again today. I must, however, say this. In our view it is indefensible for the control of this industry—on which depends our economy, the fate of townships and the livelihood of hundreds of thousands of employees—to rest in the hands of people with no public responsibility.
For example, when the people of Jarrow were suffering from widespread unemployment and all the demoralisation and malnutrition which goes with it, it was morally and socially wrong that a decision as to whether a new steel works should be built there should have been made by directors of other steel works responsible only to their shareholders rather than by the Government of the day, responsible to Parliament. We believe that it is equally wrong that people with no public responsibility should have the power to decide where and when steel works are to be closed and whole communities rendered derelict. It is wrong that decisions on such matters should be dictated by private profit interests.
It is our belief, also, that the defects of our iron and steel industry—and they are serious—can only be removed through common ownership of all the large plants. These defects have been clearly stated in the conclusions of the Iron and Steel Team of the Anglo-American Council for Productivity. They report at considerable length that in their view in this country there is too great a dispersal of production facilities and that the production units are too small.
We consider, and I think it is plain, that these defects cannot be removed without eliminating the conflicting vested interests of the companies concerned, large and small. Only then can reorganisation take place based on national plans, unhindered by sectional obstruction. That, of course, means single ownership and I think it is accepted, even on the other side of the House, that a single ownership of this great industry 282 is only tolerable under full Parliamentary control.
Next, we say that de-nationalisation, which is bound to disturb and dislocate this industry, cannot possibly be justified without evidence to show that the industry has in some way suffered from nationalisation. No such evidence has been produced in any debate on this industry—it has not been produced by the Minister of Supply today—for the simple reason that there is no such evidence. On the contrary, the industry, as we know, is flourishing. Its production is greater than ever; it will be greater, we are told, next year. Its profits are greater than ever and it is in a more prosperous condition than at any time in its history. So far from nationalisation having damaged the industry, I have on several occasions recounted to the House facts showing how the industry has benefited already—in small ways it is true but in significant ways—from nationalisation, and these facts no one has denied.
Moreover, the iron and steel industry has adapted itself to the new machinery established by the nationalisation Act. That machinery is working well. I believe, and I do not say this without some knowledge of the industry and those who work in it, that, by and large, managements—relieved, perhaps to find that the tiresome interference in their affairs which they were told by Conservative spokesmen would follow nationalisation has not happened—are content with the new set-up. In any case, I am certain that most of them would far rather that the industry should be left in peace than that it should suffer from the upsetting and long-term uncertainty that will follow the enactment of this de-nationalisation Bill.
It is for these reasons that we oppose the Bill in principle irrespective of the demerits of the detailed provisions in it, which are many, and we say that the Government, in bringing it forward, are sacrificing the true interests of the iron and steel industry to please their political supporters.
I now want to consider some of those detailed provisions. To carry out the intentions of the Government, as we have been told today, it is proposed to set up two bodies, an agency for selling the companies to private owners and a Board to 283 provide, in the words of the White Paper, a measure of adequate supervision for the industry. The selling agency is to be called by the clumsy name of the Iron and Steel Holding and Realisation Agency. I should have thought it would be much simpler just to call it "The Sellout Agency." It is to be appointed by the Treasury. Curiously, we are not told much, indeed we are not told anything, about its membership or constitution except that it is to consist of six people.
I should like to ask whoever is to reply to the debate to tell us a little more about this agency. Will it consist of Treasury officials only, or in part? Will there be outsiders on it, businessmen, accountants, or anyone actively engaged in the industry? Until we have an answer to these questions, further comment is impossible, except to point out that it is to be entirely responsible to the Treasury. The Board will have such powers as are granted by this Bill and be responsible to the Minister of Supply. This surely will give rise to unlimited confusion.
For example, companies, desirous of undertaking development schemes and wishing to raise large amounts of capital for that purpose, presumably will have to apply both to the Board and to the agency, or maybe to the Minister of Supply and to the Chancellor of the Exchequer as well in cases of dispute. That, obviously, is a ridiculous situation. We should like to know how the Government propose, if they have considered this matter at all, to avoid such difficulties as seems to us bound to result from this dual responsibility.
I know that my hon. Friends want to raise a number of points about the disposal of the iron and steel companies. I want to make only one comment on a point discussed to some extent today by the Minister of Supply, but in a way which was wholly unsatisfactory to us. That is the split in the basic section of the industry which will inevitably occur as a result of this selling out scheme. I do not think it has been denied—it was not denied by the Minister today—that there will be great difficulty in selling off these companies. That certainly is accepted in the City and in the entire financial Press.
Is it not, therefore, bound to happen that those units which can be sold will be the profitable, up-to-date and modern ones, 284 and those which are not profitable but are comparatively inefficient will remain in public hands? That has not been denied.
§ Mr. Summers
Are we to understand from the argument of the right hon. Member that the up-to-date works are assumed by him to be the most profitable?
§ Mr. Strauss
Broadly speaking, but not necessarily, of course. If the hon. Gentleman prefers it, let me say that it will be the profitable ones that will be sold off into private hands and the unprofitable ones that will be left in public hands.
We want to be told by the Government whether such a division of the industry would not be wholly bad, politically and socially, whether it would not be indefensible, and whether it will not mean profits for the boys and losses for the taxpayers. We expect, and, no doubt, the Government expect, that if this happens, lovely speeches will be made by Conservative back benchers comparing the apparent efficiency of the companies in private hands with those that will remain in public hands. No doubt some hon. Gentlemen opposite are already preparing speeches on that theme.
We are entitled to ask for further comment on this point, too. Is it the Government's intention, and, if so, they should say so, that through a levy or similar device the profitable, privately-owned companies will be asked to subsidise the publicly-owned companies to an unspecified and unlimited extent? If this is the proposal, will the private owners submit to it, and for how long, and to what extent will this lessen the price that they will be prepared to pay for the companies they buy?
I come to the Board, the other body to be set up under the Bill, and whose duty it will be to maintain adequate public supervision over the industry. I say straight away that in our view the proposed Board is a sham and that the supervision it will exercise will be neither public nor adequate. First, I invite the House to consider for a moment the proposed scope of the Board's supervision.
The Labour Government came to the conclusion that it would be possible to 285 achieve all that was needed to make this basic industry serve the nation to the full, by an effective control over the kernel of the industry. The Corporation was, therefore, given, by virtue of ownership, the necessary authority over the 92 major iron and steel producers. These companies produced between them last year 97.4 per cent. of all the iron ore mined in this country, 97.1 per cent. of the pig iron produced, 98.7 per cent. of the steel ingots, 90.6 per cent. of the alloy steel ingots, 97.3 per cent. of the plates, 93.4 per cent. of the sheet, and 99.6 per cent. of the heavy sections, bars, rails, etc., together with a large percentage of the other major products of this industry.
There was no division of the basic iron and steel industry under our scheme. It was our deliberate policy to limit the area of public control, but in this area public control was absolute. We did not like, and do not like, the blurring of public and private responsibility, and, therefore, we left outside the ambit of the Corporation's authority the ancillary iron and steel industries such as the founders and the re-rollers, except those who were already integrated with the publicly-owned companies.
Her Majesty's present Government take a different view. The Minister of Supply told us recently, and told us again today, that our structure created an artificial division in the industry, and that any body controlling or supervising the basic iron and steel section must also supervise the founders, and presumably the re-rollers, which, altogether, comprise 2,400 firms. I am still doubtful whether we were not right when, in framing the Bill, we believed that by co-ordinating machinery the difficulty of the distribution of raw materials, and so on, could be easily overcome. Nevertheless, the present Government, no doubt after careful thought, have decided that to ensure adequate public supervision over this industry these 2,400 firms must be brought in.
We shall have to consider that situation when we re-nationalise the industry. It will be difficult to ignore the views of Her Majesty's present Government on this matter. If we bring into the scope of the re-nationalised industries some or all of these firms, we shall be fortified by the knowledge that the then Tory Opposition 286 cannot logically oppose us. It is, no doubt, just because many founders and re-rollers have appreciated this that they are so violently opposing the Government on this aspect of the proposals. Probably their condemnation of the Government is even more vehement in private than it has been in public.
I sympathise with them, when they criticise the Government for putting these foundries and re-rollers, many of which are only part of an engineering works, under the proposed Board. It is because at that time we shared their view that we did not do so. Now we are told by the Conservative Party that we were wrong and that they should be in. As that conclusion conies from the party whose motto is, "Set the people free and reduce the shackles on industry," we are impressed. When we come to re-nationalise the industry we may feel impelled to act on their advice.
Let us examine the duties of the Board and compare them with the powers they will have with which to implement them. The duties of the Board are set out in Clause 3 and they are comprehensive and onerous. They will have to supervise the industry—and here I quote the Clause—with a view to promoting the efficient, economic and adequate supply under competitive conditions, of iron and steel products.Note the word "promoting," which has a very positive meaning.
The first thing to appreciate is that the duties given to the Board are immensely wider than those ever performed by the old Board set up as a stopgap measure by the Labour Government, and often called the Forbes Board, after Sir Archibald Forbes, its chairman. The duties given to the new Board are exactly those we gave to the Corporation under our nationalisation Bill. The difference is that the Corporation was concerned with 92 companies and had all the powers necessary to carry out its duties, while the board, under the Bill, will be concerned with 2,400 companies and will have virtually no powers at all.
I will tell the House what powers the Board will possess. First of all, the Board can get the information it desires from the companies within its ambit. That is not much use, it will be agreed, unless the Board is able to do something with the information. Secondly, it can promote research and education. That 287 is all right, but in fact of not much value because research is already well organised by the industry, and good training schemes are fairly general. Thirdly, the Board can fix maximum prices. Incidentally this will be for producers only and not for stockists, merchants or importers. There is obviously an immense loophole here.
The Minister has already full powers to fix maximum prices. My comment on the observation of the hon. Gentleman about the difficulty of the Corporation fixing prices, and the ease with which the Board will be able to do so, is that, in my view, a great deal is to be said in an industry such as this for the power of fixing prices to rest with the Minister in any case, rather than with any other body. Fourthly, the Board can impose a levy scheme on the industry. Such a scheme has existed for many years and exists today. There is nothing new, certainly nothing constructive, here.
It will be obvious to the House that none of these powers will enable the Board to carry out in the slightest degree the positive duties with which it is charged, of promoting—I repeat the word "promoting"—the efficient, economic and adequate supply of iron and steel products. The Board will possess only one other weapon, and the Minister attaches great importance to it. It is the power to stop—note "stop"—development schemes; not any development scheme, but one which might substantially and seriously—these are the words in the Bill—affect the production facilities of the country.
How fruitful, how dynamic, how inspired! Or is it not ridiculous that these powers, and only these powers, should be granted to a Board charged with such onerous and serious duties? And is it not a fact that these powers are not only unrelated to the duties with which the Board is charged but to the real problems of this industry?
I say, therefore, that this Board as a measure of adequate public supervision responsible for promoting efficient and adequate production in this industry, is a sham. It is a piece of calculated deception and an attempt to trick Parliament and the country into the belief that there is to be some effective control over this industry once it passes into private 288 hands. It is granted no authority whatsoever to ask any unit in the industry to do anything—to re-organise or anything else—which that unit does not want to do.
Incidentally, even the power given to the Board to stop development is wholly inadequate for the limited objective which the Government appears to have in mind, for the Board will have no power to prevent a series of individual small schemes being put into operation among, for example, re-rollers, the most profitable part of the industry, which in total might be considerable and upset the balance of industry. Moreover the Board will have no power to prevent possibly millions of pounds being spent on the reconstruction of existing works however much it may be convinced that in the national interest the resources required could be better used elsewhere.
I hope that the Minister who replies to this debate will tell us rather more than is contained in Clause 2 of the Bill about the constitution of the Board and how it is intended to function. Will any members be full-time, apart from the Chairman, and if so, how many? In our view, they certainly should be full-time if they are to fulfil the heavy responsibilites placed on them by the Bill. Will they be actively engaged in the industry and be expected to devote just their spare time to its work? In our opinion, that would be indefensible on a number of grounds.
What kind of staff will the Board employ? The scores, indeed hundreds, necessary to exercise effective supervision over these 2,400 firms? Or will it consist of a clerk or two seconded from Steel House? In short, is it intended that the Board, with these vast wider responsibilities, should be similar to the old Forbes Board, whose members were mostly working in the industry and who met about once a fortnight and had practically no staff of their own?
I believe that is really the intention of the Government. I believe that the Government are trying to imitate what the Labour Government did—a flattering but foolish thing to do under entirely different circumstances. I believe, too, that the Government have no desire—and the industry naturally supports them in this—to permit a Board to come into existence which will have any effective authority or any control over the affairs of the industry.
Mr. Gerald Nahum (Kidderminster)
Are we to infer from the views of the right hon. Gentleman on the composition of the Board that he is in favour of a Board comprised of only full-time members?
§ Mr. Strauss
Not necessarily. I believe that the majority should be full-time, but it may be desirable for some to be drawn from the industry and to serve part-time.
§ Mr. Nabarro
If I may interrupt the right hon. Gentleman a second time, in the case of the electricity industry, which provides a close analogy in this respect, the party opposite set up a Board with only four full-time members and eight part-time members.
§ Mr. Strauss
The conditions were very different. I am, however, giving my view that the majority of the Board should be full-time members. The Forbes Board, which has been frequently quoted as an example by hon. Members opposite, including the Prime Minister, had to operate within a narrow compass and within that narrow compass it did its job satisfactorily. But if it is thought that the views I am expressing, either about that Board, or the new Board which is to be set up in imitation of it, are biased I invite hon. Members opposite to consider the comments made by a paper of standing in the financial and business world, a paper which cannot possibly be accused of anti-Government bias. That paper is the "Statist."
In its issue of 15th November it said:Behind the creation of this body"—that is the new Board—is a good deal of political expediency. The current glorification of the original Forbes Board, set up in 1946 and which collapsed when the decision to nationalise was finally announced is just a little disingenuous. It is well known in the industry that during these three or four years effective control remained at Steel House where all important decisions were really made.As the Minister responsible for the Board for most of the time, I broadly endorse that comment.
I also ask the House to consider another short extract from the 1st November issue of that paper:The possibilities of friction if the Board tries to behave as if it knows its job and its own mind would appear to be endless. Yet the terms of the Bill make it difficult to 290 believe that the Board would be in a position effectively to exercise the supervisory functions which it has been authorised to perform. In the circumstances the Board would become either an ineffective nuisance or a mere rubber stamp for the trade associations.
§ Mr. Strauss
Of course that is what the Government intend. I add this, that I do not believe any person outside party controversies who reads the Bill can come to any other conclusion than that stated in the extracts I have read.
The House may remember that during the debate on the White Paper the Parliamentary Secretary made the point that it was not necessary for this Board to have much power because we could rely on the co-operation of the industry. The Minister of Supply endorsed that point of view today. I wonder if they really believe that. I wonder whether they are really as innocent as all that. If they are, and if they really believe that they can rely in all important matters on the co-operation of the iron and steel industry, let me tell them that whatever good will there may be in individual managers or individual leaders of the industry, the industry as a whole—if experience is any guide—dominated, as it is by Steel House, will co-operate just as far as suits it and not one inch further. On the contrary, if it is asked to do anything it does not want to do, it will, if necessary, thwart the Board, defy the Minister and try to sabotage an Act of Parliament. The present Government, whose Ministers endorsed the action of the steel industry on such occasions in the past, knows perfectly well that this is true.
The Government have made some play with the power of the Minister under the Bill to operate a plant if he considers it to be desirable and the industry thinks it commercially unsound to do so on its own account out of its own funds. This provision is, no doubt, put in to answer the criticism which has been made, and which will continue to be made, that the powers provided by this Bill are entirely negative.
I submit that this provision is a sham, too, and I will tell the House why. Indeed, the Minister himself has told the House—no doubt he did so with a desire not to frighten the iron and steel industry—that only on grounds of strategic interest would these powers be operated. 291 He said, on 23rd October:I do not believe that that power will often be needed or used, except in very rare cases where it is needed on strategic grounds.Before touching the strategic point, he said:If the Government wish to undertake a scheme which is uneconomic, then it is up to the Government to pay for it. I personally do not believe that this kind of case will happen."—[OFFICIAL REPORT, 23rd October, 1952; Vol. 505, c. 1293.]Of course, it will not happen. It is inconceivable that having been told by Steel House that the building of additional plant will provide too much production and too much competition, and will threaten the output and the profits of the existing privately owned plants, this Government would proceed with such an undertaking.
There is this further point. Normally, the most useful way of increasing capacity is by modernising existing plants, and not in building new ones. Under the Bill the Minister is given no power to do that, nor, of course, as we know, have he or the Board any power to compel any company to do so.
There is a related point on which I should like to make a comment. It arises under Clause 9. If at any time the Board consider that the existing arrangements for importing iron and steel raw materials and their distribution are unsatisfactory, they can make arrangements to do so themselves. The organisations at present responsible for importing and distributing iron and steel materials are called B.I.S.C. (Ore) and B.I.S.C., both agencies of Steel House. It is significant that whereas the Board can get such information as they require from the iron and steel companies under their authority, they can get no such information from these two vital organisations, on which the whole welfare of the industry depends. Steel House and everything to do with it is, apparently, to remain sacrosanct.
Supposing, however, that by some way or other the Board do get the information which they require and they decide that these organisations must be improved—as the Corporation did, finding them seriously deficient; supposing the Board find them deficient in any way, they have no power to take over B.I.S.C. (Ore) or B.I.S.C. All that the Board will be able 292 to do would be to set up themselves their own agency for importing and distributing the raw materials of iron and steel. I cannot believe that the Government seriously believe it to be practical for the Board to set up their own purchasing and importing organisation, which would duplicate and compete with the existing ones. I suggest, therefore, that this power in the Bill is also a bit of window dressing.
The last thing I want to say about the Bill today—no doubt I shall have many opportunities of saying other things on other occasions—is that it contains a curious phrase in the opening sentence of Clause 3, to which attention should be drawn because it is wholly misleading. The Board's duties are set out in the Clause—I have quoted the sentence once, but must quote it again—to be as follows:to exercise a general supervision over the iron and steel industry, with a view to promoting the efficient, economic and adequate supply under competitive conditions of iron and steel products. …"Under competitive conditions" are the words to which I want to draw attention. They only make sense on the assumption that those responsible for the Bill have either deliberately inserted them for propaganda purposes or are suffering from the delusion that the industry is not now being operated under competitive conditions similar to those on which they were operating before nationalisation.
It may well be—I can quite believe it when remembering some of the comments made by the Prime Minister when we were discussing the de-nationalisation of road haulage—that the Prime Minister himself has been so misinformed on this subject that he is seriously of the opinion that the industry today is a tight monopoly under the Corporation and that there is no competition. It may be for that reason that he has insisted on bringing the Bill before the House. If so, it is my very happy duty to disillusion him, and then, perhaps, he will withdraw it.
The fact is that today, under the Labour Government's nationalisation scheme, every steelworks which the Corporation possess is independently run, on commercial lines, by its own board of directors, and can compete with every other steelworks in the prices it charges, the quality of its products and the delivery date it promises, in exactly the same way as before nationalisation.
293 What more competition do the Government want? What more competition are the Board expected by the Government to achieve? These words, presumably, are put in the Bill for some purpose, and I hope that someone will tell us why they are there. If we cannot have some proper explanation, the only possible conclusion which we can draw is that these words have been inserted irresponsibly and unscrupulously for propaganda purposes to provide a plausible excuse for handing this public property over to private owners.
So much for the Bill. I have attempted to show that apart from the principle involved, which divides the parties, the method by which the Government propose to carry out the denationalisation of this industry is open to serious objection on technical as well as on political grounds. We are not alone in our view. The Minister of Supply has, no doubt, read, probably with some concern and anxiety, the criticisms recently expressed in the letter columns of "The Times." In case any Member of the House missed the letter published yesterday from Sir Albert Herbert, the Chairman of the great machine tool firm of that name, I will quote an extract from it.
After endorsing the critical view previously expressed by representatives of a large number of foundry firms, he said this:Actually, I go further and question whether de-nationalisation of the steel industry is worth while. It might, indeed, be better to accept the fait accompli of nationalisation and thus to avoid the bitter controversies and the vast amount of work which the Bill will involve, if it becomes an Act.
§ Mr. Strauss
Is that not true? That is the view of a Conservative. Would it not be the view of anybody outside the political controversy raging over this subject? Is it not true, also—I hope we may get a reply about this—that the Government, in bringing the Bill before the House, did so in the belief—goodness knows why—that this was a conciliatory Measure which would appease the Opposition; that it would be one to which we would not strongly object and which would afford a permanent settlement of the iron and steel controversy?
We have been told by Ministers that they believed this was so. The situation 294 has now changed. The Government now know that we most emphatically disapprove of the Bill. They know, moreover, that we consider it not only thoroughly bad in principle, but in detail reprehensible, and inspired by the worst political motives. They know, too, that we conceive it our duty at the first opportunity to regroup under public ownership and Parliamentary control all those iron and steel producers essential for the national planning of this industry.
Knowing all these things, the Government should withdraw the Bill, which, in our view, is nothing more than a smart but fruitless attempt to make something disreputable look reputable. But we are not deceived. If the Government persist in continuing with this Measure, then, with all these warnings in mind, they must take full responsibility for all the serious consequences it will have in the steel industry during the years to come. Meanwhile, all we can do is to fight it, to try to amend it drastically in Committee and to ask the House tomorrow to reject its Second Reading.
§ 5.30 p.m.
§ Mr. F. J. Erroll (Altrincham and Sale)
I should like most emphatically to dissociate myself from the remarks about the Bill to which we have just listened from the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) and instead to say to my right hon. Friend the Minister of Supply how much we on this side of the House welcome the appearance of this workmanlike and satisfactory Measure.
§ Mr. Erroll
I should like to assure hon. Members opposite that I very sincerely believe in this Bill and for very many reasons. One reason why I particularly welcome this Bill is that it boldly sets out in its opening Clauses to repeal the 1949 Act, an Act which at the time those of us who were then in Opposition thoroughly deplored and did our best to oppose. Nevertheless, it was steam-rollered through Committee by means of the Guillotine procedure, and 295 we were unable to amend the Bill thoroughly, as we should have liked. We have now in front of us a new Bill which will satisfactorily and adequately repeal that misconceived Measure.
I listened with great interest to what the right hon. Gentleman had to say because his speech, which was as clear and explicit as his speeches usually are, served to underline the great difference in outlook between the two sides of the House. That, of course, is the great difficulty in discussing this Bill, that we are not really so much discussing the merits of one form of control or another for this particular industry, but that one side is discussing how to supervise the industry while the other side is saying that private industry is a bad thing and ought to be removed from iron and steel.
If I may put it in another way, it is very difficult to argue about the merits of the game of cricket if one party to the argument disapproves of the institution of cricket altogether. I feel, therefore, that we should approach the discussion of this Bill from the point of view that we will all support the Government and the Government's belief in the soundness and the suitability of the private enterprise system for the iron and steel industry, because it is upon that belief that our expectations of the workability of this Bill are founded.
We are, if hon. Members opposite like, being as doctrinaire about free enterprise as hon. Members opposite often are about public ownership. Our Bill is founded upon our belief that private enterprise, when allowed to work in the steel industry, will do all we expect of it. We base our own case on that, and if that is wrong then as a party we will suffer defeat at the polls.
§ Mr. Frederick Mulley (Sheffield, Park)
I have read many dissertations on the merits of private enterprise, but I do not believe I have ever heard that it was necessary to supervise private enterprise by setting up a quasi-Government board.
§ Mr. Erroll
I am coming to that very point. I want first to make my initial point, that we believe that the procedure which will result from this Bill will work because the private enterprise system will flourish under the arrangements proposed in this Bill.
296 I want now to turn to the point put by the hon. Member for Sheffield, Park (Mr. Mulley). The question of how to organise this industry is a difficult one, and if I may say so, there are three possible ways of going about it. One is the full-blooded state of public ownership as put into effect by the late Labour Government. At the opposite end is the system of complete laissez faire under which the industry grew to its present stature. Then there is the half-way house of State supervision, while allowing the best elements of private enterprise to have their full sway.
The history of the industry in the interwar years was not happy, and today we are now faced with the difficulty of applying the solutions of the problems of the '30s to the conditions which now prevail in the 1950s. I venture to suggest that the solution of the late '30s was only an imperfect solution, namely, the protection afforded under tariffs and the setting up of the Import Duties Advisory Committee. Mistakes were undoubtedly made, and particularly can we see that when we now have, as we all have, hind-sight and can look back at the events which took place in those days.
But do we want to frame our policy for the 1950s merely on some attempt to correct the mistakes of the '30s? Surely we want to work out a new policy appropriate to the present time. I think the policy of nationalisation might well have been appropriate in the days of the '30s, when the steel companies were faced with the problems of despair, of price cutting, redundant plants, closing down of plants and all the social distress that there followed from that. The problem today is quite different. It is to secure the modernisation and the expansion of this industry and to secure a greater output. Furthermore, we want to get away from the rigid price structure with elaborate systems of levies for home ores as against imported ores, and other devices which rightly were born in the period of restriction and continued through the difficulties of war time.
We want to get away from those things into a freer atmosphere and into a climate in which the best elements of private enterprise can flourish for the good of all, and that is exactly what this Bill sots out to achieve. This Bill sets a stage, so to speak, on which private enterprise 297 can develop and flourish for the good of all. The arrangements, which the right hon. Gentleman the Member for Vauxhall sought to criticise as being too loose and too vague and which in a more lively moment he suggested were disreputable, are quite rightly loose and free because we believe that they should be loose and free in order to get the best out of the system in which we believe.
It may well be that hon. Members opposite would argue that we should not believe in this system, but we do and that is why this Bill is shaped in the way it is. It is the way we believe the industry should go. For my part, I should like to see rather more freedom and rather less supervision in a period such as this. We want the minimum of supervision and the maximum of freedom, but I recognise that in this Bill we have resorted to a compromise. There is considerably more supervision in this Bill than many of us would have written in on our own, but it is a genuine attempt to seek a permanent solution with hon. Members opposite. [HON. MEMBERS: "Oh!"] I am sorry so many hon. Members opposite shake their heads, because I would ask them to remember the amount of nationalisation legislation which we are leaving untouched. We are not going to denationalise electricity, gas or the great coal industry. We are not attempting to denationalise coal.
§ Mr. Erroll
Whether we dare or not is another subject, but the fact is we are not going to do so, and in this particular industry we are only going half-way or perhaps two-thirds of the way towards complete freedom. The reason for that is that many of us on this side of the House would like to secure a permanent and lasting settlement of this matter, and I hope hon. Members will appreciate our motives in that respect.
§ Mr. Erroll
Many of our great industries today are flourishing without supervision of this type and it cannot be said that they are suffering from the freedom which they enjoy. I would mention but two, the shipping industry and the oil industry. Neither of those two requires a board to supervise it or control 298 its prices or decide where its new projects should be sited. They are able to decide these things for themselves and they have decided wisely and well. I wonder why in the House of Commons nowadays we are always so bent upon supervising everybody else. Why must we have all this supervision?
§ Mr. Erroll
We are always supervising other people and that is why we must look very carefully at the question of supervision. I see that Mr. Hardie is coming forth with a scheme for industrialists to supervise the nationalised industries. Perhaps we shall get to the stage where we shall have businessmen supervising some Government activities.
§ Mr. Erroll
We are not debating the brewing industry today. Industries should be allowed as much freedom from supervision as is possible, and if we could only get away from the idea that we must for ever be supervising everybody else the country would do better and so would our industries.
§ Mr. Mikardo
I am fascinated by what the hon. Gentleman is saying. Is he, in effect, giving notice to the Minister that on the Committee stage he will move Amendments to take all the supervision out of the Bill?
§ Mr. Erroll
I am sorry if I have not made myself quite clear. I am compromising with the principles of true freedom in the interest of trying to secure a lasting settlement for this industry. I suggest that we should do very much better if we could let the industry go its own way, just as other industries do with great success, in the changed conditions of the '50s. Close supervision and control may have been necessary in the '30s, and, indeed, in the '40s, but conditions have now changed considerably. However, we are continuing with the idea of a supervisory Board in order that hon. Members opposite may feel that a principle which we know they cherish is still to be retained in the industry.
§ Mr. Erroll
I should certainly like to see the supervision by the Iron and Steel Federation considerably loosened and, if necessary, examined by the Monopolies Commission, if there was to be no alternative form of supervision as now planned in the Bill.
As to the features of the Bill which are particularly concerned with disposals and realisations, I consider it a most valuable development to separate the policy supervision of the industry, since we are agreed that we must have it, from the physical ownership of the companies. The right hon. Gentleman the Member for Vauxhall stressed some of the advantages of a single vast unit, such as the Steel Corporation, with its beginnings of an embryo regional organisation.
From his point of view, and looking at the matter through Socialist eyes, I can see great merits in such a system, but not according to our way of looking at things. We do not believe that produces a satisfactory solution in which the free enterprise principle can flourish. Such a system as he suggested may apply satisfactorily to an organisation like the Post Office, which is relatively stable and static in character, but it is not suitable for a technically evolving industry.
§ Mr. Erroll
It is most noticeable that the behaviour of wholly-owned subsidiary companies in any industrial structure is substantially different from the behaviour of companies whose shares are held by a large number of shareholders. The attitude of the board of directors towards the problems of their company when they are responsible to one single shareholder is quite different from that when they are responsible to a large number of shareholders. [HON. MEMBERS: "Hear, hear."] I am glad that hon. Members opposite agree about that, because there is no doubt that the companies whose directors are responsible to a large number of shareholders behave in a much more responsible manner because they have to pay more heed to what the shareholders may say than when they are responsible to one shareholder. In the latter situation they are often merely managers appointed by the shareholders; in the other case, they are—this is of great importance—responsible for the financial and other policies to a large group of the public.
§ Mr. Erroll
I am not suggesting that shareholders run the companies. The directors run the companies, but the effective supervision of the directors is much more ably realised when there are a large number of shareholders than when there is only one shareholder.
§ Mr. Erroll
I appreciate that the Realisation Agency will be the sole shareholder of a number of companies when the Bill becames an Act, but it is the intention to dispose of the assets of the companies to as wide a number of shareholders as proves possible. I hope that, when the shares come to be disposed of, they will be spread as widely as possible and will be purchased not only by small investors but also by trade union pension funds. [HON. MEMBERS: "Oh!"] As many of them were held by trade union pension funds before, it is understandable that they might like the opportunity of buying them back.
I feel we are entitled to expect that those who believe in the system of private enterprise will help us in spreading the ownership of the steel industry throughout the length and breadth of this land. I deplore the line which has been taken by the right hon. Gentleman the Member for Vauxhall. To suggest, and almost to threaten, that those who act in accordance with an Act of Parliament may subsequently have their shares either confiscated or taken away from them without due and proper compensation—
§ Mr. Jack Jones
Is the hon. Member suggesting that my trade union, which has £1,250,000 in liquid capital assets, and sponsors the public ownership and control of the industry should invest its money in this venture when it knows that the industry is being destroyed?
§ Mr. Erroll
The hon. Member should leave that to the investment manager of his union, who will, no doubt, show good sense. I put it to the right hon. Member for Vauxhall that, although we said many hard things during the passage of the 1949 Act—I said as many hard things as anybody did—we never 301 suggested to those in the industry or to the shareholders that they should try to prevent the operation of the Act once it became law. His conduct has been as reprehensible in the last few weeks and again today as ours would have been if we had, for example, told the managers in the steel plants that they should not co-operate with the new Iron and Steel Corporation.
§ Mr. G. R. Strauss
As the hon. Gentleman surely knows, that is exactly the suggestion which went out from the authority at Steel House to all the leaders in the industry.
§ Mr. Erroll
If the hon. Gentleman cares to give me that informaton, naturally I shall be very glad to receive it. I was dealing with the proceedings in this Chamber and in the Committee Room upstairs. [HON. MEMBERS: "Ah!"] I was dealing with the Parliamentary conduct of the matter. I am not responsible for what Steel House might or might not have done. I am dealing with the conduct of hon. Members, whether on the Government side or on the Opposition side. I suggest that it is most dishonourable to make such implications and references to the future as would seriously embarrass the passage of this Bill. We certainly did not do that when we were in Opposition, although some of us would have liked to have embarrassed the Government of the day in that way.
§ Mr. Arthur Palmer (Cleveland)
Would the hon. Gentleman allow me to put this point to him? Did not the present Financial Secretary to the Treasury talk on one occasion about "quislings in the City"?
§ Mr. Erroll
I am obliged to the hon. Member for Reading, South (Mr. Mikardo) for instructing me how to conduct my speech. I am sure his advice as a time and motion study expert on these matters must be most valuable.
I wish to deal particularly with the activities listed in the Third Schedule of the Bill, because it is plain that there is a certain amount of feeling in the industry over these matters which the right hon. Member for Vauxhall was quick to exploit. He quoted from the letter of a Midland manufacturer who, I think, expressed himself quite unnecessarily strongly on the subject, because he was one of the gentlemen who, when we were in Opposition, was most anxious to secure from us a pledge that we would denationalise the industry as soon as we were returned to power. And now he is suffering from a sharp bout of frozen feet—which is perhaps understandable in view of the weather—
Mr. Deputy-Speaker (Mr. Hopkin Morris)
Order. It is undesirable that there should be these interruptions. There are many hon. Members who are anxious to take part in this debate, and these interruptions should be cut down to a minimum.
Order. It is not a question merely of giving way. It is taking up time which should be devoted to speeches. It is impossible to conduct this debate by way of dialogue in this way. It should be conducted by speeches from one side of the House or the other.
§ Mr. Erroll
You appreciate, Mr. Deputy-Speaker, that I am in the difficulty that if I do not give way to hon. Members opposite I am bound to have my speech heavily interrupted by casual interruptions, and I felt that I ought to give way to an hon. Member from my own side of the House.
I would remind hon. Members on both sides of the House that there should be no interruptions in speeches except by way of personal explanation of any ambiguity. Interruptions which are merely getting in another point of view eat into the time of hon. Members who wish to make other speeches.
§ Mr. Nabarro
I am grateful to my hon. Friend for giving way. I merely wanted to ask him whether he was aware that the change of opinion on the part of the gentleman concerned is probably due to the fact that he is 87 years of age?
§ Mr. Erroll
I am, of course, aware that there is understandable apprehension on the part of a large number of engineering manufacturers when they see some of the activities mentioned in the Third Schedule. I was particularly sorry to see that the right hon. Member for Vauxhall took the point so quickly and turned it to his own advantage, and made the evil suggestion that a future Labour Government might nationalise all the engineering firms who are conducting these processes. I consider that was a most disreputable statement to make and quite unworthy of the right hon. Gentleman. In fact, I should like to challenge him to write that proposal into any Labour Party doctrine pamphlet—
§ Mr. Erroll
—because I am quite sure they would lose the next election on any such statement as that.
§ Mr. G. R. Strauss
I am sorry to interrupt the hon. Gentleman, but he seems to have misunderstood what I said. I said that we must take note of the view of the Conservative Government that we cannot, or should not, divide this industry for the purpose of supervision; and therefore, when we come to re-nationalise, we shall have to take their decision into account and see whether we have to, or should, bring into the nationalisation scheme all, or part, of those whom the Conservative Government consider should come under national supervision.
§ Viscount Hinchingbrooke (Dorset, South)
On a point of order. Seeing that just now, Mr. Deputy-Speaker, you obliged my hon. Friend the Member for Kidderminster (Mr. Nabarro) to resume his seat in the course of a question he was putting to my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), may I ask why you did not do the same to the right hon. Member for Vauxhall (Mr. G. R. Strauss)?
I understood that the right hon. Gentleman was rising to a point of explanation. An explanation of an ambiguity is in order. What I was deploring was the growing practice among hon. Members of interrupting by making interjections and so, in effect, getting in a second speech.
§ Mr. Edward Evans (Lowestoft)
Further to that point of order. Is it in order for an hon. Member to question the motive underlying a decision of the Chair?
§ Mr. Erroll
I hope that now the right hon. Member for Vauxhall will realise what I have been saying, that our idea of supervision is a very different one from his. We believe, not in the restrictive supervision so dear to the hearts of hon. Members opposite, but only in the supervision of general expansion and conditions.
In including certain processes in the Third Schedule we have in mind supervision only of the lightest degree. It may indeed be possible, with regard to foundries, to consider whether we are concerned only with the supervision of the supply of their essential raw material, namely pig iron and scrap, and certainly not with the detailed type of supervision which is what the word means to hon. Members opposite.
At the same time, I hope the Minister will reconsider the word "rolling" in paragraph 5 of the Third Schedule, because as it stands at present, it includes bending by means of rollers, and thus goes considerably wider than I think any of us intended. It would be quite simple to alter the word "rolling" to a more expressive phrase such as that used in the 1949 Act to limit it to the rolling process.
§ Mr. Erroll
Not the rolling of logs, but of steel sections whose cross-sectional areas are thereby altered.
Forging is another process which surely calls for closer definition—[HON. MEMBERS: "Hear, hear."]—hon. Members opposite are quick to see that the word is too widely drawn as it stands at present. As it stands just now, it means that anybody who owns any form of power hammer, such as a steel hammer in a locomotive repair shop, or even in a large garage, would automatically be brought within the supervision of this Bill. I am sure that was not intended, and I am equally sure that it can quite readily be amended so as to limit the application of the phrase to what was originally intended.
I have tried to explain to hon. Members opposite the underlying philosophy of this Bill. I hope that when they come with us on Committee stage they will realise the basis on which we are working and make constructive Amendments, so sharing with us our belief that it may be a permanent solution for the industry.
§ 5.49 p.m.
§ Mr. Alex. Anderson (Motherwell)
I welcome the opportunity to intervene in this debate because the town I represent is the heart of steel production in Scotland. It is a town where private enterprise, which the Minister extolled today and which he is so anxious to restore to power, operated. It is a town which sweated in war-time and starved in peacetime. It is a town which had 54 per cent. of its steel operatives idle at a time when private enterprise in steel was entering into cartels, restricting production and bringing from India coolie-produced iron ore in order to depress wages in this country.
I regret that this Bill has been introduced in this fashion. What we are discussing today is not merely an abstract question of who is to control steel, who is to own the shares in the steel industry; it is a question of the life and happiness of countless men and women who depend on the production of steel. In the area which I represent nobody welcomes this Bill, except a handful of people who have had a stranglehold upon the life of the community for generations.
The managers and operatives have done their best under the new set-up. The 306 users of steel are content with the present distribution—much more content than they were under private enterprise. The traders in the town are happier. There has been a buoyancy since the changeover because the men in the industry have had heart to go to their work with a feeling that they were working for the community. To change all this, without any reasons being adduced, we get this Bill.
It is a mass of contradictions with no leading line through it. It should have been produced by Gilbert, and if music by Sullivan could have been supplied it might have been produced somewhere in the West End. We find the Minister saying that he intends to set the industry free to win dollars. At the same time, he extends the number of firms over which he will have some control from 92 to 2,400. He drags in, in spite of their protests, many small firms who are to be martyred on the altar of Toryism.
He sets up a Board to organise and control the industry with wider powers even than those possessed by the present Board. He charges them with grave and serious responsibilities, gives them duties to perform which would take a lot of performing even with the highest powers, and he carefully draws their teeth so that they can carry out none of the functions he assigns to them. The Minister proposes to have a bargain sale of the steel industry in which the cream will be siphoned off and the rest will be left. That is to be done by an agency responsible to the Treasury and divorced from the body responsible for the control of the industry.
There is no provision in the Bill to say who is to deal with the parts of the industry which are to be left on the Government's hands. Nobody seems to know exactly what is to be the set-up, except that there is indecent haste to send back to the people who formerly controlled steel the profits which are now coming from a much expanded industry.
We in Scotland will feel the change much more than any other part of Britain. This Bill will affect Scotland profoundly and deeply. We have in Scotland a steel industry which is doing well and producing between 2,000,000 and 2,500,000 tons of steel a year. But it is not nearly so well integrated as the industry in the southern parts of this island. 307 Possibly private enterprise in Scotland was not operating so well as it was in England, but we have had undue and unpardonable delay in the attempt to integrate and modernise Scottish steel.
Therefore, we shall be in the position when these businesses are returned to the firms which owned them previously, that we shall no longer be a part of a conception of a united steel industry in Britain. We shall be a section working on our own, facing our geographical and financial difficulties in a way which will give us very grave concern. There are many small plants in Scotland. Those plants have existed because they gave a personal attention or produced a specialised product. Many of these plants will ultimately close down.
The closing down, under a nationalised steel industry, would have been carried out with a due concern for the social implications in the area affected. We in Lanarkshire have bitter memories of what private enterprise in steel did when it was decided to close down plants. I can recollect that a great steel firm in Bellshill, without consultation or consideration, having blackened the landscape of Lanarkshire with bings, decided to shift and to blacken part of the English countryside instead. They left the place derelict, and all the social values that we in local authority work had built up were derelict also.
We have many problems of this nature to face in Lanarkshire. We face the problem that we depend largely on imported scrap, that our native ores have been neglected and our iron industry allowed to die because goods could be bought cheaper from other sources. The real purpose of this Bill is not to get the best out of the steel industry. This is a return to the old system. I have not noticed anything which this Government have done since they took office—
§ Mr. Robson Brown (Esher)
I should be most interested to know what iron ore field in Scotland has been deliberately neglected either before or since the war.
§ Mr. Anderson
There has been a steady retrogression in the production of iron in Lanarkshire and in Ayrshire—
§ Mr. Robson Brown
I have followed what the hon. Gentleman has said 308 closely. I should like some information about iron ore, because what he said disturbed me. It is something of which I had no knowledge whatever.
§ Mr. Anderson
Low grade iron ore is found in various parts of Scotland. Iron ore of a low grade was found with coal. The first iron works in Scotland were put up to exploit that iron ore. That industry was allowed to die with the working out of the coal.
§ Mr. Anderson
And partly the working out of the iron ore, too. That is beside the point. The point is what are we getting at in this Bill. Is this a real and honest attempt to make an industry in which we can take pride, to build up an industry over which there will be public control and inside which there will be happiness for operatives, with service to the community as the main purpose? Or is this an attempt to bring back into power a body of men who have controlled the lives of people in certain areas of this country for generations?
Is this an attempt to relieve them of the responsibility for development inside the industry? Is it an attempt to give them freedom to enter into cartels again, to restrict production and to do all those vicious things which left a blight over a large part of Scotland and England? Already a great Scottish iron master, in a speech in the West of Scotland, has defended the cartel system. He said that he could see the time coming when the cartel system would again operate.
We do not believe in that system. We do not believe that restrictions ever achieve anything.
§ Mr. Anderson
Not even in trade unions. It seems to me that this Bill has no justification except as an attempt to bring back the private profit motive into the steel industry.
§ 6.10 p.m.
§ Mr. Spencer Summers (Aylesbury)
We have just listened to a speech packed with prejudice and sadly lacking in that factual knowledge which I should have thought the House would have preferred to hear from the hon. Member for Motherwell (Mr. Alex Anderson). The 309 hon. Gentleman went so far as to contradict himself. First of all, he complained that under this Bill Scotland would be deprived of that central authority which could intelligently integrate the various units in Scotland, and, in his next sentence, he complained that an unreasonable closing down of works would follow from the plans we are now putting forward. The hon. Gentleman cannot have it both ways.
§ Mr. Alex. Anderson
I am sure that the hon. Gentleman would not like to misrepresent me. I did not suggest that an unreasonable closing down of works would follow, but I believe that when works become seriously uneconomic it is folly to try to keep them open. What I said was that, when closing down takes place under private enterprise, it is done without any consideration being given to its social implications.
§ Mr. Summers
It is precisely to prevent the closing down of works being the sole right of private enterprise that powers of supervision have been given in this Bill.
I want, first of all, in order to satisfy an hon. Member who interrupted me last time, to make the usual declaration of personal interest, which I do before we go any further. The right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) showed quite clearly, by the extravagant language which he used in connection with this Bill, that he starts from a very different point of view to that of hon. Members on this side of the House, which really is the fundamental reason why it has not yet been found possible to build a bridge between the two points of view.
The right hon. Gentleman starts on the assumption that those in control of industry, and, particularly, those in the steel trade, are suspect, and that, for that reason, he is not prepared to give them freedom to operate their own companies, subject to certain safeguards, because of the suspicion with which he views the whole of private enterprise. He finds that system unsatisfactory, and he demands that a system of State ownership should take its place. Let us make no bones about it; we do not share that suspicion that is so frequently voiced from the other side of the House, and it is because of that that we look forward 310 with confidence to being able to work out a satisfactory partnership between the Government and those in control of this industry.
I welcome this Bill, because it seems to me that it will be possible under it for the Government to be able to take part in that strategic planning which it is in the national interest that it should do, while, at the same time, leaving to the management the tactical operation of the day-to-day management of the companies. It is precisely because experience was beginning to show that that was not going to be so that we foresaw the risk of leaving the present situation to operate any longer.
I think the right hon. Gentleman also alluded to the fact that there had been so little change under nationalisation that he could not quite understand the fears which were voiced, for the position, he said, was so different to the fears predicted for nationalisation before it was an accomplished fact. I hope the right hon. Gentleman will read the document, which has been circulated to all of us today, which is written by Mr. Hardie, when he will see that the fears referred to were the fears of an increasing bureaucracy after nationalisation. [Interruption.] If the hon. Gentleman wishes to interrupt, perhaps he will have the courtesy to rise to his feet.
§ Mr. Mikardo
I merely observed—and the hon. Gentleman could hear me quite well—that there is nothing in Mr. Hardie's document in support of the hon. Gentleman's suggestion, and I think he should read it before he quotes it.
§ Mr. Summers
I am not going to be diverted. Anybody who takes the trouble to read this document—and I have done so—will find a reference to duplication and more bureaucracy in the system than anything that could be found elsewhere.
Whatever we may say in this House, I hold the view that many people outside are getting rather tired of some of these controversies. I think they are coming to the conclusion that there is a sector of the British economy which will remain nationalised. That sector is outside the field of controversy. At the other end, it is by common consent agreed—except perhaps by extremists—that a vast variety of miscellaneous manufacturing operations in this country will at no time be 311 nationalised; but that, in the middle, lies a section of the British economy, of which the steel industry is a part, in which there should be a compromise between the extremes of nationalisation and laissez faire which will ensure that the public interest and private enterprise motives are adequately reconciled. It is because I feel that this Bill does that that I believe that, outside the House, it will have a much more favourable reception than has been given to it by Members opposite.
There is one point upon which even those who hope profoundly that this compromise may be a lasting one are some-, what disturbed, and it is one to which I want to allude, namely, the question whether, when this industry is no longer nationalised, it will be possible to raise sufficient capital for its requirements. [Interruption.] An hon. Gentleman thinks it will not; perhaps he will have the courtesy to wait until I have made my remarks. Since the war, over half the capital spent has been found from internal resources, and that has been a very marked contribution to the problem of capital provision.
Reference was made earlier to the additional resources of capital—the finance corporation and the like—which was, somehow, thought to be Government money. Let me make it quite clear that it is not Government money at all, but that it is a perfectly right and proper place for private enterprise to go to for its capital resources, if it so desires.
There are two considerations which I would ask those concerned with the matter to take into account. The second development plan will be a much cheaper one in terms of output per annum than the first stage, because, in a very large number of cases, the foundations for the extensions built in the first plan were carried further, so that a part of the job would be done when further extensions were required. The addition of further extensions will, for that reason, be considerably cheaper than was the case with the first plan.
Secondly, the industry will have the benefit, during the period of development of stage two, of the undistributed profits earned by the plant put up in the first stage, so that, on both these grounds, it will tend to be easier for the industry to finance its own requirements, and I 312 expect that a higher percentage of the capital can be found from internal resources in stage two than it was possible to find, in fact, in stage one. [Interruption.] The hon. Gentleman may take a different view, but I am expressing what I believe to be the facts, and we are all entitled to our own opinions.
Reference has been made to skimming off the cream and leaving the rest behind, and the inference was that there would be—I am not sure if the words "sharp practice" were not used—in regard to the sale of profitable undertakings. What seems to me to be completely ignored in this connection are two facts. First of all, whether or not an undertaking is profitable to the buyer will depend upon the price at which it is offered. Perhaps, one business may make only modest profits, but it may be a very attractive investment if, in fact, the price is cheap enough. Therefore, it is quite impossible to relate the profitability without knowing the price that is going to be charged for these undertakings.
It may be—a view with which hon. Members opposite differ—that the plant which has been put up most recently will remain in public hands the longest. The Steel Company of Wales has cost very large sums of money and is at a particular disadvantage in that it is not able to marry the results of that vast expenditure with a very considerable quantity of older plant put down at a time when captial expenditure was much cheaper. The exceptionally high proportion of new plant in that case will make it a much more difficult proposition to finance and maintain on that account.
If that happens, there will surely be no complaint from hon. Members opposite because they have criticised the industry for not spending enough money on modernisation, and if they find that such plant is left in the public sector of the industry, I am sure they will be only too delighted.
I now want to say a word about the scope and function of the Board. In his speech, the Minister alluded to the worries of the foundry industry and mentioned that they were concerned lest the Board should interfere unreasonably with the development of their plants. I cannot think that there is any justification for such fears when one reads the particular Clause under which the Board would have 313 the right to do that. It can hardly be imagined that the modest changes which will be made in most cases willprejudice the economic development of productive facilities in Great Britain.A letter in one newspaper said that it would be unfortunate if one part of a large foundry works had to operate on a different system from that obtaining in the rest of the works owing to the powers of supervision of the Board. That is a complete misunderstanding of the intentions of the Government under this Bill. It is not intended that the Board should concern itself with the day-to-day management of individual plants, but only with the strategic supervision of policy.
Having said that, and holding the view that these fears are unfounded—because it will not be proper for the Board in most instances to worry the foundries on those grounds—it follows that, without destroying the benefits of the Bill, it should be possible to cut out from certain specific duties of the Board their application to the smaller foundries in a very large number of cases, if only on the grounds of administrative convenience. I should have said there was a lot to be said for that.
I cannot agree with the argument—obviously used to escape from the consequences of the Bill—that a foundry which produces only for itself should on those grounds be excluded from the provisions of the Bill. In the first instance, a blast furnace might be established primarily to supply its products not for sale generally, but for the company that built it. In that sense, it is a tied blast furnace.
For instance, it would be perfectly possible for a sheet mill to be established for the benefit of the motor trade and for producing all that that trade needed. If that is to be the reason for excluding such a mill from the provisions of this Bill, it means that on that account it would be outside the purview of the Board. Therefore, I cannot agree that the argument for the tied firm is a valid one.
§ Mr. Summers
So far as this suggestion and the apparent threat of the hon. Member for Reading (Mr. Mikardo), who persists in muttering instead of getting to his feet, is concerned, namely, that this 314 Bill is an invitation to a future Labour Government to nationalise them, the party opposite know quite well that if in power in future they do not require to take what they call a leaf out of the Conservative Party's book to do that. They will follow their own views. They did not take a leaf out of the Tory Party's book on the last occasion, and will not do so next time. This is just bluff for the benefit of this debate.
Lastly, I want to draw attention to the fact that among the duties of the Board, which are particularly listed in Clause 3, no mention is made of marketing. The Board is given the duty of supervising development, prices, research, welfare, and such matters, but nothing is said about marketing. I should have thought it was essential for the Board, in order properly to do its job, to supervise the marketing arrangements of the private concerns, particularly if a time should arrive when it would be in the national interest that this country should co-operate with Continental countries in the export market.
I do not regret that we are not members of the Schuman group, but I think that the time may well come when this country will wish to co-operate with the Schuman countries in the same way as between the wars we were associated as a group with Continental producers. Indeed, I am sure that the time will come when the producers of this country will want to make arrangements with the producers of the Schuman group.
I hope that when we reach the Committee stage it will be possible to insert words into the Bill to make it clear that the Board will be the instrument used by the Government for any ideas they might have in that field. In conclusion, I hope that when this Bill is passed and the present party controversy, which is inevitably aroused on an occasion such as this, has abated a fair chance will be given for the system here proposed to prove its worth, namely, the reconciliation of the public interest with the freedom of private enterprise.
§ 6.27 p.m.
§ Mr. Clement Davies (Montgomery)
This has been a very interesting and helpful debate. The opening speech of the Minister, in which he explained the Bill, and also the speech of the right hon. Member for Vauxhall (Mr. G. R. Strauss) were, if I may be permitted to 315 say so, very excellent debating speeches. I was also very impressed by the speech of the hon. Member for Motherwell (Mr. Alex Anderson), which called attention to the fact that we are dealing not only with one of the biggest and most vital industries of this country, but also with the future of the men and women engaged in it. I am sure I am echoing the wishes of every hon. Member in this House when I say that we ought to hear from the hon. Member for Motherwell more frequently in our debates. He is always so well-informed.
One does not want to enter into the ideologies underlying this matter. Those have been thrashed out time and time again ever since 1949. Hon. and right hon. Gentlemen on this side of the House without a doubt are absolutely convinced that there is only one way of dealing with this industry, and that is that the ownership should be in the possession of the Government representing the people as a whole. On the other hand, hon. and right hon. Gentlemen on the other side of the House do not believe in that. Nor do I.
I always have been and shall always be anti-Socialist as far as that is concerned. I do not believe in public ownership unless it is proved to me beyond a peradventure that that is the best way. [Interruption.] I wish hon. Members would learn tolerance in these matters. So often on this side of the House if anybody on any occasion dares to hold a different view from hon. Members on any subject those hon. Members get angry. There is no need for it at all. They must really learn that there are different views in the world and that tolerance is required.
I am not alone even on this side of the House in not thinking that the ownership of all the means of production, distribution and exchange are essential. My views are shared by the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison). I remember on more than one occasion the right hon. Gentleman adopting a formula of which, I think, I was the author, and I do not object in any way to his having pirated it. I remember saying somewhere as early as 1945, and it was adopted on many occasions afterwards, that if it was desired to change the ownership into public 316 ownership in any industry the burden of proving that it was beneficial to the public lay upon those who desired to change that ownership into the hands of the public, and that there should be very full, adequate and fair inquiry. If on that inquiry it was found that it was far and away the best means of serving the public—and I am now speaking as a Liberal—I would say that I was in favour of transferring that service or industry into the hands of the public.
I might give as an instance the cases of gas and electricity, in both of which there was a very full inquiry. My complaint about this frightfully important industry of iron and steel is that there was no inquiry whatsoever. I wish the then Government had not been in such a hurry in 1949. I protested at the time, and I asked that there should be a full inquiry. Much of what has been said and of the arguments that have been going on ever since would have been unnecessary if that inquiry had been held.
That not having been done, and believing as I do in private ownership as against the other unless it is proved that it is wrong, I welcome this Bill. On behalf of my people I took that attitude in 1949 and before the elections of 1950 and 1951. I broadcast that view when I was allowed to broadcast. It is rather significant that the coming into operation of the Bill which is now an Act was deferred until after the Election. It is rather extraordinary that that had been the last major Bill which had been discussed in the House and yet in no single instance—and I have had this checked—when hon. and right hon. Gentlemen who were then in the Government spoke on behalf of the Government and appealed to the public, did one of them in any broadcast mention steel. I did, and so did the Conservative speakers.
What was the result? Unfortunately, as far as I and my party were concerned, we polled about 2,500,000 votes and we are now only a handful in this House. But I think that we still represent a point of view which is very widely held in the country. Liberalism is so deeply embedded in the people of this country that it will be a very long time before they ever throw it completely on one side. Taking the votes of both Liberals and Conservatives, there was an overwhelming majority against going on with the nationalisation of iron and steel.
§ Mr. Ellis Smith
Will the right hon. and learned Gentleman bear in mind that in the Labour Party manifesto for 1945 we said:Public ownership of iron and steel—private monopoly has maintained high prices and kept inefficient high-cost plants in existence. Only if public ownership replaces private monopoly can the industry become efficient.These socialised industries, taken over on a basis of fair compensation, to be conducted efficiently in the interests of consumers, coupled with proper status and conditions for the workers employed in them.We won the election just on that.
§ Mr. Davies
I was referring to 1950, when this was a very burning issue not only before this House but before the country, and there was no reference then. I welcome this Bill because it put matters back into private ownership, and I think that gives a far better opportunity to those working in the industry. I am hoping that in a very short time there will be far and away more co-ownership in that industry.
§ Mr. Davies
The hon. Member does not believe in that. He believes in ownership by nobody but the State.
§ Mr. Mikardo
My ejaculation was forced out, not because I did not believe in it, but because the directors of the steel companies do not believe in it.
§ Mr. Davies
They are not the only people involved. After all, influence will come to bear even upon the owners. I hope that there will be representation of all those who are actually working in the industry. I cannot possibly see that in a nationalised industry.
§ Mr. A. C. Manuel (Central Ayrshire)
Does the right hon. and learned Gentleman not recognise that he is advocating the return of the steel industry into the hands of private firms? Is he willing to recreate the insufferable position created in many areas up and down the country in the inter-war years because of the antics of those people in reserving the profits for themselves?
§ Mr. Davies
First I believe that we should go back to private ownership, but that is not all. The key of this Bill is the Board with its power of supervising and seeing what is happening, the fact that it will gather information and make 318 that available and, through the Minister, will be responsible to the House. To me, that makes the position under this Bill far and away different from and better than was the position prior to the war and prior to nationalisation.
This is such an important industry and such vast sums are involved and it can so affect human beings that it is only right and proper that there should be exercised over the industry some strong and independent body that will have the power that is given in this Bill. That is why I welcome the Bill, though I am not going into it in great detail tonight.
We have known how wrong some of us were when, after an inquiry had been held, we welcomed nationalisation. Let us take for example electricity or gas. How often did I at that time advocate it and say, "Look at it. If anyone of you suffers now I cannot do anything except possibly write to the Board who may not pay any attention, but once the industry is nationalised we can ask questions". We all realise that after nationalisation has been carried out practically nothing can be done in that respect except once a year when the Minister gives a review. [An HON. MEMBER: "Nor before."] There was nothing before, but there is now under this Bill. In Clause after Clause there is reference to a duty placed upon the Minister. Whenever there is a duty placed upon the Minister, or even where discretion is given to the Minister, this House has then a perfect right to ask the Minister why he exercised that duty, or did not do so.
§ Mr. Albu
The right hon. and learned Gentleman, I believe, has read the Report of the Select Committee which considered this matter. I think he will agree that the powers of Ministers in this Bill are greater, stronger, wider and more direct than in the present Act. If the Select Committee found that it was not possible for the Minister to be asked questions under the present Act, what sort of questions does the right hon. and learned Gentleman think it will be possible to ask the Minister under this Bill?
§ Mr. Davies
One sees how often the Minister is referred to in the Bill, how often duties are placed upon him and discretion is given to him, and under the 319 rules of the House questions can be put to the Table and the Minister would be bound to answer why and how he has exercised that duty of discretion.
My last point is this. It was referred to by an hon. Gentleman who knows so much about this industry and who has spent his life in it. I would like to know, if the Bill becomes law, what will be the liaison with the Continental companies under the Schuman Plan. I have begged the Government to take part in that plan, to go to Paris and at any rate take part in the discussions. The matter has gone on. This industry affects all of us. It affects Europe, this country, our export position and everything else. The closer the co-operation there is between all of us, the better it will be. For these reasons, I welcome this Bill.
§ 6.43 p.m.
§ Mr. Wilfred Fienburgh (Islington, North)
I am always charmed to listen to the speeches of the Minister of Supply. He worries his way through his brief with an agonising frown on his face as though searching for some hidden truth which he knows in his heart he will never find. If the truth that he is looking for is the answer to the problems of the iron and steel industry, he did not find it today, because the answer lies not in his speech nor in this Bill nor in the policy of the party opposite.
He is trying to impress upon us that in putting forward the conception of a public authority to control and exercise some jurisdiction over a private monopoly, he is in some way acting as the midwife at the birth of a new and lusty infant. He is doing nothing of the sort. He is disinterring a corpse which was buried by the last Labour Administration. We have had three previous experiences within the last 20 years of an attempt to exercise public accountability, through a public board, over the private steel industry, and every single one of those attempts has failed.
Therefore, I am glad that he rested so much of his case upon the need which he felt resided upon him to prove that it was possible to control this industry by some external Board. I propose during my remarks to draw attention to the previous experiments and to show how completely inadequate from every point of 320 view and in every respect was the supervision of the privately-owned iron and steel industry by some public authority.
Some Conservatives have at least got the Dutch courage of their prejudices, even if they have not got the courage of their convictions. They are still prepared to argue against all the evidence from all over the world that it is, by some peculiar alchemy, possible through the private ownership of the steel industry to make it competitive, and from that competition to get the right amount of steel at the right place at the right time at the right price.
But nowhere in the world today is there a fully free, privately competitive steel industry, and there has not been for some considerable time. Even in the United States where they are tied—hamstrung, one would think—by the operations of the anti-trust and anti-cartel laws, by some extraordinary coincidence the price of steel is always raised by precisely the same amount by every single company at precisely the same minute of the same hour of the same day, proving conclusively that if there is no formalised agreement between these industries, they have recognised that they must operate collectively and centrally in order to protect their interests and their industry.
I have no objection to this, because steel just happens to be one of those industries which is inevitably a natural monopoly. Steel is too big in its individual units. To envisage a competitive battle between the independent units of a competitive steel industry is to visualise a battle between Goliaths beneath the feet of which the whole economy would be trampled to pieces. That is why we make no suggestion—I believe no hon. Member has made the suggestion—that it is going to be possible to return to completely out and out competitive steel production.
§ Mr. Robson Brown
I am obliged to the hon. Member for giving way. I want to take him back to his statement on the situation in the United States of America. Could he be a little more specific, because the only information I have is that they have a central organisation for the collection of statistics, and nothing else.
§ Mr. Fienburgh
I am not talking about what sort of organisation they have. The formality of that organisation is very slight indeed. I was pointing to the coincidence that whenever they act they 321 act together; whenever they raise the price of steel beyond a certain level it goes up by the same amount throughout, in every single firm at the same time. One does not need a formal organisation to do that. It can be done over a cocktail or a highball or a telephone or at a Rotarian meeting. But it proves the point that they no longer operate completely independently or competitively.
In fact, there is inevitable centralisation in this industry, and we can have that centralisation in one of three ways. We can have cartelised monopoly of the old pattern; we can have public supervision of this cartelised monopoly, or we can have common ownership of the assets, which ensures at least that there is some central co-ordination which is answerable to the community as a whole.
Hon. Members opposite have rather belatedly cone down in favour of the middle course, as they call it. Rather belatedly they are prepared to accept some degree of public co-ordination and supervision. It is a very belated conversion indeed. It looks more like a death bed repentance than anything else, because there was no suggestion from hon. Members opposite that it was necessary publicly to supervise this industry until the industry itself was in dire straits in the inter-war years, and at that time public supervision just grew up and was not imposed by any act of any Conservative Government.
I said that we were here disinterring a corpse, which when alive saw its first life during the days of the Import Duties Advisory Committee. That Advisory Committee was never created to supervise the steel industry. It did so, however, because upon its responsibility devolved the job of deciding whether steel should be protected by a tariff or not. It agreed that steel should be protected by a tariff, but it agreed on very firm conditions. The conditions were that the industry should internally reorganise itself, rejuvenate itself and create its youth anew, and thus enable itself to face the competition of Continental producers.
The powers which resided in the hands of the Import Duties Advisory Committee were far in excess of the powers imposed on this proposed new Board, because it had the power to hit the producer where it hurt, which was in the pocket, since 322 it was enabled to recommend the removal of the tariff; that was a sanction far in excess of any sanction possessed by this Board. Yet, despite that power, I.D.A.C. was ignored. The suggestions that it put forward for reorganisation were ignored. The tariff was imposed in April, 1932. By June, 1932, after many discussions and many pleas by Lord May, the steel industry still refused to act; they refused to come together adequately to consider plans for reorganisation.
In March, 1933, some considerable time later still, they did form a National Reconstruction Committee, which was not charged with the job of reorganising the industry, but simply of considering the possible variations of machinery which ought to be set up ultimately to think out some reorganisation of the industry. If we are suggesting that it is possible publicly to supervise this private monopoly, it is very important to take the views of some distinguished steel masters who were concerned at that time, because from their mouths it can be proved quite adequately that there was no intention on the part of the steel industry to respond to any form of public supervision.
I am sorry to have to bring up the name of Sir William Firth again, because I know that his voice haunts many of these debates; but he had some very interesting things to say about this industry and hon. Gentlemen opposite should be interested because they pretend to bring an empirical approach to everything; they are not doctrinaire. No one can bring them better proof than their own distinguished colleagues. In February, 1934, Sir William Firth said, in connection with the attempt to reorganise the industry, that he did not feel justified in stifling his criticism by pretending to approve a scheme which was masquerading as a reconstruction scheme… when it is entirely devoid of any factor which can bring about a reduction of cost, but, on the contrary, by quota and price arrangement will prolong the life of inefficient plants and delay the elimination of cross haulages and the centralisation of manufacture and the erection of up-to-date plants.This was the view of one who was within the councils of hon. Members opposite, as to the attitude of the privately-owned steel industry to the demands which had been made upon it 323 from a public authority, that it should undertake some reorganisation. It proves that they have no intention of undertaking the prime task and responsibility which they pledged themselves to undertake as the price for tariff protection.
Mr. Henry Summers, writing in "The Times" in March, 1934, a little while afterwards—and I am sure that if hon. Gentlemen opposite did not want to listen to what was said by Sir William Firth they might be interested in this quotation—said this:… the steel trade spent nearly two years drawing up schemes which if adopted could only prove futile and abortive. The main objects were to bolster up redundant and obsolete plants and by rings and quotas to put up costs to the consumer. … Even the majority were unwilling to do what was best for their industry.Despite public supervision; despite the existence of a Board far stronger than the new Board which is proposed, they were not prepared to do what was required—and they did not do what was required—in the best interests of the industry.
In this particular episode of the manifestation of public control reorganisation was not carried out. Despite repeated pledges of price reduction, prices doubled. Between the creation of tariff protection and the outbreak of war they went up far quicker than the prices of raw material and labour which went into the industry. Competition was rigorously quelled and steel went on in its own way in its own time, as it has always done and as it always can do so long as it remains in private ownership.
Then there was a second attempt at control. There was the wartime control by the Ministry of Supply—a rather more direct form than that of the Import Duties Advisory Committee. In effect, however, there was no control at all, partly because Steel House moved en bloc into the Ministry of Supply, which they will do again in respect of this Board as soon as it is set up; there is no provision to see that that is not done in this Bill.
What have the other independent critics to say of this attempt at public supervision of private industry? I quote what was said by Mr. Oscar Hobson, who is no friend of ours. In May, 1940, during the war, he said that there was:… only too good reason to fear that the control of the steel industry has not shaken 324 itself free from the old notions … that a balance of power must be preserved between different big producing firms"—and he suggested that… efficient plant must be used to capacity in priority to less efficient, irrespective of the ownership of either.There is someone—who does not share our view of the ownership of this industry—pointing out that while it remained in private hands private interests were overweighing public interests. That was inevitably so because the Ministry of Supply were not able to control an industry which remained privately owned. Similar comments were made by the "Manchester Guardian," but I shall not trouble the House with those.
I was interested to note the plea on the part of the Minister that effective price control had been exercised in this industry for the last 20 years. In fact it was not until 1944, only eight years ago, that these controlling bodies operating in the public interest—I.D.A.C. first and the Ministry of Supply later—were able to find out the detailed mechanism of the price-fixing machinery in this industry. I quote what was said by Mr. G. N. D. Worswick, in the Bulletin of the Oxford Institute of Statistics—a very reputable source:The fixing of steel prices by the Iron and Steel Control has been one of the most interesting, but one of the most elusive problems of the wartime economy. … Each year the Auditor-General reported that he had been unable to find out on what basis these prices were determined and each year the Public Accounts Committee attempted to press the investigation a stage further.There was no control and no adequate investigation, or, rather, there was an investigation but nothing much could be discovered because of the impossibility of unravelling all the ramifications and seeing that the decisions taken were carried out properly whilst there was this division between an attempt at control and the actual ownership in which resided the final power of decision.
Then we had the post-war Board, when a third attempt was made at public control. As my right hon. Friend stated in his opening speech, this again was a failure. Some degree of control was possible in an expanding period, when manufacturers and producers were falling over each other to establish new productive plants. There was then a possibility of control by saying to one, 325 "You may" and to another, "You may not." That was a negative control by which it was, to some extent, possible to direct the development of the industry. But let us not pretend that this honeymoon period is going to carry on very much longer.
The slump in the 1920's was preceded by two things—a decline in orders in the shipping industry and deflation by the Government. We are having a repetition of those two things today.
There will always be a sub-division of objective between a Board which is trying to control in the national interest, on behalf of 50 million people, and the owners and directors of an industry whose main and prior objective is the simple one of guaranteeing dividends to the shareholders. There will be many occasions when there will be a clash between those two points of view, and whilst the ultimate ownership resides in private hands the private view will remain paramount.
My knowledge of the steel industry—in common with the entire Government Front Bench and 99 per cent. of hon. Members opposite—is one derived from external study rather than internal experience; but there is one thing I have discovered, and that is that the steel industry is the king of all industries. We have here something far more thrilling than any military display or military march-past—the sight of a furnace being tapped, or red-hot steel whipping across the floor of a rolling mill. That is one of the most thrilling of all sights. This industry should be a pride in the eyes of a nation. Let us therefore retain it in public hands and not hand it back to the money grubbers.