IRON AND STEEL BILL

§ LORD CLYDESMUIR

I would like to support this Amendment. It is difficult to see that there can be any objection to it. The stockholding merchant fulfils a very useful function, particularly with regard to the small consumer. The small consumer who wishes to buy steel in small quantities may have great difficulty in satisfying his requirements quickly; he has to wait until special sizes are being rolled, and that sort of thing. If he could secure his steel from a stockholding 355 merchant, his needs would be readily adjusted. There may be some reason which the noble Lord wishes to advance as to why they have been left out so far, but I have some difficulty in understanding why they should not be put in the same category as other consumers.

§ LORD LUCAS OF CHILWORTH

The noble Earl who moved this Amendment correctly stated the case up to a point. Clause 3 of the Bill puts upon the producers of steel products an obligation to do certain things. One of those things is to meet the reasonable demands of manufacturers. It is to meet the reasonable demands of the persons who use iron and steel products for "manufacturing purposes," the definition of which, in Clause 58, is including the carrying-out of building operations and works of construction or civil engineering and the treatment of products by any process. The clause is designed expressly to exclude the stocking merchant, whereas the noble Earl's Amendment, as he said, is designed expressly to include him. The reason for the exclusion is that the real and effective demand is created by the end user, the manufacturer, not the merchant, whether he be a stocking merchant or whether he is not. The merchant may be dealing with one manufacturer, but the one manufacturer may be dealing with two or three merchants. In other words, the merchant, whether he be a stockist or otherwise, is an intermediary, and intermediaries do not create effective demand.

The demands of intermediaries may be sometimes fictitious—I do not say that in any derogatory sense: they may build up. But the real and effective demand comes from the manufacturer, as defined in Clause 58. Now that I have said that, I would add that His Majesty's Government have no intention of ignoring the work of the merchant—be he merchant or be he stockist—and we ask your Lordships to believe that his interests are fully covered under Clause 6. which states that the "Consumers" Council shall consist of thirteen to thirty representatives of consumers. The definition of "consumer" in Clause 58 is a person who uses those products for manufacturing purposes or is engaged in the merchanting of those products. On my assurance that the interests of the people whom the noble Lord wishes to 356 protect by this Amendment are fully covered—and it would be completely wrong, as Clause 3 is drafted, to include a non-effective person in that demand—I hope the noble Lord will withdraw his Amendment.

§ THE EARL OF DUDLEY

I am very disappointed indeed with the noble Lord's reply. I have been at pains to follow him, but I am quite incapable of doing so. I cannot see why the stockholding merchant should not be included under this clause. The noble Lord says that the reason is that they do not create a demand. Well, if it were not for the stockholding merchant who holds in his stockyard what I might describe as a very large number of bits and pieces which are rolled at odd intervals by the manufacturers, the general demand would diminish very considerably. He performs not only a useful function but an essential function, and his interests need looking after just as much as those of the person who uses the product who, as the noble Lord says, creates the demand. You can argue just as well that the stockholder creates the demand. I do not want to divide upon this particular point, because it is not by any means a vital point—I admit that. But I hope the noble Lord will ask the Minister to give careful consideration to this point between now and the next stage of the Bill. I beg leave to withdraw the Amendment.

§ THE EARL OF BUCKINGHAMSHIRE

As my name appears on the Order Paper in support of this Amendment, I would like to emphasise one or two points made by the noble Lord, Lord Balfour of Inchrye. As this paragraph is drawn, the Corporation must see that such steel is available as may seem to them best calculated to satisfy reasonable demands and to further the public interest. But, as the noble Lord said, it may not seem in the public interest to satisfy users' reasonable demands and, at the same time, try to get new products, because it may not be deemed in the public interest to undertake expenditure to satisfy that demand. It is quite unacceptable that, when the Minister is an interested party, having created a Corporation which, through the companies it owns, is competing with privately-owned companies, he should himself be the judge of what is the public interest.

§ LORD LUCAS OF CHILWORTH

I am very glad the noble Lord. Lord Balfour, prefaced his remarks by saying that this was really an exploratory Amendment. If he had not said that, I was going to express surprise from this side of the House that, after hearing so much during the previous sitting of the Committee about the public interest, noble Lords opposite should want now to leave out from the Bill all reference to public interest. I understand that the noble Lord has put this down only so that he may have an explanation, and I therefore acquit him of any malafides on this point.

§ VISCOUNT SWINTON

I gather that the shaft is directed at me. We are all deeply interested on this side of the House in the public interest. What we are concerned with here is to know how the Government—who apparently are going to be the judges—are going to interpret the public interest. There seems to be growing up a strange new doctrine of l'Etat, c'est moi in the sense that whatever the Government say is the public interest I must be the public interest. It is from 359 that that our, anxiety arises, and not from any question of safeguarding the public interest.

§ LORD LUCAS OF CHILWORTH

The noble Viscount might have allowed me to answer the question instead of doing it himself, because I think I can satisfy the noble Lord, Lord Balfour of Inchrye. The facts are these. The Bill as drafted really takes care—in fact it sets up a structure to take care—of the operations of the iron and steel industry in file home market. If we do not insert here the words in question, the public interest and the interests of the manufacturer and the merchant who specialises in the export market may be lost sight of. We contend that without these words it would be considered that the Corporation's duty with regard to the "reasonable demands" referred to in subsection (1) of Clause 3, finished at the point of the interest of the home producer. I feel certain that is not the noble Lord's intention, and neither is it the Government's intention.

The noble Lord, Lord Balfour of Inchrye, asked me one or two questions. He wanted to know who was to interpret the public interest. The answer is, the Corporation. Somebody has to start interpreting the public interest, and under this clause the Corporation do that. If there is any appeal arising out of a complaint that the Corporation have wrongfully interpreted what is in the public interest, to the detriment of any of the users of the articles specified, then an appeal lies through the Consumers' Council to the Minister. The noble Lord said in effect but can the Minister determine the public interest, since he is an interested party?" Of course he is an interested party. This kind of point has been argued often enough in your Lordships' House. If a Minister responsible to Parliament cannot be entrusted, under the supervision of Parliament, to determine the national or public interest, who can? I do not know, and I should be glad if any of the noble Lords sitting opposite can tell me. Who is there but Parliament to determine public interest? Who but the properly appointed Minister who is responsible to Parliament? That is my answer. I am sure that my reply has been given in such terms as to be as 360 acceptable to the noble Lord as it is to myself.

May I add that he misquoted my noble friend? The noble Viscount, Lord Hall, did not say that a statutory obligation was unnecessary. What he said was that he hoped that public spirit would be paramount—which is a different thing. The noble Lord ended by saying that he would rely on that, since, according to him, Lord Hall had said that the statutory obligation was unnecessary. But public interest has to figure some time in this Bill and we feel that this is the proper place for it to do so that is the reason for the inclusion of these words.

§ LORD LLOYD

I must make one comment on what the noble Lord has just said. He stated with complete satisfaction and complacency that, so long as the Minister was going to judge what was the public interest, that was all that anybody could require. I dare say that in days gone by the noble Lord would have been right in that statement, because in those days the Minister was an entirely impartial person. He had nothing to do with industry; he was in a perfectly good position to look at such matters from both sides, and to determine what was the public interest. Under this clause it is the Corporation who are to interpret the public interest. But the Corporation are an interested party. If there is an appeal against them it goes to the Minister—another interested party—and he has then to determine the public interest. I must say that I do not find the noble Lord's reply very convincing.

§ VISCOUNT SWINTON

I am sorry if I interrupted the Minister unfairly, but I did not think it was unfair. I should now like to put a question to him. Of course, everybody wants the public interest to prevail in this matter, but sometimes the public interest prevails best when least is done. I think it was the great Lord Melbourne who once said of the Government, "If only they would have the goodness to leave it alone"—or words to that effect. The present Government seem so obsessed with the idea that they are omniscient (as they are certainly omnipresent) that they must interfere at all stages to direct the public life. If these words are in, then the Government and the Minister have to 361 do something. I agree with the noble Lord to this extent, that if there is a real case in which Governmental action has to be taken, nobody can take it except the Government or the Minister —and the Minister must judge to the best of his ability what is the right action to take. If Parliament thinks the action wrong, Parliament will use whatever process is open to it to call him to account. But it is a very long way from that to saying that in every department and every relation of life the Government have to do something—either something positive to direct us what we are to do, or something negative—rather like saying "Go and see what baby is doing, and tell him not to." I am afraid that that is the situation into which we are getting more and more.

What is the value of having these words in at all? We have laid down a number of sensible provisions—that it is the duty of the Corporation to provide all the steel of the different kinds required, to provide it at the best possible prices, to supply so far as is practicable all the consumers of these articles, and generally to conduct their business in the most efficient way possible. Why cannot the Bill end there? Hitherto, business has gone on without a general direction from the Government to do what the Government may believe to be in the public interest. The words in the Bill mean that the Corporation have some special duty, in addition to these special duties that are laid down, which does not arise in the ordinary course of business. They mean that the Minister of Supply or some concatenation of Ministers, will come in with a duty to perform—a duty which they will certainly exercise. That gives them a status which I do not think they ought to have.

Those of us who have been Ministers can recall occasions, time after time, when we had been anxious about something. We have done the obvious thing; we have sent for representatives of the industry concerned, had a talk with them, and action has been taken. But what will happen now, if this specific duty is placed upon the Corporation and the Minister? What does it mean? It means some special supervision—because you cannot put a duty on a Corporation or a Minister without meaning that he has to supervise and take action, either to direct or to prevent something being done which is done in the ordinary course of business. 362 What is he going to do? What then is the idea of public interest? Everybody knows about the broad directives which the Government give, and quite rightly give, to-day in order to secure the maximum of dollar export; but a special clause is not needed for that. That is being done in every industry to-day by the Government, in consultation with the industry, without any statutory provision.

You may want to decide what is to be the output of steel. That can be done under this clause without involving anything to do with "the public interest," because one of the functions of the Corporation it to determine how much steel is to be produced. The Government certainly can give a broad directive—it is all dart of the policy of capital investment, and all the rest of it—and decide what are to be the priorities in the industry, whether steel shall go into power stations rather than into bridges, or whatever it may be. All that is being done to-day by the Government—I will not say perfectly well; that is a matter of opinion, but the Government have ample power to do it to-day, and are able to do it. But these words mean something much more meticulous than that. What would be the Corpora ion's power if these words implying a special duty were inserted? Would they not have power to say: "I think you ought to sell steel to this particular customer"? Suppose that they decided on one particular class of customer—I was going to say in whom they were interested, but I will not put it like that, or I shall be told I am attributing to them some corrupt motive. Shall I say—to whom, because they are their direct employees or the company in whom they have the taxpayers' capital invested., they owe a special responsibility. After all, as we go on with this, and industry after industry comes under Government control, the taxpayers' money is invested.

Then there is the question: Is steel to be directed by the Corporation, possibly on easier terns, certainly with a priority in supply? I ask the noble Lord, would that be "the public interest"? I think that, if you put these words in, it would; and not only would the opinion of a Minister go, but the Minister would have put upon him by this clause a duty to decide whether that was the right thing to do. I very much 363 doubt whether that is wise. I believe that it is much better to leave a few things alone and subject to the broad directives which the Government give today, and which the Government will agree industry most loyally carries out, not to put upon the Minister and the Corporation the specific duty to see whether all their activities are in the public interest. I do not say that I am the "Adam Smith" sort of man who, when everybody is carrying out his business to the best of his ability and a sum of wealth is added to the country, thinks that that is necessarily the best way. My noble friends below the gangway may still have that undiluted view. We in our Party have never shared it. On the other hand, fundamentally, if I have to choose between the old Adam Smith doctrine and the doctrine of meticulous interference at every point, then I am bound to say that I prefer Adam Smith every time. But I should have thought that we had found a sensible compromise here in the practical working of life, that everybody accepts the broad Government directives, and that it was enough to leave the matter there.

§ LORD LUCAS OF CHILWORTH

May I say how much I appreciate the reasonable tone of the noble Viscount's speech? I think it has considerable point —but not now. In an Amendment to which we shall come shortly, when the question of public interest again arises, I think we shall be able to argue upon the lines that the noble Viscount tends to argue upon this Amendment. The inclusion of these words in this context is easy to understand. It is a short point. If I may, I will read paragraph (a) of Clause 3, without the alterations that have already been made, because I have not had time to write them in. Clause 3 says: It shall be the general duty of the Corporation so to exercise their powers as—

1. (a) to promote the efficient and economical supply of the products of the activities specified in the first column of the Second Schedule to this Act, and to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes…"

By this Amendment, the noble Lord wants to stop there. My contention is 364 that, as this Bill is drafted, it controls the whole operation of the iron and steel industry, and it could be construed that the duty of the Corporation is to satisfy all those requirements for the home user alone, and to exclude everybody else. We say that in the public interest it is necessary to include those persons, both in merchanting and manufacturing, who operate in this country and abroad for the export trade. Perhaps the noble Viscount will forgive my not going further into this point now. It is not from any discourtesy that I do not reply to his other arguments now; it is because I think they are better replied to at a later stage, when we get down to their more positive application.

§ LORD BALFOUR OF INCHRYE

I trust that your Lordships will not begrudge me a few moments upon this important point. There is one further point I want to raise with the noble Lord. In answer to my question, he said that the Corporation would interpret the public interest, but appeal by an aggrieved party lay through the Consumers' Council to the Minister. I am no lawyer, but we have the benefit of the advice of many eminent lawyers of great distinction in your Lordships' House. What I am not clear about is why the appeal should not lie, as a matter of fact, to the courts and be determined by the courts in the event of dispute. It seems to me that that must be so with the Bill as it is at present drafted. On the point of appeal to the courts, may I remind the noble Lord of some words in the Economist on September 18, dealing with this point. The Economist said: The history of freedom is one long list of devices—from trial by jury and habeas corpus to the judges' rules of evidence—based on the assumption that the State cannot be trusted to serve the public interest.…Yet in economic matters the doctrine appears to be accepted that whatever a Minister of the Crown may take it into his head to do is ipso facto in the public interest. It is the danger of that doctrine that we are drawing attention to now. I shall ask leave to withdraw my Amendment if I may have an answer to my first question as to the appeal to the courts, vis-à-vis the Minister.

§ THE EARL OF DUDLEY

May I also ask one question on this point? The noble Lord said that the Corporation would interpret what was in the public 365 interest and what was not, and that consumers had an appeal to the Minister through the Consumers' Council. My noble friend Lord Lloyd pointed out, very rightly, that both the Corporation and the Minister are interested parties. I am at present an interested party and I am being divested, dispossessed, largely because I am an interested party. We, as owners, have been told that we are not fit to interpret what is and what is not in the public interest. We are also told that the Federation are not fit to interpret what is and what is not, in the public interest, because they are interested parties. That applies to the President of the Federation. It applies also to the independent chairman of the Federation, who surely is just as independent as the Minister—and probably more independent than the Minister will be in the future. If we, as owners and through the Federation, are not fit persons because of our vested interests, to say what is and what is not in the public interest, why on earth should the Corporation and the Minister be able to do so when the Bill becomes law? Perhaps the noble Lord will answer that question.

§ LORD LUCAS OF CHILWORTH

I shall he pleased to answer all these questions. On the question that Lord Balfour raised as to the legal possibilities, again I think we had better leave that to a later clause, when I think we shall discuss the matter. There is an Amendment down in the name of the noble Viscount, Lord Swinton.

§ LORD BALFOUR Of INCHRYE

Could you not answer the question now?

§ LORD LUCAS OF CHILWORTH

No, I prefer to answer it then, because it is a very complicated matter, and the question will arise as to what is the legal redress under undue preference. If there is undue preference under an interpretation in the public interest, perhaps we can discuss that. I shall then perhaps have the benefit of some legal opinion from the other side on this point. I can assure the noble Lord that we do not want to burke the issue, but I think it will be better for the convenience of the Committee to discuss it then, instead of having a half-hearted discussion upon it now.

§ VISCOUNT SWINTON

Which Amendment is that?

§ LORD LUCAS OF CHILWORTH

It is to page 5, line 13. Both the noble Lord, Lord Lloyd, and the noble Earl, Lord Dudley, have missed out one great point. What I said was that the Minister was answerable to Parliament and Parliament was the last arbiter as to what was and what was not in the public interest.

§ THE EARL OF DUDLEY

The Minister is an interested party. That is not an answer.

§ LORD LUCAS OF CHILWORTH

The noble Earl says that that is not an answer. If Parliament is not a proper authority to determine what is or what is not in the public interest—and the Minister is a servant of Parliament—what other authority is there? Upon that I rest.

§ VISCOUNT MAUGHAM

Since that question has been repeatedly asked, I wish to say—although I may not be right —that in my strong opinion the question is one ultimately for the High Court. It is true that the word "public" is often very difficult to define, but the courts have had to deal with it in correlation with half a dozen words, such as "houses," "places" and numbers of other things. The courts are constantly having to deal with a public "x," and I have no doubt that they will do their best in regard to this somewhat difficult problem.

§ LORD BALFOUR OF INCHRYE

The noble Lord speaking for the Government said that we are going to have a discussion on a subsequent Amendment which will clarify the particular question that I raised. On the understanding that the clarification of the later Amendment embraces also that of the point I have raised in these particular circumstances, I would beg leave to withdraw the Amendment.

§ VISCOUNT SWINTON

Before the Amendment is withdrawn, may I ask this question? I do not really think this matter arises on either the point about decentralisation or the new clause upon which probably the major discussions will take place. I thought we were confined here to the simple question of the interpretation of these particular words, as Lord Maugham has said. The words are "the public interest." The noble Lord, for some reason, has said that if we should allow the matter to stand there, 367 there would be a good deal more point in my argument that these words should not stand in the clause about undue discrimination.

§ LORD LUCAS OF CHILWORTH

I did not say that.

§ VISCOUNT SWINTON

I thought you did.

§ LORD LUCAS OF CHILWORTH

I said I thought they could be better applied to the other argument. I did not say that the other one was not necessary.

§ VISCOUNT SWINTON

I am not sure that I follow this metaphysical distinction. They could, of course, be applied in either case, because the words are exactly the same. But the question about which we want to be informed is not whether it is a good thing that the Minister should or should not do something—that is a matter of opinion. The question is a matter purely of legal construction. If we keep in this clause the words "and to further the public interest in all respects," would the sole judge of that question be the Minister, or would there be an appeal to the courts if a party concerned, thinking himself injuriously affected, said that what the Minister or the Corporation was doing was contrary to public interest? That is not a matter of opinion or of high policy; it is a simple question of legal construction which has been raised by the noble and learned Viscount, Lord Maugham. May we have an answer to that before the Amendment is withdrawn?

§ LORD LUCAS OF CHILWORTH

Yes. I am advised that the qualification in paragraph (a) is this: as may seem to the Corporation best calculated to satisfy the reasonable demands. That means that the decision of the Corporation cannot be challenged in the courts. That is the legal advice I have received—that the position is covered by those words, but that it is slightly different when we come to paragraph (b).

§ VISCOUNT SWINTON

It has nothing to do with the Minister at all then?

§ LORD LUCAS OF CHILWORTH

It has this to do with the Minister: that an appeal can be made by all interested parties to the Consumers' Council, which has very wide powers. If the noble Viscount will look at Clause 6, he will see 368 that they have very wide powers to do anything they may think it proper to do, and they may make representations to the Minister, whether by majority or minority. That is why I said that there was an appeal to the Minister through the Consumers' Council.

§ LORD BALFOUR OF INCHRYE

I thank the noble Lord for the explanation he has given. Frankly, I think it would have been better if the noble Lord had told the Committee earlier that the Bill as drafted gave no appeal to the courts and that the Minister was the final arbiter to whom appeal could be made through the Consumers' Council. I think it would have saved the noble Lord a good deal of time if he had given that answer at the very beginning. It now leaves us with what many of us consider to be the very unsatisfactory position that the Minister is virtually determining the conduct of a body over which he has final authority—namely, the Corporation—and can actually judge in favour of his own particular child. However, we have obtained that answer. We think the position is unsatisfactory, but I beg leave to withdraw the Amendment.

§ THE EARL OF DUDLEY

I beg to support the Amendment which has just been so comprehensively moved by my noble friend Lord Clydesmuir. He has referred to the proceedings which took place during the Report stage in another place. I am not going to repeat what he has already told the Committee, but, as a matter of fact, two further points were raised during that debate and were not replied to either by the Minister or by the Solicitor-General. I hope that we shall get an answer to-day from noble Lords opposite. The first one is this. If the Corporation give an order to a subsidiary company, that they are not to show preference in a particular case, and they still persist in doing so, can a case be brought against the Corporation? The Corporation can say: "We did our best; we gave instructions in this case and no further blame lies at our door." It has not been established that a case can be laid against the Corporation if in fact they did give the necessary instructions to their subsidiary. The other point is whether a contract catered into with a subsidiary can be legally regarded as a contract with the Corporation. I think that those are two important points, although they are subsidiary ones, and I hope that we shall get a reply to them from the Government to-day.

§ LORD RENNELL

I think there is a great deal in this matter which is very important, especially in connection with what was said last week on the structure of these companies. There was then a considerable discussion as to what the Corporation were intended or entitled to do, and I quoted what the noble Viscount, Lord Hall, said in his opening statement. Other quotations were made by other speakers about the Corporation being essentially a holding company. That being so, if the Corporation are a holding company and only a holding company (the noble Viscount, Lord Hall, gave me an Amendment which confirmed that) it becomes all the more important that the subsidiaries should be bound to do 371 the same things which the Corporation are bound to do. It is very difficult indeed in this context, and in relation to certain other points which are coming up, to see exactly what the procedure is.

The noble Earl said that the Corporation can give instructions to a certain company. If a company is a holding company, it cannot in fact give direct instructions to another company. The procedure by which a holding company exercises its domination over subsidiary companies is an extremely complicated and a rather lengthy one. It might happen that the Corporation gave an instruction which it could not enforce on a subsidiary company except by a rather lengthy procedure and after a long interval, during which damage might be done. It is essential that a subsidiary to a holding company should be bound by the same principle which binds the holding company itself. If this is not the case, the structure breaks down. The matter will be brought up again by an Amendment which stands in the names of the noble Viscount, Lord Swinton, myself and others, at line 13. It is only fair to say now that to bind the Corporation to do something is not ipso facto to bind the subsidiary companies under a holding company to do the same thing at the same time. At the most, it binds them to do it at a long interval of time.

§ LORD LUCAS OF CHILWORTH

I hope I shall not be accused of seeking to make a bid for popularity if I say at once that I am very much tempted to accept this Amendment, if I can do a deal. If I can sink to such depths, I would like to do a deal with the noble Viscount, Lord Swinton, with regard to the Amendment at page 5, line 13. I am hoping to persuade him, when the time arrives, that if I accept this Amendment his Amendment will be unnecessary. Someone has to be the first to make a friendly gesture, and in this case perhaps it is up to me. So I make this offer in the hope that the noble Viscount will put it to the credit side of my account when we come to the Amendment at page 5, line 13. In reply to the point raised by the noble Earl, Lord Dudley, the Corporation's liability is absolute. The fact that they might give an order to a subsidiary which was disobeyed would not let the Corporation out. With regard to 372 the noble Earl's second point, I would point out that a contract with a subsidiary company is not a contract with the Corporation. I do not think I need delay your Lordships further. I will accept this Amendment because it does exactly what Lord Clydesmuir said it would. As has already been stated, if a publicly-owned company showed undue discrimination, proceedings would lie against the Corporation to prevent them from showing undue preference in causing or not stopping the wholly-owned public company from showing undue preference. I hope that after accepting this Amendment, I may have sympathetic consideration when we come to the other Amendment which I have mentioned. In answer to Lord Rennell, may I say that the procedure for controlling a publicly-owned company is simplified by the Ninth Schedule, and the operation would be quite speedy. We accept the Amendment.

§ VISCOUNT SWINTON

I would be content, unless called to account later on, to say nothing. I am always prepared to do a deal in the public interest. I am sure the noble Lord is right to accept this Amendment. But he put to me a rather odd proposition: that he would accept this Amendment if I would withdraw a later one. The later Amendment is purely a question of law —whether the acceptance of the obligation that the Corporation has the duty to prevent preference would make them liable if preference were given. I am prepared to discuss later the need for my Amendment, but I thought it better to put briefly the legal opinion I have been given.

§ LORD LUCAS OF CHILWORTH

Perhaps I should have put my remarks in another way. I should have said, "I hope to persuade the noble Viscount."

§ VISCOUNT MAUGHAM

It seems to me that the present proposal of the noble Lord, Lord Rennell, is important. It is clear that in the Bill as drawn, preference or discrimination as between customers and undue influence relate only to the articles mentioned in the Second Schedule, and we have nothing yet in the Bill which prevents these subsidiary companies, the whole of whose shares are to he held by the Corporation, from favouring one or more customers as opposed to 373 others. I venture to think it is desirable, in order to have the whole thing shipshape and to prevent possible abuses, to accept the suggestion of my noble friend Lord Rennell, which means that there would be one clause preventing discrimination by the Corporation and another clause preventing discrimination by any of the subsidiary companies. There is no other satisfactory way of doing it. I have looked at the Ninth Schedule, to which the noble Lord, Lord Lucas, kindly referred me, and I cannot see there any speedy way by which it is possible for the Corporation as a whole to go down to some business in Wales or Yorkshire and say they must not do so-and-so because it would be discrimination. It is my submission to the Committee, that, without being stopped by any action of the Corporation, it ought to be illegal from the start for the subsidiary companies to give special advantages to certain customers.

§ VISCOUNT ELIBANK

I do not understand this exchange of Amendments.

§ VISCOUNT SWINTON

There is no exchange.

§ VISCOUNT ELIBANK

The noble Lord, Lord Lucas, suggested that if he accepted this Amendment, a later Amendment might be withdrawn. I should like to have some explanation.

§ VISCOUNT SWINTON

May I explain? The noble Lord, Lord Lucas, said that he was advised in law that if he accepted an obligation upon the Corporation that neither they nor any of their subsidiaries were to give undue preference, it was unnecessary to put in an Amendment to say that the Corporation would be liable for damages or to an injunction, because, the statutory duty having been imposed on the Corporation, it would automatically follow without any words in the Bill that they would be liable. We will discuss that as a pure point of law when we come to it. There is no bargain. So far as Lord Maugham's point goes—

§ VISCOUNT MAUGHAM

Lord Rennell's point, which I am supporting.

§ VISCOUNT SWINTON

So far as Lord Rennell's point as concerned we have amended Clause 3 to include not only Second Schedule products, but all main 374 activities. If we pass this Amendment, which the Government have accepted, then there will be an obligation not to show a preference in all the things in Clause 3 as amended, which consist not only of Second Schedule activities but other activities of these companies.

§ LORD LUCAS OF CHILWORTH

That is what I understand. But if the noble Lord, Lord Rennell, is not satisfied, I will undertake to have the matter looked into.

§ LORD RENNELL

I think it is rather an important point, because it is coming up in another context later on. I am not happy that the Ninth Schedule in its present form would produce what the noble Lord has suggested in regard to activities. In regard to this Amendment, I am quite happy, subject to the form being looked into again.

§ LORD CLYDESMUIR

I thank the noble Lord for accepting this Amendment. I understand that following on the Amendment of Thursday night, the principal products will he included. I hope the Amendment will make a workable addition to the Bill.

§ LORD HAWKE

May I ask the noble Lord who is to reply what is the difference between "public interest" and "national interest"? In this paragraph the words used are "public interest." In the next clause of the Bill, in line 19, we have the words "national interest." In one case we have the Corporation interpreting the public interest and in another we have a Minister interpreting the national interest. Why is there this different phraseology? Are they not the same?

§ VISCOUNT RIDLEY

I would like to support this Amendment, and I hope the noble Lord will say something on this point. If the words are left in there is a danger that the Corporation, through some of their publicly-owned companies, might exercise a preference in such a way as to damage their competitors, who in fact use the products of a publicly-owned company. It might be said in a particular set of circumstances that it was in the public interest that the Iron and Steel Corporation should have the large majority of the trade in certain products, so that it would be proper that one of their competitors should he sold steel, at whatever stage it was required, at a price contrary to the real spirit of this clause. If the noble Lord can satisfy us that there is no possibility of that interpretation of "from the public interest," that point would be covered. Otherwise, I fear that there may he a Minister who will take a wrong view, or a Corporation which is unduly anxious to secure the largest share of some particular trade, and there would be danger of unfairness to competitors.

§ LORD LUCAS OF CHILWORTH

As the noble Lord, Lord Balfour, has said, we now come to another aspect of public interest. I will start by answering the noble Lord's question. The whole intent of paragraph (b) is undue preference, and if undue preference is shown a case lies in the courts. I would like to discuss this in full when we come to the Amendment of the noble Viscount Lord Swinton. I take it that the same applies to this Amendment as to the last one, in that it is a purely exploratory Amendment as to why we want "in the public interest."

§ VISCOUNT SWINTON

It is a great deal more than exploratory. I have a very definite view about this.

§ LORD LUCAS OF CHILWORTH

After the noble Viscount has heard me, perhaps he will not be quite so definite. I think noble Lords opposite are ready to concede that a case for undue preference can lie only in the home market. There must be a special case. You must allow the Corporation to show preference in the export market—that is to say, in the export of steel to dollar countries, the withholding of exports from countries which may have war-like or unfriendly intent, and so on. If we did not have these words they could not show that amount of preference in the public interest. But apart from that—here I think the noble Viscount Lord Swinton will join issue with me—it is necessary to give the Corporation some discretion to show undue preference, or what may be regarded as undue preference, in the home market, where it is in the public interest that steel, whether in its raw state or manufactured, should be diverted for the building of power stations or the building of ships as opposed to the manufacture of toys and less essentials. That is why we say it is necessary to have the words, "from the public interest." The Corporation should have that amount of discretion. If they abuse that discretion, and show undue preference which should not be shown, then under the Amendment which I have accepted from the noble Lord, Lord Clydesmuir, there is an action against them. I cannot accept this Amendment for the reasons I have stated: first, that it is necessary for the Corporation to be able to show preference in the export market; and secondly, that in special cases, in the public interest, it is necessary for the Corporation to show preference in the home market.

§ VISCOUNT SWINTON

With great respect—I speak subject to legal correction—I believe the noble Lord is entirely wrong in his conception of what "undue preference" means in law. A prohibition against showing an undue preference does not mean an obligation to charge the same price to every consumer of steel in the country. It does not mean that you have to supply the same amount to a toy-maker and a shipbuilder. It has never meant that. A great many years ago I had a few cases about railway rates. There is a great chain of authority, as every lawyer knows, about what is an undue preference. An undue preference 377 did not mean in the case of railway rates that you could not give one rate for coal and another for silk stockings. Of course you did. A very low railway rate was given for the bulk carrying of coal, and a high rate was charged on luxury goods. That was not an undue preference. It was a preference, if you like, in the sense that the rate for silk stockings was higher per ton or per pound than the rate for coal. What "undue preference" means is this: that when you are carrying coal you must not carry the coal of the Tyne Main Colliery on better terms than you carry the coal of the Lancashire Colliery. It means an undue preference as between people in the same category. I think every lawyer in the House will support that.

If this clause stands without the words about undue preference, there is nothing to prevent the Corporation saying that you ought to try to sell all the steel you can in dollar countries. There is nothing to prevent them saying to their subsidiaries: "You must give priority in your deliveries of steel to shipbuilding and power stations." That is legitimate. What they must not say, under undue preference, is: "In the delivery of steel to a shipbuilder, you shall give it on preferential terms to shipbuilder A as against shipbuilder B." If I may bring the matter a little closer home, the Government are taking over in this Bill a very large number of engineering undertakings. Those engineering undertakings will be buyers of steel. There will be independent undertakings outside doing exactly the same thing—making the wire and the hundred and one things which the Government are going to take over. It is legitimate for the Corporation to say that bridge building shall have a priority in steel delivery, and, I should think, a difference in price in basic steel, over some other type of industry. But what they are not to do is to give to an undertaking which the Corporation own, as opposed to an undertaking which is independent, better or cheaper supplies of steel, or preferential conditions in any respect. Now that is what "undue preference" means in law, in fact and in intention.

It has been said that if the Corporation—because it is the Corporation and not the Minister—consider it in the public interest, they may give a preference to their own nationalised subsidiary as against free enterprise outside. That 378 is exactly what we want to stop and, as the Minister has truly said, the judgment will be that of the Corporation and there is no appeal to the court. If these words are retained, the Corporation will be able to say: "I think it is in the public interest to keep my bridge-building works in work, or my tank works in work, or even my tennis racquet works in work; and, therefore, because first of all I am using the taxpayers' money and, secondly, I am employing the people hope will vote for me at the next election, I am going to decide that I shall give a preference to my subsidiary as against men in exactly the same class of business." That is exactly what this clause is intended to prevent. It is exactly what I thought the Minister was going to prevent when he accepted the earlier Amendment. No answer has been given to the very pertinent question posed by the noble Lord, Lord Hawke, as to what is the difference between "national interest" and "public interest." I suppose that when the Minister decides something it is in the national interest, and when the Corporation decides something it is in the public interest. The Minister has given no sort of reason.

If he will accept my view of what "undue preference" means—it means preference as between like people—it will not in the least stop him ordering the priorities of steel, it will not in the least stop him giving one price for export and another for internal consumption, and it will not stop him from saying how much is to go to export. As the Government accepted in the Transport Act, you must treat industries of the same kind equally, whether you own them or not, and you cannot discriminate. But as between class and class you can discriminate as much as you please. That is the intention of the clause. I speak in the presence of lawyers, and I think I am right in saying that that is what the law of undue preference means. If I am right, then surely there can be no possible purpose in keeping these words.

§ LORD LUCAS or CHILWORTH

I am sorry, but I still cannot accept this Amendment. There must be the power for this discrimination, and it may well be in the public interest that there is discrimination by the Corporation—

§ VISCOUNT SWINTON

Between firm and firm?

§ LORD LUCAS OF CHILWORTH

Yes, and if these words were omitted, they would have no defence that it was in the national interest for them so to discriminate.

§ THE MARQUESS OF SALISBURY

Could the noble Lord say anything further about what he means by "national interest" and "public interest"? It is a very vague phrase.

§ LORD LUCAS OF CHILWORTH

I am much obliged to the noble Marquess for reminding me. The reason why I did not reply to the noble Lord—I hope he will not think me guilty of discourtesy—was because I do not think we are dealing with that matter in this clause. If I may say so with great respect, the proper clause on which to ask for an interpretation is the Interpretation Clause. But I am willing to give it to him now. The reason is that "public interest" is a somewhat narrower concept than the "national interest." The public interest might include rather parochial affairs in a particular community, whereas the national interest is a far wider concept. That is the reason, and that is the only explanation. There is no sinister or ulterior motive in it at all.

§ VISCOUNT ELIBANK

What the noble Lord has just told us about the words "in the public interest" will vitiate the rest of the clause. He said that occasions will arise, or may arise, when it will be necessary to discriminate. Now what arguments can be advanced that it is not necessary to discriminate if these words are in the clause? It is not a statutory obligation. It simply means that the Corporation are in the position to do anything they like in the "public interest," and it vitiates the rest of the clause.

§ VISCOUNT RIDLEY

May I ask the noble Lord a question? Did I understand him to say in his last answer that it might be, and probably would be, in the public interest for the Corporation to exercise discretion as to prices, with the view to freezing out their competitors—

§ LORD LUCAS OF CHILWORTH

The noble Lord has no right to read into anything I said any such thing. He cannot put such words into my mouth. He knows I did not say it.

§ VISCOUNT RIDLEY

I did ask that question when I spoke before, and I thought that was intended to be an answer.

§ LORD LLOYD

The noble Lord did say that it might be necessary to discriminate between one firm and another in the public or national interest, whichever it was. I wonder whether he can given any explanation or example of what he had in mind? I think it would help the Committee to appreciate the noble Lord's point if he could give an example of where he would think it necessary to do that.

§ LORD LUCAS OF CHILWORTH

I cannot give the noble Lord an example, because so many contingencies may arise. I am hoping—I may not be successful—to persuade the Committee that there is redress when we come to the Amendment upon which we can discuss the whole question as to what action lies against the Corporation when undue preference is shown that should not be shown. I now speak without consulting my legal advisers and, therefore, noble Lords will have to take what I say with that reservation. But if you omit the words "public interest" from this clause, I suggest—and perhaps noble Lords who are more versed in the law will tell me if I am wrong—that we have no defence to say, "This was done in the national interest."

§ VISCOUNT SWINTON

I am afraid that we must divide on this question, but let us be perfectly clear what is the issue upon which we are dividing. Of course, there is going to be a right of action, but that right of action will be because a breach of this clause has been committed. If the words "public interest" are not in the clause, then a breach will have been committed where-ever a preference is given as between two people who stand on exactly the same footing. That is what the law as to undue preference has been for the last sixty years. If these words are retained, however, and the Corporation says: "I decide, as it is my statutory duty to do, because this clause gives me the duty to give an undue preference if I think it is in the public interest," then it would be idle to say, "You are wrong," and go to the court because what would the court have to decide? It would not decide on the merits of the case, whether it was in the public interest. 381 The most you could charge the Corporation with was that they had come to a dishonest decision of what was in the public interest. We had this question in connection with Regulation 18B during the war. The noble Lord says, in effect: "I claim the right for the Minister or the Corporation to discriminate, in what they are pleased to consider to be the public interest, between firm and firm." There you have an absolutely flat issue, and a principle upon which, though I regret it, I think we must divide.

§ LORD LUCAS OF CHILWORTH

Before the Question is put, may I say one word? Noble Lords were anxious that I should give them an example of discrimination, and I am now able to give them one. Take the case of two independent firms—nothing to do with the Corporation—making exactly the same kind of article, let us say generating plant. One is exporting and the other is not. The Corporation shows a preference in the supply of steel to the firm that is exporting. That is in the public interest.

§ THE MARQUESS OF READING

May I ask one question? The noble Lord took exception to our raising at this stage a distinction between "public interest" and "national interest." I find it rather difficult to know whether the right term in this clause is "public interest" as distinct from "national interest," and whether "national interest" is the right term instead of "public interest" in the next clause. If, as the noble Lord indicated, the Government draw some subtle distinction between these two adjectives, are they prepared -to include in the definition clause in this Bill a definition of the words "public interest" on the one hand and "national interest" on the other?

§ LORD STRABOLGI

Would it suit the noble Marquess if we were to use the words "public and national"?

§ LORD HAWKE

I started this hare of national interest and public interest and I feel that perhaps I have a right to comment on the noble Lord's reply. I do not believe he knows the answer. I certainly do not know it, and I should like the noble Lord to obtain the answer from the people who drafted the Bill, because they are presumed to know what every word in the Bill means. If, as I 382 believe to be the case, they admit they have drafted the Bill loosely, without any specific idea and that "national interest" could be substituted for "public interest" in that context, we shall have a situation in which a Corporation set up by Statute is to be an interpreter of the national interest—which is, in my view, entirely outside their scope. All the instances which the noble Lord has given of ways in which preference might be exercised are to my mind examples of what might happen in a planned economy, where the Minister would be giving directions to a Corporation as to how to exercise their functions. I suggest that it is wholly unconstitutional for a Corporation to set itself up as a judge of whether bridges or tennis racquets are more urgently required, and whether exports to one country, or another should have preference over the rest.

§ VISCOUNT RIDLEY

I should like to ask the noble Lord he will make one thing clear. He has spoken in regard to the supply of products, but I do not think he has said mach with regard to the prices at which products are supplied. My anxiety is the same as that of the noble Viscount, Lord Swinton. I want to be perfectly clear whether or not it is possible for the Corporation at some future date to discriminate between the prices for the supply of certain commodities to an outside firm, on the one hand, and to one of these controlled firms or their subsidiaries on the other. I should like to be satisfied that the words "public interest" in this clause do not mean that the Corporation could maintain that it was right and proper for them to prevent competitors competing with them on level terms.

§ LORD LUCAS OF CHILWORTH

I do not think the Corporation would want to do such things as the noble Viscount suggests. If a situation should arise such as he adumbrates, I should think an action would lie for damages for undue preference, since one firm would pay excessive prices.

§ VISCOUNT SWINTON

How could an action lie if the Corporation said, in effect, "We have decided to do this because in our opinion it is in the public interest to supply firm A, rather than firm B?" There is no appeal against the exercise of this judgment. And in this Bill you 383 are not merely giving the Corporation a power but laying on them a duty to exercise their judgment. There is no possible ground for an action.

§ LORD BALFOUR OF INCHRYE

As this debate has developed it is clear that there is a cleavage in principle between noble Lords on this side and the Government. The noble Lord claims for the