IRON AND STEEL INDUSTRY

§ Mr. Iain Macleod (Enfield, West)

I beg to move, at the end of the Question to add: but humbly regret that the Gracious Speech contains proposals for the nationalisation of the iron and steel industry irrelevant to the modernisation of Britain and damaging to the national economy. As soon as it became apparent that the Parliamentary situation would be desperately close, something of a movement was launched to proclaim that it was the duty of the Opposition not to make things too difficult for Her Majesty's Government. Whatever the merits of that proposition, and I for one think that it can be overstated, no one would dispute that on controversial issues, where feelings run deep on both sides of the House, opposition should be clear and clean-cut. We have such an issue before us today.

This debate arises from a sentence in the Gracious Speech. We have also had some elaboration—which I will probe a little further—from the First Secretary. I should like to deal not only with what looks like happening, in so far as we know the Government's plans, but what I think ought to happen. It may be, although I am bound to say that I am not hopeful, that wiser thoughts will prevail, but we have to judge here on the issue before us today and I restate our position now.

To the nationalisation or renationalisation of the iron and steel industry we are 664 utterly opposed. There are no half-measures about our opposition. If we can win tonight, we want to win tonight. If we fail and if, after consultation, such a Bill is produced, then we will try to kill it on Second Reading. If we are defeated, we will do everything we can to improve what would be a thoroughly bad Bill and we will try to cut its throat again on Third Reading. That, I trust, is clear.

I do not propose to say more than a few words on what is called the doctrine of the mandate. I have qouted Disraeli too often, when it suited me, not to remember a phrase he once wrote saying that a majority is always the best repartee—as long as the majority is not fogbound, of course. So it is.

I am not impressed by particular arguments on the mandate relating to particular constituencies. We cannot, in a General Election, "strip the ticket" and take items which we may like or cut out items which we may dislike from the manifesto of the party of our choice. But what seems wrong is this: the Tory Party and the Liberal Party are both wholly opposed to steel nationalisation and it also seems certain that a very large number, indeed, according to the National Opinion Poll, even a majority, of Labour voters do not want this measure. I do not intend to rest my case on the proposition that the people of the country detest the idea of renationalisation, although I am convinced that that is the case. I intend to rest my case on the words in our Amendment which say that such a proposal would be irrelevant and damaging, and I would like to add "out-dated".

Let us see where we are. We have a sentence in the Gracious Speech and we have been told a little more about it by the First Secretary. This succeeds, with the exception of one speech at Middlesbrough on 4th October, a long and calculated period of silence on this issue in the General Election.

§ The Prime Minister (Mr. Harold Wilson)

indicated dissent.

§ Mr. Macleod

The Prime Minister denies this. I have read through every election broadcast of the Labour Party, both on television and on sound, and this issue is not mentioned in a single one of them. The Prime Minister's own election address does not refer to it. Nor does 665 that of the First Secretary. Nor—and this, of course, is not surprising, because he has written more eloquently than anybody else against nationalisation—does that of the President of the Board of Trade. Indeed, as soon as the President of the Board of Trade saw the draft of the Queen's Speech, he fled the country. I understand that at the moment he is in Europe. He is one of the doves which have been sent out from the Ark to say that Noah is sorry it is raining.

I take it that the next step is consultation on the basis of the First Secretary's statement. I am sorry that he is not here, but no doubt there are excellent reasons for that. I hope that he will take part in these debates. I know that the Minister of Power will realise that I mean no disrespect to him by that. He and I have debated many times. It is simply that this is not just a matter of power or of heavy industry, but of profound importance for the whole of the country's economy. I hope that the Minister will take his time with the consultations. There is no hurry about them. There is no need for him to think in terms of this year or next. Some time or never would be a much better guide for him to take.

I want to take up only one point from the contribution offered to us by the First Secretary, and this is on the problems of what we can call the mixed firms. On 4th November, he said: … we do not intend to use the nationalisation of the iron and steel industry to bring the main activities of these companies into public ownership."—[OFFICIAL REPORT, 4th November, 1964; Vol. 701, c. 228.] That is a considerable advance—and I pay tribute to it—on the line taken by the Labour Government in 1948. But the Minister will realise that there are very real problems here—the problems, for example, of Tube Investments, which has a new £32 million steel works at Park Gate and which has gone into the steel business mainly to provide steel of the quality which it requires for itself. It is its own largest customer. Then there are the problems of Dorman Long, which has a vast steel interest, but other interests in bridging, engineering and chemicals.

The only point that I want to press on the Minister at the moment is this. We should be grateful if he could tell us when he speaks—I understand that he is following me in this debate—whether he has a clearer idea about the time-table of legislation 666 which will be put before the House. But, even if he has not, I urge him to clear up the issues of the companies whose future is in doubt by means of a separate statement to the House as soon as that is convenient. That is in everybody's interests, and in the interests of the best planning of the industry.

It is clear from all the evidence we have that the main argument which has been put forward by Her Majesty's Government, certainly in recent months, is based on the judgment of the Restrictive Practices Court on 22nd June this year. I want to analyse that judgment and seek to refute the interpretation put by Her Majesty's Ministers on some aspects of the hearing. I wish to state quite clearly, however, that I agree with the verdict of the Court. I, too, have criticisms of the iron and steel industry. I share the desire of the Leader of the Liberal Party to see more competition in the industry. But no one in his senses can think that the way to ensure more competition is vastly to extend State direction and control.

Before I turn to the judgment of the Restrictive Practices Court, which I want to deal with in a little detail, there are some other points of attack which have been made. I think that each of them can be refuted. We have had the argument put forward by the First Secretary and others of the interlocking directorships. The fact is that if we take the 12 major companies—and, for all we know, these may well be the basis of the Government's plan—there are 124 directors. Of these, 114, or 92 per cent., hold only one steel directorship. Of course, there are family firms and they are some of the most successful and efficient in the industry.

It is normal for son to follow father in steel just as it is in the case of doctors and dockers. The Prime Minister invited the steel masters to explain how any parent whose boy is leaving school and going into steel can have any hope that he will get to the top. That is a fair question, and the simplest way of answering it is to consider who are at the top. The man the Minister will be dealing with most is the President of the British Iron and Steel Federation, Sir Julian Pode. I will tell him how Sir Julian entered the industry. He answered an advertisement in the local newspaper. He is to be succeeded by 667 Mr. Judge, the Chairman of Dorman Long, who, when he was at school, wrote to Dorman Long and asked whether there was any chance of a job going. Therefore, the people who have come from—[An HON. MEMBER: "What schools?"] I happen to know the schools. Sir Julian Pode was educated at H.M.S. "Conway," and Mr. Judge was educated at the Royal Worcester Grammar School.

It is also possible, on questions like the industry's export or import performance, the use it makes of oxygen, which has been referred to by a number of hon. Members opposite, and the percentage of turnover devoted to research, to produce statistics and interpret them, I dare say, in utterly different ways. But all these boil down fundamentally to a view of whether the industry is or is not efficient.

Here I should like to call a witness, not from this country, but from Germany. This is a view which was given in Der Spiegel, which many people know, on 15th April, 1964: The standards of efficiency in the private British steel works hardly deserve Mr. Wilson's criticism that Britain has fallen behind the steel-making countries of the continent. British steel works operate efficiently and profitably. From 1950 to 1962 over £1,400 million was invested in new plant, nearly £200 million more than in West Germany's war damaged steel industry. The British Iron and Steel Research Association has no comparable equivalent in Germany. The final decisive argument against steel nationalisation is that the steel industry is far too complex and too important in the economy for it to be handed over to the State.

§ Mr. E. Shinwell (Easington)

Who was the author?

§ Mr. Macleod

This was in Der Spiegel. Does the right hon. Gentleman know who writes all the leading articles we quote from The Times or anywhere else?

The reason why the steel industry is wholly unsuitable for the form of nationalisation, or any variant of it, which has been practised before is contained in the very complexity of the industry. One can make a case for ownership of an industry producing one product, as with coal, electricity and gas. But the steel industry is made up of a hundred different industries, not one, and it produces a thousand different products, not one. It is for these reasons 668 that the nationalisation of iron and steel is utterly different in kind from the nationalisation Measures which were put through in the years of the Labour Government after the war.

If we contemplate such an upheaval, it is surely right to look at the structure of the industry in other countries. In the Communist world, the problem is easy. But then they can direct materials, labour and everything else. There is no problem there. In the free world, 238 million tons of steel are produced under private auspices and 23 million tons, or rather less than one-tenth, by associations which are, in whole or part, State controlled. In other words, there is something less than 10 per cent, outside the Communist world which a wide variety of countries think appropriate to have under State control. I cannot believe, therefore, that it is right that Her Majesty's Government should be contemplating moving into the public sector the major part of our iron and steel industry. The onus of proof is, surely, inescapably upon them.

We have, it is true, one nationalised large firm—Richard Thomas & Baldwins, warmly praised by the Chancellor of the Exchequer a short time ago—

§ The Prime Minister

And the Leader of the Opposition.

§ Mr. Macleod

—but the task of the Chancellor of the Exchequer in two days' time would be not just tough, but impossible, if the profit records of the great firms in this country compared with those of Richard Thomas & Baldwins.

§ Mr. William Hamilton (Fife, West)

Or Colvilles.

§ Mr. Macleod

No dividend was paid in 1962, none was paid in 1963. The financial year of the company ended on 30th September. So we have plenty of time, if the Secretary of State for Scotland, who is to wind up the debate, wishes to get the figures, for him to give us at least an indication of how this firm has done in the last year. If I may hazard a guess, I think that he will find that the record is little, if any, better than the sad record of the last two years.

I come to the judgment of the Restrictive Practices Court. When the First Secretary was referring to the evidence 669 of Mr. Craig and Mr. Judge and waved a document at my right hon. Friend the Leader of the Opposition, it was not the transcript of the evidence. It was Talking Point No. 18, issued by the Labour Party. Equally, the Prime Minister will remember his speech at Middlesbrough, of which I have the hand-out, giving long extracts from the evidence of Mr. Craig and Mr. Judge.

In passing, the odd thing is that Talking Point No. 18 omits from time to time, no doubt purely for reasons of clarity, quite a number of words from the evidence. The extraordinary thing is that the Middlesbrough hand-out omits exactly the same pieces. It is the same right down to the dots. If the Prime Minister claims that he wrote this speech himself, we had better agree on a joint reference to the Society of Psychical Research.

Talking Point No. 18 is as splendidly tendentious a pamphlet as any I ever wrote and I cannot give it higher praise than that.

§ Mr. Shinwell

Quote from it.

§ Mr. Macleod

I shall not quote from it. I shall quote from the transcript. Not one of the key sentences of the judgment is given in Talking Point No. 18, which gives no hint that there is anything to be said for the case on the other side.

There are four such short sentences and I propose to read them from the transcript in full. Two of them tell in favour of the pricing system as it was and two of them argue against. I make it clear that I accept all four. I quote: … the Registrar does not challenge the assertion that the public has at present an adequate supply of heavy steel products of good quality at fair and reasonable prices. He does not dispute that, whether or not the restriction survives, the prices are likely … to be fair and reasonable overall, under the supervision of the Board. He emphasises, however"— these are the second two sentences— his submission that it is not reasonable, nor advantageous to anyone outside the industry, that any individual producer should not be at liberty, if he should wish to do so, to depart from a common price; though it might well be that the occasions on which he would wish to do so would not be frequent. The Registrar further denies that the abrogation of the restriction would be likely to cause any disadvantage to the public in the manner asserted by the Respondents or at all. 670 This is the position. There are two main propositions. The first is that under this pricing system, whatever its defects, there are the supplies that people need at a decent price. That is the finding and a judgment of the Court. Secondly, these agreements, although they are not legally binding and there are not penalties for breach, are generally operated so that there is no competition in price. That is the finding and the judgment of the Court. There is, of course, competition in cost and quality, but there is no competition, except for a very minor segment of the field, in price.

I add one more passage concerning the evidence of Sir Cyril Musgrave, Chairman of the Board. It states: We accept the evidence of Sir Cyril Musgrave that he, and the Board, believe it to be desirable, and in the long term interests of the users of steel products, that the Board's maximum prices should usually be charged. The House will remember that included on the Board are such distinguished trade union leaders as Sir Lincoln Evans, Sir Harry Douglass and Lord Williamson.

We have reached this position. There are, I understand, 35 restrictive agreements at home. All of them are registered. One on scrap has been successfully defended. One on heavy steel, as we have seen, has been lost, and that relates to no less than 25 per cent, of the iron and steel output of the country. Six more have been abandoned.

Even if it is right to condemn these agreements—and I believe that it is—it must be right, first, to try to understand how they arose. The truth is that on both sides of industry, and also within the very law and practice and structure of government, there are practices that have their origin in past memories and in present fears of recession. That is where these come from.

Historically, we in this country fear deflation just as Germany, for example, fears inflation. One of the most remarkable examples is in the social services. Virtually the whole of that structure was planned on the assumption, which was made with all the evidence available at the time, that there would be 8 per cent, unemployment after the war. From this comes largely the idea of the retirement pension. From it comes 671 in its entirety the earnings rule, which causes so much anxiety to people all over the country. It was fear of recession that led to the building of the social service Beveridge structure that we have now.

If I may take an example of a restrictive practice from labour, I remember very well that when I was Minister of Labour almost the very first problem that came on my plate was the problem of what came to be called the screwy strike, the strike at Cammell Laird. At first sight, that strike about who would do certain jobs and the argument about demarcation seemed absurd, but the more I looked at it, the more I understood something which, perhaps, I had not understood before, that this and, I believe, all restrictive practices had their common origin in fear. People were afraid of unemployment. They were afraid, too, that newer skills and crafts would take away their opportunities.

So I come to consider the problem that is in front of us now. It is much older than nationalisation in 1948 or denationalisation in 1953. For 30 years, as the whole House will remember, in good times and in bad, in war and in peace, there has been public supervision of uncompetitive prices. It is the fear of recession all the time that has led to this. It is certainly true that this system survived the recession of 1961 and 1962 much better than did the basing point system of the European Steel Community. I am quite certain that the Liberal Party has underestimated the failure of the European pricing system to deal with the recent recession.

What happens now? I see that Mr. Paul Chambers of I.C.I., has called for a standstill. Well, I dare say that both the Minister and myself and the Leader of the Liberal Party would be all for a standstill as long as we could define the terms ourselves, as long as we could say at what moment the music stops, but I ask the Minister whether he has thought out—putting for the moment his own plans, if he has any, on one side—the ordinary consequences of that judgment in June of this year, because I think that he will find that he is tilting at windmills.

This is the dilemma. After 30 years the pricing policy of this industry is in 672 complete disarray. There has been a turmoil of arguments going on ever since. I have no doubt that the Minister knows that, and I am sure that the Ministry knows that, too. Of course, one can say, and I dare say there is some truth in it, and I dare say that it will be said, so I may as well say it first, that any change here is a deathbed repentance, but, nevertheless, the impetus has come not from the General Election, as I have shown—because, clearly, it comes far behind that—but from this judgment of the Restrictive Practices Court.

It seems to me that whichever party had won the election a few weeks ago the Minister of Power, be he Tory or be he Labour, would have had to have careful and detailed talks with the Iron and Steel Board and with the industry. [HoN. MEMBERS: "Ah."] It seems to me probable—indeed, almost certain—that these agreements will have to follow the heavy steel agreements into oblivion. I think that they will be abandoned, and in my view it is right.

§ Sir Spencer Summers (Aylesbury)

My right hon. Friend is assuming that all agreements are for the purpose he is describing and similar to one another: he has referred to fears of recession. What I would ask him to remember is that there is another fear which lies behind those agreements—the fear of excess capacity, brought about largely by Government intervention.

§ Mr. Macleod

Yes, but I am sure that my hon. Friend will realise, because I know that he has studied the transcript, too, how much of the emphasis both of the evidence and the judgment was on this single point of recession. I believe, therefore, that, quite irrespective of any proposals—we shall get them in due course—the Government are to put forward, it is right that those agreements should go, except, of course, for the ones like scrap, which have been successfully defended before the Court.

The reason really is this. If the industry is confident that a major recession is unlikely I can see no case for retention, and even if the industry is doubtful—and heaven knows the steel industry has seen many recessions—then I think that it should accept the view of the Restrictive Practices Court that perhaps the fears may be exaggerated.

673 If I am right in this, that because of a judgment that has cancelled an agreement affecting 25 per cent, of the steel products—if I am right in thinking that the others, which are similar to that agreement; and this covers the great bulk, if not all agreements—will go, we shall then have a situation which the Minister would have to consider with the industry and with the Board. He would have to look at the structure of the industry, and, in particular, at the powers of the Board. He would have to consider whether it should have power to fix minimum as well as maximum prices. He would have to consider what its power should be over imports and investment.

I ask the Minister—I agree this is a hypothetical situation, but his information must be better than anyone's in the House—what he will do then. Will he just welcome the new situation and ignore it? Because if his only argument disappears—and I have tried to show him that it is not as good an argument as he thinks—do we then still have a Bill?

Do we then have a year of Parliamentary turmoil, with the wheelchair vote mobilised, and a whole new period of uncertainty in the industry, just so that the Minister can have the pleasure of administering a ritual flogging to the dead horse of uncompetitive prices? Is that what we are to do? Is that what the House is to be asked to do? Because I say quite clearly that if he does, if he ignores this new situation which I am confident is coming, I do not believe the country will lightly forgive him.

In the leading article in The Times this morning—and I do not know who wrote this, either—the Opposition are invited to make their position plain in relation to the judgment of the Restrictive Practices Court—I have done that—and also to say what would happen—and I have given some indication to the Minister—in relation to the structure and the powers of the Iron and Steel Board, but it also sets forth a challenge to the Minister, to the Government, and I quote: It is also high time the Government deployed their case (if they have one which looks beyond party exigencies), for reverting to block nationalisation in the case of a profitable, technologically fluid, and internationally oriented industry. We have today, whatever the Minister will tell us, whatever course all these 674 negotiations may take, a clear-cut issue. This is put in the words of the Economist in the issue of 31st October: No shadow of a rational case has been put forward for the wholesale nationalisation of steel. The division among serious commentators is between those who believe that this nationalisation will do a great deal of harm and those who believe it will do only a little. What an ambition for the House, for Parliament, to set out on—a measure of which it can be said that if we are lucky, and if everything goes well, we may do only a comparatively small amount of harm to one of the vital industries of the country.

I said earlier that the word "outdated" also applied to the Government's proposals. We have had many indications already in the short period of this Parliament. We had the Minister of Transport's statement—and at once somebody rose and asked the question about the Grand Central line, of which he said there were 61 miles of track and 1,500 railwaymen. What a sense of priorities: 61 miles of track, 1,500 railwaymen, and practically no passengers.

It is no use pleading for the last century. The point has been put very clearly in the potted version of the 1964 Labour election manifesto. This is what it said: Let us take charge of our own destiny. Create and energise an atmosphere where both sides of industry can collaborate with the Government in rejecting nineteenth century solutions to twentieth century problems. This is exactly the argument we put before the House. For what is this proposal except the application by small and foolish men of a nineteenth century solution to what is a mid-twentieth century problem?

§ The Minister of Power (Mr. Frederick Lee)

In welcoming back the right hon. Gentleman at least to the fringe of the magic circle from which he and his right hon. Friend the Member for Wolverhampton, South West (Mr. Powell) were excluded, may I say that I was just a little alarmed when he began to show his old weakness for trying to forecast the future; a weakness which has revealed itself on many occasions. We all remember the speech in which he tipped Leicester City to win the cup at Wembley, and the Conservatives to win the General Election. His supporters did not get 675 much out of that double. Manchester United won.

We remember, too, the more historic occasion during the "October revolution" of 1963 when he assumed that if the situation is going to jell quickly the choice must be Butler. On a happier note, he also reminded us on one occasion that the motto of the Clan MacLeod was "hold fast", a motto which the steel owners immediately took to their bosoms.

Today, the right hon. Gentleman gave us a number of variations on the same theme, but I think that he rather forgot one thing. He forgot that he was moving an Amendment which says that the nationalisation of the iron and steel industry is irrelevant to the modernisation of Britain and damaging to the national economy. The right hon. Gentleman did not address two minutes of his speech to that Amendment. We had a turgid defence of the position of the steel owners, which was merely a paraphrase of their own propaganda slogans. To us it did not sound in the least like the progressive utterances of the image of Tory radicalism. Indeed, it sounded much more like something from Sir Alec's "Quoodle", than anything from a Tory radical. However, we are sure that in his belated support of his Leader he will display all the enthusiasm of the convert.

The right hon. Gentleman asked one or two questions which I should like to answer. He asked whether I would clear up the position of those firms which have interests outside steel. I understand the point very well. I am not today going beyond the statement made by my right hon. Friend the First Secretary, but I undertake that as soon as it is possible to clear up this point I shall do so, either in a statement in the House, or elsewhere.

We heard from the right hon. Gentleman about the opinions of Der Spiegel against nationalisation. I do not know whether he has looked back at the opinion of the Spectator in 1958, when it held an inquiry into steel and decided that there was a case for a large percentage of the industry to be nationalised.

§ Mr. Lee

I shall not give way.

§ Mr. Gilmour

On a point of order. Mr. Speaker, is it in order for the right hon. Gentleman so flagrantly to mislead the House as to describe 10 per cent. of the industry as a large percentage?

§ Mr. Speaker

I have two observations to make. First, that does not raise a point of order. Secondly, my predecessors in terms deplored the practice that when the hon. Member who has the Floor will not give way an hon. Member who wishes to intervene uses the device of raising a point of order.

§ Mr. Lee

The right hon. Gentleman —[HON. MEMBERS: "Withdraw."] What have I to withdraw? The right hon. Gentleman agreed that the whole pricing structure of the steel industry was in disarray. That has come a little late, has it not? Did we hear a word about that prior to the General Election? The right hon. Gentleman said today that whoever became Minister would have had to do something about the disarray within the steel industry. Why did not the last Government begin to do something about it? The right hon. Gentleman can claim that he was not in the last Government. I do not wish today to expound on the reasons for that, but the disarray of which he spoke did not begin a year ago. It began with the passing of the 1953 Act, and the situation has deteriorated in every year since.

It is not, therefore, true, as the right hon. Gentleman tried to suggest, that the time had come when even the Tories would have to agree to look at the results of their 1953 Act. The fact is that that Act has always been an anomaly fastened around the neck of the steel industry. When the right hon. Gentleman talks about the disarray now to be seen in the steel industry, he is, in fact, indicting the 1953 Act which brought it about.

§ Mr. Macleod

With respect to the Minister, it is not the 1953 Act which has brought this about. It has been brought about by the setting up of the Restrictive Practices Court in 1956, and the judgment of that Court in June of this year. Will the right hon. Gentleman address himself to this point: that judgment, in effect, abolished the pricing agreements for 25 per cent, of the industry. The Minister will not deny that. 677 Does not it follow that the other consequences which I indicated flow from the decision taken by the Court in June of this year?

§ Mr. Lee

I really am surprised at the right hon. Gentleman. Let us examine what happened. In 1953, the Tory Government passed the Act that he and I are discussing. That Measure produced the Iron and Steel Board and gave it certain powers. Later, in 1956, they brought into being the Restrictive Practices Court, and the very powers they had conferred on the Iron and Steel Board have now been condemned as a result of the 1956 legislation which brought the Restrictive Practices Court into existence.

There could not be a clearer case of the same Government passing two Acts, one of which completely cancels the provisions of the other. I therefore again assert that the whole position into which the steel industry has passed is the result, first, of the 1953 Act, and then the action of the same Government in bringing the Restrictive Practices Court into being in 1956.

As I have said, the right hon. Gentleman failed to address himself at all to his own Amendment, and I ask him now: why is it that today we are discussing steel instead of coal, for example? [HON. MEMBERS: "Why?"] Yes—why? Why is it that there has never been any suggestion of denationalising coal or the railways? Why is it only steel?

The right hon. Gentleman quoted Disraeli, but organised hypocrisy is the background to this debate; in other words, the only thing that the Tories are concerned about is that in 1953 they denationalised the dividends of the steel industry. The 1953 Act stultified any rational reorganisation of the industry. That, in turn, retarded the economic expansion of vital parts of our economy, and has now brought the condemnation of the Restrictive Practices Court of price-fixing arrangements that are against the public interest.

The right hon. Gentleman tried to talk his way out of this—[HON. MEMBERS: "Oh."] All right, I will quote extracts from the document he has, and challenge him to deny that these are extracts from what was said in the 678 court. [HON. MEMBERS: "Who wrote it?"] Does the right hon. Gentleman deny that questions such as the following were put to Mr. Craig? Question: For the last 30 years or so the steel industry has always had price regulation of one form or another, which has eliminated competition between steel makers? Does he deny that Mr. Craig replied, "Yes"?

Does he deny this? Question: From the customers' point of view, the position has been that, no matter with what British steelmaker he has been dealing with for a given order of steel, he would be quoted the same price and upon the same terms'? Mr. Craig: Yes. Does the right hon. Gentleman deny this? Question: And the industry has set its face against any individual variation from those prices or terms by any steelmaker? Mr. Craig: Yes. Later, the right hon. Gentleman quoted Mr. Judge, but does he deny that Mr. Judge was asked: In 1953, as a director of the Dorman Long group of companies, did you welcome denationalisation? Mr. Judge: Yes. Question: Why? Mr. Judge: Because I felt that under denationalisation there would be a return to greater private enterprise and initiative within the company. Question: But is not competition in price one of the fundamental characteristics of private enterprise? Mr. Judge: Yes, but not as applied to the steel industry in my view. I do not accept it as an essentially good thing for the steel industry. Question: It is right, is it not, that as soon as steel was denationalised in 1953, the steel industry entered into … price fixing agreements? Mr. Judge: I should imagine so, yes. Question: So that … the steel industry did not grasp the freedom that it was offered upon denationalisation? Mr. Judge: … as far as price is concerned, no, it did not grasp it. No matter how the right hon. Gentleman tries to squirm round the evidence given in that Court, those are the facts as recorded in the Court.

The right hon. Gentleman began by using, though not for long, the old argument about mandates, and so on. I do not propose to go much further than he did but, as he mentioned it, I will 679 comment on the same subject. In the General Election there was a national swing to Labour of 3.7 per cent In case the House is interested in my own credentials, the swing in Newton was 5.3 per cent., and I represent the steel workers in the Lancashire Steel Corporation.

I regret to have to record for the benefit of the House that the swing to Labour in Enfield, West was 5.1 per cent., and in Flint, West it was 3.2 per cent. In Flint, East, where my hon. Friend the Under-Secretary of State for the Colonies was defending a majority of 75, and was attacked by one of the most powerful of the steel corporations, there was a swing of 4.1 per cent, to the Labour Party. The average swing in 30 steel constituencies was 4.4 per cent., and only four of those fell below the regional swing. There were three Labour gains in the steel constituencies—Cleveland, Rutherglen and The Hartlepools. On constitution, therefore, perhaps one can leave it at that.

In booklets published during the summer by the British Iron and Steel Federation—"Steel: the Facts" and "Steel: Leave Well Alone"—it was pointed out that for the past 30 years public intervention in steel has taken the form of public supervision exercised over privately-owned companies, a unique attempt to get the benefits both of private dynamism and of central guidance. That is the Federation's comment. The Government's case is that the attempt may have been unique but that it has not been successful. This is no accident. It is, we believe, an inevitable result of a situation in which the industry lacks both the stimulus of full competition and the responsibility of public ownership.

The Leader of the Opposition has said that by nationalisation we will destroy the competitiveness of the steel industry —[Interruption.] The right hon. Gentleman and I are agreed; there is no competitiveness to destroy. The Leader of the Opposition probably got the matches in the wrong match box on this occasion. What are the facts? Before the Restrictive Practices Court it was established that the industry operated agreements under which it charged uniform prices, which were the maximum prices fixed by the Iron and Steel Board. In short, there 680 is no competition in prices. Whatever else we may disagree about, we can agree that there is no competition in prices at all. [HON. MEMBERS: "What about exports?"] I will come to exports.

Moreover, the industry failed to satisfy the Court that these restrictive arrangements were necessary in the national interest. In his evidence to the Court, Mr. Lenaghan, the Managing Director of the Fairfield Shipbuilding and Engineering Company Ltd., made it very clear that inflexibility in steel prices was a handicap to the efforts of the shipbuilding industry to secure export orders. Someone asked about exports—I am now trying to oblige. Therefore, whatever might be the case for regulating actual prices charged, I am quite sure that it ought not to be left in the hands of those whose first responsibility is to their shareholders rather than to the nation as a whole.

There is, in fact, a fundamental inconsistency between the Iron and Steel Act, 1953, and the Restrictive Trade Practices Act, 1956. This is the argument that the right hon. Gentleman and I have been deploying. But let us look at the muddle into which the previous Government got themselves. I shall quote from a journal which is not exactly a supporter of the Labour movement. The muddle into which they got themselves was put very well, I thought, in the October issue of Steel Review, the monthly publication of the British Iron and Steel Federation. I quote its words: In the mid-fifties public policy became schizophrenic. On the one hand, the Government continued consistently to acquiesce in an Iron and Steel Board pricing policy which was non-competitive in concept; but, on the other hand, by making steel pricing subject to the Restrictive Practices Court in the 1956 Act it backed, too, an implicit assumption that steel pricing should be competitive … the decision of the Restrictive Practices Court in the Heavy Steel Case is just this. It has exposed the basic conflict of logic underlying the two strands of recent public policy bearing on the way in which the steel industry should be made to conform to the public interest, whether by the disciplines of a supervisory machinery associated with non-competitive pricing, on the one hand, or by the disciplines of a competitive market, on the other. Such confusion cannot long continue to prevail. I agree with the right hon. Gentleman in this: that confusion cannot now be permitted to prevail.

Let us look at capacity. We welcome the fact that this year the steel industry 681 has now sufficient capacity to meet a record level of demand. But we do not forget that until two or three years ago, owing to the reluctance of the industry to expand, capacity was insufficient to meet the demands imposed even by the stop-go Tory economy. As a result, between 1953 and I960 inclusive we had to make good the inadequacy of our capacity to produce steel by imports at a total cost to the economy of £560 million.

Over the next few years the industry should be able, without great difficulty, to provide the steel-making capacity needed to sustain a growth of the economy generally at a rate of about 4 per cent, per year. But the Government are concerned not only with five years ahead, but with providing the pace needed for continuing rapid growth. We shall soon have to start planning for the provision of large new integrated steel works. A major new works on a green field site is likely to cost now at least £150 million. It is more than doubtful if the industry under private ownership will either be able to provide finance on this scale or willing to put up the money needed to ensure that there should not be just a bare minimum of capacity, but sufficient to cover contingencies so that steel in no way acts as a bottleneck to the expansion of the economy. It is significant that since the passage of the Iron and Steel Act, 1953, well over £400 million of public money has been put into the industry either by the Ministry of Power or by the Iron and Steel Holding and Realisation Agency.

The right hon. Gentleman talked about service and quality. A great deal has been made of the claim that there is effective competition in this field. I do not wish to denigrate the efforts of any part of the steel industry. There is certainly no doubt that the best British steel firms observe the highest standards in both these respects. But again, consumers appear to have all sorts of doubts and to be quite dissatisfied with some of the results. Sir William Lithgow, Chairman of Lithgow Ltd., writing in the Financial Times on 18th November, 1963, said: The most progressive steel suppliers to the shipbuilding industry have turned their attention to service and have appreciated the economic wastage stemming from their industries' former policy of production without regard to user requirements. Nevertheless, it is still virtually impossible to buy in Britain 682 ship's plate sheared with its edges straight … this means that every plate has to be re-marked and re-cut before it can be welded or placed in automatic machines. Frequently a steel order has to be delivered to the yard within a month of the ship-builder receiving his contract; some newer mills have not yet been designed to meet the demands so imposed. The shipbuilder cannot afford to pay for overweight sections, nor can the shipowner afford to cart this excess weight around in lieu of cargo. This is not from a person with our inclinations. It is from a practical man within the industry, and I ask that hon. Members opposite should not believe that these things are put up merely for the sake of carping against a great industry.

It is also significant that although capacity is now adequate imports of steel are continuing on a substantial scale. I know that there are some special reasons for this, but these by no means account for the high level of imports. In particular, they certainly do not account for the fact that imports of sheet steel are still costing the country about £24 million a year, despite the fact that our very fine new strip mills financed by public money are in full operation.

The motor industry is the largest single importer of sheets and the Iron and Steel Board has discussed the position with all the principal importers. In no case was it claimed that imported sheet was cheaper than British. One large producer insisted that the imported material was more consistently of high quality than that from British mills. Several motor manufacturers said that they were not importing on quality grounds, but to maintain alternative sources of supply. They have been treated pretty roughly during the days of shortage by some of the steel companies. They are not going to take that kind of chance again. These are many of the points which we feel justify a drastic change within the steel industry.

An hon. Member asked me about exports and I shall try to do what I can to help him. The point has been made that steel exports this year will reach a record level of 4½ million ingot tons. This is largely because the existence of some surplus capacity has led to a generally higher level of trade among all the major steel producing countries. I was shocked, when I went to my present Department, to learn that the Iron and 683 Steel Board expects no increase at all in steel exports between 1964 and 1970, and that the British Iron and Steel Federation looks forward to a slight decrease.

Is that a position which the House can view with equanimity? We are already committed to the concept of increasing modernisation and exports. We are asking whether we can hope to maintain good living standards under conditions of that type. The industry's attitude is exemplified by its demands for a world steel conference which would not, like the conference suggested by the Liberal Party, be concerned with reducing tariffs and increasing trade, but with regulating international trade to provide a cosy home market at the expense of export opportunities.

May I turn to the question of efficiency within the industry. The Opposition—as the right hon. Gentleman did today—claim that the iron and steel industry operates at a high level of efficiency. But the Iron and Steel Board has told me that the indications are that the level of productivity in the British steel industry is probably only about half that of the United States, that it has recently been passed by Japan and that it appears to be lower than in the steel industries of the Six. Surely that is a state of affairs which none of us can afford to contemplate with equanimity.

Moreover, over the past 10 years British steel prices have increased by one-third. By contrast, in Germany and Holland prices have gone up by only one-sixth. [HoN. MEMBERS: "Are they nationalised?"] In France they have risen by a little over one-twentieth and in Italy they have actually fallen.

§ Mr. Nigel Birch (Flint, West)

Would the right hon. Gentleman tell us by how much the price of coal has risen?

§ Mr. Lee

I am merely recording the fact that, contrary to the argument which has been advanced by hon. Members opposite, the British steel industry is not as efficient as that of most of our competitors and our prices have risen much more rapidly than have theirs.

§ Mr. William Shepherd (Cheadle)

rose—

§ Mr. Deputy-Speaker (Dr. Horace King)

Order. If the right hon. Gentleman does not give way, the hon. Member for Cheadle (Mr. Shepherd) must resume his seat.

§ Mr. Lee

May I turn to the question of research. The criticisms which we made in the past of a lack of expenditure on research were fully confirmed by the special report which the Iron and Steel Board made on research in 1963. Though, like the Government, the Board recognised that the industry had many achievements, it pointed out that a substantial increase was called for in the research effort of all branches of industry; that a considerable increase was required in the resources devoted to long-range research involving radical changes in techniques; that the provision for large-scale research work should be increased; and that arrangements should be made more frequently than in the past for such large-scale work to be financed co-operatively.

I was glad to learn, on taking office, that there has been some improvement since the Board's criticisms in its survey. Research expenditure appears to have increased quite appreciably in the industry as a whole; four major companies are planning substantial additional facilities for laboratory research; and a new iron-making laboratory is to be constructed for the British Iron and Steel Research Association. But the Government know of no plans for increasing the resources devoted to long-range research or for the provision of adequate facilities for largescale plant work within the industry. Surely this is the key to applying the results of research quickly and effectively.

Hon. Members opposite ask me what nationalisation has to do with this. I have concentrated so far on examining the claims of hon. Members opposite. My examination has shown that many of the claims which they make for the privately-owned industry are wildly exaggerated. More important from a national point of view, my examination has shown that there are many serious shortcomings in the industry as it is at present organised. These call for strong and for drastic action.

But the Government base their case for nationalisation not only on the shortcomings of the industry, but also on two 685 positive arguments. First, the iron and steel industry, in terms both of size and of the extent to which other industries rely on its products, is one of our great basic industries. It employs over 300,000 men and women—more than electricity or gas supply. The value of its sales is greater than the value of the sales of the coal and the gas industries combined. Capital expenditure in 1961 totalled £225 million. With the completion of the expansion programme launched in the mid-1950s, capital expenditure has fallen to £60–70 million a year; but even this is only slightly below the regular rate of capital expenditure in the coal and gas industry.

On any reckoning the iron and steel industry plays a most formidable rôle in the economy. Its efficiency is vital to the efficiency of those other major industries which use its products—motor manufacture, ship building, engineering, to quote but a few. In the Government's view this industry is one of the "commanding heights" of the economy which must be brought into public ownership.

Secondly, quite apart from the impossible position of the Iron and Steel Board, which I have already discussed, big changes in the structure of the industry are needed to make modernisation and rationalisation possible. There is, for example, the situation at Scunthorpe, where there are three major works in close proximity but under separate ownership. There is an admitted need for the rationalisation of plate production in the North-East. There is a need to consider as a whole the facilities for the import of iron ore into South Wales. There is a problem of surplus rail-making capacity.

The industry is, to its credit, trying to sort out some of these problems. We understand, for instance, that discussions are going on between Dorman Long and Consett which, if successful, would result in a big step towards the rationalisation of plate production in the North-East. But an industry consisting of about a dozen large groups and a large number of small companies, even though prodded and guided by the Iron and Steel Board, simply cannot achieve the swift and far-reaching rationalisation which the national situation demands.

I know that alternatives have been suggested to nationalisation. One possibility which has been mooted would be 686 to abolish the arrangements for public supervision and rely on competition to bring about the necessary reforms. The right hon. Gentleman certainly did not advocate that. The Liberal Party has not advocated it, nor does the industry advocate it. The plain facts are that the steel industry is too important to the whole of our economy to be dealt with in that way. And the existence of a strong central federation, which is needed to provide essential common services for the whole industry, combined with the well-known distaste of the steel makers for full competition make this a quite unrealistic policy.

The steel industry has an inherent tendency towards monopoly practices and in almost every major producing country—and I stress "every major producing country "—it is subject to special regulations. Even in the United States, with its strong anti-trust laws, the industry manages to practise effective price leadership. Both the late President Kennedy, as the House knows well, and as recently as last week President Johnson, have had to make it clear that prices cannot be decided by the industry alone.

The other alternative which has been discussed would be a strengthening of the Iron and Steel Board. It has been suggested that the Board should have powers to try to impose price competition and schemes of rationalisation. Such powers would certainly put the Board in a stronger position than it is now, but price competition seems almost impossible to impose on a pretty well closely knit steel industry. In France and Germany the steel industries have on the whole been able to maintain common domestic prices despite the E.C.S.C. price rules. There is no guarantee that the introduction of these rules, and the large and complicated machinery of supervision which such rules entail, would lead to any worth-while degree of price competition in a market as small and as compact as that of the United Kingdom.

If we look at the pre-war experience of both the Coal and Electricity Commissions, we find that when those commissions were set up in those days they had the greatest difficulty in functioning at all, and ultimately they were replaced by nationalisation. My feeling is that even if, by a strengthened Iron and Steel Board, we were to try to achieve 687 that kind of thing, the process would be far too slow and the solution of nationalisation, as in the case of coal and gas, would ultimately have to be faced.

The Liberal Party has suggested that a strengthened Iron and Steel Board should be combined with a majority shareholding in four major companies, but that would not be anything like sufficient to secure the immediate and drastic changes which the national situation demands and would not bring about effective competition which could be achieved.

The directors of the partly-publicly-owned companies would have an awkward double responsibility—to the Government to act in the public interest, and to their private shareholders to maximise profits. We recognise that there are some industries in which Government ownership of some of the shares may be justified as being reasonable, but the role of the British steel industry in the economy calls for a far more all-embracing policy than that kind of thing.

The Government want the scheme for nationalising the main part of the iron and steel industry to be the best that can be worked out. We are already studying the ideas formed when we were in opposition, in the light of the fuller information now available to us. I wish to reiterate the assurance given by the First Secretary of State on Wednesday, 4th November; that within the broad framework of our policy the Government would welcome discussions with the Iron and Steel Board, the Iron and Steel Holding and Realisation Agency, the representative organisations of the industry, and the trade unions and other interested organisations, including those representative of consumers of steel.

Nevertheless, the Government are convinced that only public ownership of the main part of the industry will make it possible to remedy the industry's shortcomings with the speed and determination which the national situation demands and to ensure that the industry as a whole plays its full part in plans for economic recovery and expansion.

Despite what has been said by hon. Gentlemen opposite in their propaganda, nationalisation has shown that under good leadership publicly-owned industries can fight vigorously for sales in difficult markets, can carry through major revolutions 688 in technology and can bring about big improvements in efficiency and productivity. The public sector of the iron and steel industry will bring the same drive to its problems and match the achievement of our most successful public industries.

During the past few years we have been seeing competitive private enterprise as such becoming more and more a figment of Tory mythology. [HoN. MEMBERS: "Oh."] We have seen the actions of the take-over bidders, and so on. I recall that some years ago the party opposite issued a list of 500 firms which, it was said, a Labour Government would wish to take over. Of those 500 firms, 112 have been gobbled up by private monopoly. They had a total capital in the region of £900 million.

This has been the tendency in recent years. It is worth noting that among the firms listed by the party opposite were three in Enfield. They have all been gobbled up and I would like to know why we cannot hear the voice of Enfield demanding independence for the industries there, instead of seeing them gobbled up by private monopolies.

We must face the problem of having great economic power blocs, such as the the private monopoly in steel, being a threat to the progress of our democracy. No Government, no House of Commons is powerful enough to control the actions of such huge economic power blocs. In the steel industry we have arrived at the time when either private monopoly continues to grow or we take the step proposed by the Government. Indeed, it is worth remarking, when speaking of power, that in the last two General Elections those giants spent far and away more on peddling their wares than the three political parties combined could afford to spend. They have intruded into our political arguments to the point where political argument between the parties is made difficult.

The Tories should not be too convinced, when discussing the amount of money spent on elections, and so on, that this will always be the case, for I believe that if hon. Members opposite were to campaign now to try to get competition into the industry another £1 million would be spent trying to stop them doing it. So hon. Gentlemen opposite should be under no illusions.

689 I put it to the House that it is not enough merely to say, as the Liberals say, "Surely we can maintain some type of competition within the steel industry". We have said—and I hope that the Liberals will study our words carefully—that we are not talking about the whole of the industry. If the Liberals want to do what they say they wish to do, and oppose monopolies, they certainly cannot go into the Tory Lobby tonight, for that would be to perpetuate the worst possible type of monopoly conceivable—the private monopoly, irresponsible to Parliament and Government.

I suggest to the House and the country that to speak as the Tories do and to say that this is merely dogma from the Labour movement is nonsense. What we are proposing will result in a further step in the progress of our democracy. Without such power we have an emasculated democracy, within which the people cannot determine the kind of society in which they wish to live. We aim to retain for the people the power to say that something should be done which will enable them to control great private monopolies of the kind I have described.

§ Mr. Patrick McNair-Wilson (Lewisham, West)

It is with great humility that I rise so early in my political career to address the House, although the subject under discussion is one about which I have a certain amount of first-hand knowledge, having only recently been connected with the British steel industry.

I have been greatly encouraged in this enterprise by noting, since I was elected by my friends in West Lewisham, the generosity shown to new hon. Members making their maiden speeches, and I hope that when I have completed my remarks it will not be considered that I have strained too heavily on that generosity. I should like also to pay a warm tribute to my predecessor and friend, Mr. Henry Price, who is a much loved and respected person in London and particularly in West Lewisham.

It is sad that the British steel industry has for so many years been a victim of party political warfare because, although it has its problems, I do not believe that these have been in any way helped towards solution by it becoming a sort of political football. It is difficult to talk 690 about the steel industry without some emotion and, because of this, one can often get the arguments about what should be done somewhat blurred.

I should have thought that if we looked back over the history of nationalisation and nationalisation attempts for the steel industry, we should be struck by the fact that in 1947 the then Labour Government made a serious, and I believe rightly so, series of attempts at compromise within their own ranks on the issue of nationalisation since this is not something which can be rushed at quickly. I should have thought that in examining what one is to do with the industry one must, at the start, ask oneself what on this side of the House is our real opposition to it being made a State monopoly.

It is the Government who are really in the dock about nationalisation because it must be proved that the industry will be better as a State monopoly than as a private enterprise organisation. The first criterion I should take if I were going to examine it in this way is that the British steel industry at present is, despite what others may say, efficient and that it is not suited—and I will examine this in more detail shortly—to an over-centralised type of control and that its continued efficiency is absolutely essential to the well being of the country's economy.

If we look at the efficiency of the industry as it stands at the moment, in spite of what has been said by critics, we find that this year its production is running at a record level of 26 million tons. This is 3½ million tons up on the previous year, and all the pointers show that next year it will be higher still.

There is tremendous production for export. Our exports are double what they were in 1946, and our exports to Europe have gone up by 45 per cent, in the last two years. If our steel is so expensive as critics suggest, why is this so? We have heard much about price rings within the industry, but of course those price fixings apply only to home prices. In the export market British steel compares with any in the world and it is cheaper than much of the steel produced in Europe.

In talking of steel exports one is apt to think of large tonnages of steel, but I am not so sure that that is what I want 691 to see. We are a workshop nation and surely we should be turning the steel we make into other things and sending them abroad. By that yardstick we find that 57 per cent, of all British exports are of steel and steel-made goods—motor cars, aeroplanes and so on. If we look at the export record of a nationalised industry, we find that in the British coal industry in the period 1938 to 1963 exports fell by 28 million tons, whereas steel exports in the same period rose by 100 per cent.

I now mention a problem with which the industry has suddenly been faced as a result of the 15 per cent. surcharge on imports. The steel industry now finds itself in the situation in which at very short notice we may be required to produce another 1 million tons which, from a Government committed to planning, raises enormous problems since it might well mean that we shall also have to produce additional iron capacity to make steel and to blow in new blast furnaces. For a short-term programme that is hardly an economic thing to do.

I have mentioned efficiency and I now take the second criterion, centralised control. As my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) pointed out, the British steel industry is enormously complex. It is made up of nearly 300 different companies and often the finished product of one company is the raw material of another. These 262 companies are tremendously interlocked because they depend on each other to work satisfactorily. In deciding how nationalization—State control or whatever we call it—is to be implemented, the definition problem of knowing where to draw the line in this is almost insurmountable.

This was found in 1951 when the industry was nationalised for a brief period. The then Government found themselves owning hotels, umbrella factories and all sorts of things which they had taken over as a result of making a clean sweep. I understand that the present Government do not intend to do that again, but that they intend to take over the 12 big producers responsible for most of the crude steel production. There they will run into another problem. If they take over the 12 main producers what are they to do about the rest of the industry? How can they keep the re-rollers 692 and the light end of the industry under control?

The British steel industry is a peculiar animal which already has a kind of control that would not be acceptable in other public enterprise systems. Is the Board, therefore, to have new powers, or are the Government to use the powers given to them by taking over the 12 key companies to squash the re-roller and light end of the industry by not supplying them with steel as required? What is euphemistically described as rationalisation in this industry could be very serious. Take, for instance, what the Minister said about the North-East Coast and the Scunthorpe area. Does it mean that Consett iron works are likely to be closed down in this rationalising of the North-East Coast? I am not sure that it does mean that, but, particularly in certain areas where population living around a steel works is not only dependent for employment on the steel company but perhaps also for town gas, chemicals and so on, rationalisation would have very serious effects on the workers in the industry if it were not carried out with great sympathy.

On the question of prices, I listened with great interest to my right hon. Friend's comments on the present structure because, of course, the apparent monopoly practices regarding prices have meant great criticism for the industry in the past, but this has referred to home-priced steel only. In the export field our prices are fully competitive. I do not understand how replacing the existing system by a State monopoly on prices can improve the situation. While I thoroughly support what my right hon. Friend said about scrapping the present arrangements, we must remember that the steel industry supplies to the manufacturing industries, and surely a stable price level for the motor manufacturer and the aircraft manufacturer is something which should be encouraged. We do not want sharp fluctuations throughout the pricing range.

Finally, my criterion of efficiency of the industry is in relation to Britain's economy. I believe that at the moment the industry is well led. Surely the yardstick in which we must be interested when looking at the management of an industry is, does it work efficiently? I hope I have shown that it does. In respect 693 of what my right hon. Friend said about father and son in the industry, steel is a peculiar creature, rather like coal or fishing—about which I known nothing—or the medical profession or the law. The father is followed by the son. Charges of nepotism which could perhaps be brought at the boardroom level could also be made al other levels throughout a steel works.

On the charge that leaders in the industry have to go to a particular school or come from a particular environment, one finds in one North-East Coast company—and there are other examples—that of 11 directors the chairman went to the local State grammar school and three of the others entered the firm as apprentices. There is a cross-section in the industry operating it. In both management and operative training schemes the British steel industry is second to no other industry in the country. Its qualifield manpower is increasing at the rate of about 10 per cent, a year.

I believe that the steel industry is doing excellently in Britain for Britain. It is possible to produce percentage comparisons between ourselves and other countries to show that we lag behind, but percentage comparisons, unless very carefully studied, and unless taking and comparing like with like, are often fallacious, because it can be shown that one ton of steel has been made this year, that two tons are made next year, and that therefore there has been a 100 per cent, increase in production.

The British steel industry is working at about 90 per cent, capacity at the moment. It has produced enough steel for an expanding Britain. I believe that it has much to be proud of. I am sure that nobody on either side of the House wants to see the industry reduced to a sort of cawing rookery of committees and sub-committees. Too many people are involved in the industry, and too many outside are dependent upon it. I urge the Government not to take hasty action. The livelihoods of hundreds and thousands of people are at stake, and I trust that we will not let them down.

§ Mr. Eric G. Varley (Chesterfield)

I am indeed grateful for the opportunity I have been given of making my maiden speech today, and I ask for the 694 indulgence of the House in doing so. I represent the constituency of Chesterfield, which many hon. Members will know for its crooked church spire. We in Chesterfield are proud of many other things. One of them is our claim to be the centre of industrial England. Whilst we may be out a few miles, geographically speaking, there is a vast amount of industry of all kinds in Chesterfield. We have coal and iron, on which I intend to speak later, and all types of engineering, both heavy and light. We have chemicals and surgical dressings. We are extremely proud of the industrial diversification that there is in Chesterfield.

Hon. Members will remember that only a few years ago the decision was taken by the House to disperse the Postmaster-General's Accountant-General's Department. This, too, went to Chesterfield as part of the decision to disperse the Civil Service from London. The Chesterfield Municipal Borough, the Urban District of Staveley and the Parish of Brimington, which forms part of my constituency, are truly a microcosm of England.

It would be appropriate on this occasion for me to mention my predecessor, Sir George Benson. Sir George served the House for over 30 years. He first represented Chesterfield in 1923. I know that he was greatly respected on both sides of the House for his work in the Public Accounts Committee and as Chairman of the Library Committee. His views and studies in connection with penal reform, I know, are admired and respected by everybody. In fact, Sir George set a very high standard.

I am fortunate in having an opportunity to speak in this debate, which is extremely controversial and contentious. Although I have no desire to break with convention and be extremely controversial—no doubt I shall get an opportunity of being controversial on a future occasion—I want to draw the attention of the House to the anxieties of the people working in iron and steel in my constituency. Some hon. Members will be aware that Stewarts & Lloyds have two works in Chesterfield. One is called the Sheepbridge Company; the other is called Stanton and Staveley. I know the Staveley part of Stanton and Staveley particularly well, because I 695 began an engineering apprenticeship there in 1947. Both the Sheepbridge and the Staveley works were nationalised round about the 1950 period. They were practically two of the last ones to be denationalised in 1960. Incidentally, the Staveley works was sold back from the Government to Stewarts & Lloyds for £8½ million. The Government had paid about £10½ million for it, so that there was a £2 million loss. I know that this has already received the attention of the House.

I mention this recent history, because it was when these two companies were denationalised that the troubles began to emerge in my constituency. In view of the facts, there is little wonder at the concern which emerged at that time. In 1960 the two works I have named employed approximately 5,800. There has been about a 20 per cent, reduction, so that today they employ only just over 4,000. In 1960 there were six blast furnaces in the constituency. Today, there are only two. Two of the furnaces—those at Sheepbridge—were regarded as being the most modern in the country. In fact, they were only 10 years old. They had what many people considered to be adequate capacity. As soon as they were bought by Stewarts & Lloyds, they were immediately closed and 500 men were declared redundant practically overnight. During the economic troubles of 1962, which all hon. Members will remember, the general position in Chesterfield was extremely distressing. There was short-time working, and there were redundancies.

I know that hon. Members will appreciate that when I speak of these grave anxieties which were there in the constituency I am not exaggerating. Many people believe that those who left the firms at that time are dispersed for good and will never return to the industry. Men of great skill—technicians with great expertise—felt the wind of redundancy and, as a result, left the industry. I am sure that some of them are lost to steel for good.

In July, 1963, the position was so acute that my predecessor and my hon. Friend the Member for Derbyshire, North-East (Mr. Swain) led a delegation to Stewarts & Lloyds here in London and explained the seriousness of the situation. At that time they extracted—I 696 think that "extracted" is the right word —recognition of the social consequences of this upheaval in the iron trade at Chesterfield. I do not think that any intelligent person would suggest that we had to keep open plants purely to keep men at work. If that were to be the case, it would be a negation of any economic principles. There were up-to-date capacity and up-to-date plant in Chesterfield at that time which were deliberately closed to serve the interests of boardroom decisions. Any person charged with taking a decision in an industrial concern such as steel has the duty of recognising what the social costs and the social benefits are. It is generally accepted that, if the iron and steel industry is to become more efficient, it will be on the basis of rationalisation and specialisation, but I think that that can be achieved without the troubles that we experienced in Chesterfield after 1960.

There is evidence at present that large companies which have works in different parts of the country do not allocate their orders in any rational way. For instance, there is evidence that when companies tackle the fundamental issue of securing greater efficiency and greater rationalisation they reach the decisions without enough consultation. There may well be consultation at boardroom level, but too often workers are faced with a fait accompli, and at that time it is sometimes found, as was said in the House on Friday, that restrictive practices which I do not think are to the best interests of the industry are set up.

This debate has generated a lot of heat, and by 10 o'clock tonight it will have generated much more heat. No matter what decision is taken tonight and no matter what decisions are taken in this Parliament, iron and steel will be facing tremendous problems. They will be facing changes in techniques and changes in structure. I am saying the obvious but I think that these will have profound effects on the ordinary man. I know from first-hand experience, after living in Chesterfield all my life, of the anxieties felt during the period of which I have spoken.

There will be changes in iron and steel but we have to start from the standpoint of seeing how far we can have the consultations and discussions which are absolutely necessary and seeing how far we 697 can look to the well-being of the people employed in the industry rather than at any other factor. If we do this we shall have the co-operation of the workers and their assistance in these changes.

§ Sir Douglas Glover (Ormskirk)

It is my pleasant duty to congratulate the hon. Member for Chesterfield (Mr. Varley) on a very distinguished maiden speech. I am sure that his predecessor, who was a distinguished Member of the House and very much liked on both sides, would have liked to have been here today and to realise that the constituency is still in good hands. I hope that the hon. Member will not mind my saying, because I think that it is a virtue rather than a vice, that his speech was not particularly non-controversial. I have always held the view that I was the biggest mug ever invented for having made a maiden speech which was non-controversial, because this is the one opportunity that one has in the House of being controversial and getting away with it.

We have had two very good maiden speeches today and neither speaker could have been accused of being non-controversial. I believe that the impact of the debate has been increased as a result of both the hon. Member for Chesterfield and my hon. Friend the Member for Lewisham, West (Mr. McNair-Wilson) deciding to speak without pulling any punches. This is what I also propose to do in my remarks.

I do not think that the Minister of Power, in his first appearance at the Dispatch Box as a right hon. Gentleman and a Minister, made a convincing speech for the nationalisation of the steel industry. Any argument that he put forward was shot down almost without trace by my hon. Friend the Member for Lewisham, West in a maiden speech which was cogent, to the point, and obviously delivered with a tremendous amount of closely reasoned knowledge. My hon. Friend's speech was a very impressive performance indeed.

I shall not devote most of my time to the technical arguments about the nationalisation of iron and steel, because there are far too many of my colleagues who have a much closer association with the industry and who are able to 698 advance the arguments much more cogently than I can. I shall speak purely and simply on the question of nationalisation per se, because whilst I disapprove of nationalisation I also believe that in nationalisation itself there is a real danger to the future of the people of this country.

Despite what happened in the early 1950s over steel, when the State takes over an industry, we are taking, in most cases, a final decision on the future structure not only of that industry but of the nation of which it is a part. One industry might be nationalised without serious loss of freedom to the people. If two are nationalised there is that much diminution of freedom. Since at the moment 30 per cent, of national activities are under the personal direction of the State, there is still a majority of free enterprise and therefore of freedom of action in forming the activities and the climate of opinion in the nation.

We understand now that the steel industry is to be taken over. This pushes the balance even closer to the fulcrum. Once the balance has swung, the State becomes all-powerful and it controls the individual. Once the State controls more than 50 per cent, of the nation's activities it will have to run the other free 50 per cent, under direct and physical control to keep those activities working and to fit them in with the 50 per cent, for which the State is personally responsible.

Whatever arguments may be adduced, the argument of a free society being incompatible with a society in which all the activities are controlled by the State is one which hon. Members opposite have not even begun to contradict. This is the real danger in what we are debating today. We are not debating the details of a steel renationalisation Measure. The Minister of Power indicated that when that Measure comes to be debated it may not be as far-reaching as most of us on this side of the House now expect. It may be that a great part of the steel industry will be left in free competition, but if the Government take over the commanding heights of the industry it does not seem to me, with my knowledge of the industry, that the remainder will have 699 much freedom. We shall see when we debate the Measure in detail.

I hope that I shall be in order if I now leave the steel industry and come to other aspects of the Gracious Speech which we are discussing in general.

§ Mr. Deputy-Speaker

Order. The debate today must be confined to matter within the terms of the Amendment which we are discussing.

§ Sir D. Glover

Thank you very much for that Ruling, Mr. Deputy-Speaker. I will try as a result of what you have said to remain in order. When we are discussing the nationalisation of steel we are discussing the future make-up of our society. That is the link all along the line with the actions proposed in the Gracious Speech.

§ Mr. Charles Loughlin (Gloucestershire, West)

The hon. Member will not get away with that.

§ Sir D. Glover

If the hon. Member would give me the opportunity, I am sure that Mr. Deputy-Speaker is fully competent to decide whether or not I shall get away with it, and if I know anything about Mr. Deputy-Speaker he is more likely to give me licence.

§ Mr. Deputy-Speaker

Order. The Deputy-Speaker is not the subject of this debate. I hope that the hon. Member will confine himself to the Amendment.

§ Sir D. Glover

I apologise, Mr. Deputy-Speaker. You will realise, having yourself spoken so often from almost this very place in the Chamber, that I was under some provocation from the Government benches.

We are discussing the structure of our national life and the part which the re-nationalisation of steel will have in that life and therefore it seems to me that we must tie up that subject with the other proposals in the Gracious Speech. By that I mean that if we are forming a general policy of increased State control, nationalisation and regimentation it is all part of one policy and one cannot break it up into small isolated pieces. We have in the Gracious Speech, including the nationalisation of the steel industry, all the pattern of a heading back at a great gallop towards the 19th century instead of galloping towards the 21st.

700 All the things which have happened since the Prime Minister and his colleagues took office seem to be leading backwards into the dim and distant past rather than towards an exciting future, quite contrary to what was said about our future, about a dynamic seizure of initiative in steel, and everything else, at the time of the General Election. We understand that the production of steel which would have gone into the Concord aircraft is likely now to cease.

§ Mr. Loughlin

There is no steel in it.

§ Sir D. Glover

Yes there is, and its production will stop. The modernisation programme of the railways, because they use steel, will be retarded to allow the old pattern to be reproduced. After 25 days, all the tendency shows that, under this Government, we shall soon be back not in 1964 but in 1864. Neddy will be back in the shafts. I refer not to the National Economic Development Council but to Balaam's Ass, and his name is Harold.

§ Mr. Stanley Orme (Salford, West)

I thank the House for this oppportunity to make my maiden speech as the Member for Salford, West. I wish, first, to pay a tribute to my predecessor, who has now gone to another place, who served this House for 19 years with great distinction; he served on its Committees and chaired many of its meetings. I believe that he found a place in the heart of this House of Commons, as he did in the hearts of his constituents in Salford, West.

Salford is a city in the industrial North-West, the centre of an industrial conurbation of about 2¼million people. My constituency is very heavily populated, though exceedingly small in size, and it is bound up with industry in the whole of that region of Britain. Not only in and around Salford itself, but in the North-West as a whole we have one of the largest industrial areas of Britain, and in this area, often neglected in the past, like other important parts of Britain, we look to the Government, with their regional planning, to solve many of the problems which call for attention in housing, in transport, and in other vital aspects of life and policy in the North-West.

701 The area which I represent was at the heart of our first Industrial Revolution. It has been said that Britain depended in the past on cotton and on coal, and it now depends on the manufacturing industries and their exports for its very survival. I represent many thousands of skilled and unskilled workers in British industry today, and the area I come from is the home of some of our basic industries, many of them with a world-wide reputation. Among them, of course, is the steel industry and all that it stands for.

I feel that I have been relieved of worry about whether one should or should not make a non-controversial speech on this occasion by the two previous maiden speeches, both excellently delivered and very much to the point. I intend to direct myself to that point now.

The planning of my area and its industries gives me great concern. Just on the border of my constituency is the Trafford Park industrial conurbation, one of the largest concentrations of heavy industry not only in Britain but in Western Europe. This huge industrial area depends on steel for its survival, and, of course, steel manufacturing companies are in its very midst. It depends upon steel if it is to produce and manufacture the goods so urgently needed by this country.

My connection with industry is not purely as a representative of many thousands of industrial workers. I have just come from industry, from the shop floor, as a shop steward of 15 years' experience in engineering, and I am a representative of one of the major trade unions of Britain. Therefore, I have had some experience of, at least, the workers' side of industry, of negotiation and of many of the problems which concern us.

This brings me to the philosophy of public ownership as such. I welcome the fact that, in effect, a division is created at this point because it helps to clarify the issues in the debates which lake place. A very distinguished former Member of this House, Aneurin Bevan, said that politics was about power. Power is about control, and one cannot control industries unless one has them firmly under one's power and direction. Therefore, when we talk in the Labour Party about the commanding heights of industry, we are talking about the commanding 702 heights of steel and the major basic industries upon which the country depends.

The case has already been well made. The shortcomings of the industry speak for themselves. If I may say so, the kernel of the debate became clear when the hon. Member for Aylesbury (Sir S. Summers) intervened during the speech from his own Front Bench and put the fundamental issue. It is about prices, and prices raise the question of profits. While the profit motive remains the dominant factor in the steel industry, it will never be an efficient industry. It will never produce the steel upon which the manufacturing industries depend. It is this profit motive which makes the two sides of industry, and the profit motive and all that stems from it will remain until there is public ownership. In my view, this question should not be hidden under a sheet. I invite the right hon. Member for Enfield, West (Mr. Iain Macleod) to read my election address, where he will find that I quite definitely mentioned the public ownership of steel and other industries as well.

The subject of our debate today, in this cockpit of democracy, is vital for Britain and its future. Upon the outcome will depend whether we can make our country the toolroom of the world, whether we can produce the manufactured goods needed not only by ourselves but by the developing countries overseas. If we are to bridge this gap, if we are to help these other countries, if we are to make the products which we and the world need, not just for our selfish wants at home but for the world as a whole, if we are to help break down the barriers of hunger which exist today, we must have the basic control of our economy.

The point is underlined when we recall what happened during the past 13 years, when power moved from this Chamber to the boardrooms at the centre of industry. I want to see it come back from the boardrooms to this Chamber. I want to be able to have the Minister here so that we can raise questions and thrash them out with him if necessary. I want industry to be accountable to the nation as a whole, not playing about with foolhardy schemes of publicity and denigration, trying to defend itself and its profits, as it has done in the recent past. Let us have it where it can be accountable to the nation.

703 On this basis, I am proud to stand here and support the public ownership of the steel industry. I am proud that it will put onerous duties upon this House, and I am quite certain that not only the House of Commons but the nation will, in the years to come, recognise that, with a planned economy, Britain will be able to produce the goods needed both at home and overseas. In the future, after this great industry has been nationalised, the British people will say to the Labour Party, "Thank you, get on with the job".

§ Mr. William Shepherd (Cheadle)

It falls to my lot and my pleasure to welcome the hon. Member for Salford, West (Mr. Orme), and I do so particularly for two reasons. First, he comes from a part of the country that I represent, and, therefore, I know something of the problems about which he speaks. Secondly, he brings experience from the shop floor, and practical experience is always very welcome in this House. I would agree with him that he did not attempt very strenuously to keep to what are, or at any rate were, the acknowledged conventions in maiden speeches, but perhaps on another occasion we may be able to reply in a more robust fashion than is permissible today.

I think that many of us who came here nearly 20 years ago feel that this is the wheel turning round a complete circle— and that this is where we came in. I approach this with no spirit of nostalgia, because I would have hoped that in the intervening 20 years some hon. Gentlemen now sitting on the other side would have learnt something. It is true that some of them have, but, unhappily, for reasons best known to themselves, they have to include this unfortunate and retrograde step in their present programme. It is absurd to talk as a Labour Party about the jet age when it is trundling the broken-down junk barrow of nationalisation. It is impossible to say that the Government have progressed and learnt from the past when they merely put into operation the same sort of outworn and outmoded ideas with which they came to the country in 1945.

§ Mr. Loughlin

I am intrigued by the logic of the hon. Gentleman's argument. May I assume from it that be