§ Again considered in Committee.
§ [Major Sir WILLIAM ANSTRUTHER-GRAY in the Chair]
§ Amendment proposed: In page 2, line 2. leave out "and ".
§ 5.45 p.m.
Mr. Jack Jones
On a point of order, Sir William. Will you give a direction as to the position of most hon. Members? We understand that the hon. Member for Kidderminster (Mr. Nabarro) has received certain instructions and had a letter from Mr. Speaker, and that these are within the knowledge of some hon. Members but outwith the knowledge of the vast majority of hon. Members. May I ask for your guidance whether we can debate the Bill in such circumstances, some hon. Members having been given guidance by Mr. Speaker whilst others have had that same guidance withheld?
I am in ignorance of what is contained in Mr. Speaker's letter and, indeed, have not been informed of its existence. As I understand the position, the Committee has charge of its own affairs under the Chairman of Ways and Means or myself or the Temporary Chairman and we proceed with the business of the Committee. Anything to do with a letter by Mr. Speaker would be for the House itself and not for the House in Committee. Therefore, anything pertaining to that letter would, I understand, require to be raised with Mr. Speaker in the House and not in this Committee.
§ Mr. Nabarro
Further to that point of order. I am deeply grateful to you, Sir William, for your Ruling, but does that not strengthen the case I put to your predecessor in the Chair in this Committee? Mr. Speaker has given a Ruling in connection with debates on the Consolidated Fund Bill, which has just received the Royal Assent. The Ruling given by Mr. Speaker has a direct bearing upon the Amendment now before the Committee. We cannot consider that Amendment without considering pari passu with it the Ruling given by Mr. Speaker, because the Amendment deals with control over expenditure under the Bill and accountability.
I submit, therefore, that the two issues are inseparable. As Mr. Speaker's letter to me was not marked "Private" and was a letter to me in response to an interrogation from myself, notice of which I gave during the debate last Wednesday, surely, as it is germane to our discussion of the Amendment moved by the hon. Member for Gloucester (Mr. Diamond), the letter could be considered by the Committee so that we know how to judge the value of the hon. Member's Amendment.
I appreciate the point that the hon. Members puts. As to whether the Amendment under discussion is in order, it was called by the Chairman of Ways and Means and is, therefore, in order regardless of any letter that may or may not have been written. We are, therefore, in order in the proceedings that we are carrying out. As to the further point raised by the hon. Member as to whether he would be in order in reading out the letter by Mr. Speaker, I think not. It would put 284 the Chairman of this Committee in an impossible position if, after the hon. Member had read out Mr. Speaker's letter, somebody were to ask the Chairman whether he agreed with it. For that reason, I must adhere to my Ruling that Mr. Speaker's letter can be considered only by the House as a House and not by the House in Committee, as we now are.
§ Mr. Nabarro
Further to that point of order. Without reading out the letter, and as I have given a copy of it to a number of hon. Members of the Committee for general information, would I be in order in merely referring to the decision in the letter without reading out the letter?
The difficulty in which the hon. Member would place us is that proceedings in this Committee are ruled by the Chairman of the Committee. A decision of Mr. Speaker is irrelevant to the proceedings in Committee while they are taking place.
§ Mr. Nabarro
I fully appreciate the delicate, difficult and complex position in which you find yourself, Sir William, but may I stress this to you? The Bill that we are discussing provides for sums from the Consolidated Fund to be granted to two steel companies. The Ruling by Mr. Speaker is in connection with the Consolidated Fund and we are not able intelligently to discuss the purport of the Bill without regard to the Ruling which Mr. Speaker has given concerning further debates on the Consolidated Fund.
As the two matters are quite inseparable, would it not be possible for some arrangement to be made—as our proceedings will undoubtedly be very protracted indeed today—for some further consideration, perhaps by consultation privately during the debate, between you, Sir William, and Mr. Speaker, as to whether Mr. Speaker could not occupy the Chair for a few moments to enable a decision to be given to the Committee?
I am sure that the hon. Member's last proposition would not be possible at all. There is, in fact, no appeal from the Chair of the House in Committee to the occupant of the Chair of the House while it is a House, so that would be improper.
§ Mr. Bowles
On a point of order. Supposing that Mr. Speaker on Second Reading of the Consolidated Fund Bill ruled that certain matters which the hon. Member for Kidderminster (Mr. Nabarro) was talking about were out of order, surely you would be obliged, Sir William, on Motions in Committee "That Clause 1 and Clause 2 stand part of the Bill" to rule in exactly the same way. Surely, on the Consolidated Fund Bill you would be bound by Mr. Speaker's Ruling on Second Reading.
Yes, but we are not at the moment dealing with the Consolidated Fund Bill, and I must confine myself to the Bill with which we are now dealing.
§ Mr. Bowles
You said, Sir William, that the Committee on the Consolidated Fund Bill was quite a separate body from the House of Commons on Second Reading, but, surely, Mr. Speaker's Ruling on Second Reading would in practice bind the Committee's Chairman.
But a different set of rules apply to the Consolidated Fund Bill compared with this Bill, and I hope that the Committee will now agree to get on with what is before us. Mr. Diamond.
§ Mr. Diamond
If I may respectfully say so, Sir William, the discussion which has just taken place and the questions which have been put to you have underlined the importance and the relevance of this innocent-looking Amendment. They have underlined the uneasiness which all of us feel about the lack of accountability and the lack of control to be exercised by the Committee over large sums of money.
Before we were interrupted, I was suggesting to the Minister that he should be good enough to consider this matter again. Being an extremely sensitive person, he will have sensed that his speech did not give satisfaction to either side of the Committee. Indeed, certain hon. Members on his side remain extremely anxious, and all of us on this side are anxious about one aspect in particular—the £50 million. I know that some hon. Members opposite are more anxious about the £70 million. Nevertheless, there is considerable anxiety on both sides because we shall not be able to 286 follow up the way in which the £120 million, and more particularly the £50 million, is being expended the moment that the Bill passes out of our hands.
I suggest to the Minister that he is quite in error in saying that the three opportunities to which he has referred are of a kind to give any satisfaction whatsoever to those who are interested in the detail of the expenditure. We shall certainly have a report, but that is not the sort of report we want, and I refer to subsection (6) which says:The Minister of Power shall, as respects each financial year, prepare in such form and manner as the Treasury may direct an account of sums issued to him under this Act, and of the interest and other payments received by him …That will not give us any of the detail that we want. That kind of report will not satisfy those of us who are interested in the kind of responsibility which the directors of the company have thought fit to bring to bear in expending this money.
We all want to know the sort of social responsibilities which these directors feel in expending £50 million of taxpayers' money. There will be nothing in the report which the Minister will have and will put before the House which will enable us to follow up the detail of the way in which the money is being expended or the sort of attitude brought to bear by those who are given the great power of having £50 million in their hands to spend. This is an enormous concentration of power, and it is quite unsatisfactory that the matter should be left in this way.
I ask the Minister to give it further consideration, for a number of reasons. First of all, it was clearly my fault in assuming that the word "assessor" was as well-known to the Minister as it is to me. As he told the House, he was not aware until I explained them what the duties and functions of the assessor would be. This is my fault. I assumed that it is a well-know expedient. In fact, it is a well-known expedient used by the Treasury and Departments under the Treasury. The Minister was quite wrong in suggesting that to appoint an assessor is a sign of lack of confidence.
I must take a rather personal view of this, being an auditor who has spent many years of his life examining payments made by directors on behalf of 287 shareholders. Is the Minister implying that every time an auditor puts in an appearance he is suggesting to the directors that the shareholders have no confidence in them? This is a regular operation and a pattern of control. It is something which we all accept. Every honourable director accepts that there should be an auditor who should satisfy others that the money has been spent in the way it is alleged to have been spent.
I am a Member of Parliament who takes part with others in voting sums which in due course find themselves being spent by bodies which are interested in the promotion of the arts. One of these is Sadler's Wells. I am also a director of Sadler's Wells and there we spend £250,000 of the Government's or the taxpayers' money. An assessor sits with us, and I take not the slightest objection as a director of Sadler's Wells —although I am the same person who has taken part in voting the money— when he sits with us at every meeting and sees that the money is spent in the general way which the Arts Council had in mind when it said at the beginning of the year, "Here is a quarter of a million for you." That is a large sum of public money for anybody to use, and the way it is used ought to be looked at.
One should have the sense all the time that while one is spending the money there is a presence there on one's conscience making one realise that it is Government money which has been difficult to collect, as the Chancellor and the Government Front Bench should know. It ought to be spent with care and with a sense of responsibility. One of the best ways of bringing that conscience to bear is to have an individual sitting in and, where necessary, giving advice and helping in the way I have described.
There was nothing in my opening remarks to suggest any lack of confidence or anything other than a purely constructive approach to what is a very difficult question. The Minister referred to the information available to him. He was wrong there, too. He said that he had sufficient power to ask for information. But there is all the difference in the world between going to a body at arm's length, such as going to the direc- 288 tors of a company where one is a creditor or a lender of money, and asking, "Please give me a report about so and so"—it might be quite true as far as it goes but might not underline all the things that the Minister wants to know—and the information that can be obtained from someone who sits at every meeting of a board and hears all the remarks and all the asides which, for example, we hear in this Chamber and which enable us to interpret an hon. Member's speech. The right hon. Gentleman would be greatly helped if he had the report of such a person, and, as I have indicated, he needs such a report in order to carry out two of the clauses of the heads of agreement which have already been entered into.
Therefore, I appeal to the Minister —with apologies for having suggested an assessor, thinking that his function was well understood, now knowing that it was not and realising that the right hon. Gentleman needs time to thing again— to give us something more encouraging on this matter which is causing the gravest anxiety to both sides of the Committee.
Touching for a moment on the general topic of Parliamentary accountability, this is not a static or fixed matter. We must all realise that as more and more expenditure is voted by the House of Commons, we must think of new methods of carrying out our responsibility. The way I am suggesting is one such method. Of course, it is not as satisfactory as other methods, but I cannot Chink of any other Amendment to this Bill which will increase the fundamental powers of the House in respect of Parliamentary accountability. I can only go a little way, but it is an important way, and it is a way which back benchers opposite should welcome. Presumably they have confidence in their Front Bench—
§ Mr. Diamond
If the hon. Member for Kidderminster (Mr. Nabarro) can think of a better way within the rules of order and within this Bill, let him put down an Amendment. I am saying that I have not been successful in finding a better way of achieving what we all have in mind. This is, at all events, part of 289 the journey, and we must go stage by stage. I am saying that hon. Gentlemen opposite should have sufficient confidence in their own Front Bench to agree that additional knowledge and additional power in the hands of the Minister is better than not having that additional knowledge and additional power. A Minister will function better on behalf of the Government and his party by having the knowledge which I am suggesting that he should 'have under this Clause.
I am sorry that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), who was not in the Committee during our earlier discussions, is getting so frightfully irritated
§ and bad tempered. We are trying to make this an important discussion, in which hon. Members on both sides of the Committee have taken part. I am sorry that I have not succeeded in persuading some hon. Gentlemen opposite to look upon it as an important matter, going right to the root of our job as Members of Parliament. I am encouraged to know that my own Front Bench takes the same view as myself, and I hope, therefore, that the matter will be carried to a Division.
§ Question put, That "and" stand part of the Clause:—
§ The Committee divided: Ayes 232. Noes, 183.293
|Division No. 58.]||AYES||[6.4 p.m.|
|Allan, Robert (Paddington, S.)||d'Avigdor-Goldsmid, Sir Henry||James, David|
|Allason, James||de Ferrantl, Basil||Jenkins, Robert (Dulwich)|
|Alport, C. J. M.||Donaldson, Cmdr. C. E. M.||Johnson, Dr. Donald (Carlisle)|
|Arbuthnot, John||Doughty, Charles||Johnson, Eric (Blackley)|
|Ashton, Sir Hubert||Drayson, G. B.||Johnson Smith, Ceoffrey|
|Atkins, Humphrey||Duncan, Sir James||Kaberry, Sir Donald|
|Barber, Anthony||Duthie, Sir William||Kerans, Cdr. J. S.|
|Barlow, Sir John||Eden, John||Kerby, Capt. Henry|
|Barter, John||Elliott, R. W.||Kitson, Timothy|
|Batsford, Brian||Emery, Peter||Lagden, Godfrey|
|Baxter, Sir Beverley (Southgate)||Errington, Sir Eric||Lancaster, Col. C. G.|
|Bell, Philip (Bolton, E.)||Erroll, F. J.||Leavey, J. A.|
|Berkeley, Humphry||Farey-Jones, F. W.||Leburn, Gilmour|
|Bevins, Rt. Hon. Reginald (Toxteth)||Farr, John||Legh, Hon. Peter (Petersfield)|
|Biggs-Davison, John||Fell, Anthony||Lewis, Kenneth (Rutland)|
|Bingham, R. M.||Fletcher-Cooke, Charles||Lilley, F. J. P.|
|Bishop, F. P.||Forrest, George||Lindsay, Martin|
|Black, Sir Cyril||Fraser, Ian (Plymouth, Sutton)||Litchfield, Capt. John|
|Bossom, Clive||Gammans, Lady||Lucas, Sir Jocelyn (Portsmouth, S.)|
|Box, Donald||George, J. C. (Pollok)||MacArthur, Ian|
|Boyle, Sir Edward||Gibson-Watt, David||McLaren, Martin|
|Braine, Bernard||Glover, Sir Douglas||McLaughlin, Mrs. Patricia|
|Brewis, John||Glyn, Col. Richard H. (Dorset, N.)||McLean, Neil (Inverness)|
|Brooke, Rt. Hon. Henry||Godber, J. B.||Macleod, Rt. Hn. lain (Enfield, W.)|
|Brooman-White, R.||Grant, Rt. Hon. William (Woodside)||MacLeod, John (Ross & Cromarty)|
|Browne, Percy (Torrington)||Grant-Ferris, Wg Cdr. R. (Nantwich)||McMaster, Stanley R.|
|Bryan, Paul||Gresham Cooke, H.||Macmillan, Maurice (Halifax)|
|Bullard, Denys||Crimston, Sir Robert||Macpherson, Niall (Dumfries)|
|Bullus, Wing Commander Eric||Grosvenor, Lt.-Col. R. G.||Maddan, Martin|
|Burden, F. A.||Hall, John (Wyoonmbe)||Maginnis, John E.|
|Butcher, Sir Herbert||Hamilton, Michael (Wellingborough)||Markham, Major Sir Frank|
|Butler,Rt.Hn.R.A.(SaffronWalden)||Harris, Frederic (Croydon, N.W.)||Marshall, Douglas|
|Campbell, Sir David (Belfast, S.)||Harris, Reader (Heston)||Mathew, Robert (Honiton)|
|Carr, Compton (Barons Court)||Harvey, Sir Arthur Vere (Macclesf'd)||Matthews, Gordon (Meriden)|
|Carr, Robert (Mitcham)||Harvey, John (Walthamstow, E.)||Mawby, Ray|
|Cary, Sir Robert||Harvie Anderson, Miss||Maydon, Lt.Cmdr. S. L. C.|
|Channon, H. P. G.||Hay, John||Milligan, Rt. Hon. W. R.|
|Chataway, Christopher||Henderson, John (Cathcart)||Mills, Stratton|
|Chichester-Clark, R.||Hendry, Forbes||Montgomery, Fergus|
|Clark, Henry (Antrim, N.)||Hicks Beach, Maj. W.||Morgan, William|
|Clark, William (Nottingham, S.)||Hiley, Joseph||Nabarro, Gerald|
|Clarke, Brig.Terence (Portsmth, W.)||Hill, J. E. B. (S. Norfolk)||Nicholls, Harmar|
|Cleaver, Leonard||Hinchingbrooke, Viscount||Nicholson, Sir Godfrey|
|Cooper, A. E.||Hirst, Geoffrey||Noble, Michael|
|Coooer-Key, Sir Neill||Hooking, Philip N.||Osborn, John (Hallam)|
|Cordeaux, Lt.-Col. J. K.||Hollingworth, John||Page, A. J. (Harrow West)|
|Corfield, F. V.||Hope, Rt. Hon. Lord John||Page, Graham|
|Costain, A. P.||Hornsby-Smith, Rt. Hon. Patricia||Pannell, Norman (Kirkdale)|
|Coulson, J. M.||Howard, Hon. G. R. (St. lves)||Pearson, Frank (Clitheroe)|
|Courtney, Cdr. Anthony||Howard, John (Southampton, Test)||Peel, John|
|Craddock, Beresford (Spelthorne)||Hughes-Young, Michael||Percival, Ian|
|Critchley, Julian||Hurd, Sir Anthony||Peyton, John|
|Crowder, F. P.||Hutchison, Michael Clark||Pickthorn, Sir Kenneth|
|Cunningham, Knox||Iremonger, T. L.||Pike, Miss Mervyn|
|Currie, G. B. H.||Irvine, Bryant Godman (Rye)||Pilkington, Capt. Richard|
|Dance, James||Jackson, John||Pitman, I. J.|
|Pitt, Miss Edith||Smyth, Brig, Sir John (Norwood)||Vickers, Miss Joan|
|Pott, Percivall||Stanley, Hon. Richard||Vosper, Rt. Hon. Dennis|
|Powell, J. Enoch||Stevens, Geoffrey||Wakefield, Edward (Derbyshire, W.)|
|Prior, J. M. L.||Steward, Harold (Stockport, S.)||Wakefield, Sir Wavell (St. M'lebone)|
|Prior-Palmer, Brig, Sir Otho||Stodart, J. A.||Ward, Rt. Hon. George (Worcester)|
|Profumo, Rt. Hon. John||Stoddart-Scott, Col. Sir Malcolm||Watkinson, Rt. Hon. Harold|
|Ramsden, James||Storey, Sir Samuel||Watts, James|
|Rawlinson, Peter||Studholme, Sir Henry||Wells, John (Maidstone)|
|Redmayne, Rt. Hon. Martin||Summers, Sir Spencer (Aylesbury)||Whitelaw, William|
|Rees, Hugh||Sumner, Donald (Orpington)||Williams, Dudley (Exeter)|
|Rees-Davies, W. R.||Talbot, John E.||Williams, Paul (Sunderland, S.)|
|Renton, David||Tapsell, Peter||Wills, Sir Gerald (Bridgwater)|
|Ridley, Hon. Nicholas||Taylor, W. J. (Bradford, N.)||Wilson, Geoffrey (Truro)|
|Robertson, Sir David||Thatcher, Mrs. Margaret||Wise, Alfred|
|Roots, William||Thomas, Leslie (Canterbury)||Wolrige-Gordon, Patrick|
|Ropner, Col. Sir Leonard||Thomas, Peter (Conway)||Wood, Rt. Hon. Richard|
|Russell, Ronald||Thompson, Kenneth (Walton)||Woodhouse, C. M.|
|Scott-Hopkins, James||Thornton-Kemsley, Sir Colin||Woodnutt, Mark|
|Seymour, Leslie||Tiley, Arthur (Bradford, W.)||Woollam, John|
|Shaw, M.||Tilney, John (Wavertree)||Worsley, Marcus|
|Shepherd, William||Turner, Colin|
|Skeet, T. H. H.||Tweedsmuir, Lady||TELLERS FOR THE AYES:|
|Mr. Finlay and Mr. Sharples.|
|Ainsley, William||Grimond, J.||Oswald, Thomas|
|Albu, Austen||Gunter, Ray||Owen, Will|
|Allaun, Frank (Salford, E.)||Hall, Rt. Hon. Glenvil (Colne Valley)||Parkin, B. T. (Paddington, N.)|
|Allen, Scholefield (Crewe)||Hamilton, William (West Fife)||Pavitt, Laurence|
|Awbery, Stan||Hart, Mrs. Judith||Pearson, Arthur (Pontypridd)|
|Bacon, Miss Alice||Hayman, F. H.||Peart, Frederick|
|Baird, John||Healey, Denis||Pentland, Norman|
|Bellenger, Rt. Hon. F. J.||Henderson,Rt.Hn.Arthur(RwlyRegis)||Prentice, R. E.|
|Bence, Cyril (Dunbartonshire, E.)||Herbison, Miss Margaret||Price, J. T. (Westhoughton)|
|Benson, Sir George||Hill, J. (Midlothian)||Proctor, W. T.|
|Blyton, William||Holman, Percy||Pursey, Cmdr. Harry|
|Bowden, Herbert W. (Leics, S.W.)||Holt, Arthur||Randall, Harry|
|Bowen, Roderic (Cardigan)||Houghton, Douglas||Rankin, John|
|Bowles, Frank||Howell, Charles A.||Redhead, E. C.|
|Boyden, James||Hughes, Cledwyn (Anglesey)||Reid, William|
|Braddock, Mrs. E. M.||Hughes, Hector (Aberdeen, N.)||Reynolds, G. W.|
|Brockway, A. Fenner||Hunter, A. E.||Robens, Rt. Hon. Alfred|
|Broughton, Dr. A. D. D.||Hynd, H. (Accrington)||Roberts, Albert (Normanton)|
|Brown, Alan (Tottenham)||Hynd, John (Attercliffe)||Robinson, Kenneth (St. Pancras, N.)|
|Brown, Rt. Hon. George (Belper)||Irvine, A. J. (Edge Hill)||Ross, William|
|Brown, Thomas (Ince)||Jeger, George||Royle, Charles (Salford, West)|
|Butler, Herbert (Hackney, C.)||Johnston, Douglas (Paisley)||Shinwell, Rt. Hon. E.|
|Butler, Mrs. Joyce (Wood Green)||Jones, Rt. Hn. A. Creech (Wakefield)||Short, Edward|
|Callaghan, James||Jones, Elwyn (West Ham, S.)||Silverman, Julius (Aston)|
|Carmichael James||Jones, Jack (Rotherham)||Silverman, Sydney (Nelson)|
|Castle Mrs. Barbara||Jones, J. Idwal (Wrexham)||Skeffington, Arthur|
|Chetwynd George||Jones, T. W. (Merioneth)||Slater, Mrs. Harriet (Stoke, N.)|
|Cliffe Michael||Key, Rt. Hon. C. W.||Small, William|
|Collick, Percy||King, Dr. Horace||Smith, Ellis (Stoke, S.)|
|Craddock, George (Bradford, S.)||Ledger, Ron||Soskice, Rt. Hon. Sir Frank|
|Cullen, Mrs. Alice||Lee, Frederick (Newton)||Spriggs, Leslie|
|Davies,Rt.Hn.Clement(Montgomery)||Lee, Miss Jennie (Cannock)||Stewart, Michael (Fulham)|
|Davies, G. Elfed (Rhondda, E.)||Lever, L.M. (Ardwick)||Strauss, Rt. Hn. G. R. (Vauxhall)|
|Davies, Harold (Leek)||Lewis, Arthur (West Ham, N.)||Summerskill, Dr. Rt. Hon. Edith|
|Davies, Ifor (Gower)||Loughlin, Charles||Swain, Thomas|
|Deer, George||Mabon, Dr. J. Dickson||Swingler, Stephen|
|de Freitas, Geoffrey||McCann, John||Sylvester, George|
|Delargy, Hugh||McInnes, James||Symonds, J.B.|
|Dempsey, James||McKay, John (Wallsend)||Taylor, Bernard (Mansfield)|
|Dodds, Norman||McLeavy, Frank||Taylor, John (west Lothian)|
|Driberg, Tom||Thomas, Iorwerth (Rhondda, W.)|
|Ede, Rt. Hon. Chuter||MacMillan, Malcolm (Western Isles)||Thompson, Dr. Alan (Dunfermline)|
|Edwards, Rt. Hon. Ness (Caerphilly)||MacPherson, Malcolm (Stirling)||Thornton, Ernest|
|Edwards, Robert (Bilston)||Mahon, Simon||Timmons, John|
|Evans, Albert||Mallalieu, E. L. (Brigg)||Tomney, Frank|
|Finch, Harold||Manuel, A. C.||Ungoed-Thomas, Sir Lynn|
|Fitch, Alan||Marquand, Rt. Hon. H. A.||Wade, Donald|
|Fletcher, Eric||Marsh, Richard||Wainwright, Edwin|
|Foot, Dingle||Mason, Roy||Warbey, William|
|Forman, J. C.||Mayhew, Christopher||Watkins, Tudor|
|Fraser, Thomas (Hamilton)||Mendelson, J.J.||Weitzman, David|
|Gaitskell, Rt. Hon. Hugh||Millan, Bruce||Wells, Percy (Faversham)|
|George, Lady Megan Lloyd||Mitchison, G. R.||Wells, William (Walsall, N.)|
|Ginsburg, David||Monslow, Walter||Wheeldon, W. E.|
|Gordon Walker, Rt. Hon. P. C.||Moody, A. S.||White, Mrs. Eirene|
|Gourlay, Harry||Morris, John||Whitlock, William|
|Grey, Charles||Moyle, Arthur||Wilkins, W. A.|
|Griffiths, David (Rother Valley)||Neal, Harold||Williams, D. J. (Neath)|
|Griffiths, Rt. Hon, James (Llanelly)||Oliver, G. H.||Williams, Rev. Ll. (Abertillery)|
|Williams, W. R. (Openshaw)||Winterbottom, R. E.|
|Willis, E. G. (Edinburgh, E.)||Woof, Robert||TELLERS FOR THE NOES|
|Wilson, Rt. Hon. Harold (Huyton)||Yates, Victor (Ladywood)||Mr. Lawson and Mr. Cronin.|
§ Mr. J. J. Mendelson (Penistone)
I beg to move, in page 2, line 2, at the end to insert:and the distribution by the borrower of any profits made by him after those sums have been advanced in such manner that an equitable share of the profits shall accrue to the Minister".This Amendment arises directly from the central purpose and intention of the Bill. I think the Committee is agreed that the main reason for the Bill appearing in this form can be summed up in two propositions. First, it is intended that the loan should appear as a form of capital expenditure, because revenue will be produced as a result and the loan will be repaid. The important significance of that will be that it can be financed by Government borrowing. That immediately produces very considerable advantages for the firm involved, and it is these advantages that we ought to consider very carefully before we agree to the passage of the Bill through the Committee.
I have a good deal of understanding for some Members opposite who are deploring the fact that they cannot discover the kind of individual enterprise that has really not been in existence for a very long time—the kind of individual enterprise in which, we were told when we were young, the individual businessman invested more than his own money, worried about it, could not sleep, considered every risk, and came to the conclusion that he had made a profit by being very careful and very enterprising. Since the turn of the century, in large-scale industry, that has not been happening. Therefore, I have no general quarrel with the proposition that the State must be interested in how our major national industries are going.
Furthermore, it is equally important to realise that steel is one of our major national assets and, therefore, decisions as to whether it is to expand are bound to bring in the State at a very early stage. What we are recognising by this Bill is the development of a policy which involves the spending of a great deal of public money—the loan of public money at a very low rate of interest—and then the advantages accruing to the share- 294 holders belonging to that firm in the future by an increased rate of profits.
It is the purpose of the Amendment to allow the nation, which is contributing the money, to have a share in the profits when they are made. It is a simple proposition. It should be realised that there is a growing body of public opinion very much concerned about the purpose of the Bill. I was interested in finding the other day that The Guardian talked about the procedure that is being adopted nowadays in supplying public money to private firms. It said:The whole question of the use of public capital by private industry deserves much more careful consideration than it has had from Parliament so far. Over the past year or so the Government have become committed to putting up substantial sums of money for a number of industries.The Guardian quoted a large number of cases, which I will not mention now, for it would be out of order, but it is a background to our debates that a great many other industries and firms are involved. That being so, it is very important, even though we are objecting to the way in which this is done, not to throw out the baby with the bath water. I would not go as far as some other hon. Members in being so critical on principle about the supply of public loans to any industry at any time, for that is sometimes necessary. As we continue to live in an economy in which a number of important industries belong to the nation, a number are privately owned, and a considerable number of firms still belong to the nation though the Government have the clear intention of selling them back to private shareholders, it is obvious that there must be a number of different attitudes.
It is sometimes argued as good and sound public policy—and we have often urged the Government to do this—that the Government ought to encourage and induce certain firms to go into certain parts of the country. When that takes place, I can well understand that the Government have to provide inducements. On a later occasion, when the Committee deals with another Amendment, we shall be able to discuss wider aspects as to how that can be efficiently organised. The earlier Amendment bases itself on a situation that industry 295 is only partially nationalised and partially privately owned, and, though it assumes that there is no reason at all for the denationalisation of Richard Thomas and Baldwins, we must realise that there is a definite intention on the part of the Government at some stage to sell that firm back to private shareholders.
I do not know what Members opposite feel about the timetable the Government are following. That is not my business. I would desire that they would never do it, because the industry has been run very successfully under nationalisation. I do not expect Members opposite to agree with that, for that is one of our basic disagreements. We are dealing here with one of the commanding heights of the economy and Members opposite will not expect any other policy from me than the one I have believed in all my life.
We must face the facts of life. It is obvious that it is the intention of the Government at some stage to return Richard Thomas and Baldwins to private shareholders. Therefore, it is virtually true to say that although this vast sum of money will be provided, it will be provided at a very low rate of interest. It is now assumed that the Government will borrow at the current rate at which they are advantageously able to borrow and that they will add ¼ per cent. to that to make the rate at which they lend the money to the firms concerned, which would be a very much lower rate of interest than the firms would have to pay on the money market.
I can well understand that there are many people who will be alarmed at the prospect that that should be done without the nation having any future share in control. We have already debated that matter very usefully. However, there are at least as many people who will be equally concerned about the return on the capital so invested.
In the last eighteen months, there has been a great deal of discussion about why there have not been more approaches to the money market by the steel firms. May I kill stone dead what has been alleged on the Second Reading of the Bill and on many other occasions, that it was merely the threat of nationalisation which prevented firms from 296 going to the money market? It was nothing of the sort.
When the people who were assembling the facts for the Spectator inquiry into the steel industry last year came to investigate the matter, they found a host of other reasons alongside that. One of the main reasons which they found was that there was a long period between the erection of a steel plant and the first return of profit, and that it was a major undertaking to decide in advance on an outlay of £80 million, £100 million or £150 million to erect a new steel works when that decision had to be taken in the light not only of future capacity, but future markets.
Anyone with any knowledge of the steel industry knows that this is not in the least controversial in any of the boardrooms or among informed trade union leaders who have been discussing this matter with the managers. The first consideration is future steel-making capacity to be married to future demand. If hon. Members refer to the journal of the Steel Federation, they will find that in the years 1950, 1951, 1952 and 1953, there were a number of articles dealing precisely with this problem.
This is how the argument was advanced: "The Government are pressing us to expand steel-making capacity; what will happen in six or seven years if there is a recession and steel cannot be bought, if there are not sufficient people who want to use it?" That has been one of the decisive reasons why the market has often been reluctant to provide the vast sums of money which might be needed. One of the decisive reasons why steel owners have preferred not to go into the money market for these demands arises from the fact that the argument about where the steel strip mill should be sited, according to the Spectator inquiry, took up six or seven months of fierce arguing while another twelve or eighteen months were spent on arguments between the Federation and individual firms. Anyone who knows anything about those negotiations will be bound to agree, whether he agrees with my conclusions or not, that those two years or more, spent on an argument between individual firms and the Board, were a time which was decisively lost and which had nothing whatever to do with nationalising the industry.
297 It is very important to get away from the atmosphere of electioneering and instead to look at the facts calmly. What conclusions we reach about an industry as important to the economic life of the nation as the steel industry will be decisive no matter who happens to be in office at any given moment. That is why I ask hon. Members to look at the facts calmly and fairly. Those were the decisive reasons why expansion did not take place. I quite understand that the Government found themselves in considerable difficulty when they agreed to induce the expansion which they seemed to think was necessary and in addition to that wanted to induce individual firms to go into certain parts of the country. It is important that hon. Members on this side of the Committee should realise that as well, because we might one day find ourselves in a similar position with the steel industry, which, I hope, on coming to power, we shall take back into common ownership, with other industries like the engineering and aircraft industries. This is a problem which any Government will have to face.
The important thing to be remembered is that those difficulties are no justification for not doing the honourable thing and saying to the country and the industry, "We are advancing these loans on particularly advantageous terms to you and we are doing it on behalf of the nation, but in return we insist that a share of the profits should accrue to the nation when they are being made in the years to come."
§ Mr. Anthony Fell (Yarmouth)
When the hon. Member suggests that the nation should share in any profits, would he agree that the nation should also share in any losses?
§ Mr. Mendelson
Certainly. If a firm uses its own capital and is a concern which raises the capital either by reinvestment or by using capital derived from the: money market, then it can do as it likss, but if it uses public money, then, as we are trying to show in our other Amendments, it is the duty of the Government to ensure that the firm does not make losses. [Laughter.] Let hon. Members wait a minute. Ever since the days of our various students' unions, when we all debated the sort of catchpenny question which has just been put —" Have you stopped beating your 298 wife?"—we have known that one must never answer such questions with a "Yes" or "No". It is essentially part of our plan, with common ownership or in a mixed economy, to make sure that industry is directed in such a way that the community benefits. If that is done, then my answer is in the affirmative and I say that the State and the community have to share in losses as well as profits.
§ Mr. R. Gresham Cooke (Twickenham)
In other words, the hon. Member would follow the example of the British Transport Commission which is losing millions of £s?
We must be careful not to get on to the next Amendment and away from that which we are now discussing.
§ Mr. Mendelson
I accept your Ruling, Sir William, but, with respect, if I had hidden behind the rules of order, I should have heard from hon. Members opposite from now until Domesday that the question had been evaded. That was my difficulty. I do not mind if we talk about the railways. I hope that there will soon be an opportunity to talk about the railways a great deal and to show that it was the panic change of plans imposed in 1957 which was responsible for the difficulties of the railways. We shall return to that in good spirits cm another occasion.
It is important to realise that many people have many fears about a policy by which the expectation of future profitability—and we are not talking about peanuts—accrues to private shareholders. The increase in profits in one steel company in one year was more than £1 million. It is important to realise that one of the reasons for the increase in profitability recently is to be found in the little word "recession"—nothing to do with the threat of nationalisation. The chairman of one of the major steel companies has a heading in his annual report, "How we came through the recent recession."
One of the reasons why I am anxious that as a matter of equity these profits should be shared with the nation and not only with the shareholders is that many of our industries which are now private companies and many of the firms which will be sold back to private shareholders, under the guidance of Her 299 Majesty's Government, are profitable for their shareholders because they are largely dependent on the success of the nationalised industries. But for the demands from the nationalised industries, many of those profits would not be earned. That is a simple fact of economic life and it is not controversial in the steel industry, or in the privately-owned engineering industry. That being so, on all these facts as well as on moral grounds it would be a good thing if agreement could be reached on the Amendment.
I have recently spoken to members of the electorate, and to groups of trade unionists at various conferences. I have been surprised at the number of people who have put questions to me on this subject. There is a lot of talk about apathy. There is a lot of talk about people not being interested in what is going on. Let me assure the Committee that people are greatly interested in what is being done in their names in this procedure under the Bill. The Government must be jolly careful about the decisions they make in this part of our proceedings.
If the Government accept the Amendment we shall at least be able to say that the nation's money is being used, and that the nation will derive profit from what has been done in its name. But if they do not, we shall know that they are returning to the old policy which Tory Governments have pursued in the past of using public money but allowing the nation no share in the profits.
Mr. Jack Jones
I support the Amendment on financial, sensible, and moral grounds. We hear a lot about morality in finance. Nobody on the other side of the Committee can say that this Amendment does not have a 100 per cent. moral basis. The position is simple. We are asking 52 million John Bulls to put their brass into the steel industry.
They have been told in effect, "Please hand on your money and we will pay you an undetermined amount of interest. It has not been decided what the interest will be, but, having acquired your money, we shall build blast furnaces, steel furnaces, rolling mills and, in the case of Colvilles, a modern strip mill. 300 We shall enhance the value of the existing works to the tune of £50 million and allow the equity shareholders to receive the benefits accruing from the production in the new plant, but you, the people who are putting in the money, will receive a fixed rate of interest of probably 3 per cent., 4 per cent., or 5 per cent." All we are asking is that John Bull should, as a result of the sweat and toil and moil of directors, departmental foremen, managers and steelmen, have an equitable share of the profits.
The answer to the silly question of what happens with the losses, is that there are no losses, because prices are fixed on the least efficient in the steel industry. The least efficient company in steel gets the same price on the British market, or the world market, as the most efficient. We are putting £50 million of public money into an industry and, if efficiency is not improved, costs reduced and overheads remain static, I am a Dutchman. If that is wrong I will regard myself as not knowing anything about the steel industry, and I have lived in it all my life, as did my father and grandfather.
A few weeks ago we had a discussion on the same problem and the hon. Member for Kidderminster (Mr. Nabarro), with his usual aplomb, tried to get at the miners who have some money in steel. The Co-operative Wholesale Society has money in steel. The Prudential also has money in steel. It is at a fixed rate of interest without a single vote to give the company power to decide how the money is used. The miners' investment fund is to care for the sick miner. There would not have been so many sick miners if there had been a proper mining industry when hon. Members opposite were in power.
§ Mr. Nabarro
The hon. Gentleman will be aware that the funds of the National Union of Mineworkers invested in the steel industry are invested in equities as well as in preferred stock. I am in sympathy with the view he expressed about the prices of the steel industry being controlled by the least efficient. He is right. That is why the Conservative Party's Restrictive Trades Practices Act, 1956, is so effective because these steel agreements are to be heard by the court.
§ The Temporary Chairman (Mr. F. Blackburn)
Order. I think we are rather getting away from the Amendment, whether a share of the profits shall accrue to the Minister. I do not think that we can go into the detailed discussion that we are having now.
The Amendment is based on moral grounds. All it seeks to do is to give the Minister, and through the Minister the Treasury, and through the Treasury the people of this country— and possibly the old age pensioners—a bob or two more than they will get if the Bill remains unchanged. Fifty million pounds are going to Colvilles and £70 million to Richard Thomas and Baldwins, a company which last year remained nationalised and made a cool £2¼ million profit. It was the only company in Great Britain that worked to full capacity. I defy contradiction that the company worked to full production. It made that profit after paying taxes, and it put back into the company more money than any other company in the country. It is no wonder that it is to be denationalised. As the hon. Member for Kidderminster says, it is a blue chip. Denationalisation is so urgent that he is tripping over himself to buy shares, and his cronies are doing the same.
The object of the Amendment is simple. It is that John Bull's brass, which is to be put in to improve the industry, should earn for John Bull a profit comparable to that which is earned by private money. If there is nothing in that, let hon. Members opposite go into the Lobby and say so.
§ Mr. Grimond
I have one or two questions to ask relative to the Amendment. I think many of us felt as we considered the Bill that there were two points to bear in mind. One is that, granted this sort of Government assistance that is to be given—and we are precluded from considering the principle of the matter —we should do our best to safeguard some fairness between firm and firm. In all these cases in which Government money is given to an individual firm a tendency is growing up to create unfair competitive conditions in industry. Furthermore, there is a tendency to favour new undertakings, in many cases at the expense of older firms established in the district.
For instance, round the Glasgow district there is the firm of Stewart and 302 Lloyd. It provides a lot of employment, and it may consider that it makes as valuable a contribution to the employment situation and wealth of the country as do Colvilles, but it is not able to get this money on these favourable terms. Secondly, there is the question of being fair to the public, or being fair between Colvilles and the public.
In considering those matters we are in a difficulty because of the form in which this has been done. The loan is ostensibly made under a Bill which is not designed to cure unemployment. It is not designed for social purposes. It is designed to enable the Government to give assistance where it is considered necessary for the well-being of the steel industry, and for economic reasons. In fact, we all suspect that Colvilles were not very keen to have this strip mill. It is outside the usual line of its products, and it would no doubt rather have had money to produce the kind of steel which conforms to its traditional lines.
We also suspect that the Government were keen to get Colvilles to provide a strip mill in Scotland. It was done for social more than for economic reasons. But the Government's ostensible reason is that because of the wickedness of the Labour Party, which threatened to nationalise the steel industry, these unfortunate firms could not raise money on the market and were therefore prevented from expanding.
During the Second Reading debate considerable doubt was cast on whether that was true, because some firms raised money at the time in question. Secondly, it brings in a new principle, because if before the next election the Labour Party proposed nationalising the whole of the machine tool industry we should presumably have demands from that industry that the Government should provide their capital.
§ The Temporary Chairman
The hon. Member has referred to the Second Reading debate. He is now making a Second Reading speech.
§ Mr. Grimond
I was referring to it only in passing, Mr. Blackburn. There is some difficulty in discovering the real motives of the Government. We have been told that it was done to counter a Socialist threat.
303 If we accept that, we have a right to ask two things of the Government. First, there is no doubt that they have made Colvilles a much more attractive proposition by putting up this money. If hon. Members do not believe that, let them read any circular from a reputable stockbroker. It will point out that the firm of Colvilles has settled its capital financial transactions for the time being. That makes it a more attractive investment. That being so, the Government have an obligation to look closely at the rate of interest charged to Colvilles, both as between the Government and the public and between the shareholders of Colvilles and the shareholders of their competitors, in order to make sure that that rate of interest is not such as to put Colvilles' competitors at a severe disadvantage, or to ensure that the shareholders come off very much better than the taxpayers.
Secondly, there is the firm of Richard Thomas and Baldwins. That firm is on a slightly different footing. It cannot go to the market, and it has been said that it may soon be denationalised.
§ Mr. J. Griffiths
I know the history of Richard Thomas and Baldwins. It has been more successful under nationalisation than it ever was before it.
§ Mr. Grimond
I yield with gladness to the right hon. Member for Llanelly (Mr. J. Griffiths) in order that he may again make his point about Richard Thomas and Baldwins, but I would point out that there is a possibility that it may be denationalised.
§ Mr. Grimond
I am in favour of it. Perhaps you will assist me in keeping the hon. Gentleman in order, Mr. Blackburn.
§ The Temporary Chairman
I should be grateful if we could get away from the question whether it will be denationalised or renationalised.
§ Mr. Grimond
If it is to be denationalised the Government will have to be sure that the substantial injection 304 of capital at rates preferential compared with those applying to the rest of the steel industry is taken into account.
Part of the object of the Amendment might be met if the rates of interest were rightly fixed in the case of Colvilles, and if, when Richard Thomas and Baldwins were denationalised, its favourable position in already having had its capital financing met for the time being were taken into account and reflected in the price.
§ Mr. Strauss
I have been listening with great interest, waiting to hear Liberal opinion about the principle which is now being discussed. When public money is loaned in large quantities to a private company, is it right that the public—the taxpayers—should benefit out of any profits subsequently made as a result of that investment?
§ Mr. Grimond
To begin with, I made it clear in the Second Reading debate that I am doubtful about the whole proceeding. I hope that it is an exceptional proceeding. In most cases, where public money is given to assist a company it should be given for a specific purpose, such as to make good any drawbacks which the company may suffer as a result of its moving into a certain area. It should not be given merely to encourage a successful company to earn profits by erecting a strip mill when such a mill is outside its normal kind of business. In general, however, the right way to proceed is to have control over the financing and, secondly, to charge a proper rate of interest
§ Mr. Nabarro
The speech to which we have just listened is worthy of only one word by way of description, and that is "equivocation". It is the traditional Liberal speech in this House, in which the Leader of the Liberal Party refuses to say—in this case in the context of the Amendment—whether he is in favour of State participation in profits earned as a result of State investment.
§ Mr. Grimond
I tried to make it as clear as I could, but the hon. Gentleman does not listen, because he is always talking. I tried to make it clear that I am in favour of this Committee being told the rate of interest. It will presumably be a fixed rate, and it should be an adequate rate, commensurate with that charged to other companies. As a 305 general rule I am not in favour of the State having equity shares in industry— as Liberals have always made clear.
§ Mr. Nabarro
But the Amendment refers to the word "profits". The hon. Member still equivocates and refuses to tell the Committee which side of the fence he is on. Is he on the Tory or the Socialist side? I ask him once again. He complained of my talking continuously, but I will take up only two more sentences and then I will give way. In context of the Amendment—I said that because I thought that you were about to rise, Mr. Blackburn—
§ The Temporary Chairman
The hon. Member is usually worried as to whether the Chairman is going to rise or not.
§ 6.45 p.m.
§ Mr. Nabarro
I am delighted to see that you did rise, Mr. Blackburn, but I am still very much in order. The Amendment refers to profits, and I again ask the Leader of the Liberal Party to tell the Committee whether he is in favour of State participation in profits earned following State investment. That is the question. Will he now answer it?
§ Mr. Grimond
Ceftainly. Surely the hon. Gentleman can follow. I am against the State taking shares and therefore sharing in the profits of private industry, for various reasons which I have often given that I will not now develop.
§ Mr. Nabarro
Jolly good. I (have one more adherent in this matter. The hon. Member now acclaims himself a supporter of the Conservative view in this regard.
§ Mr. Grimond
No. I said that the whole matter arises out of a Conservative Bill, which the hon. Member is opposing.
§ The Temporary Chairman
This is not very much to do with the Amendment that we are supposed to be discussing. In a debate on the Amendment it is not in order to try to elicit 306 the whole philosophy of the Liberal Parry.
§ Mr. Nabarro
Perhaps my approach has been fragmentary, but at least I have established the single point that the Leader of the Liberal Party, in the context of profits referred to in the Amendment, is with the Conservative Party and against 'the Socialist Party.
My intervention takes the form of a single question put to my right hon. Friend the Minister of Power. We cannot consider the merits of this or many following Amendments until the Minister tells us what rate of interest is to be applied to loans made under the Bill. I hope that my right hon. Friend will not equivocate by saying that the rate will be related to the Bank Rate at the time when a particular loan is made. That is not relevant. Let us suppose that the loan were made today, with the present level of the Bank Rate at 5 per cent. What would be the rate applicable? If we were told that we would all know in future, when the Bank Rate rose or fell, what rate would be applicable to loans made from the Consolidated Fund in respect of the measures contained in the Bill.
Will my right hon. Friend be very careful to reply specifically, without equivocation, and tell us what is to be the rate of interest? That is what we all want to know.
§ Mr. A. J. Irvine (Liverpool, Edge Hill)
At a time when an industry is in process of being denationalised I view with great suspicion any provision under which large sums of public money are given or advanced on loan to that industry. It is that which makes me sympathetic towards the Amendment of my hon. Friend the Member for Penistone (Mr. Mendelson) which is designed to ensure that some part of the profits of the enterprise, after these advances have been made, will accrue in favour of the State. I do not know what would be the view of the hon. Member for Kidderminster (Mr. Nabarro) about that, but I ask him and hon. Members opposite, is there any evidence at all that when Colvilles—to take Colvilles as an example—was denationalised, the purchase price negotiated by the selling agency for the assets reflected in any degree at all the prospect of these enormous advances being paid to the company in the future?
307 If the price did not reflect that prospect, as I imagine it did not, is not it entirely unfair and inequitable that this loan should be made now without any provision for the recovery of profits from the enterprise, for the benefit of the public purse? Surely this goes to the heart of the matter. What is the development of the affair, seen in perspective? First, we have the decision to hand back substantial assets from the public sector to the private sector. Then we have the disposing agency, the selling agency, pursuant to its statutory duty, determining what is the appropriate, fair and reasonable price for the assets. A price is arrived at. Then, at some short interval of time after, the Treasury approves the disposal of the assets, by the selling agency, by I.S.H.R.A., and then along comes the Government and they start authorising advances and loans which enormously improve the prospects of the recipient company.
This fills me with suspicion. To me, it certainly makes unanswerably strong the claim incorporated in the Amendment moved by my hon. Friend that some part of the profits to be made by private enterprise after this loan should be brought back to the public purse. As has been said by the hon. Member for Orkney and Shetland (Mr. Grimond), there is no doubt that this advance to Colvilles has made Colvilles a far more attractive proposition for the investor, a far more propitious enterprise, than before. I think it entirely wrong—and I desire to place it on record—that that should not have been reflected in any degree whatever in the purchase price paid for the assets.
Were the Minister able to say to the Committee, as I conceive that he is not able, that when the assets of Colvilles were sold by I.S.H.R.A., the price reflected the possibility of this kind of advance being made a short number of years afterwards, he might have an answer at least to some of the arguments advanced by my hon. Friend in favour of the Amendment. If he cannot do that, I should have thought the substance of my hon. Friend's argument was made out.
§ Mr. J. T. Price (Westhoughton)
May I draw to the attention of my hon. and 308 learned Friend the fact that we need not speculate or talk in the abstract about recent transactions under which large sections of the industry were nationalised and handed back to private shareholders? I understand that it was assumed that the industry had an earning capacity of 7 per cent. and the capital payment to the State by private shareholders was on the basis of that 7 per cent. Within two years of the hand-over the earning capacity was revealed to be about three times the estimated rate. That process is going on. It is something which stinks and comes very near to corruption, in my opinion. It ought to be stopped.
§ Mr. Irvine
I am obliged to my hon. Friend. He is emphasising, with characteristic force, the point which I seek to make.
I ask the Minister to deal with this point. If he has to confess to the Committee that the kind of provision contained in this Bill was not reflected at all in the purchase price paid for the shares, it seems to me that he will make an admission of great importance. I wish also to ask that the right hon. Gentleman should give an assurance, arising out of this Amendment and the requirement that profits should go back to the State, that when Richard Thomas and Baldwins is denationalised, I.S.H.R.A. will see to it that the purchase price for its interests will reflect at least some part of the value of the loan now being made.
§ The Temporary Chairman
Order. The hon. and learned Gentleman appears to be going outside the scope both of the Bill and of the Amendment.
§ Mr. Irvine
With respect, Mr. Blackburn, may I put to you that surely there is relevance between the amount of the price to be paid to the selling agency for this enterprise, after these loans have been made, and the question whether the Minister should share the profits.
My proposition to the Minister and to hon. Members opposite is that if the Minister can satisfy me that the buying price for Colvilles' interests, or for Richard Thomas and Baldwins', takes account of the scale of the loans being offered by the Government, I might be prepared to concede the argument that 309 it is inappropriate that any part of the profits should go back to the Minister. Unless the right hon. Gentleman can do that, I support the Amendment moved by my hon. Friend. With respect, Mr. Blackburn, that is my argument regarding the relevance of this point.
I am asking the Minister, in relation to Richard Thomas and Baldwins, to give an undertaking to the Committee that when these assets are transferred back to private industry, as we understand they will be—
§ The Temporary Chairman
Order. They are not being transferred under this Bill. The case which the hon. and learned Gentleman is presenting is all right so far as it goes, but we are not now dealing with denationalisation.
§ Mr. J. Griffiths
Are we entitled to ask the Government whether, while they are asking the public to provide £70 million to build new works for Richard Thomas and Baldwins, they are at the same time conspiring with private enterprise interests to secure a successful firm and hand it over to the profit-makers? This is public property and we are responsible to the public.
§ The Temporary Chairman
I have to give a Ruling that in a discussion on this Bill and on this Amendment, it would not be in order to do so.
§ Mr. Irvine
I accept your Ruling in that respect without question, Mr. Blackburn.
May I revert to the matter of Colvilles? The implications arising from the treatment of Colvilles upon the prospects for Richard Thomas and Baldwins will be apparent to hon. Members on both sides of the Committee. I ask the Minister to recall that under the 1953 Act, the selling agency and the Treasury alike are bound to have regard to all the relevant factors in determining what is the appropriate selling price of assets. One of the factors which, under the Act, the agency is required to bear in mind is the capital structure of the acquiring company. Huge loans of this character enormously affect the capital structure of Colvilles and therefore, under the Statute, it should have been an element in the calculation of the price. It is well worth while, I think, to remind the Committee of what that obligation was.It shall be the duty of the agency" —310 the Iron and Steel Holding and Realisation Agency—to secure … the return to private ownership of the undertakings "—
§ 7.0 p.m.
§ Mr. Irvine
Yes, it suits hon. Members opposite, experts in loot, experts in pillage and experts at the frivolous justification of the crimes after they are committed.
Provided that the agency may discharge their duty … in such manner … as they may with the approval of the Treasury determine, and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate.It goes on to say that the appropriate Department—that is the Treasury—in deciding what will be the appropriate payment to make, is required to have regard to the capital structure of the company. These loans we are discussing today substantially affect the capital structure of the companies.
It is, therefore, entirely wrong that the price for the purchase of these assets should be determined without regard to the kind of transaction to which this Bill and the Amendment refer.
§ The Temporary Chairman
With the best will in the world I cannot link what the hon. and learned Gentleman is saying in his speech with the Amendment. I should be glad if the hon. and learned Gentleman could come back to the actual terms of the Amendment and not discuss something entirely irrelevant.
§ Mr. Irvine
The argument is that if we have a loan being made by the Government and by the Treasury to industry in the fashion which this Bill provides for and if at the same time they are disposing of assets at prices which do not reflect the value of the loans, then it is appropriate that profits should be recovered for the Minister. That is how I argue the relevance of this point.
§ Mr. Cyril Bence (Dunbartonshire, East)
This has been a rather extraordinary Committee. I have served on Committees of one kind or another for eight years but I have never experienced one like this. This has been an amazing Committee. I want, if possible, to keep to the Amendment.
311 As I understand it, the purpose of the Amendment is to return to the Minister some of the profitability arising from the financing undertaken by the Minister. That seems to me to be a reasonable request. As I see it as a layman in these matters and as an ordinary taxpayer—we are all ordinary taxpayers here—the Government take some of our income, collect it and put it in the Consolidated Fund. They then hand it out to private enterprise. They are going to hand it out to Colvilles, Richard Thomas and Baldwins, shipping companies, the cotton industry and all sorts of other industries, and they are handing out these loans, I presume, at fixed interest rates. It may be 4⅞ or 4⅝ per cent. Whatever the Bank Rate may be tomorrow, next week or the year after, the interest is fixed for a period of years.
It may well be that when the representatives of the taxpayers, the taxpayers' Government, raise money, they may have to pay something more than that. So it is quite possible that the borrowing on industrial units like Colvilles, which is getting money from the taxpayers at 4⅞ per cent., may cost the Government 5⅝ per cent., but by the operation of that capital they may well make 33 per cent. To my mind this seems quite unjust. As a taxpayer, I resent the idea that taxation should be taken off me by the Chancellor of the Exchequer and handed to the Minister, who in turn hands it to Colvilles which pay the Minister, on my behalf, 4$ per cent. while they operate a plan to make 33 per cent. I feel very sore indeed about this.
This is an indictment of the whole monetary and financial system under which we live. We are taxed—I was going to use an un-Parliamentary expression—right up to the hilt. The Government take the money and then take a slice of that taxation to finance the industries which they have previously taxed. This seems to me to be a frightful contradiction. This is going on in everything. Which is to be the next industry? Is the motor industry to be the next? Is the next industry to have capital at a fixed interest rate? Is the aircraft industry to be the next? Are we to tax the people so that they cannot save and so that the Government can then lend the money to private enterprise at fixed 312 interest rates, which may cause a loss to the taxpayer and enable private enterprise to make excellent profits because it has not had to find the capital to build its industrial units? Is this the way in which Western industrial economy is proceeding? That is what the Government seem to be doing.
Is it in the interest of national planning? Do the Government need a planned economy, because, if they do, it is obvious that the motive of that plan is not in the interest of the taxpayers but in the interest of the equity shareholders. It is in the interest of the people who can get the equity shares. Again, I feel a bit sore about it, because if I want to raise capital with which to buy a house, or if my children want to buy a house, we go to a building society.
It is no good our going to the Minister with a begging bowl; it is just waste of time. It is no good our going to the Minister of Housing and Local Government who, in fact, wants to cut out subsidies. We have to go to the building society and pay interest rates based upon the Bank Rate. It seems to me that large-scale private enterprise can get the taxpayers' money at possibly below Bank Rate. It depends on the contract made. We do not know the rate of interest to be charged.
If there is to be any equity at all as between groups of taxpayers and industry, it is quite unjust that certain industries should be selected for preference and have cheap capital for their businesses.
The other point is this. Why should not the taxpayer—because, after all, the Minister represents the taxpayer—who is providing the money, not by lending it to the Government but by having it taken off him whether he likes it or not, have some of that profit given back to him by way of relief from taxation? The reason is this. The hon. Member for Kidderminster (Mr. Nabarro) suggested that the steel industry would be brought before the Restrictive Trade Practices Court, but the maximum prices of the steel industry are fixed by the Minister.
§ Mr. Nabarro
I am sure, Mr. Blackburn, that this is strictly within the context of this Amendment dealing with profits. It is not a suggestion on my part. Nine of the agreements that govern prices of rolled and rerolled steel 313 products are to be considered by the Restrictive Trade Practices Court under the Act of 1956 at an early date. That is very relevant.
§ The Temporary Chairman
Order. We are not debating how profits are arrived at but whether there should be some return to the public.
§ Mr. Nabarro
I quite appreciate that, Mr. Blackburn, but these are related subjects. I want to make this simple point in response to the hon. Member for Dunbartonshire, East (Mr. Bence). These prices are not fixed by the Minister. They are fixed by the Iron and Steel Board.
§ Mr. Nabarro
I am delighted to see my right hon. Friend immediately nodding assent. For once we are in complete agreement. At any rate I have made my point.
§ The Temporary Chairman
It is not very pleasant for the Chair to hear the remark, "At any rate I have made my point."
Mr. Jack Jones
The hon. Member for Kidderminster (Mr. Nabarro) is completely wrong. He suggested that the Minister fixes the price, but the Minister does not—
On a point of order, Mr. Blackburn. If an hon. Member makes a statement, surely it is within the ambit of order for another hon. Member to rebut that statement.
§ The Temporary Chairman
Order. I think that the hon. Member for Rother-ham (Mr. Jack Jones) will recollect that I stopped the hon. Member for Kidderminster (Mr. Nabarro) in the same way as I stopped the hon. Member.
§ Mr. Nabarro
Further to that point of order, Mr. Blackburn, I wish only to apologise to you for your overhearing what was intended to be a sotto voce remark on my part.
§ Mr. Bence
In the course of debating this Amendment much has been said about profits or losses of the steel industry. It is well known that the maximum prices of products, which bear some 314 relation to the profitability in the marketing of a product, are fixed between the Iron and Steel Board and the Minister of Power. The prices of scrap, iron ore, limestone and all the products of the industry are related, and all steel users pay the same price.
§ Mr. Bence
They are all bought in bulk. Provided the market is there the profitability is reasonably stabilised for the industry, especially when one considers that British steel is the cheapest in the markets of the world. Our steel is cheaper than any other steel produced. The profitability is therefore reasonably assured for the future, as far as one can see ahead. It has been mooted in this Committee that taxpayers should share the losse:; if there are to be any losses, but surely if we are to lend £50 million to a private company and it starts losing money it will not be long before that £50 million has gone down the sink.
§ Mr. Gresham Cooke
The hon. Member refers to the taxpayer being mulcted for the loans, but the Bill gives power to raise the money by borrowing. Presumably it will be raised by borrowing at a fixed rate of interest and then lent at a fixed rate of interest.
§ Mr. Bence
I covered that point as an alternative. The Government might borrow the money at 5 per cent., according to the market, and make a contract for lending at 4⅛ per cent., in which case the taxpayer would be losing. We do not know what the rate of interest is. We do not know whether it is tied to the Bank Rate from period to period. We do not know whether the interest rate will rise and fall with the Bank Rate. If we knew that, that argument could be eliminated. To me it is quite clear that this could be an alternative. The Government could pay more for the money to lend to these companies than the companies were actually paying the Government—that is, the taxpayer.
§ Mr. Grimond
I understand that the hon. Member is saying that in this case the Government ought to take what amounts to an equity interest and have some share in the profits. Would he apply that to loans made under D.A.T.A.C. and say that in making loans 315 to a company under that Act too that the Government ought to take an equity interest in the company concerned?
§ 7.15 p.m.
§ Mr. John Cronin (Loughborough)
I wish to support the Amendment so ably moved by my hon. Friend the Member for Penistone (Mr. Mendelson). I share the unhappy feeling of the Patronage Secretary about the progress of this Bill. It is very refreshing that this Amendment is being debated in an atmosphere which lacks the stridency of the discussion on the last Amendment. Perhaps that indicates that it might be favourably received on both sides of the Committee.
I notice that hon. Members opposite are quite relaxed. The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) is sitting in a relaxed position and the hon. Member for Kidderminster (Mr. Nabarro) has spoken only once in the last half hour. There is an uncanny silence. I cannot help feeling that we would have made more progress if the hon. Member for Kidderminster had not spoken so much today. I have always suspected that, unlike some monks, he has sworn a vow of eternal loquacity.
This Amendment is very simple. We have simply to decide whether the Government should receive a larger or a smaller return on the same loan. I should like the Committee to do a little mental arithmetic. I cannot ask the Minister to say what the rate of interest will be. That struck me as a rather naive question because no Minister can say what the rate of interest will be in future. Suppose, however, that it were 5 per cent. We have next to consider what is the working profit on that capital outlay. My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) suggested 33 per cent. I think that rather high.
316 Perhaps the best indication comes from the Report of the Monopolies Commission, which approved Imperial Chemical Industries profit because it represented about 15 per cent. of working capital. Some people say that in the steel industry the working profit on capital expenditure is about 20 per cent., but let us take the lower figure of 15 per cent. Shareholders of Colvilles and prospective shareholders of Richard Thomas and Baldwins would receive 15 per cent. on the total sum lent less 5 per cent. which I postulate as the rate of interest, less taxation. If one works that out one finds the total of £120 million and the difference between 15 per cent. and 5 per cent.—10 per cent.—makes £12 million a year.
§ Mr. Philip Bell (Bolton, East)
The hon. Member would not distribute all the profits. Surely there would be some tax?
§ Mr. Cronin
I said, less tax. All profits after taxation are not distributed, but those not distributed go into the assets of the company and therefore increase the value of the shareholders' holding. The shareholders would would receive roughly 15 per cent., the lowest figure, less the interest, less tax, and that is about £12 million a year. If one takes the higher figure it comes to £20 million a year.
As a responsible Committee, are we going to look with equanimity at this gigantic sum being lost to public funds? We have a real responsibility here. There are good grounds for ensuring that some of the money goes back into the public purse. Why must it go entirely into the hands of private shareholders?
It would have been suggested some years ago that this was a rather unusual way of achieving a loan. Years ago it was customary for a loan to be at a fixed interest, or to be of preferred stock or an outright equity. There was a fairly sharp distinction. In recent years it has been much more common for loans to made with the prospect of the lender having some interest in the equity.
If I may give an example, Imperial Chemical Industries has a capital of about £220 million. In 1957 it borrowed £40 million at 5½ per cent., but it gave the lenders an option to convert into the 317 equity at a certain time. That arrangement, which has been taking place over the last few years, has worked perfectly smoothly. Why could not we have a similar arrangement whereby the Government could, if necessary, convert the loan into an equity, or in some way have a share of the equity profits?
If I may give another example, the Finance Corporation for Industry lends large sums to industry, but in the majority of cases the Corporation imposes a condition that it has a right to convert its loan stock into an equity at a specified future date. Therefore, there are ample precedents for my suggestion. There is no satisfactory reason why these gigantic sums should be lost year after year simply because the Government will not accept the Amendment.
I do not think that the Amendment cuts across any party lines. The Minister must feel responsible for easing the burden on the public purse. He knows that below the Gangway there are several hon. Members who have the strongest feelings about Government expenditure. In the last week or so they have staged the most strenuous demonstrations, showing how much they object to the increased scale of Government expenditure. Therefore, I hope that they will support the Amendment. It will save money and be reflected in taxation. It is a reasonable Amendment, and I hope that the Minister will be able to accept it.
The Government have produced a strange sort of mongrel in the steel industry now. It is not competent for us within the scope of the Amendment to discuss the principle of public money being invested in the steel industry. What we suggest is that, public money now being there, it is proper that, in the words of the Amendmentan equitable share of the profits shall accrue to the Minister".In this respect, it is helpful to look at what we are discussing when we talk about the public money now invested in the steel industry. It is important to get the problem into perspective. I was interested in something said by the hon. Member for Kidderminster (Mr. Nabarro) on Second Reading—The State's stake in steel at 1st January, 1960, was £239.8 million, but added to that is 318 a further proposed State investment now of £120 million "—that is, the proposed investment we are now discussing—making the total State investment in steel, if the Bill goes through unamended, up to approximately £360 million, or £110 million larger than at the date when we commenced denationalisation of steel eight years ago."— [OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 1500.]This is a most fantastic situation. This is the issue we are discussing within the context of the Amendment.
One hon. Member asked my hon. Friend a rather rhetorical question. He asked whether we would accept losses just as we want profits. The quite unequivocal answer is "Yes. We will chance losses in the steel industry any time." If that were not the case there would never have been a Bill to denationalise.
We are discussing an act of the Government which robs the State of profits which would otherwise have accrued to it. We transfer what is a profitable asset from the nation to private enterprise, despite the fact that the Government allege that the private sector is unable to obtain sufficient finance without using public money. We are now lending this public money to private enterprise at terms more advantageous than those at which the nation lends itself its own money. This is the background against which we are now discussing the Amendment.
The Leader of the Liberal Party was asked one or two pertinent questions by the hon. Member for Kidderminster.
I thoroughly agree. The Leader of the Liberal Party was asked what the attitude of the Liberal Party was to the question whether the State should profit from its moneys invested in private enterprise. The Leader of the Liberal Party quoted the case of Stewart and Lloyd, Limited. His heart was bleeding for that company, apparently, because it did not receive the advantageous terms which Colvilles are to get under the Bill. I do not know whether the Leader of the Liberal Party is aware of the financial constitution of Stewart 319 and Lloyd, Limited. There are 5 million 5½ per cent. redeemable cumulative preference shares of £1 each, 5 million 5½ per cent. cumulative preference shares of £1 each, and £10 million 4½ per cent. Unsecured Loan Stock 1964 still owned by the State. From none of it is the Exchequer or the nation as a whole able to profit in the sense of receiving profits on the level of those which the manufacturing profits of Stewart and Lloyd now yield.
I could go through a whole list of the moneys still invested by the nation in these great firms. Already Colvilles Limited has £14 million of public money invested in it. That money is at fixed interest, and we get nothing but that from it. Dorman, Long and Co., Limited has £15 million of State money invested in it. The State investment in John Summers and Sons, Limited is £12 million. The Steel Company of Wales, Limited has £65 million of public money. These are the questions about which my hon. Friends are most concerned.
I will now examine what has happened to these firms since denationalisation and ask hon. Members to relate it to the public money invested in them. I will give, for instance, an estimate of the increase in value of steel shares since denationalisation till 18th March of this year, allowing for bonus and rights issues. United Steel, which was sold in 1953, has appreciated by 371 per cent. Stewart and Lloyd, Limited, about which the Leader of the Liberal Party is worried, has appreciated by only 217 per cent. John Summers & Sons, Limited has appreciated by 452 per cent.
Dorman, Long & Co, Limited has appreciated by 232 per cent., Colvilles by 190 per cent., and the Steel Company of Wales, about which the hon. Member for Kidderminster is anxious, by 137 per cent.
Based on this kind of appreciation, which includes a very great agglomeration of State capital placed in these great firms, my hon. Friend suggests that it would be right and proper for the State itself to have an equitable share of the profits which accrue from this kind of investment.
§ 7.30 p.m.
§ Mr. Fell
On a point of order, Sir Norman. The hon. Member for Newton (Mr. Lee) himself said that it would be out of order, or at any rate he assumed it would be out of order, to discuss the principle affecting this matter. Is it not out of order for him to start discussing the principle in this way?
Further to that point of order, Sir Norman. If I may say so, with respect, what we are here discussing is an equitable share for the State in the profits which accrue as a result of the investment of State moneys. I have reminded the Committee about the appreciation of the shares in these firms as a result of the investment of public money in them, and I take it that it is quite in order and within the framework of the Amendment to do that.
§ The Temporary Chairman (Sir Norman Hulbert)
We are discussing not how profits are made but how they are distributed.
With respect, I do not think the hon. Member for Yarmouth (Mr. Fell) has listened with his usual attention to what I was saying. I said that we could not discuss on this Amendment the principle of whether public money should or should not be invested in private enterprise. I said that we could not discuss that principle within the terms of the Amendment, but we can, I submit, discuss the things which flow from it. I was giving the position in the steel industry which has arisen as a result of the large investment of public money within it.
I really have not yet heard any argument showing that we are wrong in asking for a fair allocation of the profits which flow as a result of these investments. I will give way now if any hon. Member opposite can advance one reason why it is unfair or improper for the nation to expect a return on the huge blocks of public money invested in the industry. I care not for this purpose whether one takes the principles of Toryism, of Liberalism—if anybody 321 knows what they are—or of the Labour movement. We are asking that there should be a fair distribution of profits.
The Minister could bring this debate speedily to a close by saying that now that the Government have said that it is impossible to finance the steel industry by the usual methods of going to the market and, in other words, it is essential to put up public money for investment, it is proper Chat that public money should show a return for those who do the investment.
§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)
The hon. Gentleman talks about these moneys not receiving a fair return. The various stocks in each of the companies to which the referred pay a dividend. Those loans are made for repayment and the interest is paid as laid down. It is, therefore, a commercial transaction, a loan. Loans which pay interest and receive repayment do have a return.
But why are these loans still in public hands?—because they are not sufficiently attractive for private enterprise to buy up.
Then why are they not bought up? The hon. Member knows a great deal about these things. He is being far too naive.
I am arguing that if the loans we are here discussing cannot be raised on the market and have to be raised in the way the Minister asks us to accept, then it is proper that they should yield a fair and equitable rate of profit based on the profitability of the industry in which they are invested. What could be fairer? As I say, I have not heard a single argument from the benches opposite to show where my hon. Friends are wrong in asking for this fair method of distribution of profits in this respect.
§ Mr. Grimond
May I put to the hon. Gentleman the same question which I have already put, with some difficulty? Does he apply this to loans under all Acts, to all kinds of industry, for instance, under D.A.T.A.C?
I am very sorry, Sir Norman. With my usual courtesy, I was trying to enlighten the Liberal Party about the real principles of this matter.
Sir H. d'Avigdor-GoIdsmid
I am doing my best to follow the hon. Gentleman. Is he now suggesting that the original terms on which these loans were granted ought to be altered and that what was a fixed-interest loan should be turned into one with varying interest? If so, will he cast his mind back to days more than twenty years ago when all these great companies that we are now discussing were not earning profits at all? What is sometimes said about "sauce for the goose" can be used against the hon. Gentleman. I cannot really believe that he is advocating as Government policy that loans made by Governments or other institutions should have their terms changed in that way.
If the hon. Gentleman wants me to go back twenty years, I can tell him of the preferences which this industry received at the hands of Conservative Governments at a time when it was in very dire straits indeed. But I shall not develop that point in order to keep within order.
As regards the other point raised by the hon. Gentleman, I say that we certainly have Amendments down to alter the financial structure of the companies. Why not? At the time when these moneys were invested, this "mongrelisa-tion"—if I may use that awful word— of the steel industry had not taken place. Now there is a very different situation in the whole system of financing. Therefore, I should like to change the capital structure of these firms. I should like to feel that the nation was now able to have a far higher return on the moneys it has invested than is possible on the basis of these loans which were granted some time ago.
§ Sir H. d'Avigdor-Goldsmid
Surely, these loans are related to particular projects. The costing of a project, as the hon. Gentleman knows perfectly well, allows for a certain scale of depreciation, which is tied up with the cost of interest on the borrowed money. If one suddenly raises the rate of interest which has to be paid, the depreciation and other costs will suffer. What the hon. Gentleman suggests is really the most optimistic form of Socialist financing that I have ever heard.
If the hon. Gentleman will look at the 1953 Act itself, he will see the answer to his point about depreciation and that kind of thing.
The basic point was put by my hon. Friend the Member for Penistone (Mr. Mendelson) who opened the debate. We have not had any argument deployed to contradict the points which we have made. We do not approve of this kind of financing, but, confronted with it now, we believe it to be right and proper that those who hold what is comparatively a minority share in this great industry should not be the only ones to benefit as a result of the totality of the financing of the steel industry. We ask the Minister to say that it is his intention so to amend the agreement which he has made with these companies that we can ensure that the nation will receive an equitable share of the profits which will accrue as a result of the transaction we are here discussing.
§ Mr. Wood
This debate, like the previous one, seems to have ranged rather widely. In fact, I had to confer with one of my colleagues on the Front Bench about which Amendment we were discussing.
I should like to begin by discussing in a fairly objective way the heart of the Amendment which seems to have received fairly scant attention. One thing that does not seem to have been discussed is the definition hat can be placed on the phrasean equitable share of the profits".In view of the Amendment of the hon. Member for Gloucester (Mr. Diamond) with regard to the assessor, I hoped that at least the assessor would be able to define the equitability of the share. That is why I expressed some doubt about what the assessor would do and whether 324 the point of the assessor was to assess the equitability of the profits.
If the Committee were to agree to this Amendment, it would be faced immediately with several problems. The first would be the difficulty of reaching agreement on the exact proportion of profits which should be distributed and the proportion which should be reinvested or put to reserve. Secondly, we should be faced with the difficulty which would arise from the different kinds of rights enjoyed, on the one hand, by shareholders and, on the other, by those who hold fixed-interest securities. I think that the Committee will agree that if the Amendment were accepted there would be two entirely different kinds of claim on the earnings of the company.
Lastly—and, to my mind, this is a serious criticism of the Amendment, although hon. Members may hold different views—it would remove control of the company from the hands of the shareholders and directors. I conclude that what is proposed in the Amendment is not a mere alteration in the contract which was reached between the Government and Colvilles but a very far-reaching change with almost indefinite implications.
The Government agreed these loans on a fixed-interest basis.
§ Mr. Wood
I am prepared to face this question. It was specifically asked by my hon. Friend the Member for Kidderminster (Mr. Nabarro). As he is not here, I was keeping the good news for later, but if other hon. Members are interested in the news I am prepared to say that the rate of interest, if a tranche were issued today, would be 5½ per cent. That has regard to the rate at which the Government are able to borrow at any given period. I cannot say what the rate of interest might be in future. If a tranche were borrowed today, it would be at the rate of 5½ per cent.
In the Government's view, and apparently in the view of the Committee, these agreements represented a fair bargain for the Government at the time that they were made. The nation needed extra productive capacity and at that time the money could not be otherwise 325 raised. There were undoubted risks from expansion for a firm in advance of local demand. At the same time—I think the Committee must remember this—these developments were welcomed by the House and perhaps especially by hon. Members opposite who saw in them, rightly I think, new hopes for Scotland and South Wales. There was no cry then that the Government should exact more than a fair return on their outlay, because, although this has received little attention this evening, one of the problems of profit sharing is the obligation also to share possible losses.
If hon. Members in 1958, when the agreements were made, had urged the Government to share the profits which might accrue from the making of these loans, they must have faced also the risk of loss. In fact, the Government, as we know now, and as we saw then, faced no risk. They were bound to get their money back. The risk was faced by Colvilles, and because Colvilles faced it successfully the Amendment is on the Order Paper today.
I suggest that it is rather late to back one's horse when it has already passed the post. I do not know what would be thought of a Government which made the best terms they could at a time of difficulty and then sought later, when things became a little easier, to alter them. The hon. Member for Penistone (Mr. Mendelson) spoke about our doing the honourable thing. The hon. Member for Rotherham (Mr. Jack Jones) said that this Amendment represented 100 per cent. morality. I cannot believe that it is 100 per cent. morality to alter a contract unilaterally when it suits one to do so.
I therefore feel that the strongest case against this Amendment and others is that it would make it essential to renegotiate agreements which were entered into in good faith by the Government and the steel companies merely because at present it might be to the advantage of the Government to get a better agreement than they possibly could have foreseen they would get when they made the agreements. I therefore ask the Committee to reject the Amendment.
Mr. Jack Jones
The Amendment does not seek to do what the Minister said it seeks to do. There is no question of the rate of interest paid by the com- 326 pany being altered. The purpose of the Amendment is simple. Its purpose is to enable the nation to obtain a fair equitable share of the profits resulting from its capital investment. The interest rate can remain the same.
§ Mr. Mendelson
There are one or two points which were made by the Minister and the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) on which I want to comment. Whatever decision the Committee takes, this sort of situation might arise again. The mere repayment of the loan, whatever the rate of interest, is not the burden of our argument. I do not know whether the hon. Member for Walsall, South was present during our discussion on the Amendment, but he will realise that this is a rather special kind of agreement. It is not the normal agreement between a borrower and lender. The Minister has confirmed that. He has told the Committee that there were special reasons for inducing a particular firm to do a particular thing, and that the terms were agreed under conditions of difficulty from the Government's point of view.
Our argument concerns the use of money lent in this way to increase future profits that will accrue to the private shareholders of that firm. We say that, if money lent in this way is used to increase profits, some of them should go back to the nation. This is a different arrangement from the normal arrangement on the money market between borrower and lender.
I think that it should be common ground that the narrow definition that we have heard of what is honourable does not meet the point. When my hon. Friend the Member for Rotherham (Mr. Jack Jones) argued about morality, he made a point which is well understood among people outside this Committee. Many firms are not in the position that the firm that we are discussing will be in. It is not only a question of people who have no interest in the business community.
There is involved here a special arrangement concerning the borrowing 327 of money by the Government and the transfer of that money to a private firm. When that is done, it is surely right that the Committee, and, above all, the House of Commons, should look at the terms of the contract at the first available opportunity.
I am amazed that the right hon. Gentleman should say to the Committee that we have no right or that we are acting immorally when we carefully scrutinise the terms of the contract with this firm. What other opportunity have we got to do it except today? We are doing it at the first available opportunity. If it is to be the common practice that Ministers engage in negotiations involving public money and borrowing by the Government, and then enter into agreements, and come to the House of Commons to tell us that this has all been done and that nothing can be done about it, it will mean the abdication of this House, and we will not stand for that. This matter will be debated up and down the country, because it is so serious. It involves a principle that comes very dangerously near to special arrangements not sub judice to the scrutiny of anybody democratically elected.
A great deal has been made of the position of shareholders and directors of companies twenty years ago. Obviously, so long as the Government are not called upon to borrow money on the market and transfer it to private firms, the risk taken twenty years ago— I am well aware of this, and agree to this extent with the hon. Member, that a national asset like the steel industry needs encouragement at times, and I said that when moving the Amendment. I agree with the Minister and I welcome, as did my right hon. Friend, the expansion of the industry, for which we have asked and which is in the national interest; but surely it is possible to combine the national interest with arrangements to allow the firms to be built up and the industry to expand, and some of the profits to accrue to the nation?
The Minister has asked us how we are to make the assessment, and he links that with the Amendment moved by my hon. Friend. I do not know what is in his mind in thinking that an assessor 328 could do the job. I do not think he would be the man to do it, even if the Amendment were carried. The assessment and the decision as to what is equitable must be reached by agreement between the Government, who are borrowing the money on the market in order to lend it to the firm, and the firm concerned, but surely it is not beyond the wit of the Government to say, "This is what we regard as equitable."
I suggest immediately that it could be related to the contribution made by the new investment to the future appreciation of the shares of the company, and the hon. Gentleman opposite knows a great deal about these things. There are many other ways which we could think of as to how that could be assessed, and I cannot believe that the right hon. Gentleman has not got able advisers who could propose a scheme of that kind to him in better terms than I can. I see no reason why the Government cannot accept the Amendment, and if they do not, it is our bounden duty to vote for it in the Lobby.
§ Mr. Cronin
The Minister should answer the question which my hon. Friend the Member for Penistone (Mr. Mendelson) put. The right hon. Gentleman gave as one of his reasons for rejecting the Amendment the idea that he had negotiated already with the firms concerned, and had come to some form of binding contract which could not be disturbed by an Amendment voted by this Committee. I should like the Minister to clear up this point. By what authority can he enter into a binding contract which cannot be changed by this Committee to pay out £120 million from the Consolidated Fund?
§ Mr. James Dempsey (Coatbridge and Airdrie)
I wonder if the Minister could clarify for me his reference to interest rates. He conveyed the impression to me, though perhaps I am wrong, that where this money was to be lent on the basis of present rates of interest, it would work out at 5½ per cent. That is the impression which I formed in my own mind. I should like him to clarify the position, because in Lanarkshire, where the Colvilles combine or the Colvilles empire is one of the largest recipients of this loan for development from the Government, there is a strong rumour 329 that the company has received loans at interest rates which are lower than the borrowing rate paid by local authorities in Lanarkshire for the provision of essential social services. Therefore, I should like the right hon. Gentleman in his reply to state quite definitely the rate of interest at which Colvilles has received the loan.
§ Mr. Wood
I will reply first to the last point raised by the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) about local authority borrowing rates. Although it is not for me to say so, that would be even more appropriate to a later Amendment, which deals with that problem, and my hon. Friend the Economic Secretary to the Treasury will try to deal with the point which the hon. Member has made.
On the point made by the hon. Member for Loughborough (Mr. Cronin), it would seem to me that, if his dictum held sway, it would be a complete negation of government. This agreement was made some eighteen months ago, and it has not been challenged until the recent debate, which arose as a purely fortuitous exercise, as we were in fact transferring the power to lend this money from the Vote of my Department to below the line. Therefore, I cannot believe that he would seriously suggest that the Government should never enter into agreements which should remain firm if challenged by the House of Commons, or that they should be abrogated unilaterally by one of the parties.
§ Mr. Strauss
The statement has been made so often by the right hon. Gentleman and others that the terms of the agreement were agreed by the Government with the Opposition. Nothing of the kind. A few days after the agreement was published, I took the opportunity to ask questions from the Front Bench on the agreement, suggesting that it was entirely wrong. I suggested in a supplementary question that the terms of the agreement should be such that the State should benefit from any profits which were made. Of course, I got a negative answer, and was told that the Government did not agree. The only (point I am making now is that the terms of the agreement were in fact challenged by the Opposition at the time from the Front Bench.
§ Mr. Wood
The right hon. Gentleman knows enough of the procedure of the House to know that if he or any other large body of hon. Members had seriously challenged the agreement, they would have found perfectly fair and easy ways of challenging it in a Division, thereby ascertaining the will of the House. The right hon. Gentleman knows very well that there was not then that degree of opposition which he suggests to the agreement, which in general had the support of the House at that time.
§ Question put, That those words be there inserted: —
§ The Committee divided: Ayes 157, Noes 221.333
|Division No. 59.]||AYES||[7.58 p.m.|
|Ainsley, William||Davies, Ifor (Gower)||Hayman, F. H.|
|Albu, Austen||Deer, George||Healey, Denis|
|Allaun, Frank (Salford, E.)||Dempsey, James||Herbison, Miss Margaret|
|Allen, Scholefield (Crewe)||Dodds, Norman||Hill, J. (Midlothian)|
|Awbery, Stan||Ede, Rt. Hon. Chuter||Howell, Charles A.|
|Bacon, Miss Alice||Edwards, Rt. Hon. Ness (Caerphilly)||Hughes, Cledwyn (Anglesey)|
|Baird, John||Edwards, Robert (Bilston)||Hughes, Hector (Aberdeen, N.)|
|Baxter, William (Stirlingshire, W.)||Edwards, Walter (Stepney)||Hunter, A. E.|
|Bellenger, Rt. Hon. F. J.||Evans, Albert||Hynd, H. (Accrington)|
|Bence, Cyril (Dunbartonshire, E.)||Fernyhough, E.||Hynd, John (Attercliffe)|
|Benson, Sir George||Finch, Harold||Irvine, A. J. (Edge Hill)|
|Blyton, William||Fitch, Alan||Janner, Barnett|
|Bowden, Herbert W. (Leics. S.W.)||Fletcher, Eric||Johnson, Carol (Lewisham, S.)|
|Bowles, Frank||Foot, Dingle||Johnston, Douglas (Paisley)|
|Boyden, James||Forman, J. C.||Jones, Dan (Burnley)|
|Broughton, Dr. A. D. D.||Fraser, Thomas (Hamilton)||Jones, Elwyn (West Ham, S.)|
|Brown, Rt. Hon. George (Belper)||George, Lady Megan Lloyd||Jones, Jack (Rotherham)|
|Brown, Thomas (Ince)||Ginsburg, David||Jones, J. Idwal (Wrexham)|
|Butler, Herbert (Hackney, C.)||Gooch, E. G.||Jones, T. W. (Merioneth)|
|Callaghan, James||Gordon Walker, Rt. Hon. P.C.||Key, Rt. Hon. C. W.|
|Carmichael, James||Courlay, Harry||King, Dr. Horace|
|Collick, Percy||Grey, Charles||Ledger, Ron|
|Corbet, Mrs. Freda||Griffiths, David (Rother Valley)||Lee, Frederick (Newton)|
|Craddock, George (Bradford, S.)||Gunter, Ray||Lever, L. M. (Ardwick)|
|Cullen, Mrs. Alice||Hall, Rt. Hon. Glenvil (Colne Valley)||Lewis, Arthur (West Ham, N.)|
|Davies, G. Elfed (Rhondda, E.)||Hamilton, William (West Fife)||Lipton, Marcus|
|Davies, Harold (Leek)||Hart, Mrs. Judith||Mabon, Dr. J. Dickson|
|MacColl, James||Price, J. T. (Westhoughton)||Thompson, Dr. Alan (Dunfermline)|
|McInnes, James||Proctor, W. T.||Thornton, Ernest|
|McKay, John (Wallsend)||Randall, Harry||Timmons, John|
|Mackie, John||Rankin, John||Tomney, Frank|
|McLeavy, Frank||Redhead, E. C.||Wainwright, Edwin|
|MacMillan, Malcolm (Western Isles)||Reynolds, G. W.||Warbey, William|
|Mahon, Simon||Robens, Rt. Hon. Alfred||Watkins, Tudor|
|Manuel, A. C.||Roberts, Albert (Normanton)||Weitzman, David|
|Marquand, Rt. Hon. H. A.||Robinson, Kenneth (St. Pancras, N.)||Wells, Percy (Faversham)|
|Mason, Roy||Ross, William||Wells, William (Walsall, N.)|
|Mayhew, Christopher||Royle, Charles (Salford, West)||Wheeldon, W. E.|
|Mendelson, J. J.||Short, Edward||White, Mrs. Eirene|
|Millan, Bruce||Silverman, Julius (Aston)||Whitlock, William|
|Mitchison, G. R.||Silverman, Sydney (Nelson)||Wilcock, Group Capt. C. A. B.|
|Monslow, Walter||Skeffington, Arthur||Wilkins, W. A.|
|Moody, A. S.||Slater, Mrs. Harriet (Stoke, N.)||Williams, D. J. (Neath)|
|Morris, John||Small, William||Williams, Rev. Ll. (Abertillery)|
|Moyle, Arthur||Smith, Ellis (Stoke, S.)||Williams, W. R. (Openshaw)|
|Neal, Harold||Soskice, Rt. Hon. Sir Frank||Willis, E. G, (Edinburgh, E.)|
|Oliver, G. H.||Spriggs, Leslie||Woodburn, Rt. Hon. A.|
|Oswald, Thomas||Stewart, Michael (Fulham)||Woof, Robert|
|Owen, Will||Strauss, Rt. Hn. G. R. (Vauxhall)||Yates, Victor (Ladywood)|
|Pavitt, Laurence||Sylvester, George|
|Pearson, Arthur (Pontypridd)||Symonds, J. B.|
|Peart, Frederick||Taylor, Bernard (Mansfield)||TELLERS FOR THE AYES:|
|Pentland, Norman||Taylor, John (West Lothian)||Mr. Cronin and Mr. Lawson.|
|Prentice, R. E.||Thomas, Iorwerth (Rhondda, W.)|
|Agnew, Sir Peter||Doughty, Charles||Irvine, Bryant Godman (Rye)|
|Aliason, James||Drayson, G. B.||Jackson, John|
|Alport, C. J. M.||Duncan, Sir James||James, David|
|Arbuthnot, John||Duthie, Sir William||Jenkins, Robert (Dulwich)|
|Ashton, Sir Hubert||Eden, John||Johnson, Dr. Donald (Carlisle)|
|Atkins, Humphrey||Elliott, R. W.||Johnson, Eric (Blackley)|
|Barber, Anthony||Errington, Sir Eric||Johnson Smith, Geoffrey|
|Barlow, Sir John||Erroll, F. J.||Kaberry, Sir Donald|
|Barter, John||Farey-Jones, F. W.||Kerans, Cdr. J. S.|
|Batsford, Brian||Farr, John||Kerby, Capt. Henry|
|Bell, Philip (Bolton, E.)||Fell, Anthony||Kershaw, Anthony|
|Bennett, F. M. (Torquay)||Finlay, Graeme||Kitson, Timothy|
|Bidgood, John C.||Fletcher-Cooke, Charles||Lagden, Godfrey|
|Biggs-Davison, John||Forrest, George||Leburn, Gilmour|
|Bingham, R. M.||Fraser, Ian (Plymouth, Sutton)||Legh, Hon. Peter (Petersfield)|
|Bishop, F. P.||Gammans, Lady||Lewis, Kenneth (Rutland)|
|Black, Sir Cyril||Gardner, Edward||Lilley, F. J. P.|
|Bossom, Clive||George, J. C. (Pollok)||Linstead, Sir Hugh|
|Bourne-Arton, A.||Gibson-Watt, David||Litchfield, Capt. John|
|Box, Donald||Glover, Sir Douglas||Lloyd, Rt. Hon. Selwyn (Wirral)|
|Boyle, Sir Edward||Glyn, Dr. Alan (Clapham)||MacArthur, Ian|
|Brewis, John||Glyn, Col. Richard H. (Dorset, N.)||McLaren, Martin|
|Brooman-White, R.||Goodhew, Victor||McLaughlin, Mrs. Patricia|
|Browne, Percy (Torrington)||Grant, Rt. Hon. William (Woodside)||Maclay, Rt. Hon. John|
|Bryan, Paul||Grant-Ferris, Wg Cdr. R. (Nantwich)||McLean, Neil (Inverness)|
|Bullard, Denys||Gresham Cooke, R.||MacLeod, John (Ross & Cromarty)|
|Bullus, Wing Commander Eric||Grosvenor, Lt.-Col. R. G.||McMaster, Stanley R.|
|Burden, F. A.||Hall, John (Wycombe)||Macmillan, Maurice (Halifax)|
|Butcher, Sir Herbert||Hamilton, Michael (Wellingborough)||Macpherson, Niall (Dumfries)|
|Butler, Rt.Hn.R.A.(Saffron Walden)||Harris, Frederic (Croydon, N.W.)||Maddan, Martin|
|Carr, Compton (Barons Court)||Harris, Reader (Heston)||Maginnis, John E.|
|Carr, Robert (Mitcham)||Harrison, Col. J. H. (Eye)||Markham, Major Sir Frank|
|Cary, Sir Robert||Harvey, John (Walthamstow, E.)||Marlowe, Anthony|
|Channon, H. P. G.||Hay, John||Marshall, Douglas|
|Chataway, Christopher||Heath, Rt. Hon. Edward||Marten, Neil|
|Chichester-Clark, R.||Henderson, John (Cathcart)||Mathew, Robert (Honiton)|
|Clark, Henry (Antrim, N.)||Hendry, Forbes||Matthews, Gordon (Meriden)|
|Clark, William (Nottingham, S.)||Hicks Beach, Maj. W.||Mawby, Ray|
|Cleaver, Leonard||Hiley, Joseph||Maydon, Lt.-Cmdr. S. L. C.|
|Cooper-Key, Sir Neill||Hill, J. E. B. (S. Norfolk)||Milligan, Rt. Hon. W. R.|
|Cordeaux, Lt.-Col. J. K.||Hinchingbrooke, Viscount||Mills, Stratton|
|Corfield, F. V.||Hirst, Geoffrey||Montgomery, Fergus|
|Costain, A. P.||Hocking, Philip N.||Morgan, William|
|Courtney, Cdr. Anthony||Holland, Philip||Nabarro, Gerald|
|Critchley, Julian||Hollingworth, John||Nicholls, Harmar|
|Crosthwaite-Eyre, Col. O. E.||Hope, Rt. Hon. Lord John||Osborn, John (Hallam)|
|Crowder, F. P.||Hornsby-Smith, Rt. Hon. Patricia||Page, A. J. (Harrow West)|
|Cunningham, Knox||Howard, Gerald (Cambridgeshire)||Page, Graham|
|Currie, G. B. H.||Howard, Hon. G. R. (St. Ives)||Pannell, Norman (Kirkdale)|
|Dance, James||Howard, John (Southampton, Test)||Pearson, Frank (Clitheroe)|
|d'Avigdor-Goldsmid, Sir Henry||Hughes-Young, Michael||Peel, John|
|Deedes, W. F.||Hurd, Sir Anthony||Percival, Ian|
|de Ferranti, Basil||Hutchison, Michael Clark||Peyton, John|
|Donaldson, Cmdr. C. E. M.||Iremonger, T. L.||Pickthorn, Sir Kenneth|
|Pike, Miss Mervyn||Smith, Dudley (Br'ntf'rd & Chiswick)||Tweedsmuir, Lady|
|Pilkington, Capt. Richard||Stanley, Hon. Richard||van Straubenzee, W. R.|
|Pitman, I. J.||Stevens, Geoffrey||Vosper, Rt. Hon. Dennis|
|Pitt, Miss Edith||Steward, Harold (Stockport, S.)||Wakefield, Edward (Derbyshire, w.)|
|Pott, Percivall||Stodart, J. A.||Ward, Rt. Hon. George (Worcester)|
|Powell, J. Enoch||Stoddart-Scott, Col. Sir Malcolm||Ward, Dame Irene (Tynemouth)|
|Prior, J. M. L.||Storey, Sir Samuel||Watts, James|
|Prior-palmer, Brig. Sir Otho||Studholme, Sir Henry||Wells, John (Maidstone)|
|Profumo, Rt. Hon. John||Summers, Sir Spencer (Aylesbury)||Williams, Dudley (Exeter)|
|Ramsden, James||Sumner, Donald (Orpington)||Williams, Paul (Sunderland, S.)|
|Rawlinson, Peter||Talbot, John E.||Wills, Sir Gerald (Bridgwater)|
|Redmayne, Rt. Hon. Martin||Taylor, W. J. (Bradford, N.)||Wilson, Geoffrey (Truro)|
|Rees, Hugh||Teeling, William||Wise, Alfred|
|Robinson, Sir Roland (Blackpool, S.)||Thatcher, Mrs. Margaret||Wood, Rt. Hon. Richard|
|Roots, William||Thomas, Leslie (Canterbury)||Woodnutt, Mark|
|Ropner, Col. Sir Leonard||Thomas, Peter (Conway)||Woollam, John|
|Russell, Ronald||Thompson, Kenneth (Walton)||Worsley, Marcus|
|Scott-Hopkins, James||Thornton-Kemsley, Sir Colin|
|Seymour, Leslie||Tiley, Arthur (Bradford, W.)||TELLERS FOR THE NOES:|
|Shaw, M.||Tilney, John (Wavertree)||Mr. Whitelaw and Mr. Sharples.|
|Shepherd, William||Turner, Colin|
Mr. Jack Jones
I beg to move, in page 2, line 2, at the end to insert:and, if the borrower is a company, the nomination by the Minister of a director or directors of the company ".We have failed to get the Minister to agree that he should appoint an assessor to look after the interests of the people who lend these vast sums of money or make the loan of them possible. We now put forward a simpler request, that the Minister should have power to appoint to any company or companies a director or directors. Our specific intention is that they should be so appointed toy the Minister to take care of the interests of the nation at large and primarily of the interests of those who have made it possible for these sums to be loaned to the companies.
Today, we are discussing Colvilles, a company about which I know quite a bit. My grandfather was associated with it donkey's years ago. It is a company which produces, and has produced, a fine type of steel of a particular product, rounds, joists, rails and what have you.
The company is now being given an enormous amount of money for the purpose of putting up a strip mill. Its technicians, brilliant as they may be, and its directors, good as they are—I have no fault to find with any of them— do not have the "know-how" of running a modern strip mill. It is in the company's best interests, more than in the interest of anyone else, that it should have allocated to it a director or directors who have knowledge of the particular and peculiar form of industry in which it is shortly to engage.
I make no apology to anybody for saying that we wish the Government to have the right and the Minister to have 334 the opportunity, in his interest, to appoint a director or directors to look after the national interest and indeed at the same time to look after the interests of the company. It is a very simple request. I know that it will be said on the other side of the Committee that no matter who the director might be he is a brilliant person who knows all about the business and, hey presto, everything in the plant will be lovely. It does not work out like that. Hon. Members opposite who are directors of companies know as well as, and in many cases better, than, I do what happens.
In modern developments, in companies like Colvilles, R.T.B., United Steel and others, huge changes take place and contracts come in, and it is a case of "You scratch my back and I'll scratch yours." If the Minister is not careful it is possible that he will find within the large companies directors appointed as the result of nepotism and other methods and the best possible use not being made of the money allocated to the company and the best service not being given to the company, in the first instance, and eventually to the nation at large.
I know that the Minister will say, as he honestly believes, not knowing the industry as some of us know it, that all these chaps who are appointed directors are full of skill, and that they start at the bottom and work as craftsmen until they reach the top. In many cases he would be right, but in many other cases utterly wrong. I cannot think of one brilliant metallurgist, steelmaker, mill man or designer who has been put on the directorship from trade union ranks in my union. I can think of trade union secretaries who have been appointed to the board full-time or part-time and no 335 doubt they are an acquisition to the board.
What would be wrong in the Minister saying to a brilliant young director, full of scientific knowledge, practical information and familiarity with labour management, engaged as a director by R.T.B., that very successful State-owned industry in South Wales, that in the public interest he should move from R.T.B. and join Colvilles or, for that matter, remain on the books of R.T.B. and be seconded to Colvilles? There is nothing wrong in that. The State would not grumble if one of these young men, paid indirectly by the State, were on loan or seconded or was transferred without any fee at all to Scotland to help Colvilles to make steel sheets.
It is a wonderful negation of what we hear so much tripe about—that if one has anything at all to do with a nationalised industry one is effete, incompetent or inefficient—that R.T.B. has proved itself so successful in a world of competition, beset by private enterprise which does not like a company which has proved so successful that the transfer of a director from that company to Colvilles would be of great value. I could mention the names of one or two at Colvilles who could conveniently disappear and not be missed, but I will not be unfair about that.
We make this very simple suggestion to the Minister, in an age when industry is changing, when we are beset by intense Continental competition. The political business that we are always hearing about always fails, but the Schumann Plan has not failed. And talking of competition and modern developments, I spoke ten years ago about oxygen induction. Some people thought that I was crazy, but now we find that in this country we are ten years behind the times. New schemes, new methods and new plants are coming into being and it is on these new techniques that State money should be spent.
State money should not be frittered away and wasted and allowed to get into the hands of people who do not have the know-how. They have the "know-how" in matters in which they have been engaged primarily in the past, but these techniques are new. The Minister should have power to say to the industry, through the T.U.C. and the Institute of 336 Directors, "Where are your brilliant young men in whom I can put my faith and trust and who are not people who have been given jobs because someone likes the colour of their eyes or the amount of hair they have got, or the depth of their pockets, but who have been appointed because of their scientific knowledge, which can be applied in the interest of Colvilles and of the State?"
The Minister has nothing to lose. At the moment he can sack any director of R.T.B., which is State-owned, but he cannot sack any director of Colvilles. If he so wishes, he can appoint any Member of Parliament to be a director of R.T.B. and nobody within the law could say, "No." He could not appoint his own brother to Colvilles if he wished to do so. I know that the Minister can see force in this argument and I ask that the Amendment be adopted and applied. There is nothing political about it. It is not a political manoeuvre or something which is quite insincere.
If the Minister made the kind of appointment which is suggested in the Amendment, such a man could see what was going on by way of siting, planning, future development, transport input and outgoing of raw materials, the different types of furnaces in use—the present ones used in Britain as against those in operation on the Continent and in America and elsewhere. I ask the Minister to give this matter serious consideration. There is nothing under-handed or subversive about it. It is something which in his own interest, in the interest of the State, and of these companies he should adopt.
§ Mr. Bence
This is probably the most reasonable Amendment which has been put forward today. Those of us who have spent a great part of our lives in industry will remember the difference in those years when most of the industrial companies—and I was concerned with about six of them which were working together—were in dire distress and had to go to the insurance companies and the banks. But every time we got money from the insurance companies and the banks we also had a director, and a very hard creature he was, too. Many of the industrial firms of the country suffered in their development and in the evolution of their technology 337 from the presence of insurance company directors and bankers who were concerned only with money and not with technology.
It is an old-established principle that he who pays the piper calls the tune, and it is quite reasonable that where the Government are financing industry to the tune of over £300 million—for £120 million are going in today and there are about £230 million of public money already in the companies—there should be men on the boards of these companies in a position to hear what is going on when State money is involved.
I have a more important reason for believing that the State should have directors where this money goes. Everyone who is running an industry, from the middle level of executives to the top, knows that at appropriate times certain people will be asking questions and wanting to know facts. It is known some time before that questions will be posed and there is a rehearsal between executives at all levels. I have no doubt that there are hon. Gentlemen on the opposite side of the Committee who are in industry and are used to this practice. We even get word of the questions that may be asked, and it is made certain that all those who have to give the answers give only the right ones. They are in grave danger of their situations if they give the wrong answers.
When one searches for facts and statistics from boards and from executives in industry, one cannot invariably ask all the relevant questions. Even if one does, the people to whom the questions are addressed are quite as skilled as politicians in evading the answers. Indeed, many of them are much more skilled than politicians. I have seen some of the ablest directors completely hoodwinked when facing the technologists and the experts in industry. I have also seen people from the Ministry completely hoodwinked. They have asked a lot of questions, but by very clever techniques they have been prevented from asking the right ones, and they would only have got the right answers to the right questions had they been stationed permanently in the administration concerned.
In modern, large-scale industry it is no use sending for these people. If one wants to know exactly what is going on 338 one must live and work amongst them. If this is not done, the taxpayer and the Government will be completely hoodwinked, blackmailed and milched by big business. Make no mistake about that, it is the nature of the beast. We have spent over £2,000 million on private enterprise since 1951—
§ Mr. Bence
Of course they have not, and they will have it better. Here is another £120 million, and this is not the end of the story. With the rising costs of technological development, we have the beginning of more and more State planning from the central Government in the interests of the investor. If it is to be in the interests of the investor it will have to be financed. The Government are hoping that they can finance it without anyone asking the questions; is it planned as well; and how is it planned? It will have to be planned, and I suggest to the right hon. Gentleman that he gives serious consideration to the suggestion that wherever public money goes into an organisation, whether it is organised industry like Richard Thomas and Baldwins or private enterprise like Colvilles, directors should go as well.
I am upset when I hear people talk about Colvilles, Limited being private enterprise. That is utter nonsense. Colvilles is a State-controlled physical entity. There it is in Lanarkshire Colvilles, Limited. A financial group has entered the property, is working it and is paying a rate of interest for the money with which the Government built the place, and it is taking the profits. It is working State property. It is not the owner. It is hiring the place in perpetuity and taking the profits out of it. I have no doubt that when the present capital equipment is worn out there will be another Bill to provide the money for Colvilles to build another steelworks to replace the one it has worked out in taking the profit. It is the same with Richard Thomas and Baldwins and the same with the Steel Company of Wales.
I am the first to admit that Colvilles did not want the strip mill. The strip method of making sheet can be a very costly process if it is not possible to work to about 95 per cent. capacity—
§ The Temporary Chairman
I am not clear how the hon. Member is relating 339 his argument to the necessity of having Government directors.
§ Mr. Bence
These are the considerations that a Government director would have to take into account, Sir Norman. I am justifying a director being appointed by the right hon. Gentleman because these are the considerations which would apply. The process of producing steel sheet by the strip method is such that unless it is worked at 95 per cent. capacity it is very expensive. It must work to capacity because it is integrated. I admit that Colvilles is not an integrated mill in the sense that R.T.Bs would be, but it is important that whoever is working these mills, whether they are integrated or not, should do everything possible to work them to capacity.
Often operating companies find it much more advantageous in their own interests to import instead of to work their own plant to capacity. This has happened in the past and may happen in the future, and it is difficult for the outsider to get information. It is true that engineers are not so bad as financiers. No people in the world have surrounded themselves with more professional mystique than the financier. He is an extraordinarily competent person in this respect and, as a result, millions of people all over the world believe that the resources of the earth cannot be used unless we get hold of him first.
Now engineers, metallurgists and steelmakers have their mystique as well. They have not been quite so successful as the financier, who has been the expert. Indeed, he has been so expert that everyone believes that our society can only work if there is confidence in money—in other words, the confidence trick. I beg the Minister seriously to consider this. Here is the opportunity to see that wherever public money is in any large-scale industry, whether steel or aircraft, we do exactly the same as the bankers and insurance companies do, and that is to have one of our directors on the Board to see how the money is used.
§ 8.30 p.m.
§ Mr. John Morris (Aberavon)
The purpose of the Amendment is to ask for intervention in the steel industry, in particular Colvilles at the moment and 340 Richard Thomas and Baldwins in the future. Had it not been for the result of the last General Election we on this side of the Committee would have been asking for greater intervention. In my constituency, the Steel Company of Wales has a plant at Margam, which is the greatest steel plant in Europe. I am fortified in my contention that we should carry this Amendment to ask for greater State intervention in this particular part of the steel industry by the fact that both my majority and that of my hon. Friend the Member for Ogmore (Mr. Padley) were substantially increased at the General Election.
We would like to ask for greater State intervention, but this is as far as we can go within the terms of the Bill and this Amendment. There are two precedents for this Amendment—one ancient and one modern. One of the more important cries heard in this House in the eighteenth century was "No taxation without representation." Such was its effect that the Rockingham Administration in 1766 had to withdraw the Stamp Act because of opinion in the American colonies.
I will use that as an analogy to ask that in this case also there should be no taxation without representation. Here money is going from the Consolidated Fund to bolster two parts of the steel industry. We are entitled before this money is granted to these two companies —one of which, I understand, will shortly be denationalised—to have direct representation on their boards. It would be an important precedent for the future in that where a large amount of public money was injected into private firms, the State, which was paying the money, should have direct representation in the running of those companies.
The Government have asked for £120 million, of which £70 million is to go to Richard Thomas and Baldwins and £50 million to Colvilles. Four-fifths of Colvilles will be public money, yet there will be no control on the company's activities, apart from that exercised by the Iron and Steel Board. My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) said, "He who pays the piper should call the tune." Surely it is not too much to ask that the Government, who pay the piper, should have some small voice in the boardrooms of these great companies?
§ Mr. Morris
They should—in fact, they should lead the orchestra and play a far more formidable rôle in the activities of these companies. If we were to have a nominee or nominees—the Amendment is phrased for either the singular or the plural—on the boards of these companies, then probably they would not be able to take part in such electioneering tactics as those in which they were engaged before the 1959 General Election. I was at the receiving end of that type of electioneering and I wonder whether, had there been a Government nominee on their boards of directors, these companies which put up such a vast amount of money to defeat democracy would have been able to do so.
The chairman of Colvilles, Sir Andrew McCance, sent to his shareholders a statement which I am sure he regrets. Had he realised that it would be repeated in the House on numerous occasions, I am sure he would not have made it. He said that the new mill should contribute to the general profits of the company. I understand from that that after an agreed rate of interest has been paid to the Government, who have provided the money, any profit over and above that will go into the pockets of the private shareholders.
It is possible to argue about the effect lhat one Government director could have on a far larger number of directors on the board, but this director—or directors —would be representing, in many oases, particularly in Colvilles, the overwhelming majority of the capital of the company. He would be representing four-fifths of the capital of Colvilles and would have an influence far greater than his number.
Today, six years after it was begun, the Government's policy of denationalisation of the steel industry is stagnant. Yet today individual companies are able to do whatever they like, apart from the powers of the Iron and Steel Board. In this instance, with public money being injected on an ever-inoreasing scale, the State should have greater power of intervention. The people who run the steel industry are the financiers, the banks and the insurance companies. One-third of a column of HANSARD is devoted to that 342 part of the Second Reading speech of my hon. Friend the Member for Ogmore in which he listed the companies of which the chairman of the Steel Company of Wales is a director.
I have no objection to those appointments, but if one peruses that list of companies one will find that the great finance houses, the banks and insurance companies do not put money into industry without asking for something in return. They ask for a quid pro quo—direct representation on the boards of directors of the firms into which they inject money. In this case, we ask that the Government should follow the example of the banks, insurance companies and finance houses and, when they put £50 million into private firms, they should have direct representation on the boards of directors.
I quote another precedent which is more modern, that of agriculture, about which I know a little more. In 1947, we had the Agriculture Act, which was divided into two parts, one allowing a measure of support to the industry and the other permitting Government control. That is a modern precedent. We gave great power to the Government over farming in individual counties and over individual farms. Can we ask less in this Bill? The man who pays the piper is entitled to direct representation on the boards of all these companies.
§ Mr. Lawson
My hon. Friends have already put forward a case which will be exceedingly difficult to answer. My hon. Friend the Member for Dunbartonshire, East (Mr. Bence) showed that in business it is invariably the practice of insurance companies and bankers who put large sums of money into a firm to have a voice in the control of the busines, an argument which was reinforced by my hon. Friend the Member for Aberavon (Mr. Morris). It is an established practice in business, but in many ways it is also an established practice when the Government does this kind of thing.
For example, the Government have two directors on the board of British Petroleum, for excellent and good reasons. Under the D.A.T.A.C. scheme, substantial sums of money are injected into companies in difficulties and in those cases the Treasury often appoints directors to the boards of the companies concerned. I understand that one very 343 important Glasgow firm, whose name I shall not mention, had its board transformed because the board was found to be incompetent, and that was done at the instigation of the Government, acting under the D.A.T.A.C. scheme.
So this is an established practice and we consider it an excellent practice. All we are asking is that the practice should be adopted with the steel firms which have been denationalised, or are likely to be denationalised and which are to receive large sums of public money.
I think that the Minister, for whom I have great respect, will reply to this as he has replied to earlier Amendments, that an agreement was reached at the end of 1958, that the House had an opportunity to challenge it, if it was seriously concerned, that it did not challenge the agreement and that at this late hour it would be unreasonable to expect the terms of the agreement to be altered.
I think that the Minister will credit us with honesty even though he cannot accept the Amendment. We appreciate that the agreement with Colvilles was made prior to the election and the Minister will say that the election having been won by the Tory Party, the Government need no longer worry about this. The hon. Gentleman said in effect that the agreement which was arrived at with Colvilles had a political purpose. It was made at the end of 1958 or the beginning of 1959. None of us knew when the election would be held. Perhaps even the Prime Minister had not decided on the date. He was, quite rightly, looking for the best opportunity. The Prime Minister and the hon. Member for Glasgow, Pollok (Mr. George), were able to gauge the feeling in Scotland.
The hon Member for Pollok started by opposing the idea of a strip mill in Scotland. Being a wise politician, and having his ear to the ground, he then realised how solidly opinion in Scotland was behind the demand for a strip mill, and he associated himself with the demand.
Order. The Amendment deals with the appointment of a director by the Minister. I think that we must keep ourselves as closely as possible to that issue.
§ Mr. Lawson
I agree, Sir William. I am trying to forestall the argument of the Minister. I expect that the Minister will say that he cannot accept the Amendment because it will mean a change of the agreement. I am trying to put to the Minister the argument that what he might consider to be an agreement arrived at for business reasons we consider to be an agreement made for political reasons, and that, viewed from the standpoint of Scottish interests, this is a vital Measure.
We say that denationalised steel failed Scotland. Denationalised Colvilles did not provide Scotland with its essential strip mill. In those circumstances the State had to intervene. Had Colvilles been nationalised there would have been no difficulty. As it was not, the State could not get its way as it would have with a nationalised steel industry, so the Government had to bribe Colvilles.
Order. I am very reluctant to interrupt the hon. Member, but the Amendment is quite narrow. It refers to the nomination by the Minister of a director. We must try to keep closer to that.
§ Mr. Lawson
I will try to bring myself back to the narrower point. I was trying to show that the argument which may be advanced that it is not proper to change the business agreement is not valid. That is the point which concerns us. When we entered into the agreement with Colvilles there was no question of our imposing a director on the firm. The Minister might say that Colvilles would have rejected the £50 million offer if it had been suggested that a director should be appointed to the Board. I doubt that, but that may be the suggestion.
The Minister may reply along those lines and I am trying to put to him that that argument is not valid. In view of what has taken place, we on this side of the Committee would be failing in our duty if we did not say that the established practice in business, of appointing directors, as was done by the Government in the case of the British Petroleum Company, D.A.T.A.C. and the old Suez company, should be done here in the interests of public money and the nation.
345 8.45 p.m.
There is a lack of sufficient control of the finer type which the existence of a director or directors on the board of a company would provide. It is all very well for hon. Members opposite to say that there is always the overriding control exercised by the Iron and Steel Board. We appreciate that but in many cases the kind of control that emanates from the Board is a kind of tug-of-war control, or a balance of power control. If a Conservative Government are in power the Board will modify its policies largely to suit the Government, but if there were a Labour Government in power it is very doubtful whether the Board could effect control over the industry, because it would be dealing with powerful private enterprise units which would challenge it. The Bill provides that the loan is given for certain purposes, which we assume to include the building of a strip mill, presumably to enable Scotland to meet its problems. That being so, we need the control that can come only from the inside and not from the outside, as it would do in the case of the Board.
There is the further point that the amount of steel produced and sold depends largely upon the price of the commodity. It might be that a director of Colvilles, representing the State and inspecting the accounts of the company, would conclude that the firm was charging far too high a price for its steel—and what is true of Colvilles is true of other companies—and that if the price were lowered Scotland might have a better chance of selling its steel, and consequently Britain would have a better chance of overcoming some of its problems. If the Minister gives us the same argument that he has given on previous Amendments we shall feel very far from satisfied.
§ Mr. Ellis Smith
My hon. Friend the Member for Rotherham (Mr. Jack Jones) made a reasoned case in moving the Amendment. I formed the impression that the Minister was impressed with that case. While my hon. Friend was speaking I thought of the late Sir Andrew Duncan. Although he and I differed fundamentally in our political outlook I feel that he would have been an ideal man for the job, because he was a big man. There was nothing small about him. If the Amend- 346 ment were accepted the Minister would have the right to select someone like that. I know many similar men serving in industry who would fulfil a position of this kind very ably but who have not yet had the opportunity of working their way up.
In these days one has to be a professor or a big financier before one can get on to the board of a steel company. There are exceptions to this rule, and if I can remember to do so I shall mention a few later on, but, in the main, the big financial men and the professors form these boards. There is a political trend in that direction, too, which we must watch.
It was my privilege for some time to work with Sir Charles Bruce Gardner, Sir Robert Sinclair and Sir John Wood. In their younger days those men would have been ideal persons to fill a position of this kind. I shall never forget those three men. I am under a great debt of gratitude to them for the sympathy with which they treated me at the time of a very difficult domestic situation. I gladly take the opportunity to refer to that and I contrast the treatment I received at their hands with the treatment I received from some other people.
They were big men in spite of their political outlook and they represented an ideal type of person to undertake the responsibility of this position in accordance with the ideas mentioned by my hon. Friend the Member for Rotherham. If the Minister has not yet made up his mind, I hope that he will consider what has been said and also the type of men I have mentioned as examples of the person needed to fill such a position.
§ Mr. James Dempsey (Coatbridge and Airdrie)
I rise to support the Amendment, which I consider to be a reasonable and perfectly logical one. Paragraph 4 of the Explanatory and Financial Memorandum states:The Bill correspondingly authorises the Treasury to borrow and to make issues from the Consolidated Fund up to a maximum amount of £120 million, but not beyond the end of March, 1965.Anyone reading that paragraph will agree that as custodians of that enormous amount of public money, we cannot allow it to be lent to the steel industrialists of this country without some guarantee of prudence and supervision. 347 I know of no association, body corporate or group which would lend money in such a large amount without demanding the right to have some supervision over its expenditure. It is public money. If we propose to lend public money we should ensure that there is a certain degree of public control over its expenditure, and that is all that is asked in this Amendment.
Hon. Members have said that we have a problem with Colvilles, but I do not propose to discuss that matter. In the part of Scotland from which I come we recall that there was real hostility to the development of the steel strip mill project, as was mentioned by my hon. Friend the Member for Motherwell (Mr. Lawson). If that attitude is adopted in connection with this expansion, I know of no better reason why we should have representation on the company. One of the main reasons why we should be represented is to ensure that the proposed development will take place in the way in which it is intended, by the making of this loan.
I have heard all sorts of arguments relating to this type of public money. Hon. Members opposite have said that it is not the taxpayer's money and I am willing to accept that. But it is public money, and for a certain number of years until the capital has been repaid Parliament will be responsible for it. Surely the acceptance of that obligation entitles us to accept the responsibility for appointing a representative to the firm's board of directors. It is not an unusual practice in British industry for interested parties to appoint representatives in order to ensure that money which they have invested, perhaps by way of loan, will be used properly.
Frankly, I am at a loss to understand what arguments the right hon. Gentleman will use tonight to reject such a very valid Amendment. If these associations can appoint representatives, so can the Government. I cannot see any difficulty in that respect. I feel Chat we should realise that we are legislating not only for what is happening at present but also for the future. I do not know how many hon. Members of this distinguished House of Commons have in their constituencies basic industries which are deteriorating rapidly at the present time. Many are becoming 348 obsolete owing to the lack of proper planning, modernisation and proper capital investment. They are under private ownership, not public ownership. I belong to a constituency which, as I have quoted time and again, has one of the highest rates of unemployment in the United Kingdom.
§ The Deputy-Chairman (Major Sir William Anstruther-Gray)
I hope that the hon. Member will try to keep himself closely to the Amendment. I would point out for the third time that it deals with the nomination by the Minister of a director or directors of a company, not with unemployment in general.
§ Mr. Dempsey
I am very anxious that we should appoint directors in order to ensure that there will be no repetition of these industries creating the very problem to which I have referred. If Parliament, by reason of lending public money, had representation on these industrial boards, I am convinced that our economy would be expanding rather than contracting in many parts of the United Kingdom. It is for that reason that I strongly quote this case.
I do not think that we are asking anything unusual in submitting this Amendment. I know of other boards of directors, particularly in Scotland, upon which the Government are represented where Government money is involved. They ensure that the representatives attend every meeting. I think that is a good thing because expenditure is kept within reasonable limits whenever we have Government representation, advising, directing and guiding as to the proper use of the capital. Surely, with the experience which Parliament has of industry, the nomination of such directors with specialist knowledge would not be resented by companies of this nature. In my opinion, they would welcome the benefit of that experience and the financial support of the Government in the effort to expand their industry.
I hope that when the right hon. Gentleman replies he will not give us a recital of all the difficulties which he mentioned on the previous Amendment. Difficulties exist only to be overcome. We have all learned very much from our own experiences, and I earnestly ask the right hon. Gentleman to give the most sympathetic consideration to the Amendment. The Amendment is in the 349 Government's interest. It ensures that when they lend money in this quantity not only will it be used progressively but wisely in the interest of the Government, in the interest of industry and, even better than that, in the interest of the community.
§ 9.0 p.m.
§ Mr. Wood
The effect of this Amendment would be that I should be prevented from lending any money unless I first appointed one or more directors. I gathered from the speeches which have been made so far that the aim of hon. Members opposite is to give the Government some control over the two companies, particularly over Colvilies, to which money is being lent. The function of the directors whom hon. Members have in mind, presumably, would be, first to protect the Governments loan and to see that is was properly used and—although this has not been mentioned, apart from perhaps a passing reference in one of the speeches —the other function would be to give the Government a voice in the future management of the company, especially in its employment policy and other social considerations.
The hon. Member for Aberavon (Mr. Morris) suggested that the Government at present have no control whatever and the hon. Member for Coatbridge and Airdrie (Mr. Dempsey) said it was essential that we should have some guarantee of supervision and control. We touched on one or two of these arguments when we were discussing the earlier Amendment in the name of the hon. Member for Gloucester (Mr. Diamond). In fact the loan agreements in both these cases are very well protected by formal legal provisions, to which I referred on that occasion. Perhaps I could summarise them now. They are provisions specifying the purpose of the loan, dealing with the repayment of principal, the securing of the loan, the provision of adequate sanctions in the event of default and—most important here as in the case of the other Amendment—giving me power to obtain information.
The question that is very relevant here is, how far in the achievement of those and other objectives could Government directors help? What are the other matters which, if it is conceded that Government directors would in fact not 350 secure much greater benefits on these lines than are already secured in the firm's policies, the Government should seek to influence? First, there are conditions of employment. I think I should carry most of the Committee and most hon. Members opposite with me if I said that conditions of employment are much better left to the ordinary processes of collective bargaining.
Then there is the extent and location of future development of the company. Here again the Government can exert a considerable influence with the help of the Iron and Steel Board. As the Committee is well aware, there are conditions attached to the granting of Industrial Development Certificates. Finally, there is my veto under the actual agreement, to which reference has been made already this afternoon, in respect of any new project which will cost more than £100,000 and which Colvilies might want to carry out.
The hon. Member for Motherwell (Mr. Lawson) referred to other instances in which the Government were represented by directors on boards of companies. Perhaps it will help if I try to divide into four the kinds of companies in which the Government may appear to have some interest where public money is either directly or indirectly involved. First, there is the category of the Government trading companies which are wholly owned by the Government, such a company as Cable and Wireless. In the second category there are the joint companies in which the Government have a primary interest jointly with other parties. I think the hon. Member gave the example of British Petroleum.
Then there are administrative companies in which it is desirable for the Government to keep control without having full Departmental responsibility. The example which is easiest to give is that of N.A.A.F.I., of which hon. Gentlemen have heard. Lastly, there are the independent companies working for profit, in which the Government are temporarily interested as a guarantor. That is clearly the category into which the company which we are discussing falls.
The hon. Gentleman mentioned the companies in which D.A.T.A.C. has an interest. The first three categories—the Government trading companies, the joint 351 companies, and the administrative companies—have Government directors, and I think that it is agreed by us all that they should. On the other hand, some independent companies have directors and some have not. There does not seem to be any definite rule to guide us. Therefore, I think that we must look at the merits and benefits which Parliament and the country would achieve if Government directors were appointed to a company of this kind.
I am afraid that I again have to refer to the argument which the hon. Member for Motherwell foreshadowed. In fact, the present agreement gives no right to such an appointment. I should like to consider the position of the Government director.
§ Mr. Douglas Johnston (Paisley)
Is there any reason to believe that, if Colvilles were asked to allow such an appointment by the Minister, they would not agree to the Minister making the appointment?
§ Mr. Wood
I do not think that I know the answer to that.
I was about to examine the merits of this proposal in the light of what I have already said, that in my view the Government's interest and the public interest in this matter is already very well protected. I was examining the position which a Government director would occupy in a company such as Colvilles. What I was about to say was underlined and strengthened by the wise advice we received from the hon. Member for Dunbartonshire, East (Mr. Bence). He pointed out the dangers of directors being hoodwinked and the mystique which was sometimes exerted or might be exerted upon them.
I cannot see that if I were given the power, and accepted it, to appoint a director to a firm such as Colvilles the Government director would be able seriously to affect decisions. On the other hand, I think that it would be quite impossible for him to sit at the meetings of the board and refrain from expressing views on such topics as future trends of output, wages and prices, on which the Committee would generally agree again that it was best in such circumstances that the Government should not be committed.
352 Therefore, there are several reasons why it would be unwise of me to agree to the Amendment. The first, and I think perhaps the strongest, is that in my opinion the Government's interests are already properly safeguarded by the loan agreements themselves. Secondly, questions such as employment and other social matters are very much more effectively covered by other means. The presence of a Government director on a board such as Colvilles would be more likely to be embarrassing than helpful to the Government.
§ Mr. Wood
Again, although I take into account the point made by the right hon. Gentleman that it might be possible to obtain the agreement of Colvilles, the loan agreement gives no such right and I do not think, for the reasons I have already given, which seem to me in themselves to be convincing, that I have any wish to try to renegotiate the loan agreement in order to secure that right, because I do not think that the presence of a Government director would itself lead to benefit.
§ Mr. H. A. Marquand (Middlesbrough, East)
We find quite unsatisfactory the right hon. Gentleman's answer to the very cogent arguments which have been put to him. He reminds us that he has made provision in the agreement for the protection of this loan. We do not seek to dispute that, but we are here proposing to give him an effective instrument to watch the matter from day to day to ensure that the protections he requires are being fulfilled.
We suggest in the Amendment no more than all bankers normally require when they make loans of anything like these dimensions. Here is a company, Colvilles in particular, in which the State already has a holding of no less than £14 million without any representation whatever on the management of the company, and to that sum the right hon. Gentleman now proposes to add £50 million, making a total investment of £64 million in the company. Yet he is not prepared to do what any ordinary banker would do in similar circumstances and, indeed, what bankers have already done in respect of other companies in the steel industry.
353 Why does anyone suggest that Sir Harald Peake, for example, is in the Steel Company of Wales if he is not in that position as a skilled banker entitled to be there to look after the investment which was originally provided from the banks? What was the whole history of Richard Thomas and Baldwins when the bankers came to the rescue of that company at the time when Sir William Firth was the chairman and later put in their own nominees?
It is a wise and sensible policy for those who make enormous loans to private enterprise concerns of this kind to protect their interests not merely by some agreement legally entitling them to come in and get what remains after the smash, if a company is mismanaged, but to exercise day-to-day supervision over the affairs of the company in order to be completely sure that their interests are looked after.
My hon. Friend the Member for Rotherham (Mr. Jack Jones) pointed out the great advantage it would be to Colvilles to have a director appointed by the Government who had special knowledge of sheet and tinplate production, an activity in which the company has never engaged at all. The Minister has given no answer whatever to that very reasonable suggestion.
We are forced back to the conclusion we have reached all along about the Minister's approach in rejecting our Amendments. He has entered into certain agreements, with Colvilles in particular, in this matter without first obtaining the power to make those agreements. He has now come to Parliament
§ to ask for the powers, after he has made the agreements. Having made the agreements and having tied his hands completely, he cannot make any of the reasonable provisions which any prudent banker or any prudent man of business would require to be inserted in such agreements.
§ When we point out the mistakes he has made in the agreements, the Minister says he cannot do anything about it because he has already made the agreements. He had no power to make them. If he had, the Bill would not be necessary now. He makes the agreements first and then asks Parliament for the power to do so afterwards. This is a thoroughly wrong principle to follow and we are bound to object to it. If there were no other reason to express our displeasure in the Lobby, that would be sufficient. Once again we are up against the same situation as on previous Amendments.
§ The Minister deliberately tied his own hands and now he is denying to Parliament the overriding power to alter any arrangements which he has made. He requires the powers under the Bill to fulfil the very agreements he has made, and yet he denies the House of Commons any ability whatever to amend the arrangements. Whatever we may think, he will use his majority to override good sense and prudent business management. We are bound to express our displeasure in the Lobby.
§ Question put, That those words be there inserted: —
§ The Committee divided: Ayes 154, Noes 218.357
|Division No. 60.]||AYES||[9.14 p.m.|
|Ainsley, William||Collick, Percy||Fraser, Thomas (Hamilton)|
|Allaun, Frank (Salford, E.)||Craddock, George (Bradford, S.)||George, Lady Megan Lloyd|
|Allen, Scholefield (Crewe)||Cronln, John||Ginsburg, David|
|Awbery, Stan||Cullen, Mrs. Alice||Gooch, E. G.|
|Bacon, Miss Alice||Davies, G. Elfed (Rhondda, E.)||Gordon Walker, Rt. Hon. P. C.|
|Baird, John||Davies, Harold (Leek)||Gourlay, Harry|
|Baxter, William (Stirlingshire, W.)||Davies, Ifor (Cower)||Grey, Charles|
|Bellenger, Rt. Hon. F. J.||Davies, S. O. (Merthyr)||Griffiths, David (Rother Valley)|
|Bence, Cyril (Dunbartonshire, E.)||Deer, George||Gunter, Ray|
|Benson, Sir George||Dempsey, James||Hall, Rt. Hon. Glenvil (Colne Valley)|
|Blyton, William||Diamond, John||Hamilton, William (West Fife)|
|Bowden, Herbert W. (Leics, S.W.)||Dodds, Norman||Hart, Mrs. Judith|
|Bowles, Frank||Ede, Rt. Hon. Chuter||Hayman, F. H.|
|Boyden, James||Edwards, Rt. Hon. Ness (Caerphilly)||Herbison, Miss Margaret|
|Broughton, Dr. A. D. D.||Edwards, Walter (Stepney)||Hill, J. (Midlothian)|
|Brown, Alan (Tottenham)||Evans, Albert||Hughes, Cledwyn (Anglesey)|
|Brown, Rt. Hon. George (Belper)||Fernyhough, E.||Hughes, Hector (Aberdeen, N.)|
|Brown, Thomas (Ince)||Finch, Harold||Hunter, A. E.|
|Butler, Herbert (Hackney, C.)||Fitch, Alan||Hynd, H. (Accrington)|
|Callaghan, James||Fletcher, Eric||Hynd, John (Attercliffe)|
|Carmichael, James||Forman, J. C.||Irvine, A. J. (Edge Hill)|
|Janner, Barnett||Oliver, G. H.||Swain, Thomas|
|Johnson, Carol (Lewisham, S.)||Oswald, Thomas||Sylvester, George|
|Johnston, Douglas (Paisley)||Owen, Will||Symonds, J. B.|
|Jones, Dan (Burnley)||Parker, John (Dagenham)||Taylor, Bernard (Mansfield)|
|Jones, Elwyn (West Ham, S.)||Pavitt, Laurence||Taylor, John (West Lothian)|
|Jones, Jack (Rotherham)||Pearson, Arthur (Pontypridd)||Thomas, Iorwerth (Rhondda, W.)|
|Jones, J. Idwal (Wrexham)||Peart, Frederick||Thompson, Dr. Alan (Dunfermline)|
|Jones, T. W. (Merioneth)||Pentland, Norman||Thornton, Ernest|
|Key, Rt. Hon. C. W.||Prentice, R. E.||Timmons, John|
|King, Dr. Horace||Price, J. T. (Westhoughton)||Wainwright, Edwin|
|Lawson, George||Proctor, W. T.||Warbey, William|
|Lee, Frederick (Newton)||Pursey, Cmdr. Harry||Watkins, Tudor|
|Lever, L. M. (Ardwick)||Randall, Harry||Weitzman, David|
|Lipton, Marcus||Rankin, John||Wells, Percy (Faversham)|
|Mabon, Dr. J. Dickson||Redhead, E. C.||Wells, William (Walsall, N.)|
|MacColl, James||Reynolds, G. W.||Wheeldon, W. E.|
|McInnes, James||Robens, Rt. Hon. Alfred||White, Mrs. Eirene|
|McKay, John (Wallsend)||Roberts, Albert (Normanton)||Whitlock, William|
|Mackie, John||Robinson, Kenneth (St. Pancras, N.)||Wilcock, Group Capt. C. A. B.|
|McLeavy, Frank||Ross, William||Wilkins, W. A.|
|Manuel, A. C.||Short, Edward||Williams, D. J. (Neath)|
|Marquand, Rt. Hon. H. A.||Silverman, Julius (Aston)||Williams, Rev. Ll. (Abertillery)|
|Mason, Roy||Silverman, Sydney (Nelson)||Williams, W. R. (Openshaw)|
|Mendelson, J. J.||Slater, Mrs. Harriet (Stoke, N.)||Willis, E. G. (Edinburgh, E.)|
|Millan, Bruce||Small, William||Wilson, Rt. Hon. Harold (Huyton)|
|Mitchison, G. R.||Smith, Ellis (Stoke, S.)||Winterbottom, R. E.|
|Monslow, Walter||Sosklce, Rt. Hon. Sir Frank||Woodburn, Rt. Hon. A.|
|Moody, A. S.||Spriggs, Leslie||Woof, Robert|
|Morris, John||Stewart, Michael (Fulham)||Yates, Victor (Ladywood)|
|Moyle, Arthur||Stonehouse, John|
|Neal, Harold||Strauss, Rt. Hn. G. R. (Vauxhall)||TELLERS FOR THE AYES:|
|Mr. Howell and Mr. Mahon.|
|Agnew, Sir Peter||Donaldson, Cmdr, C. E. M.||Hutchison, Michael Clark|
|Allason, James||Doughty, Charles||Iremonger, T. L.|
|Alport, C. J. M.||Drayson, G. B.||Irvine, Bryant Godman (Rye)|
|Arbuthnot, John||Duncan, Sir James||Jackson, John|
|Ashton, Sir Hubert||Duthie, Sir William||James, David|
|Atkins, Humphrey||Eden, John||Jenkins, Robert (Dulwich)|
|Barber, Anthony||Elliott, R. W.||Johnson, Dr. Donald (Carlisle)|
|Barlow, Sir John||Errington, Sir Eric||Johnson, Eric (Blackley)|
|Barter, John||Erroll, F. J.||Johnson Smith, Geoffrey|
|Batsford, Brian||Farey-Jones, F. W.||Kaberry, Sir Donald|
|Bell, Philip (Bolton, E.)||Farr, John||Kerans, Cdr. J. S.|
|Bennett, F. M. (Torquay)||Fell, Anthony||Kerby, Capt. Henry|
|Bidgood, John C.||Finlay, Graeme||Kershaw, Anthony|
|Biggs-Davison, John||Fletcher-Cooke, Charles||Kitson, Timothy|
|Bingham, R. M.||Forrest, George||Lagden, Godfrey|
|Bishop, F. P.||Fraser, Ian (Plymouth, Sutton)||Leburn, Gilmour|
|Black, Sir Cyril||Gammans, Lady||Legh, Hon. Peter (Petersfield)|
|Bossom, Clive||Gardner, Edward||Lewis, Kenneth (Rutland)|
|Bourne-Arton, A.||George, J. C. (Pollok)||Lilley, F. J. P.|
|Box, Donald||Gibson-Watt, David||Linstead, Sir Hugh|
|Boyle, Sir Edward||Glover, Sir Douglas||Litchfield, Capt. John|
|Brewis, John||Glyn, Dr. Alan (Clapham)||Lucas, Sir Jocelyn (Portsmouth, S.)|
|Brooman-White, R.||Glyn, Col. Richard H. (Dorset, N.)||MacArthur, Ian|
|Browne, Percy (Torrington)||Goodhew, Victor||McLaren, Martin|
|Bullard, Denys||Gower, Raymond||McLaughlin, Mrs. Patricia|
|Burden, F. A.||Grant, Rt. Hon. William (Woodside)||Maclay, Rt. Hon. John|
|Butcher, Sir Herbert||Grant-Ferris, Wg Cdr. R. (Nantwich)||MacLeod, John (Ross & Cromarty)|
|Butler,Rt.Hn.R.A.(Saffron Walden)||Gresham Cooke, R.||McMaster, Stanley R.|
|Carr, Compton (Barons Court)||Grimond, J.||Macmillan,Rt.Hn.Harold(Bromley)|
|Carr, Robert (Mitcham)||Grosvenor, Lt.-Col. R. G.||Macmillan, Maurice (Halifax)|
|Cary, Sir Robert||Hall, John (Wycombe)||Macpherson, Niall (Dumfries)|
|Channon, H. P. G.||Hamilton, Michael (Wellingborough)||Maddan, Martin|
|Chataway, Christopher||Harris, Frederic (Croydon, N.W.)||Maginnis, John E.|
|Clark, Henry (Antrim, N.)||Harrison, Col. J. H. (Eye)||Markham, Major Sir Frank|
|Clark, William (Nottingham, S.)||Harvey, John (Walthamstow, E.)||Marlowe, Anthony|
|Cleaver, Leonard||Hay, John||Marshall, Douglas|
|Cooper, A. E.||Heath, Rt. Hon. Edward||Marten, Neil|
|Cooper-Key, Sir Neill||Henderson, John (Cathcart)||Mathew, Robert (Honiton)|
|Cordeaux, Lt.-Col. J. K.||Hendry, Forbes||Matthews, Gordon (Meriden)|
|Corfield, F. V.||Hiley, Joseph||Mawby, Ray|
|Costain, A. P.||Hill, J. E. B. (S. Norfolk)||Maydon, Lt.-Cmdr. S. L. C.|
|Courtney, Cdr. Anthony||Hirst, Geoffrey||Milligan, Rt. Hon. W. R.|
|Critchley, Julian||Hocking, Philip N.||Mills, Stratton|
|Crosthwaite-Eyre, Col. O. E.||Holland, Philip||Montgomery, Fergus|
|Crowder, F. P.||Hollingworth, John||Morgan, William|
|Cunningham, Knox||Hope, Rt. Hon. Lord John||Nabarro, Gerald|
|Currie, G. B. H.||Hornsby-Smith, Rt. Hon. Patricia||Neave, Airey|
|Dance, James||Howard, Gerald (Cambridgeshire)||Nicholls, Harmar|
|d'Avigdor-Goldsmid, Sir Henry||Howard, Hon. G. R. (St. Ives)||Osborn, John (Hallam)|
|Deedes, W. F.||Hughes-Young, Michael||Page, A. J. (Harrow West)|
|de Ferranti, Basil||Hurd, Sir Anthony||Page, Graham|
|Pannell, Norman (Kirkdale)||Russell, Ronald||Tweedsmuir, Lady|
|Pearson, Frank (Clitheroe)||Scott-Hopkins, James||van Straubenzee, W. R.|
|Peel, John||Sharples, Richard||Vosper, Rt. Hon. Dennis|
|Percival, Ian||Shaw, M.||Wade, Donald|
|Peyton, John||Shepherd, William||Wakefield, Edward (Derbyshire, W.)|
|Pickthorn, Sir Kenneth||Smith, Dudley (Br'ntf'rd & Chiswick)||Ward, Rt. Hon. George (Worcester)|
|Pike, Miss Mervyn||Stanley, Hon. Richard||Ward, Dame Irene (Tynemouth)|
|Pilkington, Capt. Richard||Steward, Harold (Stockport, S.)||Watts, James|
|Pitman, I. J.||Stodart, J. A.||Wells, John (Maidstone)|
|Pitt, Miss Edith||Stoddart-Scott, Col. Sir Malcolm||Whitelaw, William|
|Pott, Percivall||Storey, Sir Samuel||Williams, Dudley (Exeter)|
|Powell, J. Enoch||Summers, Sir Spencer (Aylesbury)||Williams, Paul (Sunderland, S.)|
|Prior, J. M. L.||Sumner, Donald (Orpington)||Wills, Sir Gerald (Bridgwater)|
|Prior-Palmer, Brig. Sir Otho||Talbot, John E.||Wilson, Geoffrey (Truro)|
|Ramsden, James||Tapsell, Peter||Wise, Alfred|
|Rawlinson, Peter||Taylor, W. J. (Bradford, N.)||Wood, Rt. Hon. Richard|
|Redmayne, Rt. Hon. Martin||Thatcher, Mrs. Margaret||Woodnutt, Mark|
|Rees, Hugh||Thomas, Leslie (Canterbury)||Woollam, John|
|Rees-Davies, W. R.||Thomas, Peter (Conway)||Worsley, Marcus|
|Robinson, Sir Roland (Blackpool, S.)||Thornton-Kemsley, Sir Colin|
|Roots, William||Tiley, Arthur (Bradford, W.)||TELLERS FOR THE NOES:|
|Ropner, Col. Sir Leonard||Tilney, John (Wavertree)||Mr. Bryan and|
|Royle, Anthony (Richmond, Surrey)||Turner, Colin||Mr. Chichester-Clark.|
§ Mr. Cronin
I beg to move, in page 2, line 4, at the end to insert:Provided that no such terms as aforesaid shall be approved if the borrower is a company, of which any shares are not held by or on behalf of a public authority, unless the terms include provisions for the transfer to a public authority of all shares not so held being a transfer at such price, and on such terms as appear fair and reasonable to the Minister and the Treasury.This Amendment is fairly clear in its terms. It means in so many words that we object to this money being loaned to any company other than a company which is in public ownership. I fear that this will not command a large degree of unanimity. Nevertheless, I should like to make it absolutely clear that my hon. Friends and myself who have put down the Amendment are in no way opposed to the idea of these two companies receiving a loan as such. We fully appreciate that these loans will produce a good deal of extra employment and will be beneficial in the neighbourhood of Ravenscraig and Gartcosh and also in South Wales. We have no objection, therefore, to the loans as such. Our objection is to these loans being made to private enterprise companies or to a publicly-owned company which is shortly to become a private-enterprise company.
The arguments in favour of the Amendment are simply the arguments in favour of public ownership of the steel industry. Many of my right hon. and hon. Friends on this side have not been satisfied with the progress made by the steel industry over the last twenty years or so. We know that there has been a good increase in steel production. For example, steel production in the United Kingdom is now 358 110 per cent, higher than in 1938. If, however, we look at the figures for other countries, we find that in the U.S.S.R. there has been an increase of 183 per cent., in Italy an increase of 190 per cent. and in the United States an increase of 225 per cent. It appears, therefore, as though our steel industry is rather at the bottom of the league of increased production. Obviously, this must be a source of disquiet to us, and we should investigate the reasons.
If one looks at the development plans of the steel industry, one finds that in 1948 the development plan proposed by the Iron and Steel Federation was inadequate and had to be increased substantially at the request of the Labour Government of those days. Again, the development plan of 1955 would have been inadequate had it not been for the circumstance that monetary policy produced something in the nature of a slump in 1958. Only for that reason was steel production adequate in the second development plan. If one recalls the early 'fifties, the economy of the country was bedevilled the whole time with inadequate steel production and net exports were unsatisfactory.
This is a particularly grave situation because, as several hon. Members mentioned on Second Reading, a loss of 1 million tons of steel means a loss of £250 million worth of engineering products. So an inadequate supply of steel obviously has the gravest effects on our economy.
We must ask ourselves why we have had this less satisfactory result from the steel industry than we could have done. The simple answer is that not enough 359 capital investment goes into the industry. There is always a conflict of interests. The privately-owned company has first to consider its shareholders and to consider profits, not merely from the viewpoint of shareholders, but from the point of view of the prestige of the company. The private company is in constant fear of having surplus capacity, which in the steel industry is an expensive and costly matter.
There is always this conflict of interest whenever the directors of a privatelyowned steel company have to make a decision about increasing their plant. They always have to be concerned whether they will increase their capacity too much and suffer losses. That consideration always comes first before considerations of the national interest.
Nobody can quarrel with that attitude on the part of the directors. Their job, first of all, is to look after their shareholders and to look after the interests of their company. For that reason it seems essential that the steel industry should be under a large measure of public control. We know, of course, that when there is smaller production, management problems are easier. It is always much more satisfactory to sell one's product in a market where that product is short, and we are always coming up against the problem of the fear of surplus capacity on the part of directors militating against the national interest.
If the two mills with which the Bill deals are considered, it will be found that there is considerable opposition. Colvilles object most strongly to this increased capacity. That illustrates the basic position—the interest of the privately-owned company against the national interest. If we look at other aspects of the steel industry we find that the steel companies, through the Federation, have opposed the increased production of home ore. This again is the conflict between the fear of surplus capacity and the national interest.
The most remarkable feature of the Bill is that it illustrates that the steel companies are apparently unable or unwilling to finance themselves. We heard before the General Election that 360 fear of nationalisation was holding up their plans for increased investment but that is no longer the case, for some time at least. Nevertheless, the Government still feel bound to give them this aid. If these companies cannot provide their own capital and have to depend on Government capital, the simplest thing would be for the Government actually to own them.
Another important aspect of this problem is that if all these companies are publicly owned there can be some measure of rationalisation. One of the difficulties of the steel industry is that many steel works have obsolete plants. In 1955 it was calculated by the Iron and Steel Board that a third of the heavy steel section and a fifth of the pig iron and crude steel operative capacity was obsolete. It is very disagreeable that when we are competing in world markets a large proportion of our steel plants should be obsolete, and it is obsolete because we are up against this eternal position that as long as the plant makes adequate profit the national interest is regarded as unimportant.
The same applies to research. We have a situation in which private steel companies tend to conduct individual research and the amount of pooling of research is negligible. Finally, one should take into consideration the views of the workers in the industry. They have made it quite clear through their trade union leaders that they are almost 100 per cent, in favour of public ownership of the industry. That has been said unequivocally by the leaders of the unions concerned.
Why is it necessary that Richard Thomas and Baldwins should be removed from public ownership and placed in private hands? What is the purpose? It fits Conservative ideology that everything possible should be in private hands. Can the Minister produce one single argument, which would commend itself to the Committee, in favour of Richard Thomas and Baldwins being put into private hands? Why has it got to be sold out to private shareholders? We should like to know the answer to that question because that is the one steel firm which has done exceptionally well. In spite of the recession of 1958, Richard Thomas and Baldwins increased its trading profit by 26 per 361 cent., which was a remarkable achievement, so this cannot be on any ground of inefficiency.
If Richard Thomas and Baldwins is sold to private shareholders, instead of the directors concentrating on their proper job, which is producing steel in accordance with the national plan, they will in future have to consider the shareholders. They will have the shareholders on their back, like the old man of the sea—
§ Mr. Cronin
All right, like the hon. Member for Kidderminster (Mr. Nabarro). Again, the directors will have to worry about surplus capacity, because if they have too much plant, too much capital investment, they will be in trouble with their shareholders and the prestige of their company will suffer. The same consideration applies to Colvilles, which has its shareholders on its back. That is the first consideration, namely, that shareholders must take precedence over the national interest.
At this time of the evening one must truncate one's speech to some extent, but I must say that we on this side of the Committee feel that there is a strong case for restoring the whole of the steel industry to public ownership. It is true that there are arguments in the opposite direction—
§ Mr. Cronin
There is no doubt about that, but taking a balance of the situation, one must come down unhesitatingly in favour of returning the whole of the steel industry to public ownership. The steel industry is unquestionably a commanding height of economy of Himalayan proportions, and it is not supportable that it should be covered with myriads of shareholders.
§ Mr. Cronin
I was arguing from the general to the particular, Sir Gordon. I was making my concluding remarks to the effect that there can be no dout that, as regards my hon. and right hon. Friends, the sooner the whole of the steel industry is restored to public ownership, the more fortunate the economy of this country will be.
§ The Economic Secretary to the Treasury (Mr. Anthony Barber)
If I intervene at this stage I do so only because this Amendment differs from all the others on the Amendment Paper in one significant respect. That is because the issue which it raises is absolutely clear. I would have thought, and I say this with all due respect to any deliberations which we may have in this Committee, that every member of this Committee, if he were honest, would admit that he had made up his mind definitely before this debate took place as to whether or not he was in favour of steel nationalisation. It is for this reason that it seemed to me to be appropriate that in respect of the Amendment I should say something at this stage.
The Amendment raises the whole question of nationalisation. We on these benches have long ago made up our minds where we stand and we are united in our aim. To put it succinctly, we are on the side of the electorate, which considered that Clause 4 is an outdated anachronism. The purpose of the Amendment is to make possible the re-nationalisation of Colvilles, because its equity shares are held by the general public. This is a purpose which runs directly counter to the purpose of the Government's policy of denationalisation.
I should like to say something about the progress which has so far been made in the denationalisation of the industry and about our intentions for the future. I know that certain of my hon. Friends hold the view that the Government have not made adequate progress in returning the industry to private enterprise.
§ Mr. Barber
As I expected, my hon. Friend the Member for Kidderminster (Mr. Nabarro) says, "Hear, hear". Perhaps I might say to him and to his hon. Friends, without impertinence, that I wish just as much as they do that we had been able to carry the process of denationalisation further, but, to put it mildly—I am sure the Committee will agree with this—over these past few years conditions could hardly have been worse in enabling us to complete the operation.
§ Mr. Nabarro
Yes, that was certainly so before the last General Election, for political reasons. But can my hon. Friend deal with the simple point? Was 363 there any more propitious moment for the denationalisation of the I.S.H.R.A. subsidiaries than last November and December, when steel shares on the London Stock Exchange and the provincial stock markets were booming? Why not let us be a little more expansive in our progress in this matter?
§ Mr. Barber
I am sure that on reflection my hon. Friend will agree that it would not only be inappropriate but, for obvious reasons, quite wrong and not in the national interest, if I were now to give specific reasons why action was not taken in the autumn of last year. I will mention only one fact, which he may think is not conclusive but which is relevant. It would have been difficult to take action in respect of Richard Thomas and Baldwins, which is the nationalised part of the industry with which we are concerned in this Bill. To have done that in the month or six weeks immediately prior to the election—
§ Mr. Barber
Yes, I was coming to the question of whether it could have been done in the remainder of the autumn. One thing which strikes me as being apparent immediately, though my hon. Friend may have more knowledge in these matters than I have, is that it would have been extraordinarily difficult in the remainder of the autumn to have floated a loan of £50 million on the market in the short time available.
§ Mr. Sydney Silverman (Nelson and Colne)
Does the Economic Secretary, by his reply to the hon. Member for Kidderminster (Mr. Nabarro), intend the Committee to infer that he agrees with the hon. Gentleman that the reasons which prevented the Government from proceeding faster with the denationalisation of steel before the General Election were political reasons? If they were, what were those political reasons? Was he afraid the country would not like it?
§ Mr. Barber
No. The political reasons were perfectly clear. I do not want to trouble the Committee by going into details on this Amendment, but, briefly, it was that a deliberate decision was taken by the Labour Party that, if returned, it would renationalise the steel industry. For that reason—which far 364 outweighed any other in people's minds —it was virtually impossible to continue to proceed with denationalisation at the pace which I and my hon. Friends would have wished.
In general, there was, prior to the election, a cloud of uncertainty hanging over the industry which made the process of denationalisation inevitably very difficult. Also—and this is a factor sometimes overlooked—the Government had to have regard to the need for the industry to expand in order to meet the nation's demands for steel, and to the fact that in the uncertainty as to its future it was difficult to raise money privately for this purpose.
These factors have meant that not only have the Government been unable to proceed with denationalisation as rapidly as they would have wished but that they also had to leave the money on loan in the industry in order to provide funds for its development which could not be provided from elsewhere.
There are two reasons why it is not easy to give a short account of the outcome of the Agency's operations. The first is that the picture which emerges is the result of a great many transactions of very varied kinds, and the second is that the steel industry of 1960 is a very different affair from that of 1953 when the Agency began its operations, because, of course, it has grown as the economy has expanded.
However, I ask the Committee, in considering whether the steel industry should be nationalised or denationalised and whether the Government have done as much as they possibly could do in the extent of denationalisation, to ponder this significant fact—five-sixths of production, employment and sales in the industry are now in private hands. Government holdings in terms of actual financial transactions have been reduced by two-fifths, although, as I pointed out, the residue does not by any means represent the same share of the total industry which it did in 1953.
Mr. Jack Jones
Will the hon. Gentleman complete that analysis of the situation and, having said that five-sixths of the industry is now in private hands, will he tell the Committee, and through the Committee the nation, 365 that £4 out of every £5 in the industry is public money?
§ Mr. Barber
Because I thought that it would interest the Committee, I was going on to give the actual figures.
The Agency took over securities with a book value of £252 million and outstanding loans of a further £57 million, and when it had discharged the obligations which it inherited from the Iron and Steel Corporation, the total assets to be disposed of amounted to £364 million. It now holds securities and investments which stand in the Agency's books at £213 million. That is a reduction in money terms, as the hon. Member for Rotherham (Mr. Jack Jones) will realise, of £151 million, or 40 per cent.
The important point to bear in mind is that that reduction is not the result of a simple process of successive sales and it is fair to make this comparison: while the total book value of the securities, loans and obligations which the Agency took over amounted to £364 million, receipts and reductions in obligations have amounted to £290 million, but, for the reasons which I have given, the Agency has had to reinvest £139 million in the industry.
§ Mr. Nabarro
I am sure that my hon. Friend is anxious not to anticipate an Amendment in the names of my hon. Friends and myself. At this stage, I shall not attempt to reply to my hon. Friend, but I do not accept his figures or the interpretation which he is seeking to place before the Committee. Our figures, based on previous answers by the Chancellor of the Exchequer, give a very different picture and, as we all know very well, figures may be attuned to suit any argument for every occasion.
§ Mr. Barber
My hon. Friend may attune his figures when he makes his observations. I was merely trying to give an objective account of what has actually happened. I am dealing with these points, not in anticipation of anything which may follow on other Amendments, but simply because this is the Amendment which raises the question of nationalisation.
The Government are determined to proceed with the process of denationalisation until it is completed, and it is in no sense a weakening of that determination 366 to point out that the rate of progress which the Agency can make in returning the industry to private enterprise must inevitably depend upon the state of the market and the fulfilment of the considerations to which, by Statute, the Agency must have regard.
I hope that I have left the Committee in no doubt about our determination to press on with the completion of denationalisation. The hope of the Government is that, within the lifetime of the present Parliament, the Agency will complete its duty of substantially returning the industry to private enterprise. We are very hopeful that conditions will be such that the Agency will be able to make significant progress during the course of this year.
As I have said, the purpose of the Amendment is to enforce, or at least make possible, the renationalisation of Colvilles. Such a purpose could hardly be further from the Government's policy which has been clearly defined and which we are pursuing as fast as we can. It could hardly be further from that policy for the future of the steel industry.
Of necessity, therefore, I must ask the Committee to reject the Amendment.
§ Mr. Lawson
This is much too late an 'hour to embark on arguments about nationalisation, but I should like to reply shortly to one or two points that have been made.
First, the Economic Secretary to the Treasury told us that it was the Government's policy to return the steel industry to private enterprise, or free enterprise. I take it that those two terms are synonymous. I challenge the Economic Secretary that that is the Government's policy. There is no intention to return the steel industry to free enterprise. The steel industry has no desire for that, and it would bitterly resist any effort to enforce a return to free enterprise.
The first essential of free enterprise is that a free enterprise concern determines its own prices. The steel industry does not do that. The Iron and Steel Board does it, happily for Colvilles and other companies. Steel prices have gone up since 1947 almost as fast as coal prices. Steel prices are not determined privately on the basis of competition, but on a closed monopoly. There is no 367 desire to return the steel industry to private enterprise. The Economic Secretary should not put forward that argument.
In addition there is no desire that the steel industry should compete for the purchase of its steel scrap. The Government recently decided that they would no longer enforce the control of scrap prices. The steel industry and the scrap merchants got together and established scrap prices. There is no free enterprise in that.
The steel industry and the Federation do not want the separate units of the steel industry to be in a position to determine for themselves whether they will develop, what they will develop, or how they will develop. The industry requires protection from the Federation, or from the Board, but more especially from the Federation. The steel units have not started to compete with each other.
During the inter-war years when the steel industry was really free it was on its hands and knees, and it had to come begging to the Government to rescue it from free enterprise. There is no intention of breaking that closed monopoly under which the steel industry operates. That is another argument which the Economic Secretary should not put forward.
Several hon. Member on this side of the Committee have said that they see no reason why Richard Thomas and Baldwins should be denationalised. I can see a very good reason, and so can the hon. Member for Kidderminster (Mr. Nabarro). He, and many like him, are anxious to dip their hands into this rich source and derive income for doing nothing.
§ Mr. Nabarro
I am sure that the hon. Gentleman listened to my speech on Second Reading. He intervened on a couple of occasions. I said then, and quoted all the supporting statistics, that the steel industry in its share ownership is more widely diversified than any other major industry in the country. Other than the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) whose absence we regret, I am the only hon. Member who can claim two Richard Thomas and Baldwins' works in his constituency. That is why I know a good deal about the affairs of Richard Thomas 368 and Baldwins, and the views of the steel workers in that undertaking. They are not for nationalisation as the hon. Gentleman suggests.
§ Mr. Lawson
When the facts about the British steel industry are known, it will be found that a large part of the ownership is held abroad, in the United States and elsewhere.
§ Mr. Nabarro
Would not the hon. Gentleman admit that a large part of the shares in the steel industry are owned by the trade unions and cooperatives, notably the National Union of Mineworkers, who revel in the profitability of this great private enterprise industry?
§ Mr. Lawson
I should like to tell the hon. Member and the Committee a little story on that very point of ownership and the control that goes with it. I happened to be talking about this to an audience in my constituency. One man said, "I have fifty shares in Colvilles, but that did not prevent them from sacking me just the same."
§ Mr. Lawson
I realise that this is a very wide subject, and I wish to make only one more point. I want to illustrate the great advantages that come to certain people as a result of the process of denationalisation. When Colvilles was denationalised, 10 million equity ordinary £1 shares were sold for 26s. each. This was in 1955, after the Tory Government had come to power and before there was any thought of the industry being renationalised. They could have been sold thirteen times over. The demand for them was so great because it was appreciated that they were a very good bargain. They are now valued on the market at 76s. each, without a hand's turn being done by those who hold them.
Richard Thomas and Baldwins is being denationalised for the same reason —to enable people who render no useful service to society to reap a rich reward. It is not because of any desire that the industry shall be free to function upon a competitive basis, because there is no more competition in the steel industry. Nowadays it merely wants protection, and on the basis of this protection and 369 freedom from risk large rewards go to those who are in the happy position of holding some shares.
§ Mr. Diamond
The Economic Secretary was right in saying that it is pointless for us to address any remarks to the argument whether or not steel should be nationalised because we have all made up our minds on the subject. But the hon. Member took the opportunity to describe the work of I.S.H.R.A. and went on to explain the reason why it was not possible to denationalise steel before the General Election. He hinted at some of the things that were going to happen now, and it is because I was not able to follow what he said—in fact, I find it difficult to accept what he said—that I am giving him an opportunity to make the position clearer.
As I understand it, I.S.H.R.A. has disposed of equity shares and retained ownership of preference shares, debentures and loans. It has sold the equity shares on a basis that has realised a profit of £25 million to the shareholders of Colvilles alone. That is not bad going for one company, which is by no means the biggest of the steel companies.
What were the reasons for selling £10 million worth of equity shares and holding on to £4 million of preference shares and £10 million of debentures? If this money was available in the market, why was it available only for equity shares which would show a great profit to the shareholders? There is no reason to doubt that it would show a great profit; it was known that it would do so, because it was oversubscribed 13 times. My recollection is that every one of these steel issues, apart from Stewarts and Lloyds, which I think was the very first one, sold—
§ It being Ten o'clock The CHAIRMAN left the Chair to report Progress and ask leave to sit again.
§ Committee report Progress.
§ Proceedings on Government Business exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[Mr. R. A. Butler.]
§ Bill again considered in Committee.
§ Mr. Diamond
I am grateful to the Committee for giving me the opportunity to continue my remarks which otherwise 370 would have been brought to a premature end.
The question I was asking of the Economic Secretary was how he could explain the action taken by I.S.H.R.A. which had the duty of selling these holdings at the greatest profit and in the way most helpful to the nation. In the case of Colvilles it has sold £10 million of equity, retained £14 million of preference and debenture, retained the larger amount, and sold shares in a way which would enure to the benefit of the new buyers, as it has done to the extent of £25 million.
What the Economic Secretary says in explanation, and what has been repeated, and what I cannot accept, is that this was done because of the political situation, because of the political danger of a Labour Government being returned to office after the General Election and re-nationalising steel. Whether that be so or not, that can only have the effect that as between the equity share and the fixed-interest loan the one which is the more risky suffers more devaluation at a time of risk than the one which is less risky.
It follows, therefore, if we take the case of Colvilles—so far as I can see it is inevitable—that if what the Government spokesman is saying is correct, the thing not to sell was equity shares which were unduly depressed by the threat to the market and the thing to sell was fixed-interest stock which, because it was not variable by reference to profits and because it was bound to be redeemed at par in the course of time, could not vary very much as to market value and as to realisable price. In short, suppose the Economic Secretary had the responsibility of disposing of these stocks—as trustee under a will or something of that kind—during these past months prior to the General Election he would have said to himself, "This is not a time to sell equities because they are unduly depressed. I need money, therefore I will sell anything but equities."
I am bound to come to the conclusion that either the argument is hopelessly wrong, either the situation he has described is quite incorrect, or else we are in the very unhappy position of being compelled to question the bona fides of I.S.H.R.A.—a very unhappy conclusion to reach because I.S.H.R.A., so 371 far as one knew, had its responsibilities and carried them out in the public interest. I.S.H.R.A. had got as much as it could for its shares, yet it sold them on a basis on which they were over subscribed thirteen times and in the case of the company we are considering made a profit to the new buyers of no less than £25 million.
I hope, therefore, that the Economic Secretary, as he has chosen this occasion to deal with the progress made by
§ I.S.H.R.A., will explain to us which is the right answer. Has I.S.H.R.A. failed in its duty? Has I.S.H.R.A. thought more of the profits of the buyers on the market than the needs of the nation, or is what he was saying about the political situation—as I suspect it was—utterly wrong?
§ Question put, That those words be there inserted: —
§ The Committee divided: Ayes 139, Noes 208.373
|Division No. 61.]||AYES||[10.5 p.m|
|Ainsley, William||Harbison, Miss Margaret||Pursey, Cmdr. Harry|
|Allaun, Frank (Salford, E.)||Hill, J. (Midlothian)||Randall, Harry|
|Allen, Scholefield (Crewe)||Hughes, Cledwyn (Anglesey)||Rankin, John|
|Awbery, Stan||Hughes, Hector (Aberdeen, N.)||Redhead, E. C.|
|Baxter, William (Stirlingshire, W.)||Hunter, A. E.||Reynolds, G. W.|
|Bence, Cyril (Dunbartonshire, E.)||Hynd, H. (Accrington)||Robens, Rt. Hon. Alfred|
|Benson, Sir George||Hynd, John (Attercliffe)||Roberts, Albert (Normanton)|
|Blyton, William||Irvine, A. J. (Edge Hill)||Ross, William|
|Bowden, Herbert W. (Leics, S.W.)||Janner, Barnett||Silverman, Sydney (Nelson)|
|Boyden, James||Johnson, Carol (Lewisham, S.)||Slater, Mrs. Harriet (Stoke, N.)|
|Broughton, Dr. A. D. D.||Johnston, Douglas (Paisley)||Small, William|
|Brown, Alan (Tottenham)||Jones, Dan (Burnley)||Smith, Ellis (Stoke, S.)|
|Brown, Rt. Hon. George (Belper)||Jones, Elwyn (West Ham, S.)||Snow, Julian|
|Brown, Thomas (Ince)||Jones, Jack (Rotherham)||Soskice, Rt. Hon. Sir Frank|
|Cliffe, Michael||Jones, J. Idwal (Wrexham)||Spriggs, Leslie|
|Craddock, George (Bradford, S.)||Jones, T. W. (Merioneth)||Stewart, Michael (Fulham)|
|Cronin, John||King, Dr. Horace||Stonehouse, John|
|Cullen, Mrs. Alice||Lawson, George||Strauss, Rt. Hn. G. R. (Vauxhall)|
|Davies, G Elfed (Rhondda, E.)||Lee, Frederick (Newton)||Swain, Thomas|
|Davies, Harold (Leek)||Lever, L. M. (Ardwick)||Sylvester, George|
|Davies, Ifor (Gower)||Mabon, Dr. J. Dickson||Symonds, J. B.|
|Davies, S. O. (Merthyr)||MacColl, James||Taylor, Bernard (Mansfield)|
|Deer, George||McInnes, James||Taylor, John (West Lothian)|
|Dempsey, James||McKay, John (Wallsend)||Thomas, Iorwerth (Rhondda, W.)|
|Diamond, John||Mackie, John||Thompson, Dr. Alan (Dunfermline)|
|Dodds, Norman||MacMillan, Malcolm (Western Isles)||Thornton, Ernest|
|Ede, Rt. Hon. Chuter||MacPherson, Malcolm (Stirling)||Timmons, John|
|Edwards, Rt. Hon. Ness(Caerphilly)||Mahon, Simon||Wainwright, Edwin|
|Edwards, Walter (Stepney)||Manuel, A. C.||Warbey, William|
|Evans, Albert||Marquand, Rt. Hon. H. A.||Watkins, Tudor|
|Fernyhough, E.||Mason, Roy||Weitzman, David|
|Finch, Harold||Mendelson, J. J.||Wells, William (Walsall, N.)|
|Fitch, Alan||Millan, Bruce||Wheeldon, w. E.|
|Fletcher, Eric||Mitchison, G. R.||Whitlock, William|
|Foot, Dingle||Monslow, Walter||Wilcock, Group Capt. C. A. B.|
|Forman, J. C.||Morris, John||Wilkins, W. A.|
|Fraser, Thomas (Hamilton)||Neal, Harold||Williams, D. J. (Neath)|
|George, Lady Megan Lloyd||Oliver, G. H.||Williams, Rev. Ll. (Abertillery)|
|Ginsburg, David||Oswald, Thomas||Williams, W. R. (Openshaw)|
|Gordon Walker, Rt. Hon. P. C.||Owen, Will||Willis, E. G. (Edinburgh, E.)|
|Gourlay, Harry||Parker, John (Dagenham)||Wilson, Rt. Hon. Harold (Huyton)|
|Grey, Charles||Pavitt, Laurence||Winterbottom, R. E.|
|Griffiths, David (Rother Valley)||Peart, Frederick||Woodburn, Rt. Hon. A.|
|Gunter, Ray||Pentland, Norman||Woof, Robert|
|Hall, Rt. Hon. Glenvil (Colne Valley)||Prentice, R. E.||Yates, Victor (Ladywood)|
|Hart, Mrs. Judith||Price, J. T. (Westhoughton)|
|Hayman, F. H.||Proctor, W. T.||TELLERS FOR THE AYES:|
|Mr. Short and Mr. Howell.|
|Agnew, Sir Peter||Bidgood, John C.||Butcher, Sir Herbert|
|Allason, James||Biggs-Davison, John||Butler,Rt.Hn.R.A.(Saffron Walden)|
|Alport, C. J. M.||Bingham, R. M.||Carr, Compton (Barons Court)|
|Arbuthnot, John||Bishop, F. P.||Carr, Robert (Mitcham)|
|Ashton, Sir Hubert||Black, Sir Cyril||Channon, H. P. G.|
|Atkins, Humphrey||Bossom, Clive||Chataway, Christopher|
|Barber, Anthony||Bourne-Arton, A.||Chichester-Clark, R.|
|Barlow, Sir John||Box, Donald||Clark, Henry (Antrim, N.)|
|Barter, John||Boyle, Sir Edward||Clark, William (Nottingham, S.)|
|Batsford, Brian||Brewis, John||Cleaver, Leonard|
|Bell, Philip (Bolton, E.)||Browne, Percy (Torrington)||Cooper, A. E.|
|Bennett, F. M. (Torquay)||Bryan, Paul||Cooper-Key, Sir Neill|
|Berkeley, Humphry||Bullard, Denys||Cordeaux, Lt.-Col. J. K.|
|Corfield, F. V.||Howard, Hon. G. B. (St. Ives)||Pott, Percivall|
|Costain, A. P.||Hughes-Young, Michael||Powell, J. Enoch|
|Courtney, Cdr. Anthony||Hurd, Sir Anthony||Prior, J. M. L.|
|Critchley, Julian||Hutchison, Michael Clark||Prior-Palmer, Brig. Sir Otho|
|Crosthwaite-Eyre, Col. O. E.||Iremonger, T. L.||Rarmden, James|
|Crowder, F. P.||Irvine, Bryant Godman (Rye)||Rawlinson, Peter|
|Cunningham, Knox||Jaokson, John||Redmayne, Rt. Hon. Martin|
|Curran, Charles||James, David||Rees, Hugh|
|Currie, G. B. H.||Jenkins, Robert (Dulwich)||Rees-Davies, W. R.|
|Dance, James||Johnson, Dr. Donald (Carlisle)||Robinson, Sir Roland (Blackpool, S.)|
|d'Avigdor-Goldsmid, Sir Henry||Johnson, Eric (Blackley)||Roots,William|
|Deedes, W. F.||Kaberry, Sir Donald||Ropner, Col. Sir Leonard|
|de Ferranti, Basil||Kerans, Cdr. J. S.||Russell, Ronald|
|Donaldson, Cmdr. C. E. M.||Kerby, Capt. Henry||Scott-Hopkins, James|
|Doughty, Charles||Kershaw, Anthony||Sharples, Richard|
|Drayson, G. B.||Kitson, Timothy||Shaw, M.|
|Duncan, Sir James||Lagden, Godfrey||Shepherd, William|
|Duthie, Sir William||Leburn, Gilmour||Skeet, T. H. H.|
|Eden, John||Legh, Hon. Peter (Petersfield)||Smith, Dudley (Br'ntf'rd & Chiswlck)|
|Elliott, R. W.||Lewis, Kenneth (Rutland)||Stanley, Hon. Richard|
|Errington, Sir Eric||Lilley, F. J. P.||Steward, Harold (Stockport, S.)|
|Erroll, F. J.||Linstead, Sir Hugh||Stodart, J. A.|
|Farey-Jones, F. W.||Litchfield, Capt. John||Stoddart-Scott, Col. Sir Malcolm|
|Fell, Anthony||Lloyd, Rt. Hon. Selwyn (Wirral)||Storey, Sir Samuel|
|Flnlay, Graeme||MacArthur, Ian||Summers, Sir Spencer (Aylcsbury)|
|Fletcher-Cooke, Charles||McLaren, Martin||Sumner, Donald (Orpington)|
|Forrest, George||Maclay, Rt. Hon. John||Talbot, John E.|
|Fraser, Ian (Plymouth, Sutton)||McLean, Neil (Inverness)||Tapsell, Peter|
|Gammans, Lady||MacLeod, John (Ross & Cromarty)||Taylor, W. J. (Bradford, N.)|
|Gardner, Edward||McMaster, Stanley R.||Thatcher, Mrs. Margaret|
|George, J. C. (Pollok)||Macmillan, Maurice (Halifax)||Thomas, Leslie (Canterbury)|
|Gibson-Watt, David||Macpherson, Niall (Dumfries)||Thomas, Peter (Conway)|
|Glover, Sir Douglas||Maddan, Martin||Thornton-Kemsley, Sir Colin|
|Glyn, Dr. Alan (Clapham)||Maginms, John E.||Tiley, Arthur (Bradford, W.)|
|Glyn, Col. Richard H. (Dorset, N.)||Markham, Major Sir Frank||Tilney, John (Wavertree)|
|Goodhew, Victor||Marlowe, Anthony||Turner, Colin|
|Gower, Raymond||Marten, Neil||Tweedsmuir, Lady|
|Grant, Rt. Hon. William (Woodside)||Mathew, Robert (Honiton)||van straubenzee, W. R.|
|Grant-Ferris, Wg Cdr. R.(Nantwich)||Matthews, Gordon (Meriden)||Vosper Rt. Hon. Dennis|
|Gresham Cooke, R.||Mawby, Ray||Wade, Donald|
|Crimond, J.||Maydon, Lt.Cmdr. S. L. C.||Wakefleld, Edward (Derbyshire, W.)|
|Grosvenor, Lt.-Col. R. G.||Milligan, Rt. Hon. W. R.||Ward, Rt. Hon. George (Worcester)|
|Hamilton, Michael (Wellingborough)||Mills, Stratton||Ward, Dame Irene (Tynemouth)|
|Harris, Frederic (Croydon, N.W.)||Morgan, William||Watts, James|
|Harrison, Col. J. H. (Eye)||Nabarro, Gerald||Wells,John (Maidstone)|
|Harvey, John (Walthamstow, E.)||Neave, Airey||Williams, Paul (Sunderland, S.)|
|Hay, John||Nicholls, Harmar||Wilson, Geoffrey (Truro)|
|Heath, Rt. Hon. Edward||Osborn, John (Hallam)||Wise, Alfred|
|Hendry, Forbes||Page, Graham||Wood, Rt. Hon. Richard|
|Hiley, Joseph||Pannell, Norman (Kirkdale)||Woodhouse, C. M.|
|Hill, J. E. B. (S. Norfolk)||Pearson, Frank (Clitheroe)||Woodnutt, Mark|
|Hinchingbrooke, Viscount||Peel, John||Woollam, John|
|Hirst, Geoffrey||Percival, Ian||Worsley, Marcus|
|Hooking, Philip N.||Peyton, John|
|Holland, Philip||Pickthorn, Sir Kenneth||TELLERS FOR THE NOES:|
|Hollingworth, John||Pike, Miss Mervyn||Brooman-White and|
|Hornsby-Smith, Rt. Hon. Patricia||Pilkington, Capt. Richard||Mr. Whitelaw.|
|Howard, Gerald (Cambridgeshire)||Pitt, Miss Edith|
§ Mr. Strauss
I beg to move, in page 2, line 4, at the end to insert:Provided that no such terms as aforesaid shall be approved if the borrower is a company, of which any shares are not held by or on behalf of a public authority, and if the security does not take the form of a debenture of the company, convertible into ordinary shares of the company at the option of the Minister (not to be exercised without the consent of the Treasury) and on such conditions and at such time or times as the Minister with the consent of the Treasury may consider right and equilable.This Amendment is a further attempt to rectify the shockingly bad agreement which the Government made in January last year with Colvilles. We do not go quite so far as the hon. Member for Shipley (Mr. Hirst) who earlier in the 374 day described the agreement as shattering and dastardly. Our language is more measured than his, but we are interested to know that he feels strongly that it was a bad agreement. We think so too, and this is an attempt to put it right.
Up to now, when we have moved various Amendments for this purpose, we have been told by the Minister of Power, first, that we have no right to suggest any alteration in the agreement at this stage, because when the agreement was first announced to the House we did not object to it. I have pointed out already that this is incorrect. The agreement was announced to the House on 21st January of last year. On 2nd 375 February I asked Questions opposing very definitely the terms of the agreement, particularly in regard to the profits which are likely to accrue as a result of the loan to Colvilles, and pointing out that all the profits will go to the shareholders of Colvilles and none to the State. Therefore, we cannot be accused of having agreed with the agreement when it was published.
It is ridiculous to say that, if we disagreed with it, we should have tabled a Motion and voted against it. Because we do not vote against everything the Government do, it cannot be assumed that we agree with everything. It should be quite satisfactory and sufficient for us to express disagreement officially from the Dispatch Box on behalf of the Labour Party.
When we have moved earlier Amendments to try to improve the agreement the Government have said, secondly, that it is too late to do so. They say that the agreement has been made and we cannot at the present stage ask the company to revise it. We understand that argument, but it is not one which Parliament or this Committee can tolerate. This is the first occasion when Parliament has had the opportunity to consider the agreement. Only now when the legislation confirming the agreement is before us do we have an opportunity to give our verdict and saying whether we think it is good, bad or indifferent. We are doing so now. This is the first opportunity we have had. We say that in many respects the agreement is bad, it is profligate, does not properly regard the public finances and should be amended accordingly.
I shall not suggest anything very revolutionary in my Amendment. I start with an assumption which is common in industry. I base my arguments entirely on the normal practice in private industry and in banking. I start with the assumption that, when large sums of money are lent to a company over a long term, it is usual and right for the lending organisation to demand some share in the profits which are likely to accrue as a result of the loan. We are dealing with a company in which private investment at the moment amounts to about £16 million. Fifty million pounds are to be lent by the Government and 376 we know, because the chairman has said so, that it is likely to prove profitable to the shareholders in the company. I do not think that anyone can doubt that, if not immediately, at any rate within a few years, if the country is to flourish at all, the steel industry will flourish and this investment will turn out to be wholly profitable.
I will give the Committee—I want to speak very briefly because of the late hour—two examples of substantial loans by semi-public institutions to an industry which is very similar indeed, so similar as to be closely related to the loans which the Government are now making. On both occasions an interest in the profits was demanded and accepted when the loans were made.
My first example is the Finance Corporation for Industry. It is a semiofficial body. The largest shareholder is the Bank of England. Before the steel industry was nationalised the Corporation lent the Steel Company of Wales £35 million. When it did so, it asked for an option, which it received, for taking up a certain number of ordinary shares at a later date. It had that option. That is exactly what we are asking for on this occasion.
What happened as a result? On behalf of the Labour Government, I introduced a Bill to nationalise the industry. We bought all the shares of the big companies, including the shares of the Steel Company of Wales. But we found that this body, the Finance Corporation for Industry, had an option on a number of ordinary shares in the Steel Company of Wales. We had to compensate the Finance Corporation for Industry. We could not buy the shares because it had not got them, but it had the option.
If one turns to the last Report of I.S.H.R.A., one finds on page 19 an itemCompensation paid by the Corporation for cancellation of option rights, 2¼ million pounds.That is money which the Iron and Steel Corporation had to pay to the Finance Corporation for Industry to cancel its rights to take up ordinary shares. That burden is now being accepted by I.S.H.R.A. A more closely analogous situation I cannot imagine. I ask immediately the question, why did not the Government do exactly the same when they lent £50 million to Colvilles?
377 There is a second example. Not very long ago, the Finance Corporation for Industry lent to the South Durham Steel and Iron Company £22½ million. When it did that, it asked for an option, and received it, to take up 2 million ordinary shares. It has taken up those ordinary shares. I do not know the exact details so I cannot say at what price it was entitled to buy or what profits the F.C.I. made out of it. Presumably, there was a substantial profit because those shares are now being put on the market at 52s. 6d. This and the first example I gave are very similar; large sums of money have been lent to two steel companies by a semi-public body and, on each occasion, that body, at the time of the loans, said that it felt itself to be entitled to have a right to participate in the profits which would be made as a result of those substantial loans.
The last example I will give is not one of a public body lending money to a steel company but of a steel company asking for money from the public and issuing convertible debentures. The company in question is Colvilles itself. A little time ago, Colvilles issued to the public £6 million of convertible debentures. It was not so much as the £50 million it is to have now, but at that time it wanted £6 million. It said that anybody who took up those shares would be entitled to convert the debentures into ordinary shares at certain figures ranging from 27s. 6d. to 30s. 11d. between March, 1959, and March, 1963. Colvilles itself accepts the principle that it is right when it, a steel company—
§ Sir H. d'Avigdor-Goldsmid
I am much obliged to the right hon. Gentleman for giving way. Does he seriously suggest that it was open to Colvilles to borrow £50 million from the public on convertible debentures at the time when it took this loan from the Government instead?
§ Mr. Strauss
All I am saying is that the principle of issuing convertible debentures and giving them to people lending money to the company is accepted by Colvilles because it did that very thing itself. Whether Colvilles was able to obtain better terms in any other way at some other time does not concern me at the moment. I am dealing with the 378 principle, a principle which has been accepted by the company itself, which did it to the tune of £6 million.
My case is quite short. This principle has been accepted and operated by semi-public bodies when they have lent large sums of money to the steel industry. Colvilles itself accepted the principle. I said, a week after the terms of the agreement were published, that the Government should have done exactly the same in regard to their £50 million loan. Why should they not say that, since the money which was to be provided through Government sources—it is true it is not taxpayer's money, but it is provided through public sources—will almost certainly lead to substantial profits in the distant future, a proper share of that money should come back to the public in the same way as the F.C.I. said that it should come back to the F.C.I. and, through the F.C.I., to the Bank of England?
The failure of the Government to do this is very serious, and they deserve the censure of the House of Commons and the country. Why did not the Government do that? When I asked the Question, what answer did I receive? I was told:The Government do not believe that they —the Government—should participate in the equity of the steel industry."—(OFFICIAL REPORT, 2nd February, 1959; Vol. 599, c. 28.]That is all. I was given no explanation. Can anyone in the Committee think of a good reason why the Government should not participate in the equity of the steel industry? The Bank of England cannot think of a good reason. It is not a question of control. It is merely a question of using in the public interest part of the profit resulting from the investment of public money.
I do not know whether any hon. Member can think of a good reason why exactly the same thing should not happen here. We propose our Amendment because it seems to us that the Government have not a leg to stand on. Their refusal to do this can stem only from political prejudice, as was shown by the Answer which I have quoted. I suggest that my proposition is common sense. It has most respectable precedents and has proper regard for the public purse.
§ Mr. Barber
As the right hon. Member for Vauxhall (Mr. Strauss) said, the effect of this Amendment would be to convert the loan to Colvilles into convertible debentures which might be turned into ordinary shares at the Government's discretion. It does not apply to Richard Thomas and Baldwins, all of whose shares are held by the Government.
I ask the Committee to reject the Amendment for two principal reasons. The first, which I think is an overriding reason, is one which has been given before by my right hon. Friend the Minister of Power on other Amendments, namely, that the Government have entered into a solemn agreement with Colvilles. [Laughter.] It is all very well for the right hon. Member for Middlesborough, East (Mr. Marquand) to sit there laughing, but no one has made a bigger mistake than he when he got up and solemnly stated at that Dispatch Box that my right hon. Friend the Minister of Power had not the authority of Parliament to enter into this agreement. That, if I may say so with respect, was complete nonsense. My right hon. Friend had full authority to enter into this agreement.
§ Mr. G. R. Mitchison (Kettering)
Did not Colvilles know perfectly well that this agreement could not be implemented without the subsequent authority of Parliament to take the money from the Consolidated Fund or some other source?
§ Mr. Barber
No. Under Section 5 of the Iron and Steel Act, 1953, the Minister has power to make arrangements such as this. He did so.
§ Mr. Marquand
Surely the 1953 Act gives the Minister power to provide the money himself to build the works to be owned by the Government?
§ Mr. Barber
I beg to differ. I have taken advice on this matter. I have considered it very carefully, and I am satisfied, without any qualification whatsoever, that my right hon. Friend the Minister of Power had the full authority of Parliament to proceed under Section 5 of the 1953 Act to make the arrangements which he made with Colvilles.
§ Mr. Barber
The hon. and learned Gentleman asks why we want this Bill. The reason is simple, and it was explained on Second Reading. Under Section 5 of the 1953 Act, the moneys to be provided for the purpose of this agreement can be provided only from above the line out of voted moneys. As these sums will be returned to the Treasury in due course and will bear interest in the meantime, it was thought by my right hon. Friend the Chancellor of the Exchequer appropriate that these sums should come out of the Consolidated Fund below the line.
§ Mr. Mitchison
It is not merely appropriate. It is necessary, and if Colvilles had been properly advised—no doubt the firm was—it must have known that.
§ Mr. Barber
That is not the position. I think that the hon. and learned Gentleman will agree that this money could have been provided from above the line out of voted moneys, but it was thought more appropriate to do it in this way.
Be that as it may, there is no doubt whatsoever that my right hon. Friend had the necessary powers to enter into this agreement. It may be that in all the circumstances, for reasons best known to themselves, hon. and right hon. Members opposite would be prepared to see the Government break an agreement like this by including the provision referred to in the Amendment; but that is certainly something which Her Majesty's Government are not prepared to do.
If the first reason is not accepted, I hope that the second reason will be, and it is that this agreement was negotiated. It was an agreement which the Government secured and which they considered at the time to be the best and the fairest that could be obtained in the circumstances. The right hon. Member for Vauxhall knows well that there was at that time urgent need to provide extra capacity for sheet steel. A very large amount of money was involved, and there was the threat of renationalisation which made it extremely difficult to raise funds.
Furthermore, the terms of the agreement were inevitably coloured to some extent by the fact that Colvilles were 381 taking some risk, because, after all, in the autumn of 1958 the future demand for sheet steel was not nearly as bouyant as it is today. The right hon. Member for Vauxhall suggested that there was no reason why the Amendment should not be accepted—the provision for convertible debentures—because Colvilles had done this previously. I only wish that he had given the full story, because the previous occasion when Colvilles raised £6 million by the issue of convertible debentures was nine months before the conclusion of this agreement with Her Majesty's Government.
If I may quote for a moment from Financial Times, this was its comment on this issue at the time:The question is what risk an investor is running in the event of nationalisation, and what premium he is paying for the conversion option. There is the distinct possibility —quite apart from the option becoming worthless—that nationalisation might also bring compulsory redemption, possibly at par, possibly at the issue price, but certainly on terms which cannot now be forecast.On 17th January, after the issue was made, the Financial Times commented again:It is important that this issue should succeed, since other steel companies may be coming to the market for capital in this form. It is a pity, however, that the success has not been more resounding.The price had gone to a discount of 1½ per cent. by 20th January. Only two months later the South Durham Steel Company made an issue at 6 per cent., at a price of 95, and 92 per cent. of the issue was left with the underwriters. That was a few months before the time when the right hon. Member for Vauxhall says it would have been reasonable to ask Colvilles to make an agreement involving convertible debentures.
This agreement was made in the autumn of 1958, in circumstances which in the view of the Government were perfectly fair and reasonable. If the situation had been different in one respect, if one factor had not been there which was in everybody's mind, and that was the possible threat of renationalisation by the Labour Party, of course we would have been able to get better terms. If the Opposition finds these terms in some respects unpalatable to it, it is its own fault. This is perfectly true, and I think 382 that the right hon. Member for Vauxhall would agree with me, because in the main it was the Opposition's repeated threats of renationalisation which made it necessary to make this loan on these terms. Indeed, I am sure that the right hon. Member for Vauxhall would agree, because he was one of those who made the sort of threats which caused the difficulty with which we were faced.
I repeat that the loan to Colvilles with which the Amendment is concerned was made under the authority of an Act of Parliament, the general plan was announced by my right hon. Friend the Prime Minister in November, 1958, and the terms were made known in January, 1959. Now—more than a year later— the Opposition in effect ask the Government to break their contract. All the right hon. Gentleman says is "I voiced an opinion at that time, but, of course, we do not need to vote on everything in order to take our opposition to its logical conclusion". Bearing in mind that we started this afternoon with a debate on an Opposition Amendment which was concerned solely with whether an assessor should be appointed to assist the Minister of Power in this matter, which lasted two hours and ended in a vote, I find it very difficult to understand why the right hon. Gentleman did not take advantage of other opportunities to debate this whole question.
As I have said, the terms of the agreement were settled in accordance with authority. The Amendment takes no account of the circumstances prevailing at the time the agreement was made— circumstances largely created by the Opposition—and I must ask the Committee to reject it.
§ Mr. Diamond
We are going from bad to worse. We started this afternoon in an attempt to improve the control which Parliament has over large sums of money which it is spending and to reach agreement between the two sides about some methods by which we might improve Parliamentary accountability. We have now reached the stage when the Economic Secretary is saying, quite incorrectly, that a contract was entered into and that the Opposition are asking the Government to break it. The contract is available to us all to read. As the Economic Secretary said, it was made public on 21st January, 1959. The 383 last words of the Government announcement were:The agreement is still subject to the shareholders and stockholders of Messrs. Colvilles Ltd. approving the necessary increase in the company's borrowing powers."—[OFFICIAL REPORT, 21st January, 1959; Vol. 598, c. 40.]If the company has not increased its borrowing powers—I do not know whether it has or not; I can only assume that it has, but at that point in time the company had not borrowing powers sufficient to enable it to borrow the amount of money which the Government were proposing to lend—that was not an enforceable contract. [HON. MEMBERS: "Oh."] I am not a lawyer, but I am sure that lawyers present will tell me whether or not that was a contract at that time. It was subject to that condition.
Of course, although it was not stated, similarly advice might have been given to the intending borrower that Parliament also might be consulted for a minute or two just as much as the shareholders of Colvilles were to be consulted. It might just have occurred to someone on the Government Front Bench that it was an old-fashioned idea of a type which 'it might be good to revive to consult Parliament for a minute or two whether £50 million, or, in total, £120 million, should be invested in entirely novel circumstances in two steel companies.
The Economic Secretary now tells us, "You cannot look into this again. It has all been decided." I accept it completely from him—with deference to my right hon. Friend the Member for Vauxhall (Mr. Strauss), I think the hon. Gentleman was right when he first said it—that the Government had power to enter into the agreement. What the hon. Gentleman must also accept completely is that if the Government make a shocking hash of things, they must expect to be criticised for so doing— and that is what the Government have done in relation to the agreement.
The hon. Gentleman cannot have it both ways. Either it was something which was done without consulting Parliament and is now seen to have been very 'badly done and to be a shocking breach of the most important trust that Parliament holds, the trust of the public purse, or he was wrong in saying 384 that he could not consult Parliament about it. I accept what the hon. Gentleman says, that they could not alter this agreement without accepting the responsibility of having made a shockingly bad agreement. He is now attempting to justify this on a further ground that was not mentioned before.
Before we go into that, I suggest that these are thoughts which the hon. Gentleman has conjured up between Second Reading and now. We were not told this on Second Reading. When winding up on Second Reading, the President of the Board of Trade spoke for a considerable time. I interrupted him in that debate and said:The right hon. Gentleman said that there was a possibility of risk involved in the taking of equities. This does not prevent their taking convertible debentures, where the Government can have it both ways, at the option of the lender. What is the reason for not doing that …?The right hon. Gentleman replied:I have met many people who believe that one can have it both ways, but I believe that most of them have come to a bad end."— [OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 1553.]Of all the stupid, silly answers for a President of the Board of Trade to give when Parliament is trying to exercise its function of seeing that money is voted in a sensible way and under sensible conditions, that was the silliest of them all. I cannot think of a more stupid or inane answer. Everyone knows that it is not true. It happens time after time that a lender takes an option either to have repayment or to convert into some other form.
As far as I know, the President of the Board of Trade may be living in a house with an option to renew the lease at the end of the first seven years. That is a form of one-way option. What the right hon. Gentleman was attempting to say was that there was no such thing as a one-way option, whereas we know that it happens time and time again. I was glad to see that the Leader of the House was present for part of the discussion, and I hope that he will be closely informed of the tenor of our debate and will realise, after the attempts that he has been tentatively making to see that Parliament once more has an opportunity of looking after the money it votes and of considering the matter before it 385 votes it, the way in which the Committee is being treated tonight by being told that it is too late.
These arrangements were made by the Government without Parliament being consulted at all. The Government did this knowing that Parliament was not consulted, and it is now too late to do anything. It is the sort of answer that we have had time and time again. It is quite right that the Government cannot alter the position now. The Government did not consult Parliament and they are now stewing in what they did. I hope that everyone will see how much they are stewing in it and will realise how much they are responsible for the position in which the country is being put.
§ Mr. Gresham Cooke
This debate has been going on for nearly seven hours, and we have heard nothing but criticism of the Bill from hon. Members opposite. The time has now arrived when, perhaps, a little common sense should be injected into the debate.
We all know—and many people in the Committee have been connected with the steel industry—that there are from time to time amazing peaks in the demand for sheet steel. We are going through one such peak at the moment, and we are having to buy sheet steel from America. If we cast our minds back eighteen months and think of the position of Colvilles at that time, we must realise that it was a heavy engineering company committed very much to the shipbuilding industry. It had a large programme which was going to cost £30 million or £40 million in order to expand its heavy capacity, mainly for the shipbuilding industry. Therefore, it was impossible at that time for Colvilles to contemplate going into the sheet or strip industries without substantial Government assistance.
We have also to think of the Government's present plans for the distribution of industry, plans which have been approved by both sides of the Committee. It has been proposed that the steel-using industries should be moved out of the congested conurbations of the Midlands to places like Scotland. Obviously, if the steel-using industries are to be directed to Scotland, someone like Colvilles must build a strip mill there.
386 Bearing all those things in mind, it seems to me that in 1958 it was wise to reach an agreement with Colvilles and to say that the Government would lend the money for the building of the strip mill. That agreement having been made, I do not see how we as a Committee can go back on it at this stage. However, the agreement provides that we have to find £50 million for Colvilles over the next five years. Is it possible for my hon. Friend the Economic Secretary to say that he will try to persuade Colvilles to try to place some of the burden of the demand on the money market in the ordinary way of business? If my hon. Friend can say that, many of us on this side of the Committee will be more satisfied. As someone connected with commerce for 22 years, I do not see how we as a Committee can ask the Government to go back on an agreement, but if my hon. Friend can say that he will ask Colvilles, as an act of good will, to push not the whole but some of the burden on to the money market, many of us would feel more satisfied.
§ Mr. Diamond
Would it have been reasonable for the Government when negotiating this loan to have asked that the loan should take the form of convertible debentures? This is all that is being suggested.
§ Mr. Gresham Cooke
Convertible debentures at that time were "not on" and Colvilles would not have entered into an agreement unless there had been straight debentures.
§ Mr. Grimond
As I understand it, the hon. Member for Twickenham (Mr. Gresham Cooke) has said that we cannot as a Committee go back on the agreement but that he would like it altered, if Colvilles will agree. That does not seem to be a great encouragement to the Minister.
In order to make it clear in case there is any doubt, I am against the Amendment, but I was drawn to my feet by the Minister's strange reasons for rejecting it. It may be true that, having made an agreement with Colvilles, the Government feel that they must stand by it, but that is no bar to the House of Commons censuring the Government for what they have done. It is the Minister who has to defend what he has done.
387 The right hon. Gentleman said that he could not get more favourable terms from Colvilles because the Labour Party was threatening nationalisation. I must confess that I was surprised to hear that, because it seems to me that Colvilles must have done fairly well out of this bargain and must have been fairly stiff negotiators. The implication was that if the right hon. Gentleman had been able to persuade Colvilles to agree, he might well have accepted the suggestion of a debenture or equivalent with option to transfer to ordinary shares. The Committee might well ask whether that is the Government's true view. Is it the Government's view that it would have been better if they had had an option and that they would have taken an option if they could? Is it their view that they would take an option if another case of this sort arose?
There are objections to the Government taking an option of this sort which would entitle them to an equity in a denationalised steel company. The Government would then either take some part in the running of the business —and I do not believe that they have the set-up to do so and, in that sense, they are in a different position from a commercial or financial body—or they would take no part in running the business, in which case they would become a sort of sleeping shareholder. If they want to spread profits more widely, they should do so by spreading ownership and spreading the profits among the workpeople,
We have a right to know what Government opinion is, because this matter has caused considerable anxiety.
§ Mr. Lawson
I was surprised to hear the hon. Member for Orkney and Shetland (Mr. Grimond) voice his opposition to the Government's taking any shares in this company. Only a short time ago we passed the Committee stage of the Highlands and Islands Shipping Services Bill, which the hon. Member supported, which was concerned with pumping Government money into running subsidised transport services.
§ Mr. Grimond
This is quite a simple point. I am not averse to the Government giving support to private industry, through D.A.T.A.C. and by way of the Local Employment Bill, but it is anomalous for the Government to engage 388 in denationalising some steel companies and to take up an equity interest in other steel companies at the same time.
§ Mr. Lawson
The fact is that when it suits the constituents of the hon. Member he is all for this kind of thing happening. It is another example of the contradiction which is so characteristic of members of the Liberal Party.
I take the point about the Government's not being able to go back on an agreement already arrived at. My point is that it was a political agreement and not a business one. I question the difficulty of raising money which is supposed to have dogged the industry since it was nationalised and has been in the process of denationalisation. My right hon. Friend the Member for Vauxhall (Mr. Strauss) has already said that £6 million was raised in January, 1958, on the eve of an election. In the words of the Chairman of Colvilles, there was apparently no difficulty in raising the money, despite what the Economic Secretary has said. In the Annual Report the chairman of Colvilles said:This issue "—that is, the £6 million—was offered at £99 with rights of conversion into ordinary shares in stated proportions during the years 1959-63. I am glad to advise you that this issue was fully subscribed.There was no difficulty about raising the money. It might very well be that Colvilles will not take up anything like £50 million.
§ Mr. Lawson
For the very good reason that they are earning enormous profits, as are the other steel companies.
Colvilles was denationalised in January, 1955. The 10 million £1 ordinary shares were offered at 26s. each and they were over-subscribed 13 times, so great was the demand and so clear the recognition that a good bargain was being offered to shareholders and subscribers of this company. There was no difficulty about raising £13 million in January, 1955, again at a time when one might have said that there was a threat of renationalisation hanging over the industry.
Since that time this company has put to reserve £20½ million. This belongs to the equity shareholders, not to the loan capital holders.
§ Mr. Lawson
No. If the hon. Member looks at the figures he will see that depreciation amounts to £9,922,000. That is nearly £10 million, in addition to the figure of £20½ million. That comes out of the profits. This is what the firm has earned—£10 million depreciation, £20½ million to reserves, and there has been paid in dividend to equity shareholders £7,025,000. So there is no difficulty about raising money.
§ The Temporary Chairman (Mr. Blackburn)
I am sure the hon. Member's facts are correct. My difficulty is in linking all this with this particular Amendment.
§ Mr. Lawson
As I understand the Amendment, it seeks to give the power to transform loan capital into equities. I am trying to indicate that the equity shareholder of Colvilles has been doing very well indeed. And it follows from this that if the equity shareholder of Colvilles has been doing very well indeed, the ordinary public, if they had held those ordinary shares, would have been doing very well indeed. It would have been so much better and to the advantage of the people of this country if the £14 million public money at present held with Colvilles had taken the form of equity shares, because we would have had a share of the £20½ million which has gone to reserves, and much more than we have been getting in fixed interest payment.
We are prepared to take the risk. The hon. Gentleman the Member for Kidderminster (Mr. Nabarro) is well prepared to take the risk. He does not think that the bottom will collapse as far as Colvilles and the steel industry are concerned. It would be an excellent investment on the part of the hon. Gentleman, and what is good for him I suggest is very good for the nation.
§ Mr. Nabarro
Yes, of course, this happy situation will indeed come to pass subject to one important qualification: that a Conservative Government remain in office.
§ Mr. Lawson
It is a very interesting point. I hate to give all these details of this firm, Colvilles, because I am very friendly to them—they provide so much employment in my own area—but for 390 the hon. Gentleman's information, Colvilles was bought initially for £10 million when it was nationalised and sold for £13 million, and during the short period of nationalisation it was an excellent thing for the nation and for Colvilles because it enabled them to build up in terms of capital equipment which they would not have been able to do otherwise.
§ The Temporary Chairman
This is a historical survey of what has happened in the past. I would be glad if the hon. Gentleman will come to the Amendment.
§ The Temporary Chairman
Do I understand that the hon. Gentleman's remarks so far have been introductory?
§ Mr. Lawson
Not by any means. It seems to me, and, I am sure, to my hon. Friends, that there have been two arguments raised against this Amendment: first, that the Government could not go back on an agreement, and I am not dealing with that; and, secondly, that the firm cannot raise the money. I am trying to show that they could raise money easily in many ways—stacks of money.
§ The Temporary Chairman
To discuss whether or not the company could raise the money would be out of order.
§ Mr. Lawson
With great respect, it was advanced, argued and counter-argued, and, I presume, must have been in order. If this is not in order, I will turn to a point which has been made before but which I should like to make again.
In January, 1958, when it raised £6 million, the firm raised the money in the form of loan capital which was convertible at a stipulated period. This is the advantage of the convertibility: the loan capital is so arranged that on Thursday of next week anyone who has some of this loan capital can buy Colvilles' equity shares at 28s. 3d., although at present in Che market they are making 76s. If anyone is lucky enough to have put money into this loan in January, 1958, he can buy for 28s. 3d. equity shares which are selling 391 at 76s. on the market and which will certainly be worth more than 76s. in a few years' time. Even three years after this, when all the development has taken place, when the vast sum have been spent and when the capacity of the firm is greater, people who put up the loan capital in January, 1958, will be permitted to turn it into equity shares at 30s. 11d.
This is evidence of the enormous benefit accruing to those who took advantage of the firm's offer to this
§ effect: "Give us loan capital in January, 1958, and we will give you power to turn it into equity shares."
§ In the Amendment we ask for no more than that which the firm, of its own accord, granted to people who put up money in January, 1958. If it is good enough for the shareholders, it is good enough for us.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 116, Noes 184.393
|Division No. 62.]||AYES||[11.3 p.m.|
|Ainsley, William||Hayman, F. H.||Proctor, W. T.|
|Allaun, Frank (Salford, E.)||Herbison, Miss Margaret||Randall, Harry|
|Awbery, Stan||Hill, J. (Midlothian)||Redhead, E. C.|
|Baxter, William (Stirlingshire, W.)||Hughes, Hector (Aberdeen, N.)||Reynolds, G. W.|
|Benson, Sir George||Hunter, A. E.||Robens, Rt. Hon. Alfred|
|Blyton, William||Hynd, H. (Accrington)||Roberts, Albert (Normanton)|
|Bowden, Herbert W. (Leics, S.W.)||Hynd, John (Attercliffe)||Ross, William|
|Boyden, James||Janner, Barnett||Short, Edward|
|Broughton, Dr. A. D. D.||Jones, Dan (Burnley)||Silverman, Sydney (Nelson)|
|Brown, Alan (Tottenham)||Jones, Elwyn (West Ham, S.)||Slater, Mrs. Harriet (Stoke, N.)|
|Brown, Rt. Hon. George (Belper)||Jones, Jack (Rothernam)||Small, William|
|Cliffe, Michael||Jones, J. Idwal (Wrexham)||Soskice, Rt. Hon. Sir Frank|
|Craddock, George (Bradford, S.)||Jones, T. W. (Merioneth)||Spriggs, Leslie|
|Cronin, John||King, Dr. Horace||Stewart, Michael (Fulham)|
|Cullen, Mrs. Alice||Lawson, George||Strauss, Rt. Hn. G. R. (Vauxhall)|
|Davies, G. Elfed (Rhondda, E.)||Lee, Frederick (Newton)||Swain, Thomas|
|Davies, Ifor (Gower)||Lever, L. M. (Ardwick)||Sylvester, George|
|Davies, S. O. (Merthyr)||Mabon, Dr. J. Dickson||Symonds, J. B.|
|Deer, George||MacColl, James||Taylor, Bernard (Mansfield)|
|Dempsey, James||McInnes, James||Taylor, John (West Lothian)|
|Diamond, John||McKay, John (Wallsend)||Thomas, Iorwerth (Rhondda, W.)|
|Dodds, Norman||Mackie, John||Thompson, Dr. Alan (Dunfermline)|
|Ede, Rt. Hon. Chuter||MacMillan, Malcolm (Western Isles)||Thornton, Ernest|
|Edwards, Rt. Hon. Ness (Caerphilly)||MacPherson, Malcolm (St'rling)||Wainwright, Edwin|
|Evans, Albert||Manuel, A. C.||Warbey, William|
|Fernyhough, E.||Marquand, Rt. Hon. H. A.||Watkins, Tudor|
|Finch, Harold||Mason, Roy||Weitzman, David|
|Fitch, Alan||Mendelson, J. J.||Wheeldon, W. E.|
|Fletcher, Eric||Millan, Bruce||Whitlock, William|
|Foot, Dingle||Mitchison, G. R.||Wilkins, W. A.|
|Forman, J. C.||Monslow, Walter||Willis, E. G. (Edinburgh, E.)|
|Fraser, Thomas (Hamilton)||Morris, John||Wilson, Rt. Hon. Harold (Huyton)|
|George, Lady Megan Lloyd||Neal, Harold||Winterbottom, R. E.|
|Gordon Walker, Rt. Hon. P. C.||Oswald, Thomas||Woodburn, Rt. Hon. A.|
|Gourlay, Harry||Owen, Will||Woof, Robert|
|Grey, Charles||Parker, John (Dagenham)||Yates, Victor (Ladywood)|
|Griffiths, David (Rother Valley)||Pavitt, Laurence|
|Gunter, Ray||Peart, Frederick||TELLERS FOR THE AYES:|
|Hall, Rt. Hon. Glenvil (Colne Valley)||Pentland, Norman||Mr. Charles Howell and|
|Hart, Mrs. Judith||Price, J. T. (Westhoughton)||Mr. Mahon.|
|Agnew, Sir Peter||Box, Donald||Costain, A. P.|
|Allason, James||Boyle, Sir Edward||Courtney, Cdr. Anthony|
|Alport, C. J. M.||Brewis, John||Critchley, Julian|
|Arbuthnot, John||Brooman-White, R.||Crosthwaite-Eyre, Col. O. E|
|Atkins, Humphrey||Browne, Percv (Torrington)||Crowder, F. P.|
|Barber, Anthony||Bryan, Paul||Curran, Charles|
|Barlow, Sir John||Bullard, Denys||Currie, G. B. H.|
|Barter, John||Butler, Rt.Hn.R.A.(Saffron Walden)||Dance, James|
|Batsford, Brian||Carr, Compton (Barons Court)||d'Avigdor-Goldsmid, Sir Henry|
|Bell, Philip (Bolton, E.)||Carr, Robert (Mitcham)||Deedes, W. F.|
|Bennett, F. M. (Torquay)||Channon, H. P. G.||de Ferranti, Basil|
|Bidgood, John C.||Chataway, Christopher||Donaldson, Cmdr. C. E. M.|
|Biggs-Davison, John||Chichester-Clark, R.||Doughty, Charles|
|Bingham, R. M.||Clark, William (Nottingham, S.)||Drayson, G. B.|
|Bishop, F. P.||Cleaver, Leonard||Duncan, Sir James|
|Black, Sir Cyril||Cooper-Key, Sir Neill||Duthie, sir William|
|Bossom, Clive||Cordeaux, Lt.-Col. J. K.||Eden, John|
|Bourne-Arton, A.||Corfield, F. V.||Elliott, R. W.|
|Errington, Sir Eric||Kershaw, Anthony||Ropner, Col, Sir Leonard|
|Erroll, F. J.||Kitson, Timothy||Russell, Ronald|
|Farey-Jones, F. W.||Legh, Hon. Peter (Petersfield)||Scott-Hoplins, James|
|Fell, Anthony||Lewis, Kenneth (Rutland)||Sharples, Richard|
|Finlay, Graeme||Lilley, F. J. P.||Shaw, M.|
|Fletcher-Cooke, Charles||Lltchfield, Capt. John||Shepherd, William|
|Forrest, George||MacArthur, Ian||Skeet, T. H. H.|
|Fraser, Ian (Plymouth, Sutton)||McLaren, Martin||Smith, Dudley (Br'ntf'rd & Chiswick)|
|Gammans, Lady||McLean, Neil (Inverness)||Stanley, Hon. Richard|
|Gardner, Edward||McMaster, Stanley R.||Steward, Harold (Stockport, S.)|
|George, J. C. (Pollok)||Macmillan, Rt.Hn.Harold(Bromley)||Stodart, J. A.|
|Glover, Sir Douglas||Macmillan, Maurice (Halifax)||Stoddart-Scott, Col. Sir Malcolm|
|Glyn, Col. Richard H. (Dorset, N.)||Macpherson, Niall (Dumfries)||Storey, Sir Samuel|
|Goodhew, Victor||Maddan, Martin||Summers, Sir Spencer (Aylesbury)|
|Gower, Raymond||Maginnis, John E.||Sumner, Donald (Orpington)|
|Grant, Rt. Hon. William (Woodside)||Markham, Major Sir Frank||Talbot, John E.|
|Gresham Cooke, R.||Marlowe, Anthony||Taylor, W. J. (Bradford, N.)|
|Grimond, J.||Marten, Neil||Thatcher, Mrs. Margaret|
|Grosvenor, Lt.-Col. R. G.||Mathew, Robert (Honiton)||Thomas, Leslie (Canterbury)|
|Hamilton, Michael (Wellingborough)||Matthews, Gordon (Meriden)||Thomas, Peter (Conway)|
|Harrison, Col. J. H. (Eye)||Mawby, Ray||Tiley, Arthur (Bradford, W.)|
|Harvey, John (Walthamstow, E.)||Maydon, Lt.-Cmdr. S. L. C.||Tilney, John (Wavertree)|
|Hay, John||Mills, Stratton||Turner, Colin|
|Heath, Rt. Hon. Edward||Morgan, William||van Straubenzee, W. R,|
|Hendry, Forbes||Nabarro, Gerald||Vosper, Rt. Hon. Dennis|
|Hiley, Joseph||Neave, Airey||Wade, Donald|
|Hill, J. E. B. (S. Norfolk)||Noble, Michael||Ward, Rt. Hon. George (Worcester)|
|Hirst, Geoffrey||Osborn, John (Hallam)||Ward, Dame Irene (Tynemouth)|
|Hocking, Philip N.||Page, Graham||Watts, James|
|Holland, Philip||Pannell, Norman (Kirkdale)||Wells, John (Maidstone)|
|Hollingworth, John||Pearson, Frank (Clitheroe)||Whitelaw, William|
|Hornsby-Smith, Rt. Hon. Patricia||Peel, John||Williams, Paul (Sunderland, S.)|
|Howard, Gerald (Cambridgeshire)||Percival, Ian||Wilson, Geoffrey (Truro)|
|Howard, Hon. G. R. (St. Ives)||Peyton, John||Wise, Alfred|
|Hughes-Young, Michael||Pickthorn, Sir Kenneth||Wolrige-Gordon, Patrick|
|Hutchison, Michael Clark||Pilkington, Capt. Richard||Wood, Rt. Hon. Richard|
|Irvine, Bryant Godman (Rye)||Pitt, Miss Edith||Woodhouse, C. M.|
|Jackson, John||Pott, Percivall||Woodnutt, Mark|
|James, David||Prior, J. M. L.||Woollam, John|
|Jenkins, Robert (Dulwich)||Ramsden, James||Worsley, Marcus|
|Johnson, Eric (Blackley)||Redmayne, Rt. Hon. Martin|
|Johnson Smith, Geoffrey||Rees, Hugh||TELLERS FOR THE NOES:|
|Kaberry, Sir Donald||Rees-Davies, W. R.||Mr. Edward Wakefield and|
|Kerans, Cdr. J. S.||Robinson, Sir Roland (Blackpool, S.)||Mr. Gibson-Watt.|
|Kerby, Capt. Henry||Roots, William|
§ Mr. Diamond
I beg to move, in page 2, line 4, at the end to insert—Provided that no such terms as aforesaid shall be approved unless they include provision for the payment of interest on the sums advanced, or on the part of those sums outstanding at any time, being:This Amendment, if you can hear what I am saying, Mr. Blackburn—
- (a) interest at a fixed rate equal to that applying to loans advanced to local authorities from the Local Loans Fund on the date when the sums were or the first part thereof was advanced; and
- (b) additional interest at a special rate.
- (3) The special rate of interest mentioned in the foregoing subsection shall be—
- (a) if the borrower is a company, of which any shares are not held by or on behalf of a public authority, and if the highest total rate of dividend or dividends declared by the company on any class of its shares in respect of an accounting period is (without deduction of tax) higher by one-half per cent. or more than the said fixed rate of interest, then for that period a rate equal to the difference between those two rates; or
- (b) in any other case, one-half per cent.
§ Mr. Diamond
Like the Amendment I moved earlier in our proceedings, this is a very modest Amendment. It seeks to do very little beyond giving the Government an opportunity to do what so far they have failed to do—make a single concession to the Opposition or to their own back benchers. So far the Government have not seen fit to make any concession or to meet any of the Amendments. Here we are able to accommodate the Government and make them feel that they are listening to the general sense of the feeling of the Committee, beoause in this case they are not bound by the agreement which previously on every occasion they have evoked as a complete bar to reconsideration. If I may again refer to the famous Heads of the Agreement, I point out that No. 5 states:Interest on each tranche…. In determining the rate of interest applicable to each tranche, the Treasury will have regard to the cost of borrowing by Her Majesty's Government at that date for a similar period."Will have regard to the cost of borrowing" might have meant anything. Up to 395 a late period in our discusions today, the Government gave no indication of how they would interpret that phrase. The Government left themselves complete latitude in deciding on the rate of interest, but I am sure they would not on this occasion wish to say, "We cannot listen to any Amendment defining the rate of interest because we are already committed to a specific rate".
The Amendment looks lengthy on the Notice Paper, but in fact it provides quite simply what the rate of interest on the £50 million for Colvilles, in which we are particularly interested for reasons gone over many times, will be—a minimum of the local authority borrowing rate plus ½ per cent., to increase in appropriate circumstances to the rate of the dividend declared by the company. If the company has a profitable year and declares a rate of dividend on any of its shares in excess of the rate previously referred to, it is that higher rate which would apply to the loan at the time it was made.
Let us deal, therefore, with some figures to see how it would work out. We have been told today, for the first time, I would point out, that if a loan were made of the first tranche in today's circumstances it would carry interest at the rate of 5½ per cent. That is what I understood from the Minister of Power earlier today. I also understand that if a local authority borrowed from the Local Loans Fund for a similar period, the rate would be 6 per cent. It is consequently perfectly proper for us to compare the 5½ per cent. being offered to Colvilles with the 6 per cent. demanded of local authorities for money which they need in order to build homes for the people.
There are two reasons why we should criticise what the Government have so fax indicated it would have done for borrowing to date, and the same two reasons support the proposal in this Amendment. It is surely right, on social criteria as well as on financial criteria, that local authorities should be able to borrow at a cheaper rate than Colvilles and other steel companies. It is surely right on all social criteria that homes for the people must come first. As we all know, local authorities have let it be known that in the majority of cases their 396 inability to provide houses—and the reason why, in our "surgeries," we continuously have people anxiously trying to find homes—is because they cannot do it at the current rate of borrowing.
The second reason, the financial one, is that the local authority is a much better borrower than a steel company; and for these two reasons, the rate applicable to the steel company should be higher; half per cent. higher, I suggest, than the rate at which the local authority can borrow. Yet we find, only this evening, that the rate is going to be precisely the reverse, with the Government proposing to lend money to the steel companies at half per cent. less than they would loan to a local authority trying to build new homes.
In my view, that sense of priority is something completely outrageous. It is outrageous that the Government should propose a rate for the steel companies which is better than that for the local authorities.
§ Mr. Raymond Gower (Barry)
The hon. Member does not under-estimate the importance of finding jobs for the people?
§ Mr. Diamond
I do not underestimate that. This Amendment provides what should be the minimum rate, and for the reasons which I have given I think that the Government would be criticised were they—which I gather they are not—lending at 5½ per cent.; because I understand that no loan has so far been made. This is only the rate which would be applicable. We say in this Amendment that that is not enough. We say that this is the minimum, putting no burden on either of these steel companies. We say that if the company can afford more it should pay a little more.
We are not asking for a great deal. We are not asking for a rate of interest which is the same as the rate of profit which is earned by the company. My hon. Friend the Member for Mother-well (Mr. Lawson) has already pointed out that the rate of profit earned is three times the rate of profit distributed. We are, therefore, only asking for a quarter of the total profit earned.
Nor are we asking for any share in the profit which the company will make once this development has taken place 397 and the loan has been repaid. We want to make that clear. There is a permanent addition of values to the shareholders of Colvilles in this proposed development which will be financed by a £50 million loan. That stands in common sense, and fortunately it has been underlined by the chairman of the company in making clear to the shareholders that in the long run they will benefit as a result of the loan which the Government are proposing. And Colvilles has been making a profit since denationalisation of 40 per cent. per annum.
Therefore, what we are asking is a very small contribution indeed out of the prosperity which the Government, the taxpayers and the people are providing. We are asking for only such an amount as either is the minimum or. if something more than that, such an amount as the company proves that it can pay by declaring a dividend on some of its shares at that figure. This does not involve any interference with the company's activities. It does not involve a directorship or any control. It is a simple loan within the Heads of Agreement, and all we say is that the vague words used in Head No. 5 should be translated into fact in the way provided in the Amendment.
It would never be beyond the capacity of the company if we had either of the rates referred to in the Amendment, and the taxpayer would be getting a small but, I suggest, a minimum contribution out of the prosperity which the taxpayer himself would be providing. For these reasons, I hope that the Government will accept the Amendment.
§ Mr. Barber
If the Amendment were accepted, it would have several effects which I should mention to the Committee, but before I do that I would point out to the hon. Member for Gloucester (Mr. Diamond) that it is not a fact that the figure of 5½ per cent. which is the rate which would apply to a loan made under the agreement if it were made today—it is not the fact that this is the first occasion on which this information has been given to the House of Commons. On 9th March, I explained in some detail how the figure of 5½ per cent. was arrived at, as will be seen from HANSARD for that date. However, that is only an incidental matter.
398 The effect of the Amendment on Colvilles—and the hon. Member said that he was mainly concerned with that company—would be that there would be a minimum interest payable on the loans made to Colvilles at a percentage equal to the rate applicable currently to lending by the Public Works Loan Board, plus ½ per cent., which at present would come to a total of 6½ per cent. interest. If the gross dividend on the quoted shares were higher than that, the interest would be equivalent to that gross dividend.
I must ask the Committee to consider how this would work out in practice. It would mean that the Government would in the first place receive interest as debenture holders, in effect, at the Public Works Loan Board rate, that they would have a claim as the equivalent of preference share holders to an additional ½ per cent. whatever the dividend might be, and that they would rank with the equity for distribution of dividend.
In moving the Amendment, the hon. Member said that it was a modest one. All I can say is that if there is any hon. Member here with a little spare cash I have no doubt that he would not hesitate to invest it if he could find himself in the happy position of being a debenture holder, a preference share holder and also an equity share holder. If these terms had formed part of the agreement, the Government would have enjoyed every conceivable kind of advantage.
§ Mr. Diamond
Is not the hon. Gentleman misleading the Committee when he says that the lender would be both a debenture holder and an equity share holder? He would not be a debenture holder because there is no debenture. There is the right to call for a second debenture in certain circumstances. The hon. Gentleman ought to make it clear that he is talking about the right to call for a second debenture, which is a million miles removed from being a first debenture holder. Also, it is not a question of being an equity shareholder. There is no share in the equity, there is no share in the profits put to reserve and there is no share in the surplus on distribution. To call it comparable with the equity is to mislead the Committee.
§ Mr. Barber
All I can say is that, with regard to the actual cash, if the Amendment were accepted it would mean 399 that the Government would be entitled to interest which would be equivalent to the gross dividend on the equity shares. That is what I mean by saying that the Government would have rights perhaps not identical with but for the present purpose very similar to those of an equity shareholder.
§ Mr. Barber
There is one snag to this proposal, and I am sure that it has occurred to the hon. Gentleman. It is that the terms which he has suggested and which are included in the Amendment are so onerous that Colvilles would never have accepted them. The reason for that is that, as I tried to explain on an earlier Amendment, the expected demand for sheet steel then was not of the same order as it is today. Consequently, if we wanted Colvilles to do something which we considered to be in the national interest we had to come to some satisfactory and reasonable arrangement with the firm. If we had insisted on terms such as these, obviously the negotiations would have broken down. Colvilles would never have agreed to undertake the project. There can be no doubt about that.
As I said earlier—I mention it only in passing now—the Amendment would involve a deliberate breach of the agreement reached in accordance with the authority given to the Minister of Power under Section 5 of the 1953 Act. In addition, the Opposition must accept the inevitable consequence of the Amendment. Speaking in an earlier debate, the hon. Member for Motherwell (Mr. Lawson) said that there was a great need for the strip mill in his part of the world. The inevitable consequences of the Amendment would be that Colvilles would not be prepared to go ahead with the project, with all its advantages to Scotland, particularly the provision of more employment. I tell hon. Members in all sincerity that if they want this great project to be abandoned they should press the Amendment, but if they want it to go ahead they will seek the leave of the Committee to withdraw it.
§ Mr. Mitchison
I find it very difficult to believe that Colvilles would have refused terms which apparently were never offered to it, particularly when quite a 400 short time before it had borrowed money from the public at 6½ per cent. with conversion rights of very considerable value. The question is whether it was ever asked anything more than what was actually put into the agreement.
I will deal shortly with the point that this is a breach of the agreement. It is nothing of the sort. That is clear if we look at the Bill. It states that the Treasury shall not issue any sums to the Minister to pay for these arrangements unless it has approved the terms contained in the arrangements. Did it or did it not approve those terms? It is clear that it has to derive its authority to approve them from the Bill itself. Moreover, Colvilles must have known perfectly well that whether this money was to be paid from above the line or from below the line it would require in the one case a Bill and in the other an Estimate, and that it was, of course, constitutionally and for every other reason subject to Parliamentary control. It is perfectly true that the Minister may make arrangements, but the money, as the Clause itself says, has to be provided by Parliament. That is the question which we are now considering.
This is much the most moderate Amendment that the Minister has been asked to accept on behalf of the Government. It is a very moderate Amendment. The most that the Government can get out of this is the same rate of interest as is being paid currently to Colvilles' shareholders. The chairman of Colvilles has said that this is a grand arrangement for the company because the shareholders are getting the whole benefit out of the loan.
Why should not the Government, when they are finding the money, have the same right to get the proceeds of it as is claimed by the chairman for the shareholders of Colvilles? I can see nothing in the least unreasonable in that. Though, I agree, it is very unlikely to happen, it is perfectly true that there is a minimum rate, and I want to say a word on that.
We do not yet know what the rate of interest is. We cannot know because no tranche is being drawn at the moment. In answer to a Question the other day, the Chancellor of the Exchequer told me that no rate had been approved by the Treasury in accordance with the terms 401 of the agreement. We therefore know nothing about it for the moment except what the Minister has told us today, that we are going to have a minimum rate.
Surely to have about 1 per cent. above the rate at which the Government are borrowing, or ½ per cent. above the rate charged to local authorities, is thoroughly reasonable. Why should the steel company get money at a cheaper rate than that? Surely if the social consequences are to be considered, then the local authorities who are driven to borrow through the Public Works Loan Board because they cannot get the money for their services in any other way are entitled not merely to terms as good as those which the steel company may be getting but to better terms. They are, after all, public authorities. The steel company is going to make profits out of the loan.
What is so eminently reasonable about the Amendment is this, at least from the point of view that the Government are putting forward tonight. The amount of interest, equivalent in the actual circumstances to the rate of the ordinary dividend paid, goes on only during the period when the loan is outstanding. What is unfair to the public and what would have been met by previous Amendments is that, of course, the benefit of this loan will continue to Colvilles long after it is repaid.
If the Amendment is accepted, as it ought to be, the company will be getting a thundering good bargain. It will be getting its money at no higher rate of interest than that paid on its ordinary shares, and the benefit of the loan and of the works put through by the money provided by it will continue long after the loan is repaid.
Colvilles knew very well indeed what it was doing when it negotiated the agreement. The question which the Committee now has to consider and has had to consider throughout the whole of today is whether the Government have been as provident in the public interest as Colvilles was in the interest of its shareholders.
This Amendment illustrates even more clearly than any other what a rotten bargain the Government made on behalf of the public and how they could have fulfilled the public purpose without selling the pass to Colvilles by the terms of the agreement.
§ Sir H. d'Avigdor-Goldsmid
Before the tears start from my eyes because of the wonderful deal which Colvilles shareholders have had, there is one comment I have to make. We are dealing with a company whose equity capital is £10 million. We are being asked in all seriousness to agree to the company carrying on a loan of £50 million the same rate of interest which is applied to the £10 million ordinary capital. One does not need to be a financial genius to see that the equity earnings which will provide a satisfactory dividend on £10 million cannot produce anything like so satisfactory a dividend on a figure of £60 million. [HON. MEMBERS: "Why not?"] It is not for me to teach hon. Members arithmetic. All I can say is that if I were fortunate enough to be a director of Colvilles and unfortunate enough to be put in the position in which the Amendment proposes to place the directors, there would be no problem, because Colvilles would cease to pay an ordinary dividend and in the currency of the loan there would be no gain to the Exchequer whatever.
§ Mr. Diamond
The hon. Member is quite wrong in his arithmetic and it is no use his criticising my hon. Friends. He is assuming that the issued capital is the only capital in reserve available to this company. The working capital is very much greater. I do not have the latest figure, but two years ago the working capital was about £50 million-That was the capital employed, the capital earning the dividend, and it was therefore of the same magnitude as the amount invited as a loan.
§ Sir H. d'Avigdor-Goldsmid
Is the hon. Gentleman now advocating, as I gather he is, that companies should be forced to distribute their earnings up to the hilt and put nothing to reserve? In effect that is what he is saying.
§ Mr. Dempsey
I want only to raise a question which I put earlier and which the Minister of Power said the Economic Secretary would answer, but which the hon. Gentleman did not mention. One of the main reasons for the Amendment is to ensure that the interest rates paid by local authorities are lower than those paid by private enterprise firms such as Colvilles. There is a fundamental 403 reason for that, because local authorities are non-profit-making bodies providing essential services for the public, whereas private enterprise undertakings, such as Colvilles, are profit-making undertakings.
There is a very strong rumour circulating through Lanarkshire, the home of the Colvilles combine, to the effect that the loan agreement which Colvilles made with the Government in the latter part of 1958 provides for interest rates substantially less than those paid by local authorities in that part of the country. Can the Economic Secretary deny or confirm that rumour?
§ Mr. Diamond
The Economic Secretary said that Colvilles would not have agreed to these terms. As my hon. Friend pointed out, he had no authority to say that, because the terms were never put to Colvilles, and it is entirely a matter of conjecture on his part whether or not Colvilles would have agreed. The hon. Member for Walsall, Soutih (Sir H. d'Avigdor-Goldsmid) said that it would not have been able to
§ afford these terms. He is quite at fault, because the agreement mentions clearly that until production starts no interest is payaible; it will be carried forward. Even interest payable in the early days after production has started does not have to be paid if the borrower wants to postpone it still further and, as usual in cases like this, there is no burden on the company in its pre-production period. Once that period is over the company will be well able to afford the interest in the way provided for by the Amendment.
§ The hon. Member for Waisall might have been good enough to acknowledge that when I moved the Amendment I made it clear that the higher rate of interest suggested was the rate of dividend declared and not dividend earned. The dividend declared is one quarter of the total profits and only one-third of the amount put to reserve.
§ Question put, That those words be there inserted:—
§ The Committee divided: Ayes 90, Noes 165.405
|Division No. 63.]||AYES||[11.40 p.m.|
|Ainsley, William||Hill, J. (Midlothian)||Pentland, Norman|
|Allaun, Frank (Salford, E.)||Hughes, Hector (Aberdeen, N.)||Randall, Harry|
|Awbery, Stan||Hunter, A. E.||Redhead, E. C.|
|Baxter, William (Stirlingshire, W.)||Hynd, H. (Accrington)||Reynolds, G.W.|
|Blyton, William||Hynd, John (Attercliffe)||Robens, Rt. Hon. Alfred|
|Bowden, Herbert W. (Leics, S.W.)||Janner, Barnett||Roberts, Albert (Normanton)|
|Boyden, James||Jones, Dan (Burnley)||Ross, William|
|Broughton, Dr. A. D. D.||Jones, Elwyn (West Ham, S.)||Small, William|
|Cliffe, Michael||Jones, Jack (Rotherham)||Soskice, Rt. Hon. Sir Frank|
|Craddock, George (Bradford, S.)||Jones, J. Idwal (Wrexham)||Spriggs Leslie|
|Cronin, John||Jones, T. W. (Merioneth)||Stewart, Michael (Fulham)|
|Davies, G. Elfed (Rhondda, E.)||King, Dr. Horace||Strauss, Rt. Hn. G. R. (Vauxhall)|
|Davies, Ifor (Gower)||Lawson, George||Swain, Thomas|
|Dempsey, James||Lee, Ferderick (Newton)||Taylor, Bernard (Mansfield)|
|Diamond, John||Lever, L. M. (Ardwick)||Thomas, Iorewth (Rhondda, W.)|
|Edwards, Rt. Hon. Ness(Carephilly)||Loughlin, Charles||Thompson, Dr. Alan (Dunfermline)|
|Evans, Albrert||Mabon, Dr. J. Dickson|
|Fernyhough, E.||MacColl, James||Thornton, Ernest|
|Finch, Harold||McInnes, James||Wainwright, Edwin|
|Fitch, Alan||Mackie, John||Watkins, Tudor|
|Fletcher, Eric||MacMillan, Malcolm (Western Isles)||Whitlock, William|
|Foot, Dingle||MacPherson, Malcolm (Stirling)||Wilkins, W. A.|
|Fraser, Thomas (Hamilton)||Manuel, A. C.||Willis, E. G. (Edinburgh, E.)|
|George, Lady Megan Lloyd||Marquand, Rt. Hon. H. A.||Wilson, Rt. Hon. Harold (Huyton)|
|Gordon Walker, Rt. Hon. P. C.||Mason, Roy||Winterbottom, R. E.|
|Gourlay, Harry||Mendelson, J. J.||Woof, Robert|
|Griffiths, David (Rother Valley)||Millan, Bruce||Yates, Victor (Ladywood)|
|Gunter, Ray||Mitchison, G. R.|
|Hall, Rt. Hon. Glenvil (Colne Valley)||Morris, John||TELLERS FOR THE AYES:|
|Hart, Mrs. Judith||Neal, Harold||Mr. Charles Howell and|
|Hayman, F. H.||Oswald, Thomas||Mr. Mahon.|
|Herbison, Miss Margaret||Peart, Frederick|
|Agnew, Sir Peter||Batsford, Brian||Black, Sir Cyril|
|Allason, James||Bell, Philip (Bolton, E.)||Bossom, Clive|
|Alport, C. J. M.||Bennett, F. M. (Torquay)||Bourne-Arton, A.|
|Arbuthnot, John||Bidgood, John C.||Box, Donald|
|Barber, Anthony||Biggs-Davison, John||Boyle, Sir Edward|
|Barlow, Sir John||Bingham, R. M.||Brewis, John|
|Barter, John||Bishop, F. P.||Brooman-White, R.|
|Browne, Percy (Torrington)||Hirst, Geoffrey||Powell, J. Enoch|
|Bullard, Denys||Hocking, Philip N.||Prior, J. M. L.|
|Butler, Rt. Hn. R. A. (Saffron Walden)||Holland, Philip||Ramsden, James|
|Carr, Compton (Barons Court)||Hollingworth, John||Redmayne, Rt. Hon. Martin|
|Carr, Robert (Mitcham)||Hornsby-Smith, Rt. Hon. Patricia||Rees, Hugh|
|Channon, H. P. G.||Howard, Gerald (Cambridgeshire)||Rees-Davies, W. R.|
|Chataway, Christopher||Howard, Hon. G. R. (St. Ives)||Robinson, Sir Roland (Blackpool, S.)|
|Chichester-Clark, R.||Hughes-Young, Michael||Roots, William|
|Clark, Henry (Antrim, N.)||Hutchison, Michael Clark||Russell, Ronald|
|Clark, William (Nottingham, S.)||Irvine, Bryant Godman (Rye)||Scott-Hopkins, James|
|Cleaver, Leonard||Jackson, John||Sharples, Richard|
|Cordeaux, Lt.-Col. J. K.||James, David||Shaw, M.|
|Corfield, F. V.||Johnson, Eric (Blackley)||Skeet, T. H. H.|
|Courtney, Cdr. Anthony||Johnson Smith, Geoffrey||Smith, Dudely (Br'ntf'rd & Chiswick)|
|Critchley, Julian||Kaberry, Sir Donald||Steward, Harold (Stockport, S.)|
|Crosthwaite-Eyre, Col. O. E.||Kerans, Cdr. J. S.||Stodart J. A.|
|Cunningham, Knox||Kerehaw, Anthony||Stoddart-Scott, Col. Sir Malcolm|
|Curran, Charles||Kiston, Timothy||Summers, Sir Spencer (Aylesbury)|
|Currie, G. B. H.||Legh, Hon. Peter (Petersfield)||Sumner, Donald (Orpington)|
|Dance, James||Lilley, F. J. P.||Talbot, John E.|
|d'Avigdor-Goldsmid, Sir Henry||Litchfield, Capt. John||Tapsell, Peter|
|Deedes, W. F.||Macarthur, Ian||Taylor, W. J. (Bradford, N.)|
|Donaldson, Cmdr, C. E. M.||McLaren, Martin|
|Drayson, G. B.||McLean Neil (Inverness)||Thatcher, Mrs. Margaret|
|Eden, John||McMaster, Stanley R.||Thomas, Leslie (Canterbury)|
|Elliott, R. W.||Macmillan, Rt. Hn. Harold (Bromley)||Thomas, Peter (Conway)|
|Errington, Sir Eric||Macpherson, Niall (Dumfries)||Tiley, Arthur (Bradford, W.)|
|Fell, Antnony||Maddan, Martin||Tilney, John (Wavertree)|
|Finaly, Graeme||Maginnis, John E.||Turner, Colin|
|Fletcher-Cooke, Charles||Markham, Major Sir Frank||van Straubenzee, W. R.|
|Fraser, Ian (Plymouth, Sutton)||Marten, Neil||Vosper, Rt. Hon. Dennis|
|Gammans, Lady||Mathew, Robert (Honiton)||Wade, Donald|
|Gardner, Edward||Matthews, Gordon (Meriden)||Wakefield, Edward (Derbyshire, W.)|
|George, J. C. (Pollok)||Mawbay, Ray||Ward, Rt. Hon. Geroge (Worcester)|
|Gibson-Watt, David||Maydon, Lt. Cmdr. S. L C.||Ward, Dame Irene (Tynemouth)|
|Mills, Stratton||Watts, James|
|Glover, Sir Douglas||Morgan, William||Wells, John (Maidstone)|
|Glyn, Col. Richerd H.(Dorest, N.)||Nabarro, Geriaad||Williams, Paul (Sunderland, S.)|
|Goodhew Victor||Neavy, Airey||Wilison, Geoffery (Truro)|
|Gower, Raymond||Noble, Michael||Wise, Alfred|
|Gresham Cooke, R.||Osborn, John (Hallam)||Wolrige-Gordon, Patrick|
|Grimond, J.||Page, Graham||Wood, Rt. Hon, Richard|
|Grosvenor, Lt.-Col. R. G.||Pannell, Norman (Kirkdale)||Woodhouse, C. M.|
|Hamilton, Michael (Wellingborough)||Pearson, Frank (Clitheroe)||Woodnutt, Mark|
|Harrison, Col. J. H. (Eye)||Peel, John||Woollam, John|
|Harvey, John (Walthamstow, E.)||Percival, Ian||Worsley, Marcus|
|Hendry, Forbes||Peyton, John|
|Hiley, Joseph||Pilkington, Capt. Richard|
|Hill, J. E. B. (S. Norfolk)||Pitt, Miss Edith||TELLERS FOR THE NOES:|
|Hinchingbrooke, Viscount||Pott, Percivall||Mr. Bryan and Mr. Whitelaw.|
§ Mr. Marquand
I beg to move, in page 2, line 4, at end to insert:Provided that no such terms as aforesaid shall be approved unless they have been set out in a statutory instrument of which a draft has been laid before Parliament and approved by a resolution of the Commons House of Parliament.These are the normal words permitting the House of Commons to have some control over the expenditure proposed in the Bill brought forward by the Government.
During the discussions there have been many references on both sides of the Committee to the necessity for control by the House over the public purse. The Amendment seeks simply to include the ordinary provision for that purpose. I can hardly believe that any hon. Member opposite, and certainly none of my hon. Friends, will disagree with this proposal. We have been talking a great deal about an agreement into which the Government have entered and which has 406 been presented to us in a somewhat hole-and-corner fashion by being printed in HANSARD among the Written Answers on a Friday and Wednesday afternoon. The Economic Secretary to the Treasury may say that it is our fault, but the agreement has not yet been before the House for discussion. Surely before the House authorises the expenditure of £50 million of Government money it ought to have the agreement properly presented to it for affirmative Resolution. That is all we propose.
This is a last desperate appeal for decency, and I hope it will not fall on deaf ears. I feel that the hon. Member for Kidderminster (Mr. Nabarro) is in full agreement with this proposal that the agreement should be placed before the House for discussion and approval. He could not possibly wish it to go through in a hole-and-corner manner, particularly as he proposes later to try to change the terms of the agreement. 407 Surely, whatever agreement is made, perhaps after his Amendment has been accepted, ought to be brought before the House for consideration and, if thought fit, approval.
I hope that the Economic Secretary to the Treasury will accept the Amendment, which is entirely reasonable, which is not inspired by party political spite and has nothing to do with nationalisation and denationalisation. It is merely based on the well-accepted principle that the House should control expenditure from the public purse, should be informed what expenditure it is asked to authorise and should formally authorise it by affirmative Resolution.
There is the further advantage that if the Government accept the Amendment it would be possible, the Bill having been amended, for the hon. Member for Kidderminster and his hon. Friends to discuss their Amendments on Report at a reasonable hour. Perhaps that advantage will lead those hon. Members to vote for the Amendment if the Government are foolish enough to reject it. I hope that they will not be so foolish.
§ Mr. Barber
The Amendment would give the House yet another opportunity of considering the terms of these agreements—the very terms which we have been discussing throughout the afternoon. As my right hon. Friend the Minister of Power said on Second Reading, the Bill is concerned only with loans made to Colvilles and Richard Thomas and Baldwins. As I said earlier this evening, the agreements have been made in accordance with authority previously given by the House. There has been ample opportunity on the Bill to consider the terms of the loans.
The right hon. Member for Middlesbrough, East (Mr. Marquand) was very brief in moving the Amendment and put the point succinctly, and perhaps I may reply in the same manner. In brief, I can see no reason for accepting the Amendment, which would raise doubts whether the Government were prepared to honour their obligations. That is the short answer, and I see no reason for elaborating on it.
The Committee will note that the terms of the Amendment do not refer to a Statutory Instrument being laid before Parliament on the occasion when any 408 payment is made. It simply refers to Statutory Instruments being laid before Parliament in order that the House of Commons may approve the terms of the agreement. It is about that very matter, which was announced to the House more than a year ago, that we have been talking throughout today. For those reasons, I hope that the right hon. Gentleman will think it reasonable to seek the leave of the Committee to withdraw the Amendment.
§ Mr. Diamond
Is the Economic Secretary right in saying that the only loans which could possibly be considered are the loans of £70 million and £50 million? Suppose these loans were made and repaid, does not this give authority for further loans to be made out of the Consolidated Fund up to a total of £120 million? Suppose £20 million were repaid, could not that be re-loaned under the provisions of this Bill?
§ Mr. Barber
It is true, as the hon. Gentleman says, that the Bill does not refer in terms to these companies. I have not before me the exact words used by my right hon. Friend during the Second Reading debate, but he said something to the effect that money provided in accordance with this Bill and under this Bill would be used only with respect to loans to be made to Richard Thomas and Baldwins and Colvilles. That was the undertaking he gave on that occasion.
§ Mr. Fell
Will my hon. Friend elaborate that a little further? This Amendment comes at the end of line 4 on page 2. The words at present in the Bill are… the giving of security and the payment of interest, and the Minister shall not without the consent of the Treasury enter into any agreement to vary any of those terms.Is it not possible, therefore, that, at any rate by implication, the terms could be varied and could be altered? Would not the effect of this Amendment be that if the terms were varied or altered as well as perhaps in any other circumstances, with the consent of the Treasury, Parliament would then have to be consulted and a Statutory Instrument of some sort would have to be laid? Surely, if the Treasury has to be consulted about everything, the Minister is hog-tied by the Treasury and he might also consider it worth while to be hog-tied by Parliament as well.
§ Mr. Diamond
In view of the hon. Gentleman's answer, does not it mean that my right hon. Friend's Amendment must be accepted in order to protect Parliament? Does not the Economic Secretary's answer mean that, notwithstanding an undertaking which may have been given by a particular Minister, the Bill, when it becomes an Act, would authorise the lending of up to £120 million? If, for example, £20 million is returned, that £20 million could be loaned again, and unless my right hon. Friend's Amendment be accepted, Parliament would not have an opportunity to have the thing which we have spent the day discussing—an opportunity to make its views felt before the Government entered into a contract and said, "It is too late, the contract is entered into"?
§ Mr. Barber
For the reasons given by my right hon. Friend the Minister of Power earlier, it is a matter for the Government to decide and exercise their judgment and to negotiate in these matters. I have only glanced at the details and so I am not in a position to do so, even were it proper, but obviously it would be an advantage if I could ex-plan how the negotiations were conducted and what was suggested by one party and the other. I think that would convince hon. Members that the agreement which was finally reached was fair and reasonable. But, for obvious reasons, it would not be appropriate for me to do that.
What my right hon. Friend said earlier this evening was that the question of negotiation and the reaching of agreement in these matters is for the Government. I do not know whether the right hon. Gentleman and my hon. Friend were in the Chamber at the time, but he went on to say that if there were any changes to be made in the terms either to Colvilles or Richard Thomas and Baldwins, he would inform the House about it. Further than that I do not think it would be right for me to go.
§ 12 m.
§ Mr. Barber
While I may not be able to satisfy my hon. Friend the Member for Yarmouth (Mr. Fell) completely—it is no good beating about the bush: to be frank, I do not think I am in a position to give him what he wants—I know that he has been away at a public function during the evening and was not here earlier, but on one or two occasions I pointed out that the agreement reached in this case was reached under powers given to my right hon. Friend by Section 5 of the Iron and Steel Act, 1953. There was no question in this case of my right hon. Friend simply out of the blue entering into an agreement with Colvilles and Richard Thomas and Baldwins, making advances to them and then informing the House and coming on this occasion for authority for the terms. The terms were agreed to under the authority of the 1953 Act. All that this present Measure is doing in substance is to enable the moneys to be paid from below the line, which is the proper place for them to be paid in this case for reasons I explained earlier, rather than from moneys provided from above the line.
§ Mr. Ross
One of the troubles which has arisen out of this matter is that we are now discussing the terms of payment of money and how it should be done and we are faced with the fact that the Government have already entered a contract which obviously the House would not for a moment have agreed to.
§ Mr. Nabarro
The Government have entered into a contract only with Colvilles. Richard Thomas and Baldwins—for which the sum is £70 million —is still nationalised. It is still part of government. The Government cannot enter into a contract with itself. They have entered into a contract only with Colvilles for £50 million.
§ Mr. Ross
I agree, but the point is that in relation to what they did then they were under no obligation by the Statute under which they made the contract to do anything other than inform the House. There was no obligation on them under that Statute to lay a draft for discussion by the House. Easily the most desirable thing would have been for that to happen so that the House could discuss it at the right time and at a time when the House would impress 411 its opinion on the Government while the proposal was still a draft. Then the uneasiness felt on both sides of the Committee would certainly not have arisen.
I want to address myself to the question of future contracts, because reading this Bill suggests that the possibility of future contracts arises. The hon. Member for Yarmouth (Mr. Fell) made a valid point when he said that variations of contracts are anticipated by the Government. If we are to avoid the same kind of situation arising again, the Government must amend his Bill and amend it along the lines of this Amendment. It may be that in relation to the Colvilles contract there is not much we can do and that we must find some form of words to cut that out. I regret that very much, but we must face the facts. Let us appreciate that this country, and this Parliament, by its voice today, has no desire to see millions of pounds given by loan or grant to anyone without a timely opportunity of discussing it.
I think it is relevant to go back to the Bill which has been mentioned by my hon. Friend the Member for Motherwell (Mr. Lawson). We have just passed in the Scottish Grand Committee, and in this House, a Measure to make grants, not for millions of pounds, to private companies in relation to services for the Highlands and Islands of Scotland; yet in Clause 2 (3) of that Bill—the Highlands and Islands Shipping Services Bill —it is stated,The Secretary of State shall not under this section undertake to make, or make, any advances or enter into any contract except on such terms and conditions as he considers expedient for the purposes of this Act.Then in subsection (4) it is stated that where any advance exceeds in the aggregate £10,000 the Secretary of State… shall do so only in accordance with an undertaking a draft of which … has been laid before Parliament and approved by a resolution of the Commons House thereof.Not millions, but ten thousand pounds. That is what we want done in relation to these contracts involving sums far in excess of £10,000. The Government accept the principle. Do the Government accept the same principle in respect of this type of contract which we are discussing tonight, or any variation of that contract? If they do, then we should have a pledge that on Report stage, or 412 even now, the Government will suitably amend the Clause in order to cover these points in so far as they can still do so without having to go back on contracts which have been made.
§ Mr. Hirst
I must admit that the hon. Member for Kilmarnock (Mr. Ross) has made a valid case. Indeed, it is the same case as has been made by my hon. Friend the Member for Yarmouth (Mr. Fell). I have been here roughly all the time since this debate began, and I can say that I know what has been said. The fact is that we are hurled back on the same point.
The Economic Secretary to the Treasury is trying to do his best, but frankly what he says is not filling the bill. If a loan or agreement may be varied—and we may argue that it ought to be varied—then, frankly, Parliament must have the right to discuss it. I agree that the assurance which the hon. Member for Kilmarnock wants may be given, but I hope that we can have the assurance that this matter will be considered because we are throwing a big responsibility on the Minister. If we could have that I should be satisfied, but I shall not be satisfied if we are fobbed off with the idea that this Minister or that Minister will come to the House and assure it about this, that or the other.
We must have something a little more definite than that. This is not dissimilar to the point which we discussed a little earlier, and it is no use being told certain things unless we can be shown here that we shall have a Parliamentary opportunity to discuss these matters. Since the debate began at about 3.30 p.m. I have heard this same point made dozens of times, but I have yet to hear of an instance where we are, in fact, permitted to discuss these matters if this Bill is passed. There may be a resolution which can be varied more appropriately to the purpose, and that would satisfy me and it would be some tiny little bit of victory for the House in a matter which might be very devastating and very uncomplimentary for the Government. Cannot we go home with that little bit of satisfaction for which the House has asked and which we have the right to demand?
§ Mr. Marquand
I wish the Leader of the House were here, because I feel sure that he would suggest to his hon. and right hon. Friends that something ought 413 to be done to meet the feelings of both sides of the Committee on this matter. I really mean this seriously. I must confess that, reading the Bill rather hastily, I missed the most important point which was raised by the hon. Member for Yarmouth (Mr. Fell), and since he raised it numbers of hon. Members have been seized of its importance. It may well be that this agreement, which we have been discussing in its absence as it were— because, as someone has pointed out, it appeared once in a Written Answer on a Friday—might be varied and, therefore, we might have no opportunity of discussing it again and of knowing what is happening.
I seriously appeal to the Minister of Power. He is in charge of the Bill. He is the senior Minister whose name appears on the back of the Bill. I suggest that he might now accept my Amendment. It would have the effect of amending the Bill and, if my understanding of the rules is correct, that would mean that the Bill would have to come back to the House on Report. If it is not amended it does not come back on Report. If it is amended now, the right hon. Gentleman could put down his own correcting Amendment, if he so wished, on Report and perhaps satisfaction could be obtained by both sides of the Committee. I make that appeal and hope that the right hon. Gentleman will seriously consider it.
§ Mr. Barber
I should like to make one point for the benefit of my hon. Friends and of hon. Members opposite, and that is that there is nothing new in the principle of making loans to private industry. Indeed, during the period when the party opposite was in office—
§ Mr. Barber
During that time a large number of loans were made to private industry the terms of which were never even disclosed to the House of Commons, let alone the negotiations. Therefore, it is fair to make the point that on this occasion we are going further, no doubt to a great extent because of the size of the loans, than on many other occasions since the war.
§ Mr. Nabarro
I had no intention of intervening in the debate, because I have a good deal of sympathy with the case 414 made by the right hon. Member for Middlesbrough, East (Mr. Marquand) and I did not want to prejudge anything that might be said on the Amendment which follows in page 2, line 6, in the names of my hon. Friends and myself. But I have intervened because of the perfectly disgraceful remarks made by the Economic Secretary to the Treasury a moment ago. Does he really bring to this Committee, with a Tory Government sitting with a majority of 100, as an excuse lor doing something, that the Socialist Party did it ten years ago? If he does, the sooner the Prime Minister kicks him out of office the better it will be for the Tory Party.
§ Mr. Barber
In view of that remark, might I say to my hon. Friend that he obviously did not hear what I said? I was not suggesting for one moment that the Conservative Government should follow the policy followed by the Socialist Party opposite. What I was pointing out—and I hope that now he will agree with me—was that I thought it ill-became the Opposition to make this sort of criticism when in fact it was doing various things during its term of office on which it did not give the House of Commons as much information as we are now giving.
§ Mr. Grimond
I have often protested about the habit of Conservatives following the lamentable example of the Labour Party, and I do not altogether protest against the Economic Secretary to the Treasury making the point, but is that the only point that he intends to make? Is that the only answer he intends to give? A very serious point was made by the hon. Member for Gloucester (Mr. Diamond), and I understand that it is perfectly true that further sums might be paid out under the Bill.
Another point has been raised by the hon. Member for Yarmouth (Mr. Fell), and I understand that the Minister does not contradict it. It may be that the agreement can be varied. That view is supported by the Opposition Front Bench. It may be that up to now the Minister has not broken any laws but has proceeded under some Statute. It may be true that in the past Parliament has lent money without safeguards, but it is also true that of late the House of 415 Commons has taken rather more interest in these very large sums of money.
§ Mr. Grimond
Also, it may be that it is common to have this sort of provision in Bills, and no reason has been given for not putting something similar into this Bill. The Minister has not even begun to meet the point or said that he will reconsider this or that he will talk it over with his colleagues in the Government and bring something forward on another occasion. He must at least give some indication whether he intends to take any steps about the matter or whether he accepts the points which have been made and which have so far been uncontradicted.
§ Mr. Fell
I appeal to my right hon. Friend to take a little notice of what is being said. If he cannot stomach anything that has been said on the other side of the Committee, could he not take a little notice of what has been said on this side?
Earlier in the debate the right hon. Member for Vauxhall (Mr. Strauss) was accused of not having taken something to a Division many months ago, and it was said that, therefore, he could not perhaps feel all that strongly about it. I must say that I felt some sympathy for him when that was said, but it is rather inciting us to make quite certain that my right hon. Friend cannot say that to us in six months' or a year's time when perhaps this sort of position crops up again.
I feel that my right hon. Friend could perhaps try to be at least a little more helpful, even if he goes no further than saying "I will give this more thought and see whether we can do anything to help the Committee on it", for that might help a little, but his attitude so far has been such that I myself could certainly not vote with the Government on this Amendment.
§ Mr. Hirst
I stand absolutely pat by what has just been said. The Committee has been treated with the greatest possible discourtesy in this matter. There have been speeches from both sides of the Committee which have been applauded by a large number of hon. Members, but my hon. Friend has not 416 addressed himself to the argument at all and has merely waffled about something the Socialists did ten years ago. There has been no true comparison or reference to the subject whatsoever.
We have asked, not unreasonably, whether the Bill gives power to the Government to vary the terms of the agreement to hand out more money in a nebulous way. It has been said that none of it ought to be handed out. It is also said that a good deal is paid back. It is an omnibus Bill in that regard. All these things have been brought up. Three or four speeches have been made in the last quarter of an hour bringing up new points. Yet we have had absolutely no answer at all on these specific points.
We have, after all, been reasonable. We have definitely said that we understand that the Economic Secretary might in a matter of this nature, which has blown up into a pretty good row, be in a spot, and that it is not fair. I do not want to put him in the position of having to give a quick answer. However, if he would accept the offer of the right hon. Member for Middlesbrough, East (Mr. Marquand)— I am not quite so conversant as the right hon. Gentleman is with procedure —or some other method which would permit him to have further thoughts or consultations with the Leader of the House—who is now present, though I am sorry that he has not been here while we have been talking so much of a House of Commons matter—or the Chancellor of the Exchequer or the Minister of Power, and see whether they can meet what are obviously the joint wishes of the Committee, it would be helpful.
I suggest that in a matter of this sort it is about time that the joint wishes of the Committee were met and that we did not get a mumble-mumble or a jumbled answer and were not treated to discourtesy such as we have been tonight. If that is the position, I cannot support the Government either.
Mr. Jack Jones
Surely the Minister should take cognisance of what has been said. He has had no consultations at all with his chief. It appears to me that he is not really seized of what is going on in the Committee.
All that has been suggested is that on this very important matter, unless he is agreeable to having another look at it and bringing something forward later, the will be bringing into being something which will create an enormous amount of trouble not only in respect of the Opposition but also in respect of hon. Members opposite who are generally prepared to support the Government. Surely he could have a word with either his senior Minister or the Leader of the House and ascertain whether they are prepared to look at this matter again in view of all that has been said. This is not a political issue. It is something that concerns the procedure of a democratically elected Government. Surely the hon. Gentleman could and should remove for all time the idea that because he has behind him a majority anything will do for everybody, including his own party.
§ Mr. Barber
I can only say that when I first dealt with this Amendment, as opposed to the subsequent interventions which I made, I tried in the most courteous and in the simplest possible way to explain the point of view of the Government. I put forward various reasons which, at any rate in some quarters, seem to have been wholly ignored. I pointed out the fact, which I do not think was appreciated by all hon. Members, that the agreements and the terms of these loans—and after all the Amendment refers to the terms of the agreement—were made by the Minister of Power under the authority of the 1953 Act. Therefore, it seemed to us reasonable to say that as the agreement has, as far as we know, been working well there was no need to amend it.
Of course I will take note of what has been said on this occasion as on the occasion of the other Amendments which have been moved. Frankly, the hon. Gentleman who moved the Amendment did so in terms which were very concise and very much to the point, and while it would have been perfectly easy for me, if I may use the expression used about me, to waffle on two or three times as long, it seemed to me, out of deference to those who have Amendments 418 down on very important matters, that I should be concise and should deal specifically with the point at issue.
I do not see any point in repeating myself again and I can only ask my hon. Friends and hon. Gentlemen opposite to consider what I said. I hope that on reflection, and especially bearing in mind the provisions of Section 5 of the 1953 Act under which the terms were agreed, and also the fact—I will not go into it because I am sure the Committee is seized of the point—that there is provision under Clause 1 (6) for copies of the report approved by the Comptroller and Auditor General to be laid before each House of Parliament, the Committee will feel that in the circumstances what I have said is reasonable.
§ Mr. Diamond
This is quite unsatisfactory. I really do not know how it is possible, when all of us are trying to impress upon the Economic Secretary a much more fundamental point, that the hon. Gentleman does not seem to be aware of it in the slightest. I am most grateful to the Leader of the House for listening to what I consider to be a most important part of our debate at a most critical time when Parliament is learning to control its expenditure of large sums of money.
The Economic Secretary forgot one important thing when he referred to his earlier speech. He forgot that it referred only to two loans. He was wrong —just plain wrong. It did not refer to only two loans. It referred to a total of £120 million which his right hon. Friend had undertaken would only be used in respect of £50 million to one steel company and £70 million to another.
Is the Economic Secretary aware that his right hon. Friend was good enough to say, in reply to a query that I put to him, that if £20 million was returned and the Government wanted, for example, to lend £20 million to the Steel Company of Wales, we should have to go through the whole business again—perhaps have to spend another nine hours trying to impress upon the Government Front Bench all over again what we have been saying today—have another agreement put before us and be told that it is covered by Section 5 of the 1953 Act and that Parliament has no right to comment about it? It 419 is absolutely discourteous on all the points we have been making.
I appeal to the Leader of the House to use his good offices, bearing in mind that unless one of the Amendments which are to be proposed shortly is accepted, there will be no Report stage at which something can be introduced in place of this Amendment. If this Amendment is not completely satisfactory, let us be told so, but we cannot leave the matter like this, or we will have lost our rights again.
§ Sir Douglas Glover (Ormskirk)
The whole Committee is a little disturbed about what has been disclosed. We appreciate the Economic Secretary's difficulty and we all appreciate that he does not want to have a Report stage when we have another all-night sitting.
§ Mr. Nabarro
Does not my hon. Friend appreciate that if the Bill is not amended in Committee there is no Report stage?
§ Sir D. Glover
If the hon. Member for Kidderminster (Mr. Nabarro) will allow me to make my speech in my own way, he will see that his interruption was completely unnecessary.
I was about to suggest that my hon. Friend the Economic Secretary should say that he is prepared to say that before the Bill goes to another place he will reconsider the matter to see whether it cannot be put right at that time. What we are all disturbed about is that there should be a Measure on the Statute Book giving a Government —and let us not forget that it might not be this Government—the right to lend money up to a total of £50 million without any further control by the House of Commons.
I feel that this is a House of Commons matter and has nothing to do with party divisions across the Floor. I hope that the Economic Secretary will feel disposed at least to assure us that before the Bill goes to another place he will consider whether our objections can be met.
§ Mr. Marquand
The hon. Member for Ormskirk (Sir D. Glover) contradicted himself without intending to do so. He quite rightly said that this was a House of Commons matter. If the House of Commons has done something in error, 420 it cannot foe content to leave it to another place to put right. This is a House of Commons matter which concerns the voting of finance and, by all our constitutional principles, it cannot be left to another place.
I take this opportunity to make an appeal to the Leader of the House, as I did when he was absent. It would be no derogation of the dignity of the House of Commons if the Government accepted the Amendment, which happens to be in my name, in order to give us an opportunity to consider the Bill on Report. During the interval, the Government could give thought to the matter and decide whether they could meet the wishes which have been expressed so strongly from both sides of the Committee. I put that to the Leader of the House very seriously.
§ Mr. John Biggs-Davison (Chigwell)
It was unfortunate that my hon. Friend the Economic Secretary should have used the phrase, "There is nothing new in this", because many hon. Members on this side of the Committee are disturbed about the way matters like this have been handled in the past, and we are anxious to see something different done in future. I therefore beg my hon. Friend and my right hon. Friend the Leader of the House to see whether they cannot meet the views which have been sincerely expressed on both sides of the Committee.
§ Sir Spencer Summers (Aylesbury)
I hesitate to intervene in the debate, because I acknowledge that I was not here for the earlier part of the afternoon, but I cannot help thinking that this might not be the right Measure for the wishes of the Committee to be met. As I understand it, the Government are using powers under the 1953 Act to make loans which the Committee now wants to question. At any rate, the Committee would question further loans which the Government have the power to make.
In the context of Parliamentary control, which is the essence of the discussion, it is far more important to seek to modify the powers given by the 1953 Act than to insist upon having a Report stage to make certain that any come-back on the £150 million is deployed in the way which Parliament wants. I want the Leader of the House 421 to take note of these views and to tell us that he will give consideration to the question of modifying the powers contained in the 1953 Act—
§ Sir S. Summers
We are asking the Government so to arrange matters that there shall be a Report stage so that arrangements can be made to cater for any redeployment of funds here under discussion. That is a very much smaller point than the one to which I have referred. Perhaps it would be dangerous for me to refer to it again, but if the larger issue could be considered I think it would be wise.
§ 12.30 a.m.
§ Mr. Ross
I asked the Minister whether he accepts the principle that under circumstances such as this, where money is being lent—be it £10,000 or £10 million—to a company in this way it is desirable that Parliament should have an opportunity of discussing the matter on the basis of a draft order, and he did not answer. He might have helped the Committee, which has been very reasonable with him tonight. We have gone out of our way to give him an opportunity to get himself out of his difficulties.
There are two difficulties in which he finds himself. He cannot accept the Amendment because it would mean a renegotiation of contracts already fixed and agreements already made. Am I right in that assumption? [HON. MEMBERS: "No."] I think I am right in relation to Colvilles. Secondly, he wants to get the Committee stage finished without Amendment, because he does not want a Report stage. He must meet the wishes of the Committee and amend the Clause in some way in order to meet the valid objections put up not only in relation to the terms but to the variation in the terms which are envisaged in the Bill itself. I was wondering whether he would be prepared to accept a manuscript Amendment, which would add to the Amendment moved, after the word "aforesaid" in the first line, the wordsarranged after the passing of this Act.That would provide for any future contracts and for any variations.
But the principle is a terribly important one. I appeal to the Leader of the 422 House. This is the kind of point upon which I have heard him make speech after speech—the power and the rights of the House of Commons. There is no doubt that it has been long-established that we should not allow this kind of thing to develop. The agreement in this case was made in January of last year, and we are only now discussing it for the first time. Is it not wrong that when we have an opportunity to put matters right we should not be allowed to take it? I have no doubt that if this matter went to a Division, with the Whips off, the Government would not stand a chance. The mood of the Committee is that the Bill should be amended, but such is our generosity that we do not want to put the Minister in any difficulty in relation to past contracts. Cannot he, or the Leader of the House, see his way out of this impasse? The good will of the Government is very much at stake in this matter.
§ Mr. Hirst
I will readily give way if my right hon. Friend the Leader of the House wants to intervene. I have never heard more reasonable speeches made by hon. Members on both sides of the Committee. I know that my right hon. Friend, with his vast experience, is a very keen barometer of the feelings of the House, but tonight there is something wrong, because he does not recognise that the reasonableness with which this matter has been argued hides the very serious feelings which hon. Members on both sides of the Committee have about it. We have had no satisfaction in this matter. For one reason or another, my hon. Friend the Economic Secretary has failed to address himself to the issue which concerns us.
Nobody is arguing on this Amendment the matter of the original agreements or the contracts, but the right of Parliament to discuss this matter if it is varied or if more money is given out by reason of the fact that the total sum is not entirely used. This is a matter of principle. The amount of money involved is not very great. The request being made in the Amendment is not unreasonable.
Several hon. Members have said that we are not really concerned whether these are the right words or the right way of doing it. All we have done is to express a concern, which I can feel all around me. I am sure that my right hon. 423 Friend the Leader of the House, with his greater experience, can feel it around him. Dozens of people are feeling some measure of concern that the Government are unnecessarily stonewalling and digging themselves in on this Amendment. Face-saving is not the way we normally conduct our affairs, nor the way the Leader of the House addresses himself to the problems of the House. I have been privileged to be here long enough to know this is not the case.
I appeal therefore, to my right hon. Friend to break his silence. He may not break our hearts, but he may break the confidence of not a few hon. Members in a matter where it is sincerely felt on both sides that there is something that ought to be put right and where we are offering the Government the opportunity in various ways to do so. If that is not met, here and in coming occasions on these matters the confidence of the House is going to have a cruel blow struck at it.
§ Mr. Wood
There may be a little misunderstanding. From what I have heard there are two distinct questions here. One is the obligation to give to the House information if any variation takes place, and the other is to receive from the House by affirmative Resolution or other procedure permission to make the changes.
At an earlier stage in our debate I said there was a specific provision for review of the Colville agreement in 1962 on certain bases, and that if such a revision took place I undertook to come to the House and give it that information. I also said that written into the agreement with Richard Thomas and Baldwins was the provision that if, or perhaps my hon. Friend the Member for Sunderland, South (Mr. Paul Williams) would like me to say when, denationalisation takes place, the agreement would be altered. On both those questions I gave the undertaking that I must come to the House and give the House the information it would expect about renegotiation and the change in these agreements.
What the recent discussion has been about is whether or not I should have to receive the affirmative Resolution of the House before these arrangements took place. This does impinge very closely—and perhaps this has been over- 424 looked by the Committee—on my own powers under Section 5 of the Iron and Steel Act, 1953. And this Bill, it seems to me, is entirely fortuitous. I have those powers under Section 5 of the 1953 Act, and they have been enjoyed by the Minister of Power for the last seven years. Therefore, I cannot see that there is any case here purely because of the fortuitous chance of this Bill for the acceptance of the affirmative Resolution procedure which would at the same time automatically amend my powers under Section 5 of the Act.
That is the reason why my hon. Friend the Economic Secretary (Mr. Barber) has been unable to agree to this Amendment, although I quite accept, and think the Committee generally would accept, the obligation on myself as Minister of Power if there is any change made in the agreements either in the case of Richard Thomas and Baldwins or Colvilles. I certainly accept the obligation to come to the House and give it the information.
§ Mr. Donald Wade (Huddersfield, West)
Does the Minister appreciate the distinction between informing the House and asking for the approval of the House? It is courteous of the Minister to inform the House, but that is not what is being sought. We are asking for an opportunity to give approval or not to give approval when the terms are varied.
§ Mr. Wood
I certainly appreciate the distinction. I have tried to point out that I see no need for the amendment and, but for the fortuitous chance of the Bill, the Committee would see no need for the amendment of my powers under Section 5. They were never in question before, and I see no reason why I should take this opportunity of agreeing to the affirmative Resolution procedure and thus agreeing to the amendments of those powers, which have not been questioned for seven years.
§ Sir D. Glover
The Minister is missing a point which is disturbing us: that under the 1953 Act we were dealing with a theoretical supposition whereas today we are dealing with a Bill which, in a few years' time, could present the Minister with £120 million which he could lend without any further approval from the House. Surely anyone who has any concept of the control of public expenditure 425 thinks that at least this should be the subject of affirmative Resolution within the Chamber. One was a theoretical matter and the other is an actual sum; and that distinction alters the context.
In addition, over the last few years we have realised that we must try to take a firmer grip on public expenditure than perhaps was required by the mood of Parliament in 1953.
§ Mr. Paul Williams (Sunderland, South)
The Committee should be grateful, up to a point, for what my right hon. Friend said about giving information, but in substance we have made absolutely no progress in seeking an assurance, beyond the possibility of continuing the debate to a Division. Although the Minister has been courteous, we have made no progress. My right hon. Friend repeatedly refers to the Act of 1953. I suggest that two things have happened since 1953. The first is that two elections have taken place, and the second is that the mood of the country and the House has changed considerably.
Surely the Minister realises, as must the Government, that the wind of change is blowing through the House on the question of Government expenditure. Only last week the Leader of the House courteously replied to a debate on Government expenditure which took place largely on the machinery which the House should use in controlling Government expenditure. But surely the basic point is where the policy is leading. From what I have heard from my right hon. Friend the Minister of Power this evening there seems to have been no change of policy between 1953 and today. I believe that the House should continue to demand until it gets satisfaction, repeating the demand that the matter should be referred back to us for affirmative Resolution and asserting that unless we have a statement to this effect we shall not be satisfied with the Government.
§ The Secretary of State for the Home Department (Mr. R. A. Butler)
I apologise for the fact that I was not present at the beginning of the discussion, although I have been in and out of the Chamber today and I am aware of the arguments which have been used. I am sorry that I did not hear the speech of the right hon. Member for Middlesbrough, East (Mr. Marquand). I am 426 aware of what my hon. Friends feel on this subject.
We are discussing a specific Amendment to the Bill. My right hon. Friend the Minister of Power has gone as far as is necessary, as my hon. Friend the Member for Sunderland, South (Mr. P. Williams) said, in the matter of courtesy. That is to say, he says that if there is any variation or renegotiation the House of Commons will be informed. That, I think, is what most people desire.
The gap that now exists is that hon. Members feel that the promise to inform the House is not sufficient. Clearly, from the sentiments one derives from a certain experience of its moods, the Committee feels that it wants to go a little further and that not only should the House be so informed but it should be able to express an opinion. That is understandable.
I think we are becoming a little too technical when we consider that this must be done solely through an affirmative Resolution. What I think we had better agree on tonight is this: my right hon. Friend quite rightly said that if there is to be a variation or renegotiation, he will inform the House. In fact, that is instinct in Clause 1 (6), which is post facto. It is not as actual as the undertaking given by the Minister just now. It says that each financial year the Minister shall come and there shall be a report from the Comptroller and Auditor General and the matter shall then be laid before Parliament. Even there, there is no undertaking in the Bill as drafted that Parliament shall be able to do anything about it.
We have, therefore, two separate problems to consider. One the statement by my right hon. Friend that he will inform the House of any variation or renegotiation, and secondly, something written into the Bill that there shall, each financial year, be the opportunity of stating any change or any situation vetted by the Comptroller and Auditor General which the House shall be able to consider.
I think that the only addition to the statements already made by the Government which is necessary is that there shall be an undertaking given, which I am 427 ready to give on behalf of the Government, that if such a report is made in the first place by my right hon. Friend, or if such a report is made under Clause 1 (6) of the Bill, there shall be an opportunity given by the Government for discussion by the House. That will mean that if there is to be any such report, we will undertake that the House will have an opportunity of discussing it. That will mean that there will then be an opportunity for a debate in the House.
With such an undertaking, I hope hon. Members will realise that we are quite sincere in meaning to report on variations or renegotiations and that that is just as valid as anything which may be written into the Statute and that that is an undertaking which will be respected. I think that reinforces the sincerity of the undertaking given by my right hon. Friend, and I do not see that we can go any further in showing our sincerity in desiring that these matters should be discussed.
§ Mr. Thomas Fraser (Hamilton)
I do not think the Leader of the House heard a speech made earlier by my hon. Friend the Member for Kilmarnock (Mr. Ross), who called attention to another Bill proceeding through Parliament which is now in another place. When that Measure was before this House, we gave some consideration to the way in which the House would be consulted about the amount of money and the terms on which money might be made available by one of Her Majesty's Ministers to certain companies. I refer to the Highlands and Islands Shipping Services Bill under which the Secretary of State for Scotland can make advances to shipping companies providing sea transport services to the Highlands and Islands.
What is being asked for in this Amendment is precisely what is contained in Clause 2 (3) of that Bill. That Bill is in the possession of Parliament now, and, incidentally, it is also fortuitous, which was the description given by the Minister of Power to the Bill we are now discussing. The Bill to which I have referred applies to the MacBrayne Shipping Services which have enjoyed a subsidy from the Government, from public funds, for thirty years. But it was found neces- 428 sary to introduce another Measure to give the same assistance to other services in the Highlands and Islands, and the Orkney services, and the occasion was taken to make new legislation covering the whole of the services in the Highlands and Islands.
Clause 2 (4) of that Bill reads as follows:Where the Secretary of State proposes under this section to make to any person in any financial year any advance which, by itself or taken with any other advance made or to be made under this section to that person in that financial year, exceeds in the aggregate the sum of ten thousand pounds he shall do so only in accordance with an undertaking a draft of which (including the terms and conditions upon which the undertaking is proposed to be made) has been laid before Parliament and approved by a resolution of the Commons House thereof.If the House of Commons approved this provision going into that Bill only a fortnight or three weeks ago concerning a sum of £10,000, how much more desirable is it that there should be the same kind of control by the House of Commons of sums of £50 million and £70 million? I should have thought the Leader of the House would have sensed the mood of the Committee of the House of Commons that we are not now willing to allow this to go through on the undertaking which he and his right hon. Friend the Minister have given that there will be a report to the House, a post facto report, and that we want to have the opportunity of exercising the rights and responsibilities of the House of Commons to which the right hon. Gentleman has himself called attention on so many occasions.
The right thing to do in the circumstances is for the Government to accept the Amendment now before the Committee. If there are features of the Amendment which they find unacceptable, by accepting it they would create the opportunity on Report for the Government to propose an Amendment to the Amendment. I should have thought it the wish of the majority of the Committee that that should be done. If the right hon. Gentleman does not agree that that should be done, he is not heeding what is the will of Parliament. If that is to be the attitude of the Leader of the House, if he is to put on the Whips to deny the House of Commons the opportunity of shaping legislation which we put through, that 429 would be causing great injury to our Parliamentary institutions. I beg him not to create that situation, but to respond to the mood and will of the majority and to accept the Amendment.
§ Mr. R. A. Butler
On one point the hon. Member for Hamilton (Mr. T. Fraser) was not correct. He said this was post facto. I particularly referred to the two aspects of this question. One is the undertaking of my right hon. Friend that he will bring to the House any variation or renegotiation of these loans. I further said that if that were done the opportunity would be given to the House to debate the matter and to express its opinion. I further said that in the case of subsection (6) where a post facto account is given annually, it means that an annual variation can be mentioned under that subsection and the Government would undertake also that time would be given for the House to express an opinion.
The hon. Member, although he expressed himself quite moderately, cannot have any great sense of grievance because my right hon. Friend comes with a variation and informs the House of Commons and there is opportunity for discussion under subsection (6), and, if there is any misunderstanding, I have given the undertaking that there will be opportunity for debate. I cannot see that that can be side-tracked by my right hon. Friend.
The hon. Member referred to the Highlands and Islands Shipping Services Bill and MacBraynes. That is rather different. Here we are operating under a definite Statute, namely, the Act of 1953, Section 5. There is no doubt that already the House has given my right hon. Friend undoubted powers. Reference has been made to them today, and I am now making it clear that if there are variations under those undoubted powers my right hon. Friend will come to the House and there will be opportunity for debate; and secondly, that when there is a post facto account approved by the Auditor and Comptroller General so that there is an alteration within the year there will be another opportunity. In all good faith the Government have stood by the House and said that in either case there will be discussion and we will see that there is time for it.
430 For the Leader of the House to make two declarations of that sort will, I think, show that we do understand the mood of the House and that we undertake to see that the House is brought into the matter as my right hon. Friend has already said.
§ Mr. T. Fraser
How can the House control this matter? As I understand it, the Minister will have his discussions with the companies and agreement will be reached between the Minister and the company concerned. Then the Leader of the House says that by some procedure which we have not adopted hitherto he is going to provide an opportunity for debate. There is nothing wrong in introducing a new procedure, but surely this is the procedure which is in the Amendment? If the Leader of the House is going to grant an opportunity for debate on an agreement or a variation, why should he not do it in the traditional manner by putting forward a Statutory Instrument?
§ Mr. Butler
I cannot amend the Act of 1953; but I can give the undertaking that the statement of my right hon. Friend, implemented by the Leader of the House and by the Government in providing the necessary time, will mean that the House is not side-tracked. If for some reason that does not work, then we must look at it again, but we act by faith in this House and if we break faith we are rightly disturbed. That is all that we can do tonight.
§ Mr. Fraser
The right hon. Gentleman says that we cannot amend the Act of 1953, but the Amendment with which we are concerned has been selected by the Chair and is in order and the effect of passing it would be to amend the Act of 1953. Surely there is nothing to prevent us from doing that.
§ Mr. Diamond
Will the undertaking given by the Home Secretary's right hon. Friend mean that in the case of new negotiations, or a variation, discussion will take place in this House before a firm contract is entered into?
§ Mr. Grimond
Two Ministers and the Leader of the House have been most courteous to us in trying to meet a widespread feeling that we do not want to surrender any control over future negotiations or agreements or variations.
431 I think we are entitled, having got so far, to know a little more about what form this will take. Will discussion be before the agreement has been finalised or not? Will we have any chance of expressing a view about it or, as so often happens nowadays, will we find that we cannot possibly do anything about the agreement because that would involve the Government in a breach of faith with the company concerned?
This may be as far as we can carry this matter tonight, but it is a little different thing for a Minister to say to the Committee, as a matter of courtesy or grace, that he will inform the House, and the House itself writing into the Statute that he must do so. No one wants to be discourteous to the Minister about this, but it is a point of some importance. I do not entirely accept the argument that because something is left out of the 1953 Act which should be in it we must necessary continue with this hiatus in all future Acts. This is an argument which the Minister must look at in the brighter light of day.
There is a new mood in the House of Commons. The Leader of the House himself spoke about this when Parliament met, and he indicted that he would encourage back-benchers to throw off the leading reins of the last Parliament and encourage the exercise of more control than perhaps hon. Members have been used to. This is an extremely good example. If hon. Members are wrong in detail and if the drafting is wrong, nevertheless the instinct of the Committee that, quite apart from what a Minister says, the House of Commons should not part with large sums of public money without getting written into an Act some means of checking them in the future seems to me to be a sound instinct.
I hope that the Leader of the House will clear up a little further the question as to when this discussion of any variation in agreements will take place— whether it will be before the agreements are completed or not. I hope that he will also admit Chat there is some difference between an undertaking, however generous, on the part of a Minister and the insistence of the House of Commons 432 on having something definite written into an Act of Parliament.
§ Mr. Hirst
The hon. Member for Gloucester (Mr. Diamond) has put his finger right on the point. There is certainly no hon. Member or right hon. Member whose assurance I would more readily accept than that of my right hon. Friend the Leader of the House. I am absolutely convinced of his integrity in that respect, and I hope that he will not misunderstand this intervention on my part. The difficulty is the question of what he means by the assurance he has given. Discussion of Clause 6 does not help us a bit. It is dead wood. It is like a debate on the nationalised industries year after year. However much good will there is in it, my right hon. Friend's assurance does not mean anything unless the debate which we are to have is to take place, and, if necessary a vote is to be taken, before the Government are committed to another of these agreements.
A great deal of this debate has arisen because of the agreement itself. It is no use the Government doubting that. I know that my right hon. Friend has tried his absolute best, but I have not been here for the past eight hours without knowing perfectly well that I am expressing the views of dozens of hon. Members. My right hon. Friend the Minister of Power said seven hours ago, and he has said it just now, that of course he will inform the House of Commons, and the Leader of the House says, "There you are. You have an assurance from the Minister that this matter will be discussed." It is very nice and I am sure very sincere, but what does it mean? Does it mean that we shall be permitted to discuss this matter before the event, or are we to be faced again, as we are faced tonight, with a debate in which none of us can do anything, whatever our consciences may say, because it is not possible to ask the Government, as the Opposition, it would seem, would ask them, to break a solemn undertaking?
That is the position that we are placed in tonight. We shall be placed in that situation again under the assurance given by my right hon. Friend unless we are given the opportunity to discuss the matter before the event and not merely afterwards, so that we can exercise our democratic rights. We have spent hours 433 here tonight because we have been placed in this position. Is my right hon. Friend prepared to make this assurance clear to the Committee? Both sides of the Committee would be glad to hear what he has to say.
Mr. Jack Jones
I seldom take part in these controversies about our constitutional procedure. I and most of my hon. Friends know more about shovels than complex Bills.
As I see the situation, it can be clarified quite easily. The Minister has a right to do a certain thing which has been given to him by the 1953 Act, but he has done it without the permission of the House. What has been sought is permission from the House of Commons for him to do what the 1953 Act allows him to do. I think that is it in a nutshell. There are hon. Members who seek to give or not to give him the permission which the 1953 Act lays down that he shall have.
As to the assurance given by the Leader of the House, nobody is more confident than I am about an assurance given by the right hon. Gentleman. He is a man of honour and integrity for whom all of us have a great admiration. However, we shall be in exactly the same position as we are tonight if this matter arises again. We have been presented with a fait accompli, and we have not known what it has all been about. We are being informed about an agreement which it was suggested should be put into operation as far back as last January.
Many hon. Members want to be in a position to say that the agreement as explained by the Minister is a good one and that they can agree to it and he can get on with it, or that it is a bad one and he should not be allowed to proceed with it. What we seek to do by means of the Amendment is to bring about the necessary instrument to give the Minister power to do what he suggests should be done.
§ Viscount Hinchingbrooke (Dorset, South)
I am disposed to accept what my right hon. Friend the Leader of the House has suggested to us—and for this reason. I have been in association with my hon. Friend the Member for Kidderminster (Mr. Nabarro) many times on 434 Amendments of this sort. During the proceedings on the Electricity (Borrowing Powers) Bill we moved an Amendment and voted against the Government upon it. The reason was quite simple It was that we wanted to ensure that the Government were not going to spend almost up to the hilt of the maximum borrowing powers under the Bill. We wanted to ensure that at every stage the Government should come to the House to obtain consent.
The situation here is entirely different My right hon. Friend the Minister of Power said this afternoon—in a very significant way, I thought, probably designed to have some effect on the market—that if a tranche of this loan were now made to Colvilles it would carry interest at the rate of 5½ per cent. Therefore, we know that at every stage in this borrowing situation the Government are prepared to say what the loan value is at the time the tranche is taken.
What can the Committee get out of an Amendment of this kind in altering the terms on which the money is available? Nothing at all. What does the Committee want to get out of this Amendment in terms of limiting these loans made by the Government? I can appreciate that right hon. and hon. Gentlemen opposite would like to have a Statutory Instrument and to raise Cain about a decision by the Government to vary the terms of the agreement on the invitation of Colvilles in the sense that Colvilles wants it as soon as may be to get its money from the market. That is the only way in which this loan could possibly be varied, it seems to me. We are operating on absolutely the maximum terms now. Richard Thomas and Baldwins takes £70 million and Colvilles £50 million, which is a total of £120 million, and that is written into the Bill already. There is no possibility of getting any more out of the Bill.
The best that can be done is to vary the terms of the agreement in a sense wholly agreeable to the House. In those circumstances, I think the assurance of my right hon. Friend that there will be this debate if and when the Government in some minor, transitory way want to alter the terms ought to be quite satisfactory. I hope that the Committee will so conclude.
435 What fascinates and interests me is whether my right hon. Friend the Minister of Power is going to be able to say, either on this Amendment or the next, something rather more helpful about the course of events on the market, about denationalising the iron and steel industry and about having got some hint from Colvilles that that company is only too anxious to go to the market itself as soon as the Government can release it from the obligations of this loan.
§ Mr. Philip Bell (Bolton, East)
There is a grave constitutional difficulty here which the Committee ought to face. Let us assume that the Bill stays as it is and that this matter is passed. Let us assume that we have a debate before any loan is renegotiated, and let us assume that we all vote against it. So what? A vote of the House of Commons cannot upset an Act of Parliament. Both under the Bill at the moment and under the Order the Minister is given power to make the contract and is given the money. Therefore, nothing effective could be done by Parliament by hearing about it or by voting against it before it was negotiated.
What has got to be done is this, although not, I hope, at this time of night. Perhaps the Minister might extend the undertaking that he would seriously consider whether, in fact, the proper way to do it would be to give an undertaking to consider amending the originating Act which would then put us in the clear, for nothing else can.
§ Sir S. Summers
I do not wish to detain the Committee very long and I hope that we need not be too long on the topic, but I cannot help thinking that we are losing our sense of proportion in the matter. This Bill is essentially before us because the Government wish to put the expense of exercising their powers below and not above the line. If it were not for that desire, this discussion would never have taken place at all.
Let us suppose for a moment that the Government had not wished to put it below the line. They could under the powers which they already possess lend this much, and more, to many steel companies. Where I think that we are losing our sense of proportion is that if the Government conceded what is being asked of them they would still possess 436 the power to lend money without Parliamentary consent in even greater volume than they have already done to many other steel companies.
This attempt to introduce Parliamentary control, a principle which I completely support, is misconceived in its method. It is using the wrong instrument because it is only in a very narrow field in which it will operate, and a vast field of ability to lend money without Parliamentary consent will remain with the Government of the day. I suggest that the high falutin' comments which have been made about Parliament keeping control are quite right and proper, but not in this context because the wrong weapon is being used for the purpose.
§ Amendment negatived.
§ The Deputy-Chairman (Sir Gordon Touche)
I think it would be convenient to discuss the next two Amendments together.
§ Mr. Nabarro
I beg to move, in page 2, line 6, to leave out "one hundred and twenty" and to insert "thirty".
I cannot recall in my short ten years in the House of Commons any Measure which has come under such heavy fire from every political party as has the Bill now before us. My hon. Friend the Member for Aylesbury (Sir S. Summers) entirely misconceives the purpose of the Bill and evidently neglects to observe all our earlier debates on it at earlier stages.
§ Mr. Nabarro
I shall not convert this into a Second Reading speech, Sir Gordon, but you will have perceived that it is the only Amendment on the Order Paper which seeks to vary the amount of the loan. It seeks to reduce the amount from £120 million to £30 million only and the second Amendment seeks to reduce the period from four years to one year only.
Therefore, the Amendment carries with it a consideration of the whole of the paraphernalia of investment of State moneys, taxpayers' money, in both nationalised and denationalised concerns. That is where my hon. Friend the Member for Aylesbury is evidently completely wrong.
437 1.15 a.m.
The Conservative Party has been very worried about this infusion of a large sum of money—a too large sum of money—of £120 million into two concerns and with the fact that those two concerns have been dealt with in one and the same Bill. I intend in this speech this evening to try to separate the issues, the first issue of the investment in Richard Thomas and Baldwins of £70 million and the second issue of the investment in Colvilles of £50 million, because very different considerations should be put in relation to the two separate loans.
In the case of Richard Thomas and Baldwins, there was no need for this £70 million to be included in the Bill. The Government have the power under the 1953 Act to provide a sum of £70 million for Richard Thomas and Baldwins through I.S.H.R.A. Earlier in our debates, I asked my right hon. Friend the Minister of Power why the normal procedure of furnishing this sum of money through the agency of I.S.H.R.A. was not followed. I said:Before my right hon. Friend goes on to deal with entirely different considerations, will he apply himself for one moment to the particular method now produced for financing the £120 million? What perplexes many of my hon. Friends and myself is that the Iron and Steel Holding and Realisation Agency is in existence for the specific purpose of making loans, among other things. Why does not the Agency carry out functions of this kind? Why has there to be a special Bill and a new method of financing?My right hon. Friend replied:My hon. Friend is on a very sensible point—Does my right hon. Friend wish to intervene?
§ Mr. Nabarro
Of course, I was going to read on—but we felt that these two loans were of a kind which the Agency had not been created to make."—[OFFICIAL REPORT. 18th February. 1960; Vol. 617, c. 1446–7.]That is the end of the quotation.
That is where I fall out with my right hon. Friend. I.S.H.R.A. was created for the purpose of making loans to both nationalised and denationalised steel companies. I have never been able to see why my right hon. Friend did not 438 apply the I.S.H.R.A. procedure. In case any hon. Member thinks that that is an academic point, may I trace through to its logical conclusion what would have happened if I.S.H.R.A. had provided the £70 million and the Bill had been for only the £50 million for Colvilles? It would have meant that I.S.H.R.A. would have furnished the £70 million for Richard Thomas and Baldwins, which is to be denationalised in the course of the next few weeks—[HON. MEMBERS: "Is that a promise?"]—it is an intelligent prophecy, or a sensible prophecy, as my right hon. Friend would have called it.
When Richard Thomas and Baldwins is denationalised, the £70 million to be furnished over the next four years would have been denationalised by I.S.H.R.A. along with, or following immediately after, the denationalisation of the company itself. Therefore, that £70 million would not have been called in aid from the Consolidated Fund and in fact there would have been a relief of £70 million of the taxpayers' funds within the lifetime of this Parliament. If that £70 million is ruled out from the sum of £120 million, there remains only the £50 million for Colvilles.
I am not at all happy about this Colvilles loan. Colvilles were coerced into it. I think that that is a proper description of the negotiations which took place. I say at once that I would compete with any member of this Committee, including my right hon. Friend the Minister of Power, in defending the sanctity of contracts, and I do not wish to see the contract made between Her Majesty's Government and Colvilles broken, vitiated or weakened in any way whatsoever. But Colvilles were coerced in the matter of this loan. I am not at all satisfied that a Tory Government should be creating a position whereby State moneys will still be invested in steel as far ahead as 1974.
Has any hon. Member yet realised that what we are doing today is keeping State money in steel until the middle 1970s? [An HON. MEMBER: "Until 1965."] One of my hon. Friends says until 1965. He is slightly incorrect in his interpretation. The Bill states that the last date for making a loan is 31st March, 1965, but the loans are for a duration of up to ten years, and are normally for ten years, which would carry us to the middle 439 1970s before all the money was repaid. I do not believe that I was elected as a Conservative Member in this Parliament to prolong State ownership of steel until the middle 1970s. [Interruption.] At least the State will own a substantial part of the shares in one or more of the steel companies. That is partial State ownership.
§ Mr. G. W. Reynolds (Islington, North)
We are talking about money now being loaned, and not about the aspects of the shares which are still State-owned. The hon Member is arguing that, because of the loans, there will still be State-owned steel in the mid-1970s. If it were a question of State ownership I do not think there would be so many objections from this side of the Committee.
§ Mr. Nabarro
Perhaps not. We may be indulging in a play on words. Perhaps "State finance in steel" would be a better phrase. I do not mind which definition is used. But it will exist until the middle 1970s.
During the Second Reading debate I pressed my right hon. Friend the President of the Board of Trade on the point of refinancing this Colvilles loan, and it was instructive today to hear my right hon. Friend the Minister of Power say that he did not intend to try to renegotiate the loan. That is exactly what he said today. When he replies to this debate I should like him to tell me what difference he thinks there is between renegotiating a loan and refinancing a loan. Is there any difference? Would he tell me? I am sorry he will not reply. I wanted to give him the opportunity to reply, because this is rather an important point.
He refuses to re-negotiate the loan, but my right hon. Friend the President of the Board of Trade accepts the fact that there may well be a refinancing of the loan. I would direct my right hon. Friend's attention to what my right hon. Friend the President of the Board of Trade said in the Second Reading debate. He said:So far as I know, there is no final barrier to a re-financing of this money from private sources …He is a member of the Cabinet, ranking before my right hon. Friend the Minister 440 of Power, and I therefore attach great importance to the words he used. I would add that my choice of words when intervening was singularly accurate.
§ Mr. Nabarro
I said:My right hon. Friend has used the term 're-financing'. What is he referring to? Is he referring to the issuing on the stock market, of sums already lent by I.S.H.R.A. to the denationalised steel companies, or to refinancing the proposed Consolidated Fund loans under this Bill, via I.S.H.R.A., to the stock market?My right hon. Friend said:I would not rule out either of those things."—[OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 155.]In other words, my right hon. Friend is quite prepared to reach an arrangement for the re-financing of the Colvilles loan of —50 million, not issued in one tranche in the forthcoming twelve months, but spread over four years.
Let us all understand that simple point: it is going to be between —10 million and —15 million per annum over the next four years, so the Minister has got four years ahead of him to implement the undertaking given by the President of the Board of Trade that there would be due consideration given to refinancing of this loan. Why should it not be refinanced from the Stock Market? Colvilles are going to pay 5½ per cent. based on the present level of Bank Rate, but the yield on steel ordinary shares is only slightly above 4 per cent. I do not wish to become involved at this late hour in discussion on the most desirable gearing of the capital of steel companies, but the plain fact of the matter is that Colvilles could today get the bulk of its capital money from the stock market on terms which would bear favourable comparison with the 5½ per cent. which is the rate of interest applicable under these loans from the Consolidated Fund.
I appeal to my hon. Friends. Is it not the philosophy of the Conservative Party that industrial undertakings should have resort to the money market for their capital requirements? Or are we now converted to a form of pink Socialism which says that our major private enterprise undertakings shall lean on the Treasury for their capital money needs? 441 That system is anathema to me. I want to know from my right hon. Friend the Minister, having regard to the undertakings given by the President of the Board of Trade when winding up the Second Reading debate on 18th February, 1960, what conversations he has had with the board of Colvilles. I want to know what negotiations he has had with Colvilles. I hope he is not nodding his head as a negative to me—
§ Mr. Nabarro
I want to know what negotiations he has had with a view to Colvilles having the least possible recourse to funds from this Government loan and the maximum possible recourse to finding its moneys from the stock market; and what progress he has made towards the desirable objectives which. I remind him, should have been the policy which he enunciated to his constituents in Bridlington in the last election, as I enunciated to my steel workers in Richard Thomas and Baldwins in my constituency. It is no good him nodding his head. At least I claim this privilege with the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan). He has the major part of Richard Thomas and Baldwins in his constituency, but I have a minor part in mine, and I have been rather interested in this company for quite a long time.
I said I would deal with this —120 million in two separate but related sections of my speech. In the instance of Richard Thomas and Baldwins part of the money could come from the Consolidated Fund. It is over four years. Let the I.S.H.R.A. issue it, and from I.S.H.R.A. it will find its way, with the denationalisation of Richard Thomas and Baldwins, back to the hands of private investors where it properly belongs. If we do not carry through that procedure there will be Government moneys in Richard Thomas and Baldwins until 31st December, 1970, which in my view is much too long for State ownership of a part of that steel company.
In regard to Colvilles, I rely on a renegotiation of this loan, and I hope for a detailed progress report tonight from the Minister as to the attitude of the board of directors of Colvilles towards this interesting proposition, supported, the Minister will remember, by nearly 442 every Conservative speaker during the Second Reading debate on this Bill.
May I pass to the issue of the denationalisation of the steel industry, which is associated with the Amendment in view of the extent by which I propose in the Amendment to reduce these sums? My right hon. Friend has made certain observations about future policy. There was still —240 million of State funds in steel at January, 1960.
§ The Deputy-Chairman (Major Sir William Anstruther-Gray)
Order. There is no reference to a sum of —240 million in either of the Amendments.
§ Mr. Nabarro
If you will allow me to finish the sentence, Sir William, you will see the relationship between the two matters. At January, 1960, there was —240 million of State funds in steel. If the whole of the —120 million were added, the total State stake in steel would be —360 million, I want to add only —30 million, so that the total State stake in steel would be no more than —270 million, and not —360 million.
But what concerns me so much is the antithesis to denationalisation which has been manifest by the behaviour of my Conservative colleagues in the last nine years. There was —250 million of State money in steel when we started denationalisation. Today there is —240 million. If the Bill were passed without my Amendment there would be —360 million, which is —110 million more than when we started. Even if my Amendment were accepted there would be —30 million more than when we started. I hope that that makes my hon. Friend the Member for Aylesbury, blush when he describes this as a little academic discussion of whether the expenditure should be above or below the line.
On the contrary, all our election undertakings in the Conservative Party for the 1951 election, for the 1955 election and for the 1959 election included an undertaking to get rid of the State ownership in steel. For nine long years we have been travelling in exactly the opposite direction. I hope that my comments this morning and the earlier comments of many of my hon. Friends have impressed upon the Minister of Power the need for a turn of speed in the next three years in winding up 443 I.S.H.R.A., getting rid of the —240 million of State investment in steel and minimising the demands under the Bill by allowing it to rest on a figure of —30 million instead of a figure of —120 million.
§ Mr. Peyton
I beg to second the Amendment.
These Amendments have been designed with all the tact that my hon. Friend the Member for Kidderminster (Mr. Nabarro) can manage as an exceedingly gentle hint to my right hon. and hon. Friends that they must do what they can to curtail the taxpayers' liability in circumstances wholly different from those prevailing when the original agreement was made.
Although I regret not having expressed my criticism at the time, I never welcomed the decision to split the new strip mill which is required, for I always thought that the whole project should have been in South Wales. I do not want to say much this morning about Richard Thomas and Baldwins' part in this matter. Unlike my hon. Friend, on the whole I am disposed to accept that Richard Thomas and Baldwins, being a Government creature, can come only to the Government for funds. I would leave it at that, beyond expressing the fervent hope once again that my right hon. Friend's welcome words on the subject of the denationalisation of this firm will shortly bear fruit.
I wish to add a word or two more about Colvilles. I accept that at the time when the agreement was made Colvilles probably had no hope at all of raising such a large sum as —50 million in the market. But now the circumstances have changed radically and favourably due, one might say, to the skill of my right hon. Friends—it is certainly not due to any action by Colvilles. Now, when funds from other sources are surely available to Colvilles I want to know whether it would not be right and proper for Colvilles to resort to the market rather than to the taxpayer.
I echo the question asked just now by my hon. Friend. What review has taken place since as to the possibility of refinancing the arrangement and curtailing the burden on the taxpayers? To me this seems important. If no 444 review has taken place at all, I should regard the Government as being blameworthy in a high degree. If, on the other hand, they say that they have reviewed this and are bound, as I believe they must be, by an agreement which they cannot possibly renounce unilaterally, I should have no difficulty in accepting that. But I very much hope that my right hon. Friend can say that the matter has been fully and carefully reviewed and that it is the genuine intention of the Government to lighten the burden on the taxpayers; and also I hope to hear from him a most categorical assurance of the intention of Colvilles to resort to the taxpayers and to the Budget, the Consolidated Fund, to as small a degree as possible.
There is little more than I wish to add. During these debates we have been largely concerned with the possibility of control by Parliament before it is too late of large sums of Government money. While I accept that in this case it would be wrong to urge the Government unilaterally to renounce a binding agreement, I express my strong feeling once again that it is also wrong perfunctorily to wave farewell to vast sums of public money without assuring Parliament in future of a proper and adequate opportunity for discussion. May I add that the one misgiving I have about the offer made by my right hon. Friend the Leader of the House with such courtesy and consideration is that he appeared to make it a matter of grace offered to the Committee instead of a recognition of the Committee's undoubted right.
§ Mr. John Eden (Bournemouth, West)
As third in line of succession, I wish to support the remarks of my hon. Friends. I am encouraged to do so by what was said by my right hon. Friend the President of the Board of Trade during the Second Reading debate:… I do not think that Colvilles is any more keen to borrow from the Government than we are to see it borrowing from the Government."—[OFFICIAL REPORT. 18th February, 1960; Vol. 617, c. 1552.]If from the start Colvilles has not been keen to borrow from the Government, that adds a great deal of force to the Amendment. It seems to me that the main purpose in persuading Colvilles to come to this particular agreement has 445 been not so much an economic as a social one. It has not been very concerned to set up this expansion to its plant in Ravenscraig on economic grounds. Therefore, this agreement has been made to try to persuade the firm to do this for social reasons.
It would seem that if we could speed up the process by which the firm could be released from the agreement, with which, according to my right hon. Friend, the firm is not particularly happy, the better it would be. We are very much supported in this view by an article which appeared in the Financial Times on 25th February. Referring to this and other similar loans by the Government to private industry, it said that certainly individually there could be a strong case made for each one, but collectively there does not seem to have been much consideration given to the principles in volved by this sort of manoeuvre. If I quote the last two sentences of the Financial Times article that will sum up in a more concise way the purport of my remarks. Referring to this sort of agreement by which the Government are injecting public money into private industry, the Financial Times said:Neither the Government nor industry itself seems to know how far it is prepared to go along this line of policy, how big a commitment can be supported or what freedom of action can be maintained when private industry is made dependant upon public money.The second and last quotation I make from the article is as follows:The Conservative Party itself should give much more thought to this matter.The purpose of this Amendment is to encourage all of us to impress on the Government that Conservative Party thinking on this matter should start with the Conservative Government, and I urge hon. Members to support it.
§ Mr. Grimond
I hope that the Minister will be able to tell us that, without doing any damage to any social or economic considerations which are dealt with in the Bill, he is in favour of taking the weight of such finance as this off public funds. He might find it difficult to say exactly what negotiations are going on in Colvilles, but, if he cannot say that, I hope he will say it is the object to take the weight of this sort of financing off public funds for two reasons.
I would remind him that the Governor of the Bank of England, rightly or 446 wrongly, has said that there is a shortage of first-class stock on the market. If this stock could be taken up on the market, I can see no possible harm in financing it by that method. Secondly, there will certainly not be a lack of call on the Consolidated Fund for various purposes, some concerned with industry. Therefore, it would seem essential not to give Government funds to industries which can finance themselves through the markets without damage to the projects concerned. Whatever the Minister says about negotiations, I hope he will make quite clear the Government's attitude on the general principle of financing.
§ Mr. Hirst
I am associated with my hon. Friends in these Amendments and I am grateful to them for putting the points so well. In some ways I go a little further than they have gone. I am concerned that some of these steps have not taken place already. Why on earth are we discussing this thing at all? Why should negotiations have been taking place already? Is my right hon. Friend only just waking up to the fact that we won the General Election and that there has been a change in conditions? Does he need a debate at 2 o'clock in the morning to remind him that we won the election?
If it has been done, there is no harm in the Committee knowing that negotiations have been successfully carried through with Colvilles on the lines suggested. There is no shadow of doubt that nothing could be easier with a company like that whose shares were 28s. and have shot up to the 80s. mark. A company in that position could raise the money perfectly well and easily and then there would not be the demand for this Bill and no need for a take-over, or temporary finance, or whatever is the description. That is recognised in this Amendment by limiting the figure to —30 million.
In the case of Richard Thomas and Baldwins, I am highly critical of what has been happening and I refer again to what I said earlier about why this denationalisation has not been carried out. There is no reason on earth why all the planning stage should not have been done before the election; I never had any doubt that we should win the election. We had our plans ready for it, and we 447 had a Gracious Speech prepared; we ought to have had our plans ready for the denationalisation of Richard Thomas and Baldwins.
Then it would not have been a question of —70 million being, as it is called, denationalised. The question would never have arisen because the money would never have been wanted. We should never have needed this miserable debate, nor had the miserable situation we have had to face with negative satisfaction all down the line. The reason for all this has been that the Government have not met a situation which was perfectly obvious, and I underline this Amendment very strongly. Of course, I know that it will not be carried, but it has been put down to make quite clear to the Committee that we are not satisfied with pouring more and more money into the nationalised industries when, by our own policies and our own management of the economy, a Conservative Government have done what they have. That is the question which the Minister has to answer but which, in the whole nine hours of debate, he has never answered at all.
Mr. Jack Jones
The Amendment seeks to give —30 million to these two companies whereas the Government say that —120 million should be given. I say that goes to prove that hundreds of millions of pounds have been spent since the war in profits ploughed back and so on. This is the industry which was supposed to have been in perfect condition at the end of the war, with not one furnace damaged by bombing, and yet it needed —400 million or —500 million spent on it to put it into shape to meet full employment.
§ Sir H. d'Avigdor-Goldsmid
Having sat through this debate since 3.30 yesterday afternoon, I think that there is one feeling above all that has emerged and that is the need to get on with the denationalisation of steel.
I should like briefly to address myself particularly to certain points which have emerged and, first of all, to say that one has seen that, as long as this industry remains partially nationalised, this question of agreements between the Government and various businesses will always be an issue. The people with an agreement to which the Government are 448 a party know that then there is always the question of "looking at it again"; sometimes in favour of the Government, and sometimes in favour of the other party. It is a major disadvantage to have the Government as a party to such an agreement if it can in any way be avoided.
The other matter is one which one cannot really avoid and that is the inordinate difficulty in our economy of finding finance for nationalised industry, with which hon. Members are familiar. This is a matter which recurs so often in our debates that I need only say tonight that any step in the opposite direction is more than welcome. This is the strongest possible argument for the immediate sale by I.S.H.R.A. of the remaining Iron and Steel shares it holds. I do not refer to fixed interest stocks which could not be taken over except at a book-keeping loss to I.S.H.R.A., though in the long term I.S.H.R.A. may accept that loss. What may be sold are the remaining equity stocks. My guess is that the equity stock of Richard Thomas and Baldwins could probably be sold for —25 million today and on that —25 million value the Government are receiving a dividend of under —900,000. In order to finance I.S.H.R.A., the Government are presumably paying a rate of interest of about 5 per cent. Therefore, on a first calculation, there would be an immediate annual profit to the Government of —250,000 or more on the value of —25 million, which they would receive for their holding of Richard Thomas and Baldwins' shares.
But people will say, "Ah. Look at the enormous profits that will be earned by those who purchase R.T.B. shares." I can only reply, from studying Mr. Ely's speech, that he reckons that the —70 million which his company is borrowing will be repaid by 1971. He says,We expect to be able without difficulty to repay that loan from the company's own resources, to pay a proper return on our capital and in addition to carry out further expansion and improvement projects.The moral of that is that it is perfectly clear that people who buy ordinary shares in Richard Thomas and Baldwins expecting enormous profits in the near future will in this case be disappointed. But it is quite right that people should expect that. People voted at the General Election unhesitatingly for denationalisation, and while we have it in 449 our power to give it to them, that we should do.
The Leader of the Liberal Party referred to the remark of the Governor of the Bank of England that too much money was chasing too few shares. It would improve the health of the financial world if —25 million of steel equities were made available to buyers. It would sort matters out a great deal and a false evaluation arising from the situation that too much money is chasing too few shares might be corrected by that.
§ Dr. J. Dickson Mabon (Greenock)
I do not wish to intervene in a private ideological quarrel between the Pharisees and the Philistines about the practice of Conservatism, but I am surprised that some Scottish Unionist Member opposite has not made the point either privately or in the Chamber to his colleagues who are moving and speaking to the Amendment tonight. The seconder made the point perfectly plain, but I thought rather dismissed it when he said that this matter of lending money to Colvilles was primarily for social reasons and that in his view the whole thing ought to have gone to South Wales. I would point out to him that it cannot be dismissed as simply as that.
The whole purpose of giving —120 million is certainly in order to expand the facilities in Scotland, and I do not disagree with the interpretation put by the hon. Member for Kidderminster (Mr. Nabarro) that Colvilles have been coerced in a sense into this arrangement. I do not deny that, but from the point of view of Scotland it is highly essential that this development takes place. Apart from the ideological argument about House of Commons control and the success of private enterprise, there is no doubt that without this Bill in these precise terms no expansion would have taken place in Scotland. I am surprised that no Scottish Unionist Member has said that tonight.
If it is the clear policy of Conservatives to follow the natural mechanism of the market so that all these things will arrive by process of laissez-faire or free enterprise, it follows logically that otherwise this expansion would not take place in Scotland and the Scottish economy would continue to drag. If that is a valid consequence the Conservative 450 Party in Scotland ought to recognise it and declare it.
However, my understanding from Scottish Unionist Members, speaking on the same Conservative manifesto about which the hon. Member for Kidderminster has tried to remind his colleagues tonight, is that the Tory Party in Scotland—I think the hon. Member said it recently when he addressed the Scottish Young Unionists in conference at Largs—was in favour of expanding the economy of Scotland by bringing in developments such as this. The hon. Member may argue that this could be achieved in the private market.
But among the sponsors inscribed on the Bill is the Parliamentary Secretary to the Ministry of Power who, when he was a back bench Member of the Tory Party in 1957, spoke up for Sir Andrew McCance, the chairman of Colvilles, and said that Colvilles was against the proposal for all sorts of reasons but particularly because of the economic and financial ones. Now we see that the position has been almost reversed. It is ironical that the hon. Gentleman has been placed in this position of being a sponsor of something which in 1957 he denied was possible.
The Tory Party in Scotland is obliged to sustain the expansion in Colvilles. If it did not, the whole expansion of the Scottish economy could not take place. For example, the latest extension of the British Motor Corporation in Scotland is dependent on the supply of strip steel. Are we to see the mill being removed as a consequence of the Amendment—that is what it would mean—and this proposed extension collapse?
I would expect, if the argument is to go on between some Tory hon. Members who are in rebellion against the official leadership of the Treasury Bench—
§ Dr. Dickson Mabon
It is a rebellion. Perhaps the hon. Member may not have the courage of his own conviction and vote for his own Amendment. I do not know. But he is arguing against his party Front Bench. I suggest that it is high time that his Scottish colleagues had some backbone and resisted this proposal, because it will mean the end of 451 the steel mill in Scotland. It took a long time to convert them in 1957 and 1958 but in the last analysis the Scottish Tory Members disagreed with what the Parliamentary Secretary has said today and came out in favour of the project. I hoped that they would rise and support the Government in this regard on this Amendment.
§ Mr. Wood
I could not have listened to ten and a half hours of debate today and the debate on the Second Reading without understanding and, if I may say so, appreciating the concern that some of my hon. Friends feel about the position. On the other hand, I would ask them to appreciate, as I think a number of them do, the task that was before me. It was to make provision by some means or other for the carrying out of agreements which were reached about eighteen months ago.
Incidentally, perhaps I could say to my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), who made a speech the other day on the Consolidated Fund Bill—unfortunately, I did not hear it—that I was very pained by his reference to me as the greatest spender in the Government. I had hardly arrived at the Ministry of Power before I introduced the Bill the only objective of which was to remove the spending from my Vote and put it below the line. Therefore, I hope that I shall escape the very grievous charge that he made against me on that occasion.
The two Amendments together aim at reducing the maximum of the loan to —30 million and obliging Colvilles and Richard Thomas and Baldwins after March, 1961, to raise the remaining necessary finance from sources other than direct Government advances. My hon. Friends, and particularly my hon. Friend the Member for Kidderminster (Mr. Nabarro), have suggested that it would be desirable for Colvilles to raise the money on the market. They have also suggested implicitly that it would be desirable for the Agency to be committed to the immediate denationalisation of Richard Thomas and Baldwins. However desirable it might be—and I think that my hon. Friend accepts this matter because he talked with feeling about the sanctity of contracts—I do not think it 452 can possibly be right, and I do not think he would think that it could be right, for a Government to force a company with which they had made a form of agreement to break that agreement against its will.
My hon. Friend mentioned the question of denationalisation. The Committee will have heard the statement which my hon. Friend the Economic Secretary made, and I hope that it heard it with approval. He underlined what I said on Second Reading about the Government's intentions and from time to time today I also have underlined it —that the Government intend to go forward and make as rapid progress as they can with the task of denationalisation.
I am also mindful of the statement which my right hon. Friend the President of the Board of Trade made on Second Reading, to which my hon. Friend the Member for Kidderminster has referred, about the refinancing of the contract with Colvilles. It was with this in mind that I was naturally most anxious to know the views which the board of Colvilles held about this matter. Therefore, I talked last week to Sir Andrew McCance, the chairman of Colvilles Limited, about his present attitude towards the loan agreement. After we had talked he wrote to me to confirm what he had said and to tell me this. These are his words in his letter to me, and I hope that they answer the point which was raised by my hon. Friend the Member for Yeovil (Mr. Peyton). He said:It is the intention of the Board of Colvilles to draw on the loan of —50 million from the Government to the smallest extent practicable.These agreements, as my hon. Friend and, indeed, all hon. Gentlemen know, were entered into in 1958 in perfectly good faith. It seems to me that there are only three possible ways of honouring them. One is that the loan should be transferred to the Agency, and this, I think, is the method which my hon. Friend the Member for Kidderminster would prefer, particularly in the case of Richard Thomas and Baldwins.
I considered, and I understand that my predecessor considered, the possibility of making this loan from the Agency, but I cannot go all the way with my hon. Friend about what he thinks 453 the purpose of the Agency should be. Section 18 (1) of the Iron and Steel Act, 1953, which set up the Agency, says:… it shall be the duty of the Agency to secure, by the exercise of their powers under this Act, the return to private ownership of the undertakings which on the appointed day are owned by subsidiaries …It seems to me that the Agency was given the powers of making loans for the purpose of returning those assets to private enterprise. In my view, the Agency was not given the powers, although I admit that there is a certain latitude for argument in this, to make the kind of commercial loan which we are considering in this Bill.
§ Mr. Nabarro
There is a certain amount in what my right hon. Friend says, but it would be very difficult for him to justify that the —147.8 million loaned by I.S.H.R.A. to already denationalised steel companies on 1st January last was all for the purpose of denationalising the industry. On the contrary, nearly 75 per cent. of that large sum of money was for further expansion of already denationalised companies.
§ Mr. Wood
I did not understand from what my hon. Friend said earlier that he would favour an addition to the existing liabilities of the Agency which this kind of loan would certainly represent. In my view, the Agency was not set up for this purpose and it is hard to see how the course which my hon. Friend has urged upon me would in fact achieve the objective of my hon. Friends—complete denationalisation of the industry.
I said that there were three methods by which I could honour the agreements which were entered into about eighteen months ago. One was the transfer of the loan to the Agency, which I reject for the reasons I have given. The second was the retention of provision for the loan on my own Vote, which for very good reasons I did not adopt. The third method is that chosen in the Bill—to place below the line the whole amount of the loan.
I urge on my hon. Friends that the placing of the amount below the line must mean that the whole amount is placed below the line, in order that we should give no suggestion that we shall not honour the agreement unless there is agreement to the refinancing of the contract—against which I do not shut my 454 mind any more than did my right hon. Friend the President of the Board of Trade—and unless the board of Colvilles alters its opinion about drawing the minimum amount of the loan.
I am convinced that we must give every sign, by placing the whole amount of —120 million below the line and by rejecting the Amendment, that we are prepared to honour the contract, which we entered into in good faith and which we are not prepared to abrogate unilaterally.
§ Mr. Marquand
When all these arrangements were first announced, the Labour Party said very clearly, in a pamphlet published at the time, that we approved the provision of finance from Government sources for the steel industry for essential purposes. We recognised that that was the cheapest way of financing necessary expansion in the steel industry and we were all for that in principle. What we objected to—and we made it perfectly clear and it is pointless for hon. Members opposite to deny it—was the details of the loan being offered to Colvilles.
The Amendments tonight from hon. Members opposite have been designed, very largely, to accelerate the process of denationalisation. The debate has served a very useful purpose, not so much that we have been initiated for a moment into the mysteries of the 1922 Committee and almost felt ourselves part of it for a brief hour or two, as that it has been made clear to the country at last, and perhaps to a substantial minority of hon. Members opposite, that the steel industry has been nowhere near denationalisation.
At least —1 million was spent before and during the election by the steel companies, drawing large amounts of subsidy from Government money, in trying to persuade the nation that the industry had been denationalised and that the Labour Party intended to re-nationalise it. Nothing could have been further from the truth. The truth, as the hon. Member for Kidderminster (Mr. Nabarro) will agree, was that no less than 60 per cent. of what had been taken over by the Iron and Steel Corporation of Great Britain still remained, and still remains, in public hands. The industry has not been denationalised to any substantial extent. It is true that some companies, like the South Durham 455 Steel and Iron Company and the English Steel Corporation, have been denationalised, along with one or two smaller companies of that kind, but the major companies are still owned by the State to the extent of about 60 per cent. of their capital.
What has been done has been to take the stock of the Iron and Steel Corporation of Great Britain and divide it into so-called equity and so-called prior charge securities. On the prior charge securities comparatively low rates of interest have been paid to the taxpayer, and on the so-called equity shares large juicy dividends have been handed out to the speculators, as I prefer to call the people who bought those securities.
We can see from the debate that has taken place that hon. Members opposite have no intention of changing the situation; it suits them very well. We heard tonight from the hon. Member for
§ Walsall, South (Sir H. d'Avigdor-Goldsmid) his idea of what is practicable, namely, to do the same in the case of Richard Thomas and Baldwins as has been done with Stewarts and Lloyds and others—to select a particular section of stock, call it equities, and sell it for £25 million. Then there will be good pickings, or blue chips, as tihe hon. Member for Kidderminster calls them. That is all that the Tory Party is setting out to do. It is going to take the opportunity to make further splendid gains from the excellent company of Richard Thomas and Baldwins, and leave it at that. After seven years the Tory Party has not achieved the denationalisation of the industry, and after another seven years the situation will have changed very little from what it is today.
§ Question put, That "one hundred and twenty" stand part of the Clause:—
§ The Committee divided: Ayes 124, Noes 0.455
|Division No. 64.]||AYES||[2.12 a.m.|
|Agnew, Sir Peter||George, J. C. (Pollok)||Osborn, John (Hallam)|
|Allason, James||Glover, Sir Douglas||Page, Graham|
|Arbuthnot, John||Glyn, Col. Richard H. (Dorset, N.)||Pannell, Norman (Kirkdale)|
|Barter, John||Goodhew, Victor||Pearson, Frank (Clitheroe)|
|Batsford, Brian||Gower, Raymond||Peel, John|
|Bell, Philip (Bolton, E.)||Gresham Cooke, R.||Percival, Ian|
|Bidgood, John C.||Grosvenor, Lt.-Col. R. G.||Peyton, John|
|Biggs-Davison, John||Hamilton, Michael (Wellingborough)||Pitt, Miss Edith|
|Bingham, R. M.||Harrison, Col. J. H. (Eye)||Pott, Percivall|
|Black, Sir Cyril||Hendry, Forbes||Prior, J. M. L.|
|Bossom, Clive||Hiley, Joseph||Ramsden, James|
|Bourne-Arton, A.||Hinchingbrooke, Viscount||Redmayne, Rt. Hon. Martin|
|Box, Donald||Hirst, Geoffrey||Rees, Hugh|
|Boyle, Sir Edward||Holland, Philip||Robinson, Sir Roland (Blackpool, S.)|
|Brewis, John||Hornsby-Smith, Rt. Hon. Patricia||Roots, William|
|Brooman-White, R.||Howard, Hon. G. R. (St. Ives)||Russell, Ronald|
|Browne, Percy (Torrington)||Hutchison, Michael Clark||Scott-Hopkins, James|
|Bullard, Denys||Irvine, Bryant Godman (Rye)||Sharples, Richard|
|Butler, Rt.Hn.R.A.(Saffron Walden)||Jackson, John||Shaw, M.|
|Carr, Compton (Barons Court)||James, David||Smith, Dudley (Br'ntf'rd & Chiswick)|
|Carr, Robert (Mitcham)||Johnson Smith, Geoffrey||Steward, Harold (Stockport, S.)|
|Channon, H. P. G.||Kaberry, Sir Donald||Summers, Sir Spencer (Aylesbury)|
|Chataway, Christopher||Kerans, Cdr. J. S.||Tapsell, Peter|
|Clark, Henry (Antrim, N.)||Kershaw, Anthony||Thomas, Leslie (Canterbury)|
|Clark, William (Nottingham, S.)||Kitson, Timothy||Thomas, Peter (Conway)|
|Cleaver, Leonard||Lilley, F. J. P.||Tiley, Arthur (Bradford, W.)|
|Cordeaux, Lt.-Col. J. K.||Litchfield, Capt. John||Tilney, John (Wavertree)|
|Corfield, F. V.||MacArthur, Ian||Turner, Colin|
|Courtney, Cdr. Anthony||McLaren, Martin||van Straubenzee, W. R.|
|Critchley, Julian||McMaster, Stanley R.||Ward, Dame Irene (Tynemouth)|
|Crosthwaite-Eyre, Col. O. E.||Macpherson, Niall (Dumfries)||Watts, James|
|Cunningham, Knox||Maddan, Martin||Wells, John (Maidstone)|
|Curran, Charles||Markham, Major Sir Frank||Whitelaw, William|
|Currie, G. B. H.||Marten, Neil||Wilson, Geoffrey (Truro)|
|d'Avigdor-Goldsmid, Sir Henry||Mathew, Robert (Honiton)||Wolrige-Gordon, Patrick|
|Donaldson, Cmdr. C. E. M.||Matthews, Gordon (Meriden)||Wood, Rt. Hon. Richard|
|Drayson, G. B.||Mawby, Ray||Woodnutt, Mark|
|Eden, John||Maydon, Lt.Cmdr. S. L. C.||Worsley, Marcus|
|Elliott, R. W.||Mills, Stratton|
|Errington, Sir Eric||Morgan, William||TELLERS FOR THE AYES:|
|Fraser, Ian (Plymouth, Sutton)||Nabarro, Gerald||Mr. Gibson-Watt and|
|Gammans, Lady||Neave, Airey||Mr. John Hill.|
|Gardner, Edward||Noble, Michael|
|TELLERS FOR THE NOES: Mr. Reynolds and Mr.Loughlin.|
§ The CHAIRMAN being of the opinion that the principle of the Clause and any matters arising thereon had been adequately discussed in the course of debate on the Amendments proposed thereto, forthwith put the Question, pursuant to Standing Order No. 45 (Debate on clause standing part), That the Clause stand part of the Bill:—
§ Question agreed to.
§ Clause ordered to stand part of the Bill.
§ Clause 2 ordered to stand part of the Bill.
§ Bill reported, without Amendment; to be read the Third time this day.