§ 3.46 p.m.
§ Debate on Second Reading resumed.
§ LORD LAYTON
My Lords, the Liberal Party will support the Bill before the House—but with some mental reservations. To Liberals, the form of organisation of any economic industry is not a matter of principle but one of expediency, as, indeed, the noble Lord, Lord Wilmot, has said. How can the public interest best be served? Clearly the answer depends on the nature of the activity concerned. None of us would disagree about the public ownership of the Post Office, although perhaps there is not quite such a unanimity of feeling about the railways. So far as Liberal opinion in the country is concerned, we feel that in the cage of the iron and steel industry the disadvantages of public ownership heavily outweigh the advantages. Technical efficiency, continuous development and change are essential in a commercial enterprise, as the noble Lord who has just sat down said, and especially so in a basic industry on which our future prosperity in this country depends more perhaps than it does in any other country in the world. In the debate on the Second Reading of the Bill in 1949 this issue was fully discussed.
It is possible—and indeed it happens—that because of the scale of its operations, protection by means of a tariff, and for other reasons, the monopoly element may enter into the iron and steel industry. But even when this happens, even when there is agreement on markets or on prices, it still remains essential that there should be competition inside the industry. It remains essential to preserve such elements of competition as the possibility of individual firms backing their view against. the orthodoxy of the moment in regard to technical pressure, in the matter of organisation, and in particular, of freedom to make appointments to staff.
The late Government made the claim, and the noble Lord who spoke last repeated it, that their scheme was something quite new: that by making the Corporation a holding company, and preserving the individuality of the publicly-owned companies, they were setting up something that was capable of 375 maintaining this essential element of inner competition, and at the same time finding the best way of securing the public interest. I am afraid that some of us do not agree with that view. We feel that it was inevitable that, under the system set up, though it would not happen in the first place, the industry would tend year by year to become more and more centralised. That is our basic reason for disagreeing.
§ LORD WILMOT OF SELMESTON
May I interrupt the noble Lord? Can he point to any evidence that that has occurred?
§ LORD LAYTON
Yes; but for the last year under the certain knowledge that it was going to be repealed. Actually, so far as its effective operation is concerned, it was only a matter of months. I suggest that, while it is true that this was a new experiment, the late Government did not make the best of this good intention. For example, it was a great mistake—I hope noble Lords will forgive me for putting it dogmatically, but one expresses one's opinions—to purchase all the stocks and shares of all the companies which were taken over, because it cut the line between the management of those companies and any part of the public; it made them dependent upon the Central Government. It was of no interest to anybody to publish individual reports. Why worry whether the chairman's speech appeared in the newspapers? The only place where you could find out about Dorman Long, or whoever it might be, was in the last pages of the appendix of an annual report. The real contact between the commercial public and the firms was cut. It also altered the situation radically from that of a normal holding company, in the sense that the shareholders were in continuous session. The concept of the shareholders in relation to a strong independent board of directors was utterly different, under the Act of 1949, from that of the normal relationship between a board of directors and its shareholders.
It was for that reason that your Lordships' House sought to strengthen the in- 376 dependence of the individual firms during the passage of the Bill through this House in 1949. For example, three Amendments were proposed on the Report stage. The first Amendment instructed the Corporation in quite general terms to decentralise as much as possible That Amendment was accepted and embodied in the Act. The second Amendment called upon the Corporation to prepare and table a statement as to the relationship between the Corporation and the individual companies. That was passed, contrary to the wishes of the then Government in this House, but was thrown out by the Commons. Finally, an Amendment was introduced to give to boards of directors for five years that degree of security of tenure which was given to them by their Articles of Association. That Amendment was resisted by the Government, and was not passed.
The noble Lord who has just spoken said that competition had been taken out of the iron and steel industry under private enterprise. Does he really think that it is kept alive under Government ownership? On the contrary, the only thing that will happen under Government ownership is that gradually, point by point, you will develop administration by rule. We support this Bill very largely because it divorces control from ownership. Liberals think that, in spite of the disadvantage of making another big change within so short a time, it is right to return the industry to private enterprise, rather than to attempt to amend the existing system of public ownership. But it is also right to establish a Board with powers of control. Clearly, that should not be the same body which deals with the financial problem, and although it may seem complicated it is quite right that there should be these two quite separate organisations. It also follows, and is sound in principle, that if the Board thinks it necessary to develop production, and no one is willing to do it on the terms suggested, the Government, and not the Board, should undertake the production.
From our point of view, one of the chief merits of this Bill is that it straightens out a confusion of functions that all too often arises in nationalised schemes. The Bill is also sound in establishing a link between the body responsible for steel policy in this country and the Authority recently set up to control 377 the coal and steel industries in the countries who are parties to the Schuman pool. This Coal and Steel Community which has come into operation just across the Channel will vitally affect British basic industries for a long time to come. Before the war, Britain produced approximately 10 per cent. of the world's steel. Ten years later, in 1948, it still produced 10 per cent. of the world's steel. But in 1952 that figure had dropped to under 8 per cent. The chief reason for the difference was the fact that in most countries of the world steel production had gone up, but the main item in the increase arose from the fact that in four years the Schuman group of countries, the six countries in the steel pool, had increased their output from 23 million tons to 41 million tons. Whereas these countries nearly doubled their output in those years, British output only crept up from 15 million tons to just over 16 million tons.
Your Lordships will at once say, quite correctly, that the major part of that increase in the European Steel basin was German production rising from the depths to which it had fallen after the war years. That particular increase will not be repeated. But the High Authority of the Coal and Steel Community is planning on the assumption of an increase of 1 million tons year by year for the next decade, which would bring the output of that Steel Community to some figure between 50 million and 60 million tons. The High Authority justifies this on the ground that in Europe the consumption of steel is far too low; that mechanisation has not gone nearly far enough, and that the ordinary worker in Europe has not sufficient plant at his disposal to maintain anything like the standard of living they are trying to maintain. Increase in consumption per head is rising and may continue; and if that is so the output figures suggested are not fantastic. But what is Britain doing to catch up on that tremendous increase? Is this Bill likely to put us on level terms?
May I look at the matter from another point of view? I do not think that any economist or politician believes that it is possible to maintain 100 percent. full employment all the time and to eliminate the ups and downs of trade. Supposing ups and downs occur, this country will be facing a greatly enlarged steel indus- 378 try on the Continent and one which, because it is united, may be much more efficient in competitive power than in the past. This is not the time or the place to discuss what our relations with the Schuman group of countries should be. But there can be no doubt at all that we must be linked in some way with the Authority set up by those countries. Therefore, in my judgment, Clause 4 of this which sets up the channel of communication between the new authority in this country and the Authority which has been set up in Luxembourg, is perhaps the most important clause in this Bill; and I congratulate the Labour Members in another place upon having secured -its inclusion in the Bill.
Mention of the Schuman Plan leads me to some critical comments to which I referred when I said that Liberals had some mental reservations. It is right to set up separate and independent Board-controlled policy. But does the Bill give the right powers and the right instructions? I confess that I find the provisions in Part II of this Bill vague and indefinite. The powers were summarised and explained by the noble Marquess, Lord Salisbury. The Bill instructs the Board toexercise general supervision of the iron and steel industry with a view to the promotion of efficiency and economy and of an adequate supply of iron and steel under competitive conditions.That is a rather familiar sort of clause, of a very general lend. The Bill does specify for this purpose that the Board shall keep under review productive capacity, arrangements for dealing with raw materials, promotion of research and training and arrangements for safety, help and welfare, and for joint consultation between employer and employee in the industry. It is to watch what is going on. The Bill does not, however, make very clear what policy is to be followed by the Board, or what powers it is to use. There are some powers specifically included in Clauses 5 to 12 but very little is said on the last three of those items.
As regards production, the Board is responsible for consulting and, therefore, for initiating proposals for development. In certain circumstances, it can veto proposals corning from the industry. But its positive authority for getting its proposals 379 accepted stems from the fact that it can recommend the Government to start production on its own account—tthat, in fact, is the sanction behind its programme. As to prices, the Board's powers are limited to fixing maximum prices which can be enforced in the courts; but there is no directive as to price policy. Your Lordships will remember that towards the end of the discussions on the 1949 Act the point was constantly mentioned that we should trust the Minister. In spite of what has been said by the noble Lord who has just sat down, the policy in regard to iron and steel was, in fact, left vague in a hundred ways. Yet we were asked to put our faith in what the Minister might do. I confess to a certain feeling that in the present Bill we are again setting up the machinery, although with regard to what that machinery of control can do we must just hope for the best.
§ A NOBLE LORD: And fear the worst.
§ LORD LAYTON
I have been led to make these comments after re-reading, during a visit which I had occasion to pay this last week-end to the seat of the High Authority at Luxembourg, the Treaty setting up the Coal and Steel Community. The Bill now before the House and the Treaty setting up that Community have come into being for different reasons. In some respects they cover different fields and are not, therefore, strictly comparable. I should be out of order in considering in detail the operations of that organisation, but there are certain respects in which a comparison of the Bill and of the Treaty can throw light on this debate. Both of them are concerned with the supervision of their respective steel industries by bodies which do not own those industries; and a large number of the economic clauses in the Treaty cover precisely the points mentioned in the Bill.
The most obvious contrast between the two documents, the Bill and the Treaty, is that the Treaty deals with policy in very much more complete and considerable detail than the Bill does. It is more specific and more widely drawn than the Bill. The consumers and the employees also play a much greater part in it. Like the Steel Board the High Authority will discuss programmes of development and, as I have already indicated, perhaps in- 380 augurate a very great increase in the production of steel. Like the Board, the Authority cannot impose reconstruction or extensions on privately-owned works; but whereas the Bill proposes to allow the Government to build works if they are thought necessary, the Treaty endeavours to secure the same result differently—by financial inducements; for it is empowered to levy a rate on the whole production of the six countries, and to use that fund as the basis of capital which will be used for the reconstruction of the industries of Europe. There is a very important and very powerful financial apparatus set up by that Treaty in the reconstruction of Europe's industry. I do not find anything in the Bill which is comparable to that.
In the matter of prices, the High Authority is authorised to fix maximum prices and to enforce them by imposing fines on an increasing scale for offences repeated or prolonged. But unlike the Board, the High Authority has the right also to impose minimum prices under certain conditions. That has led to the suggestion that it is a cartel. But it is very far removed from the kind of monopolistic organisation which is generally conjured up by the use of that word. Articles 58 and 59 of the Coal and Steel Treaty deal respectively with conditions of surplus (in the case of Article 58) and of shortage (in the case of Article 59). If a crisis is threatened—as it may be by a surplus over demand—production quotas may be introduced into the organisation, but only with the consent of the national Ministers of Economics and—this is an important point, which I want particularly to emphasise—only after consultation with the Consultative Committee which has been set up, consisting of producers, workers, consumers and dealers. Reference must be made to these same bodies also if there is a serious shortage. In the event of the declaration of such shortage, the High Authority may establish priorities and make allocations among the industries, subject to its jurisdiction for exports or for other forms of consumption. These powers, including the power to appoint minimum as well as maximum prices, may be felt to bear the stigmata of a cartel. If so, it is a very public form of cartel and one which operates with the support of public opinion.
§ LORD LAYTON
I will point the moral in a moment. I have indicated that we are going to compete with an organisation which, in its control, is developing and creating a powerful financial inducement. In the case of prices, the Authority has not only the power to fix maximum prices, but power also to fix minimum prices. And by fixing minimum prices it can endeavour to stabilise prices to tide over and meet the situation which may come through the ups and downs of trade. I am contrasting powers because my thesis is that the Bill gives no clear indication of policy for the Board, and that there is a vagueness about the powers which may be given to the Board.
§ LORD LAYTON
The contrast is with the organisation set up by the six Powers. There is no reference in the Bill to cartels, or to any possibility of having a price stabilisation policy. The only reference is to the fact that cases may be brought before the Monopolies Commission: in other words there is a prohibition only against high prices, whereas we are competing with countries which are trying to develop a price policy. My criticism of this Bill is on its vagueness in regard to the policy that should be followed by the Board, and the insufficiency of the powers which have been conferred upon it. I have already referred to the attempts made in this House in 1949 to secure from the Government a statement of the way it intended to work the Act, which left a very great deal of discretion to a new and untried authority. We asked that there should be a formal statement at the very beginning of the new regime indicating how that relationship should be established. I think that something of the same kind is badly needed in the present case. I ask the Government to consider whether, when this Bill conies into effect, they will table either in the form of a 382 directive or in the firm of a statement, made in consultation with the new Board, a policy which will give the industry and the public a better indication of the great tasks which lie ahead of it.
§ 4.13 p.m.
§ VISCOUNT BRUCE OF MELBOURNE
My Lords, I do not think it will be necessary for me to delay your Lordships at any length, but I have been somewhat closely associated with the iron and steel industry over the last few years, owing to the fact that the Finance Corporation for Industry, of which I am the Chairman, has found all the finances for the carrying out of the development programme after the announcement of the proposed denationalisation was made. I have been particularly interested to-day by the speech of the noble Lord, Lord Wilmot. The noble Marquess had indicated his views on the subject of nationalisation and private enterprise. The noble Lord, Lord Wilmot, followed him and said that he really agreed with what the noble Marquess had said. To me that was very refreshing, because I have spent a considerable part of my time over the last few years saying that the way in which this question of nationalisation and free enterprise was being magnified into a fundamental issue was a tragedy. What I have heard to-day has given me the slightest hope that perhaps our British traditional common sense is at last going to assert itself; that We are going to discard the idea that these things are great principles, and recognise that, while some great undertakings are suitable for public ownership, others, particularly those concerned with consumer goods or those entering very largely into international trade, are much more fitted for private enterprise. It is essential that we should get to that point, because to-day we are faced with our great obligation for rearmament and the vital necessity of increasing our exports. Unless we have an efficient, generally accepted and smoothly working industrial machine, there is no hope that we can achieve the objectives in front of us.
The other factor which I think we have to bear closely in mind when we are considering this measure is this. After all, steel is probably the most vital of all our forms of production: that was stressed by the noble Lord, Lord Wilmot, in making his point that it should be 383 under public ownership. It is so vital, that we must remember with regard to it that what is of vital importance in the case of steel applies also to a great number of other industries in the country. We have to remember that the two World Wars have completely upset the equilibrium of our financial and economic system and that, while before the First World War you could have private enterprise which went forward without very much regard to what the national policy, or even the national interest, might be, to-day Governments the world over have been forced to intervene on basic economic policy. It is essential that you should create machinery by which you will get the best out of private industry, but under which its efforts will be integrated into the overall national policy of the country. To a great extent, this measure has to be examined by us on the basis of whether it is going to do that and whether this is the best way to do it.
I venture to say that this steel industry had created for itself an ideal system for doing what we all believe is essential—that is, to make the greatest possible use of the initiative, the enterprise, the experience and the knowledge of private enterprise but, at the same time, to integrate what the industry was doing into the overall national policy. I would remind the House that this industry has done it. I have always regarded this industry as being an example to a good number of other industries in this country that I could mention as to how they ought to have conducted their affairs. The way it has been done is by the Steel Federation. That was completely a private enterprise organisation, composed of all the great steel producers of this country. But there was also the Iron and Steel Board, on which was representation of private enterprise, the trade unions, the public or the consumers, with an independent chairman. In 1945, the Government of the day invited the Federation to prepare a five-year plan to meet the needs after the war of modernisation of our steel works, and to meet the needs of industry over the succeeding five years. The Federation prepared that plan and it was submitted to the Iron and Steel Board. The Board approved the plan, with minor alterations, and it was then put into operation. There you 384 have a plan; you have all the best elements of private enterprise co-operating and the whole thing is integrated with Government policy. You have the approval of every section of the community—the trade unions, employers and consumers. That plan had been operating for about two years. The figure involved originally was £160 million, but it subsequently rose to £240 million. Great development projects had been undertaken when, suddenly the Government announced that they were going to nationalise the steel industry.
That might have caused something in the nature of a disaster; but, happily, it did not, because after the war, mainly on the initiative of Lord Catto who was then the Governor of the Bank of England, the Finance Corporation for Industry had been formed with a capital of £25 million and borrowing powers of £100 million. When it became apparent that the position would be utterly impossible for steel companies that had launched themselves on great projects and were committed to expenditure on projects that were started but not finished, and that no money could be got through the ordinary channels for the reason that nationalisation had been announced, I saw the authorities and I got their agreement to change the Act, so that if my Corporation advanced any money to carry out this development programme, should nationalisation succeed—and it was clear that it was going to take two years to do this—the Corporation would be repaid in cash and not in Government securities. The Act was altered, and as a result we undertook to find £54 million. Actually on the vesting date we had advanced just about £40 million, or a little over. If there had not been anything of that sort there would have been two years of frustration in the industry and, when nationalisation succeeded, an industry in an almost chaotic state would have been handed over.
Why should the Government have done that? I heard the noble Lord, Lord Wilmot, speak of doctrinaires and his detestation of them. But I think it is obvious that the original Steel Bill was brought forward entirely on a doctrinaire basis, because the idea of public ownership was subscribed to. That is evidenced by what I have tried to tell the House—that, above all, this was the one 385 industry that had really organised itself and was a model for all other industries. But that action was taken. I am in favour of this Bill. I should make it clear that I am not a doctrinaire on either side. I entirely agreed with the nationalisation of the coal mines; I entirely disagreed with this effort on steel. If I may say so, the noble Lord, Lord Wilmot, made what was on the surface a good case for how the Corporation "did its stuff" during the period it was in action. There was a slight dispute as to whether the period was one of one year or of two years. The period of time was two years, but the Corporation had a chance for only one year, or an even shorter period, of doing any job of work according to its own ideas.
It is quite true that during that period all the directors were not changed in all the companies. No doubt the figures quoted are quite correct. But I would say that, had the Corporation really been master of its own house during the second year, the figures quoted by Lord Wilmot would have been much higher than those he gave. An atmosphere was being created. I was closely in touch with the industry—when you have a very big stake, naturally you are closely in touch. After the Government came along and were responsible for our debt, I still had the association that had been created when we loaned the money. The atmosphere was getting more and more poisoned every day, and it was quite certain that once the Corporation went on to exercise its paramount control, we were going to lose the best men in the industry. The noble Lord, Lord Wilmot, left the impression that they did not control it; but, after all, one of his attacks was on the new Board. He said that it was going to be quite inadequate, that it was going to give rather irritating interference instead of real control of the industry. Surely that is the implication behind his words. If the Act which it is now proposed to repeal had gone on, it is clear in Lord Wilmot's mind that the Chairman and the Board of the Corporation were going to take in hand and control this industry.
I have made quite clear my belief in the necessity for real co-operation and, to some extent, real control over an industry such as this; but it seems to me that that is what this Bill provides. It 386 really restores what existed under the old Iron and Steel Federation-cum-Board—the organisation which was disrupted when the Bill for nationalisation was brought forward. I should be in entire agreement with Lord Wilmot if he said that under his Bill all the Board was going to be able to do was to interfere in a rather niggling fashion. The Board must do much more than that. They should be completely and absolutely independent. They should consist of the best meat that it is possible to get; they must exercise their influence over the whole of this industry. By the authority they will create, by their competence, and by their whole attitude, they will establish the desired position.
One point in the Bill frightened me a little, and that is the suggestion of the power of some overriding authority to the Minister. If you create a Board of this sort which is going to be subject to appeal to the Minister and will become an instrument of political pressure, then the Board will be useless—it will have no authority whatever, and the sooner it is got rid of the better. At first blush I saw a danger of that happening under this Bill. I am somewhat reassured by the two statements made by the Minister in another place. In his final speech he said:It is only when the wider interests of the nation are affected that in our opinion, the Government should consider intervening.He stated later on:Our intention is that there should be a Board which is a strong, independent, statutory body and not just an appendage of the Ministry of Supply.I am somewhat reassured by those words. I should rather that the Board were even freer than they are under this Bill. I see the Government's difficulty: that when it comes to wide issues of vital importance to the nation, one must retain some power of intervention; but I trust that the Government will carry out the intention expressed in the Minister's words in another place.
One other point, I understand that there is an idea—I think a statement about it was made by the Minister—that a certain number of the members of this Board are to be permanent and all-time. I think it will be completely disastrous if that is done. I do not believe you can possibly get the people you want, certainly from the great figures on the 387 management side of the iron and steel industry, to take on a full-time job with this Board. You could get them to give part-time service and they will be invaluable in doing it, but you cannot get them to do it full time. That means you are going to get second best on to your Board, and that is going to be thoroughly bad. I should imagine—I would not desire to speak with authority on it—that if a really top-ranking trade unionist who is vitally concerned in the iron and steel industry severed all his connections with his trade union to take a full-time position on the Board, it would mean that we should not get the best representation of labour on it, either. I make the plea that the Government should give a lot of thought to this matter before they commit themselves to the principle that any of the members of this Board must be full-time members.
I have another reason for holding this opinion. Having had a certain association with the iron and steel industry, I have a dim glimmering how this Board would operate, and I cannot see any conceivable job that would keep members of the Board in a full-time position. Yet if you put them there they are going to feel they have to justify their existence, and they will start getting into fields where they will do incomparably more harm than good. I make a plea to the Government for a reconsideration concerning full-time members of this Board.
§ 4.33 p.m.
My Lords, from the arguments put forward by the noble Lord, Lord Wilmot, I rather feel that he has not appreciated the fact that this Bill is not just a denationalisation Bill but, in fact, creates an entirely new organisation for the supervision of the iron and steel industry. I am personally interested as a considerable buyer of steel that we should have a really fine organisation. We are not just tearing down the 1949 structure without putting anything effective in its place; we are, in fact, setting up an instrument of supervision over the whole of the industry rather than dealing with certain parts of it as was done under the 1949 Act. I think it is true to say that we are all agreed that there should be some form of supervision in this great industry, and 388 this Bill, I maintain, is a most effective and flexible method of attaining this end.
I certainly do not deny that there is a difference of opinion between us on this side of the House and noble Lords opposite as to the method of supervision of the industry. We maintain that the steel industry can best be served under the stimulus of free enterprise, with suitable safeguards and supervision by a Board who thoroughly understand the industry rather than by the dead hand of public ownership. The noble Lord, Lord Wilmot, who I am sorry to see has just had to leave his place, said that the 1949 Act established a middle of the road organisation. I am afraid the answer is that the organisation which was established would soon move well out of the middle of the road and into the byways of extreme bureaucratic control. It could not do otherwise, as the Iron and Steel Corporation were charged with financial responsibilities and control of the industry. I think the noble Lord said that the new organisation is rather like a car with brakes and no acceleration. I would say that it is a more modern one, with a fluid flywheel that is perhaps able to smooth over any difficulties that might arise.
I have no doubt that the Bill will give the Board all the powers necessary to enable it to discharge its duties in a satisfactory manner in spite of what was said by the noble Lord, Lord Layton. But we also believe that it is the responsibility of the Government, and not the Board, to decide what are the wider national interests, and this has been allowed for in the Bill. On the other hand we are not prepared to give the Government unlimited powers over the Board. In fact, in another place, the Opposition endeavoured to obtain more powers than were provided under the1949 Act, and I hope we shall be spared a similar endeavour in this House. Surely it is far better for the Board to handle the industrial and technical matters that may arise, rather than a Government Department, and in our view private enterprise should be allowed to manage its own affairs as far as possible, so that incentive and flexibility in management is retained. I would further emphasise that this is one of the reasons why we propose to bring to an end the Iron and Steel Corporation, which will be one of the effects of the passage of this Bill.
No, it was a public body. The noble Lord, Lord Wilmot, also sail that no reasons have been given to-day for the new Bill before the House. I will try and give one or two reasons. I suggest that the steel industry is quite unsuited to bureaucratic control by a public board like the Steel Corporation, because of the difficulty in defining the border-line between iron and steel making and general engineering industries. As noble Lords are aware, the 1949 Act did much more than—in the words used—"nationalise appropriate sections of the iron and steel industry." It brought under the control of the Corporation a good many firms engaged in general engineering. Steel firms were nationalised if they produced over a certain tonnage of steel, and this policy left some steel firms under private ownership. Many of these private firms not only produced steel but were engaged in the finishing field. The result of this policy has been that the Corporation has had control of the major part of steel making but only a part of the finishing process.
As a result, this policy has upset the organisation of the industry, such as the conference system and the competitive balance of the member firms. The tendency is naturally for the Corporation and the private firms to drift apart, and there is nobody in a position to speak for the industry as a whole in its relations with the Government or even to provide common services, although, as I think was mentioned by the noble Marquess, the Iron and Steel Federation has continued to give these services. In the past the industry has been organised on a product basis through the conference system. Now the Corporation has a majority on many of these different conferences which handle the different products, but the Corporation does not and cannot take much interest in the minority. I suggest that competition between the Corporation and private firms can hardly be fair when private firms are dependent on the Corporation for their raw steel and the Corporation is their principal competitor in the finishing processes.
It was said by the noble Lord, Lord Wilmot, that there has been little change in the working of the industry since 1949. 390 On the contrary, I would say there has been a great deal of gradual change for the worse and it has been going on all the time, more or less on tie lines I have put forward, and if allowed to continue would undoubtedly have a damaging effect on the industry, though luckily it has not gone far enough to interfere with production. If the Steel Corporation had been allowed to continue many changes would have taken place which would have involved more control of the companies and would have created among them an over-cautious and bureaucratic outlook. It was not so long ago that changes in the board of a large steel company were made by the Corporation, and the Socialist idea that the Corporation would be simply a holding company cannot be substantiated. I have endeavoured to point out one or two reasons for the introduction of this Bill. We are determined to set up a really comprehensive and flexible system of supervision of the iron and steel industry and one which will at the same time allow the maximum freedom for the companies concerned, and I feel sure that it will produce a lasting and efficient organisation.
§ 4.40 p.m.
§ LORD OGMORE
My Lords, I think that on all sides there is a realisation that this Bill represents a distinct change by the Government. We were told during the Election campaign, and we have been told since, that the Government stood for freedom for the little man. But in this Bill neither the little man nor steel is set free. It is, in fact, a transfer from nationalisation to trustification from the Steel Corporation to Steel House. The Board's duties are wide, but, as my noble friend Lord Wilmot, has pointed out, its powers are narrow, almost minute. The noble Viscount, Lord Bruce, has confirmed that view today. He said that he could not conceive what the Board was going to do with its time, and he suggested that its members should be either reduced in. number or part-time members. The Bill creates a statutory ring to avoid the! scrutiny of the Monopolies Commission. It has all the evils of private monopoly; with none of its few advantages. The noble Marquess, Lord Salisbury, described it as a spur. He did not say upon whom the spur was to act but I 391 presume he meant the steel owners. But there is no spur here at all. I do not like to use the term "feather-bedding," because that is now patented with reference to the farmers, so I will use the word "sofa." It is a sofa, a half-way house, a limbo into which the industry is put. The Bill permits the creation of "Breakages, Limited and we shall expect in due course to see Mr. Crassus, its creature, in the Government.
The Iron and Steel Holding and Realisation Agency is created by the Government for a specific purpose. I suggest that that title is a complete misnomer. In the Transport Bill the Disposal Board could not dispose. In this Bill, the Realisation Agency will not, so far as a considerable proportion of the industry is concerned, be able to realise. It will, as the noble Lord, Lord Wilmot, has pointed out, certainly sell the profitable undertakings fairly quickly. It will have to keep, maybe for years and maybe for ever, the unprofitable ones, which, however, may be intensely important both to the country and to the industry. The duds, like the poor, will be always with us, the taxpayers. It is a sad thing to think of many of these great industrial undertakings being hawked around, as it were, from door to door. The Government and their friends, the industrialists, are to be congratulated upon this Bill, because it is the finest three-card trick in history. No thimble-rigger at a fair, no seller of gold bricks in Piccadilly, can ever equal this transaction. The public will be left with the most monumental gold brick, in the shape of these unsaleable industries. It must be at the moment the prayer of every industrial magnate: "God bless the Government, and may the supply of 'suckers' never run dry!"
The difference between our plan and this is one of great moment. It has been succinctly put by the noble Lord, Lord Wilmot of Selmeston, and I will not detain your Lordships by traversing it in detail. But I should like to ask the Government why they are changing. The noble Marquess, Lord Salisbury, said today that we on this side of the House would regard it as morally wrong to change. We do nothing of the sort. We do not in the least say that it is morally wrong. If the Government believe that 392 it is industrially right and commercially right, to do so, they have every right to change. But we say that it is infernally foolish to change at this particular time and in this way. The noble Lord, Lord Layton, said that under the 1949 Act there was certainty of centralisation, and he was supported by the noble Lord, Lord Teynham. But neither gave any evidence at all in support of that contention. The only evidence they gave was that the original Act, under which the industry is now controlled, had been in force for so short a time that there was no evidence either way. Why is there this Tory desire to change? Why do the Tories want to change everything? Why are they so doctrinaire? If the system is going well—as I hope to show that it is—leave well alone.
The noble Marquess said that we should be able to keep an eye on the industry as a whole, because every year the Board which the Government are setting up would publish a report. We do not have to be long in Parliament before we realise the value of a report for keeping an eye on anything, especially if the report is written by civil servants. In the first place, the report generally comes out months late. Just recently there was a debate on Wales, and it was admitted by everyone that the report dealt with in that debate was completely out of date. That debate, of course, took place in another place: we have not had such a debate here. But it was seven months before that report was considered. Then, too, reports usually deal in rather a vague and nebulous way with current happenings. They do not give any real illumination on what is happening or what is likely to happen. As a rule, there is no forecast in any Departmental report. Your Lordships may remember that we criticised the Colonial Report on that very ground. If your Lordships will look at the Economic Survey for 1953, published this morning, and turn to the paragraphs, nebulous as they are, dealing with steel, your Lordships will see clearly that there is very little guidance to be obtained there for this debate. So, really, if that is to be the sheet anchor of the public, that they can read a report issued every year by the Board, in order to keep any sort of control of the industrial matters, it is a sheet anchor that will soon become fouled.
393 The position is this: I think we may as well realise it—as, indeed, I am sure most of us do. The first post-war development plan with reference to steel was approved by the Government in 1946. It was a plan to modernise the steel and tinplate industries, and to raise the production of steel from 13 million ingot tons a year to 16 million ingot tons a year. In order to achieve this objective, it was necessary to expand pig-iron production from 8 million tons in 1946 to an annual rate of 10½ million tons. On this development £300 million was spent. Both these objectives have been achieved, and both have been achieved before the time set for their achievement. And in the process the productivity in labour increased by 25 per cent. There was also a very great increase in tinplate production—indeed, that increase is one of the reasons for the unemployment in the tinplate industry. We had figures given is recently, in the course of a short debate in this House, so I will not weary your Lords-ships by quoting them at length to-day. But there is a very great increase in tinplate production. Three works in South Wales will soon be able to produce all that is required to meet the total demand that exists at the present moment for tinplate—three works instead of 200. Those are magnificent achievements, and I think great credit is due to the industry and to the Government, the joint partners in this particular expansion.
Now the second plan, based on the success of the first, was to increase steel production to at least 20 million ingot tons a year, and pig-iron production to 15 million tons a year. In order to enable this to be achieved, the National Coal Board will have to increase the coking coal supply by more than 7 million tons a year to meet the demands on them. I have not so far noticed any mention by noble Lords opposite (they have not, of course, said that they are not going to deal with it) of the question of coking coal, which is an important factor in this matter. We cannot get more steel unless we get more coking coal, as we in South Wales realise only too well. This plan was submitted in November last to the Minister of Supply. Apart from the question of coking coal, with which, presumably, the National Coal Board will deal, a vast 394 expenditure will have to be made for new coke ovens, rolling mills, blast furnaces and open hearth furnaces, and ships and carriers to bring ore to this country. It will be an enormous expense, affecting not only the steel production industry but all the industries that go to make the finished product. The total cost of the second plan is estimated at £250 millions. Where is the money coming from for all this? We hear these enormous sums bandied about, but where are they coming from.
During the tinplate debate in your Lordships' House the other day, I mentioned Mr. Lever, the chairman of the Steel Company of Wales. That was an important debate, in the sense that an important industry was discussed, but not, I regret to say, with much satisfaction, so far as the Government reply was concerned. The noble Lord who replied did his best—I am not complaining about that—but the Government, as a Government, did not come out of it particularly well. Mr. Lever was speaking on the 19th of this month at Port Talbot, and this is what he said on the question of finance:The scale of modern industrial organisation meant that money was wanted on a large scale. The great industries wanted to count on having the money as and when they needed it.'The money may not be there at the right time and the right price,' said Mr. Lever. 'Indeed, it may not really be there at all.'Taxation was not leaving in the hands of persons or companies the surplus ever their needs which they used normally to invest, but worse than that the redistribution of income tended to put additional money into the hands of persons who had no easy way to invest in industry.'How, then, is industry going to find the money it needs for capital development? 'asked Mr. Lever.Clearly he did not know. He assumed that it might be possible to get some out of the insurance companies, and he made one or two rather pertinent remarks about insurance companies.
My Lords, I am sure the noble Lord will admit that the iron and steel industry found £350 million for their five-year plan quite easily.
§ LORD OGMORE
After all, Mr. Lever is one of the people who will have to find the money if this plan goes through. It is all very well for the noble Lord, Lord Teynham, to say that it is quite easy to find £250 million. They found the £350 million with the backing of the Government. The whole point of Mr. Lever's address at Port Talbot was that he did not see how he was going to find the money and he asked how the steel industry was going to do so. I have great respect for the noble Lord, Lord Teynham, and for his ability, but in this matter I would rather take the doubt of the man who has to find the money than the confidence of the man who has not.
May I turn for a moment to the position in South Wales, because it is a very important area as regards to steel, as I am sure your Lordships realise? Approximately two-thirds of British steel sheet, and vast quantities of other steel products, are produced in South Wales. So when we talk about the British steel industry, we are talking largely about South Wales. This should be the South Wales Iron and Steel Bill, because we have for so long produced much of the important products of our steel industry.
§ THE SECRETARY OF STATE FOR COMMONWEALTH RELATIONS (VISCOUNT SWINTON)
My Lords, there are one or two other areas that produce steel. As a Yorkshireman I must protest.
§ LORD OGMORE
Yorkshire produces a lot of other things, and it has produced the noble Viscount. I am sure that it is very proud of its products. I am giving the figures, and if the noble Viscount wishes to correct me, I will willingly stand corrected.
My Lords, there are many other kinds of steel produced elsewhere, as the noble Lord knows well. He referred to coking coal. South Wales is not the only place from which coking coal comes.
§ LORD OGMORE
I grant that. In this House, as in another place, no doubt we tend to exaggerate the importance of the part of the country in which we are interested. It is true that South Wales has a considerable stake in the steel industry, 396 but as the noble Viscount, Lord Ridley, has said, other parts of the country take their share. We must not over-exaggerate our importance, but I want to bring South Wales into this picture, because it is important to us. Although other areas, like Yorkshire, produce steel, that is not so important to them as it is to us, because heavy industry, wrongly but in fact, has been our life-blood; and if that goes wrong, there is not much that can be done to save us.
As your Lordships know, between the wars Wales suffered badly from industrial unbalance. The Distribution of Industry Act of 1945 provided a more balanced structure, with heavy industry at the base of the pyramid and built upon it tiers of light industries and companies manufacturing consumer Roods. In heavy industry there was already Ebbw Vale and now there are the new strip mill at Margam and the tinplate mill at Trostre. In a year or two, there will also be the new mill at Velindre. Margam will roll thin plates, as well as sheet. The largest blast furnace in Europe is now being built at Shotton, in Flintshire. What does this add up to? The great strip mills at Trostre, Ebbw Vale and Velindre are replacing the 200 hand tinplate works in South Wales. The Margam works are a beacon for the future. The day of the small steel works is over, as the day of the small tinplate works is over. The light metals and alloys have arrived. Ten years ago the volume of the output of light metals and alloys was less than one-ninth of the steel output of this country. To-day it is one-sixth; and in a decade it may be one-third.
Then there are new discoveries, such as sypheroidical graphite cast iron, which is one-fifth stronger than cast steel, and titanium, which, with half the density of steel, does not corrode. It is an alloy half-way between aluminium and steel. It is a wonderful metal for using for aircraft, because it is so light and has such tensile advantages. Aluminium alloys and aluminium metals have captured many former steel markets, and wrought magnesium alloys are being used more and more. This new age is an aircraft age, and for the construction of aircraft strong, light metals are needed. These metals have brought many new challenges to steel. Wales and steel are largely meeting them at Margam, but they can be 397 met only by large capital outlay, by intensive research, by new techniques, by the sort of integration that nationalisation provided. This is the jet age and we cannot go back, as in this Bill, to the horse and buggy age In South Wales we fear that the intensive competition which steel has to meet will not be met by a return to the old "catch-as-catch-can" conditions of pre-war days. Furthermore, the danger is that the delicate and intricate pyramid structure that I have described, a structure carefully built up, may be rudely overthrown by blundering Ministers and grasping industrialists. That is what is feared by many people in South Wales.
In a powerful speech this afternoon the noble Viscount, Lord Bruce of Melbourne, talked about the steel magnates. We have had experience in the past of coal owners, steel magnates and iron masters; and, quite frankly, we in Wales are through with them. They landed us between the wars in a terrible mess, and we thought that that was a page of history that would never again be turned. Between the wars our mines were despoiled of the best coal—a problem which the National Coal Board are now up against; our industries were left to decay; our people were driven out by unemployment in a sad exodus to the four corners of the world; our skilled workers were singing in the gutter for bread. That is the situation which we fear may once more be brought about by this Bill; and that is what Wales cannot and will not stand again.
§ 5.2 p.m.
§ LORD JESSEL
My Lords, as this is the first occasion on which I have had the privilege of addressing your Lordships' House, I ask for the usual indulgence given to people undergoing such an ordeal. I have not had the advantage of House of Commons experience, as have so many speakers nowadays when they first stand up in your Lordships' House. I should like straight away to disclose my personal interest in the matters about which I propose to speak. I have for many years been employed in an industry which both produces and consumes its own iron castings. So, naturally, my arguments are directed to expressing that point of view. However, it is with the position 398 of the iron foundries that I am even more concerned—that is to say, those foundries which are not tied to any particular concern but which make for all and sundry. It is paragraphs (d), (e) and (f) of subsection (1) of Clause 3 which, in spite of the Amendments inserted by the Minister of Supply in another place, disturb the iron founders. I understand that the steel founders are more or less satisfied with these Amendments, but the iron founders are definitely not of that view. They see no reason why they should ever have been included in this Bill and put under the supervision of the Iron and Steel Board. Other noble Lords will no doubt put forward many arguments on this broad aspect, but I should like to draw particular attention to Clause 3 (1) (f).
Iron founders and steel founders are part of the engineering industry, not of the steel industry. Their production unions are different from those of the steel industry, as also are the hours of their guaranteed week. Therefore, we say it is wrong in principle that the Board should have the right of interfering in the delicate machinery of industrial relations in this section of the engineering industry. Up to a point, the Minister seems to have appreciated this view, because he took out the tied foundries from this field of supervision when the Bill was before another place. But the existing foundries are still left in. Surely, this is illogical. We feel that the Iron and Steel Board may introduce measures for the existing foundries which will cut right across the existing consultation machinery of the engineering industry, which up to now has applied to tied and independent foundries alike. My friends fear that the Iron and Steel Board may be prevailed upon to make regulations which are out of step with those what exist in the tied foundries.
I have no doubt that the Minister and the Parliamentary Secretary are quite familiar with the arguments that I have attempted to advance. I know that there have been many meetings, that many letters have been exchanged with representatives of the iron and steel founders. But the Government have refused to alter their attitude in regard to these independent foundries. The argument of the Government has been that, although they intend that the Board should retain its powers of supervision, there is no inten- 399 tion that the powers should be used, and that the Board would not dream of interfering with the existing negotiating machinery. Then why are they so anxious that the Board should retain these powers?
The Minister has also used the argument that it is undesirable to exclude from the provisions of Clause 3 of the Bill any particular group, just because it is a party to specific agreements or conciliation machinery. This may be the view of the Government, but what they are now saying cannot be done has, in fact, been done in the past. It was done in the Road Haulage (Wages) Act, 1938. There was a special clause in that Act which prevented the Minister from referring matters to the industrial court in cases where there were already in existence arrangements for the settlement of disputes. Is it too late to insert a clause of that kind into the Bill which is at present before your Lordships?
My friends feel that the trouble is that, in regard to foundries, the Minister of Supply got off on the wrong foot. I gather that when the Bill was first presented the Minister was under the impression that the majority of the iron and steel founders were happy about Clause 3. I feel sure he now realises that that was not the case. The iron founders have held a ballot, under the auspices of Messrs. Price, Waterhouse and Company, and 93 per cent. of the votes cast were against inclusion in the Bill. Therefore it cannot be said that there is any doubt to-day about the views of the iron founders. As a supporter of the Government I must apologise for speaking critically, but I have been so impressed by the volume of dissatisfaction expressed to me by iron founders that I felt it my duty to speak as I have done.
§ 5.8 p.m.
§ LORD BALFOUR OF INCHRYE
My Lords, I am sure it is the wish of your Lordships in all quarters of the House that we should congratulate the noble Lord, Lord Jessel, upon the maiden speech he has just delivered. He has expressed a positive point of view, and he has demonstrated a combination of fluency and technical knowledge which I am sure we are all glad to welcome in your Lordships' House. We undoubtedly 400 look forward in future to further contributions from the noble Lord, presented with the same knowledge and fluency.
I rise for only a few moments to speak on one point, which I propose to address to noble Lords who form the Opposition. It is this. Have we not, in regard to the iron and steel industry, now arrived at a time when we might between us declare political peace? I believe that political peace is as important to this industry as the industrial peace it has enjoyed for so many years past. One asks oneself this question: Must this industry work always in the future with the threat of political action against it, quite irrespective of whether it has done well or badly, whatever may be the national interest in two or three years' time? If the national interest is best served by this industry enjoying the success which we on this side of the House feel sure it will enjoy, irrespective of the economic conditions which may be ruling in two or three years' time, if the noble Lords come into power are they really pledging themselves to reverse what is being done now? If they are, then I submit to your Lordships that such a pledge is not a proper or a patriotic one to give in the national interest.
§ LORD WILMOT OF SELMESTON
Will the noble Lord forgive me? This is a Government Bill which is tearing up the peace of the industry at the present time.
§ LORD BALFOUR OF INCHRYE
I am coming to that in a moment. No one has claimed that the short period of eight months during which the organisation which is now being done away with has run has had a harmful effect or a particularly good effect.
§ LORD BALFOUR OF INCHRYE
But the Labour Party Act dealt with an industry which, unlike that described by the noble Lord, Lord Ogmore, was a successful industry. Once the protective tariff was put on, the steel output of this country increased between the wars by, I think, 35 per cent. as compared to America's 12 per cent. The Socialist Party were interfering, for political purposes, with an industry which was rendering a tremendous and successful national service and was enjoying industrial peace.
§ LORD BALFOUR OF INCHRYE
No. This organisation set up by the Socialist Party has been functioning for some eight months, as it were, living on the momentum of what had been going on before. Surely, whatever our political views may be, it cannot be right for an industry as vital as the steel industry to be subject to a Socialist Party pledge to renationalise, irrespective of what the conditions may be in two or three years' time. Here is a proposal in this Bill for a marriage between State and private enterprise. As my noble Leader Lord Salisbury said in his speech, it does not please the extremists who want nothing but private enterprise on the one hand, and it does not please the Socialists who want nothing but State enterprise on the other. It is a marriage between private enterprise and the State and, broadly speaking, it is acceptable to all elements functioning within the industry.
I ask the Labour Party whether they should not hesitate before committing the industry to years of uncertainty and the prospects of a third upheaval. We may differ politically, but I am sure that noble Lords opposite have the national interest at heart, just as we all have. We may have different political ideas as to how we can achieve national interest, but fundamentally we are all patriotic citizens; and if, in two or three years from now, this industry is fulfilling its purpose, functioning satisfactorily and serving, in the broadest sense, the national interest, could it not be left alone to progress and develop along the lines of the success which it has been enjoying for many years past and which was unaffected by the short period of eight months when the new organisation was functioning?
§ LORD BALFOUR OF INCHRYE
We are arranging a marriage between private enterprise and the State in an industry which was successful for many years past and which would have been 402 brought to failure had the experiment of the 1949 Act been allowed to continue.
§ LORD WILMOT OF SELMESTON
Will the noble Lord give me one shred of evidence that there is any sign of failure in that industry to-day?
§ LORD WILMOT OF SELMESTON
The noble Viscount, Lord Bruce, made no such contention. He knows the industry far too well.
§ LORD BALFOUR OF INCHRYE
The noble Viscount, Lord Bruce, said that the ever increasing centralisation was creating feelings of frustration and bitterness. The noble Lord has only to read Hansard to-morrow to see the opinion of the noble Viscount, as to how the industry was going under the set-up for which the 1949 Act was responsible. If I may say so, the noble Lord, Lord Wilmot, is getting rather hot under the collar. What I want to try to say to him is this. If there an industry which was successful from 1930—from the tariff time right up to the war—and if there is an industry which contributed an essential service in a magnificent way during the war years, and we now wish to put that industry back so that it can continue those services, and remove it from the dangers of what we call political nationalisation, surely the noble Lord and others are big enough to say that they will not let motives of political revenge or doctrinaire views or Party pledges commit them now to renationalising the industry if and when they have the power.
I believe we are on common ground when I say that the steel industry has to play a vital part in our armaments over the next few years and, also, since Mr. Butler has committed us to the multilateral world trade policy, that the steel industry will have to face heavy competition. I do not think that the national interest will be best served if during the next few years this uncertainty is to hang over its head. There is no question but that it does. The noble Lord has but to look at the concluding speech of the ex-Minister of Supply in another place, Mr. Strauss, winding up on the Third Reading, when he pledged his Party to repeal this Bil1 and to renationalise the 403 industry as soon as they had the opportunity so to do. If the noble Lord wants the quotation it is col. 2910 of the OFFICIAL REPORT for March 17. The final words of Mr. Strauss are very clear. It is out of order to quote verbatim proceedings in another place, but if the noble Lord will read it he will see that the pledge was clearly given.
In the calmer atmosphere of this House one would not ask any of the Leaders of the Opposition to throw over Mr. Strauss, but could they not say that the pledge given by him for renationalisation is, of course, subject to the overriding national interest as and when the time may come for them to have a chance of doing it? It is not an unfair suggestion. After all, we as a Party were given a mandate for resuscitating university representation, but the Government considered it not politically right or justifiable to fulfil that pledge at the present time. If we can do that over one thing, surely the Opposition can do it over this. We feel that we are passing a measure which is going to help an industry which has achieved much in the past, and it will be the responsibility of the Opposition if that industry is to continue in a period of uncertainty as to whether it will be renationalised for the purposes of fulfilling a Party programme.
§ 5.20 p.m.
§ VISCOUNT DAVIDSON
My Lords, it is not often that I have the honour of addressing you, and on this occasion let me first declare my interest in the subject which we are debating. I am afraid the noble Lord, Lord Ogmore, will not be too pleased, but I am sure I shall get a hearing from both the noble Lords, Lord Calverley and Lord Lawson, because they are concerned with a part of the country which I regard as the greatest steel-producing area, and it is there that my interest lies. I felt that the noble Lord, Lord Wilmot, was in some difficulty. He found it difficult, I think, to criticise this Bill, for the simple reason that it is not. as some noble Lords have said, a completely denationalising Bill it is a Bill merely to produce a much more efficient system of running an already efficient industry. I am not going into detail, because the Committee stage will provide abundant opportunities for doing that, nor am I proposing to discuss technical points. But I should like to 404 make a few remarks on two subjects of the Bill—first, control and, secondly, ownership.
Now, under the provisions of this Bill control will be handed back to those persons who know how to run the industry. It is not a criticism of civil servants to say that they do not know how to run the industry. It is not their job they were not trained for it. I ought to know: I was amongst them for a great many years of my life, and a more efficient service no country has ever possessed. But the fact remains that they are not qualified, either by training or by their responsibilities, to run, control or advise a highly competitive industry which must, if it is to succeed and to compete successfully in the markets of the world, remain in the hands of the persons who have the training.
§ EARL JOWITT
May I interrupt the noble Viscount? Surely the civil servants are not running the industry. The noble Viscount is a master in this industry and I am not, but I should like to know to what extent civil servants are taking any part in running or controlling this industry to-day.
§ VISCOUNT DAVIDSON
Perhaps I might answer the noble and learned Earl by saying that one of the difficulties with which the steel trade has had to contend (and would increasingly have had to contend, owing to the centralisation which has been referred to) has been that there is between the consumer and the producer a thin red line of persons who deny them that close association which this Bill will give back to them. That applies particularly to consumers in the engineering industry. When it comes to control, the Board which will be set up will be manned, according to the Bill, by persons who will represent all the partners in the industry, under an independent chairman, and certain other persons with high qualifications. The overriding power will rest with the Minister, because the steel industry is a national industry which must ultimately serve the national interest.
What, I am sure, is not appreciated is this—and I hope Lord Ogmore will forgive me if I say that it really is not much good quoting the iron and steel industry between the wars. If you look at the board of the company of which I have the honour to be a member you will see 405 how much the industry has put its management, its production and its efficiency into the hand, for direction, of experts of the highest degree and servants of the greatest technical knowledge. There may have been times—there were times which I remember well after the First World War—when the engineering industry, including large armament firms, thrust out branches into South Africa, and firms opened pulp mills in Newfoundland. But nowadays you can accept it as a fact that the great steel industry is managed and controlled as efficiently as possible by the Boards that are left. That is why I believe it is equally true to say of the men, as of the management, that they want as little interference from Government and as much freedom as possible to run their industry. If they are going to be controlled by a Board, then let that Board have knowledge of the industry, so that we can sit down and discuss things together.
The other matter which I should like to mention is this. There is among the people engaged in the steel industry a great loyalty to their companies. I am speaking for myself only and in no way as representing the trade when I say that in my own experience, moving as I do amongst the men and management, I find that there is one great hope among both these sections of the industry, which is that having been given their freedom, they will not be interfered with again and will be allowed to go on in peace. I wish now to come to the other subject I mentioned—that of ownership. Noble Lords have suggested that it is not ownership that matters—but it is a very odd experience to attend an annual general meeting with only one shareholder present so that there is not even one to second a resolution. I myself—and again I am speaking personally and not for anyone else—sometimes dream dreams about this; I would much prefer to have 40,000 shareholders—
§ VISCOUNT DAVIDSON
They would come all right. Many of them would be employees, whether among the management or from the floor of the factory. They would have their own interest in the company and they would certainly 406 come. I believe that one of the things that would produce the finest results, and the beginnings of which are contained in this Bill, would be what has come to be called a property-owning democracy. That would result from these people having a stake in the enterprise. That opportunity would be completely denied to them if this great industry remained in the ownership of the State. This is a long-term view. But sooner or later I believe that this country will find itself in a situation in which we shall have a great progressive private industry under conditions which will enable its operations to be flexible and enable it to compete in the markets of the world.
If I may recall a speech which I made on the Second Reading of the other Bill, would say to your Lordships that one of the problems is that however much you may try to disguise the fact that the Government owns the industry, you will never deceive the foreign customer. It is all very well to say that these companies kept their names, but everyone abroad knew that they were owned by the State. I remember that between the wars, when the country was in the depths of a depression, a thing was done which no Government would or could have done. The companies in which I am interested took a great gamble to keep their men employed. They went out and built the Sydney Bridge. It was a tremendous gamble but the men were kept employed. We got other bridges and we got more men employed. That is private enterprise. No Government could have faced the potential loss, which fortunately in the course of time righted itself. It was a potential loss which no Government could have asked another place to face.
That is what we want to get back. We want to get back the initiative; we want to get back to the quick decision; we want to get back to the situation where private enterprise can go out into the world, take quick decisions and get trade. One last point is this. The steel trade is the provider of the greatest exporting industry, on the engineering side, in this country. In order to provide the maximum of the right type of steel at the right price in the right place, it must be left to co-operation between the consumers who want it and the men who produce it. Under this Bill there will be 407 a far greater measure of that co-operation than could exist under the present Act.
§ 5.32 p.m.
My Lords, like the noble Viscount who has just spoken, I must declare my interest. It may be that the noble Lord, Lord Ogmore, will be even more critical of me than of the noble Viscount, Lord Davidson, because of my being connected with both the production of steel and the use of steel, and also with iron foundries. I think that this Bill is much clearer than the Bill which we have recently been discussing on road transport, at least, in regard to that part of that Bill which dealt with denationalisation. In that case the unit which had been built up since nationalisation was to be disbanded and sold, while in this case there are units which have not yet been built up under nationalisation proposals and which are to be sold back.
The procedure adopted after nationalisation, as has been said by many noble Lords, was to leave the companies as they were. No claims could really be made either for or against the success of that system because it had practically no time in which to operate. It is generally agreed that, after the previous Election and the change of Government, nothing had yet been done to alter the industry; but there was a general feeling amongst those responsible for the industry and engaged in it that great changes were likely to be made had there not been the present change of Government. It is widely held that plans were afoot for amalgamations, for the combination of plants and for the moving of plants which would have made very great changes. It is doubtful whether changes of that sort are either necessary or even possible in the industry as we know it to-day. It cannot, therefore, be said that to change back will cause any upset. I do not think it is going to cause in the industry any feeling beyond one of relief. So far as one can ascertain, there never was any great enthusiasm amongst the vast majority of the workers in the steel industry for nationalisation as such, and I do not think there is any great feeling for denationalisation, either one way or the other.
But where there is a strong feeling is in the minds of those responsible for the 408 management and organisation, both in the higher ranks and in the lower ranks. Those men have often expressed a fear as to what may happen under national ownership, a fear that it may be difficult, with only one owner, in effect one shareholder owning all the companies, for a man to get on with some other plan if he does not get on well. It may hamper him and may make him unwilling to take risks and to put most of his ingenuity and effort into the business. There is a fear that those responsible for the management will not be allowed scope for their activities. I have heard of cases where it has been difficult to persuade men from engineering and civil industries to come into the steel trade because of their reluctance to accept employment in an industry which they look upon as nationally owned. So, at any rate, I feel convinced that for a large number of men of that kind, of the greatest importance to the industry, this Bill will be a practical relief and encouragement.
We must remember that foreign competition in steel is growing. We have been importing steel at great cost to ourselves and, although steel produced in this country is the cheapest in the world, except for that produced in Australia, the Continental prices are beginning to move towards ours. We have to look forward to a period of competition. It is not only in steel itself, but in products manufactured from steel, that the price becomes of importance. Competition of that kind in export markets requires the utmost initiative and flexibility. I believe that the system proposed under this Bill will be a very material help. After all, for a period after the war the industry experienced a control of the kind envisaged under this new Board. A system was then evolved, and it worked very well. It was, of course, combined with the Defence Regulation control of prices, which was bound to continue for a certain time.
There is, however, one point about some form of Government control not only for steel-making but also for heavy industry, such as coal mining. The location of the industry is a very important question. Here comes in the question of the power of the Board to influence and to decide on extensions and to advise the Government to build any plant which has not been proposed by the industry and which may be needed for the sake of the 409 country as a whole. I have always held that the proper view of controlling the steel industry, from the point of view of location and employment, should be that the economic facts and considerations should be put forward by those in the industry and those who are running the plant, and that the social considerations, such as the obvious effects on employment, should also be brought up. Surely it is the Government who must step in and be, as it were, the independent authority to decide that important question.
It is as an independent authority that I think the Government have a much greater standing than they would have were they themselves the owners of the plants. I always felt that under the Nationalisation Act; and I believe that this Bill will help to carify the situation. There was under the Defence, Regulations power for that kind of control vested in the Government. I think that the power to discourage increases of plant where they should not be, and for the Government to step in and to build plant where it may be necessary, should fill that gap. It is a very important thing that the Government are taking power through the Minister, on the advice of the Board, to invest money in building plant, because, if it is held that the industry, as noble Lords have suggested, may become what I think has been referred to as a trust or a monopoly, there is power in the Government's hands to put up competition at once. The plan which has been so well described by the noble Lord, Lord Ogmore, has indeed been a great success. That was a plan carried through by the industry as a whole, and I think it is recorded that rather more than half the money for that construction was found by the companies from savings out of their earnings. So that it is not at all impossible to imagine that, had they been on their own, they would have been able to put up a good enough case for the investor to find it worth his while to put money into the companies.
As to the difficult question of the makers of castings and forgings, who are no more iron and steel makers in the real sense of the words than are many others, I believe they would have been better left out. I think it was quite a mistake to include them; but, as the Bill is drafted, perhaps it is as well to leave them as they are, though I do not really believe that 410 any of the provisions will do them any harm, and I speak after some experience of firms occupied in castings. After all, the worst thing from the foundry point of view is the control of raw materials. It seems to me that if there is a shortage of raw materials or a shortage of money with which to buy them, in one form or another, whether by Defence Regulation or some other means, the Government will certainly control them; and the fact that in this Bill they come under the Board for control would seem to me to make very little difference. If, on the other hand, we ever achieve a state where we can import as much raw material and obtain as much pig iron as we want it is not likely that the Government would wish to stop any foundry from getting its supplies of pig iron or even scrap which would be available under those sort of conditions.
I have been bothered about the power which is taken to control prices where it is thought that a monopoly may result from the production of one-third of any product by one firm or small group of firms. It would seem to me that that would rather hamper production. I do not think that one-third of the output of any product is enough to control the price to such an extent that it is going to be unfair to the consumer, and the power to fix a price on an industry which may be developing some new process, which may be growing or which may be evolving a different technique and may try to charge a higher price to meet its expenses, may have the effect of hampering the people engaged in that pursuit.
My Lords, having separated, and rightly so, Government control from ownership, there arise a few points of difficulty on the procedure of the Agency while they are in the process of selling the shares. As I understand it, first the Agency have the power, indeed the duty, to rearrange the capital structure of these companies. It is inevitable that that must be done in the case of a great many companies which, as soon as they were nationalised, spent very large sums indeed on their plant construction programme and have not been in a position to borrow money as they would have done before, but have had money advanced by the Government Steel Corporation. Therefore the company that is sold will not 411 be the same as it was before. There will have to be a change in the arrangement of the shares. In some cases expenditure will have to be capitalised, and that which appears as for sale will be entirely different from what it was before.
I have no doubt that it is right that, with the help and advice of the Treasury, the Agency should be in a position to make these arrangements. There are, however, two points which ought to be considered. One is that shares will be sold from time to time; the companies will start operating as they did before, and if they are engaged, as are many of the bigger concerns, in a capital construction programme, they will need money from time to time. So no doubt it will have to be arranged that when the companies are prepared for sale, as it were, they will have to be provided with money by the Agency by which to finance these programmes, because it will be impossible for them to go to the public or to make other arrangements to get money until they get fully on their feet.
I should also have liked to see in the Bill a reference to the effect that the Agency will itself consult the Board about any amalgamations or rearrangement of companies, and also be required to consult the companies themselves. I say that because, with the best interests at heart and with the best advice, there may be amalgamations or rearrangements of one or two of the companies owned by the Agency in such a way as to make it rather more difficult to run them as they might have been run. It would seem to me fairly simple for there to be that sort of discussion. Then there is the fact that in the interim period the Agency are the people who act as the shareholder. After all, they will be responsible for such business as annual meetings, the appointment of directors and so on. It would therefore be reasonable to expect them to have consultations on those points.
There is another point which affects quite a number of companies, and one which will have to be got over before they can be sold. A number of companies have substantial interests in coalmining, and on that account are still owed very large sums by the Coal Board in satisfaction of the assets which were taken over. Eight or nine companies nave claims totalling several millions of 412 pounds. Until those claims can be at least decided, if not even paid, it will be impossible to say what in fact is being sold in the form of shares. Claims are argued one way or another, and they will have to be settled. It is indeed surprising that nearly seven years after the coal mines were nationalised, due to difficulties and obscurities in the legislation, the late owners of the collieries have not yet been paid in full. What I am referring to in fact is not what are called the coal assets, but ancillary assets in the form of coke ovens, railways and that sort of thing. It is quite clear that something will have to be done to speed up the settlements before it will be possible to sell the companies' shares.
The noble Lord, Lord Ogmore, talked about "feather beds" and "sofas," as if the steel industry was just being given freedom to do exactly what it liked. I should like to make one point which may perhaps qualify his view on that matter. How does one imagine that the actual running of these companies is to be done? If the companies were themselves, for example, to issue a prospectus and ask for money from the public who would take up shares, that would be done through the directors. In drawing up the prospectus they would state the capital assets and liabilities, the earnings of the company, give a record of past profits, and that sort of thing. I am glad that at this moment it is not going to be the directors of the company who will do that; it is to be done by the Realisation Agency. I will tell your Lordships why I am glad. It is not because I believe that the money cannot be found, or because I do not believe that the steel industry can pay its way, but because, as between one company and another, I do not think it is at all easy to say which of them is going to be the more profitable.
Under the Bill the prices of all products are controlled by the Board and the prices of raw materials are in the same way at present controlled. There are levies on the output of ingots—several pounds a ton—and there are levies on scrap used in steel-making and certain intermediary products also so used. Steel and scrap are also imported and a lot of money is spent in importing finished steel. You can imagine the complications of that system and the anxiety for each 413 company in trying to make these arrangements to obtain either home or imported ore; the doubt there is whether to use more pig-iron or scrap in steel making, whether 2s. 6d. will come out of the levy fund or whether you will have to pay 3s 6d. That kind of obscurity has grown up through the years. It started when the Import Duties Advisory Committee began and the system was used extensively during the war with a purpose of keeping the less efficient plants going. Now the time has come, if the industry is to go forward, when there must be a return to something like real costs. It must be possible to make a forecast of what costs are going to be.
I must quote a case of a most modern blast furnace plant with a very low consumption of coke, very efficiently run, and with very good performance figures, but the margin between selling prices and the cost of running the plant, based on these levies and subsidies, did not allow enough to meet depreciation of the plant. That is extremely serious, and a difficult question to have to face, and all the time these firms are juggling off one group of products against another. Any producer may come out either better off or worse off. I very much hope that when the Board is set up it will settle down to bring these things to a level of practical reality. I do not believe the industry can really be sound unless it pays for its materials what they are worth and gets a proper value for its output. That is the way I believe the industry would be successful, and I am convinced that the proposals in this Bill will be for the benefit of the steel industry and the country.
§ 5.53 p.m.
§ VISCOUNT LONG
My Lords, I rise only for a few moments to support the Bill on the whole—except on the question of iron foundries. We have listened to the maiden speech of the noble Lord, Lord Jessel, who has made it quite clear that there is grave misgiving in this country among all iron founders at being included in this Bill. The noble Viscount, Lord Ridley, at the beginning of his speech said that while he thought it a pity, he did not think it would do very much harm. It appears to me that the reason why the iron founders have been included is, as Lord Ridley said, in case 414 there is a shortage in the future—or, it may be, that there is a shortage to-day. There is. But that shortage is growing less and less, and the iron founders cannot see why they should be singled out for inclusion in this particular Bill.
The noble Viscount, Lord Ridley, as I have said, did not think much harm would come, and that, in the event of a crisis, all the companies would have to "toe the line. "That makes my point all the more reasonable—why is it necessary to include them now? So far, no member of Her Majesty's Government neither the Minister so far as I can make out, nor any other member has made that clear. All we have heard is that it would be illogical to leave them out. That is not going to be very much consolation, I am afraid, to some 12,000 to 15,000 iron founders. If there is this shortage, and if Her Majesty's Government are afraid of it, why do they not apply this Bill to other industries which use steel, such as engineering, shipbuilding and motorcar manufacture? I see no reason why they should not.
On the other hard, the plea I want to make before this Bill goes into the Committee stage is this: Would it not be possible to insert a clause in this Bill to the effect that, if a crisis is foreseen or happens to fall upon this country, then iron foundries would immediately come under the control of the Board? I cannot see, as the noble Lord, Lord Jessel, pointed out, that any good purpose will be served by including them at this moment. In any case there is this grave misgiving and doubt in the minds of all those iron founder, and I hope that, before we go into Committee stage, a definite statement will be made by Her Majesty's Government. I think the Minister or the noble Viscount who is to reply this evening should try to do away with the confusion that rests in the minds of the iron founders at this present moment. I am quite confident that they will always come up to scratch if they know exactly what is in the mind of the Minister. At present they do not, because by a vast majority lf e iron founders have turned down -inclusion. With these few words, I hope that Her Majesty's Government will remember the plea put forward by the noble Lord, Lord Jessel, in his maiden speech and also the humble one that I put forward on behalf of the iron founders.
§ 5.56 p.m.
§ LORD WINSTER
This is the second occasion within a week on which the noble Marquess the Leader of the House has upset a fait accompli. I was therefore all the more interested when, the other week-end, reading the life of his grandfather by Captain Kennedy, I came across the following:It became one of his rules that once a measure had become the law of the land he would not go back on it.That rule is evidently not part of the family tradition.
§ THE MARQUESS OF SALISBURY
The noble Lord did not follow my speech very carefully. I said quite clearly that it was impossible in politics to put the clock back where it was before, and that this was intended to be a middle course, an attempt to bring two opposing sides together. I cannot believe my grandfather would have been against such a course as this.
§ LORD WINSTER
I agree that there is an attempt to arrive at a compromise about which I hope I may be allowed to say a word later.
The speeches this afternoon have been full of interest. The real struggle on the Bill is going to be on the Committee stage, as it was with the Transport Bill, and I am sorry that the noble and learned Earl, Lord Jowitt, is not here at the moment, because on the Third Reading of the Transport Bill the noble and learned Earl used these words (OFFICIAL REPORT, Vol. 181, col. 321):…some of us are getting rather old; and some of us have not very much money, and we are bound to ask ourselves, 'Is our journey really necessary?' When we come to the House on these Committee stages and find we are not going to do any good or make any alterations, it may well be that we shall gradually fade away.He was not complaining that Amendments were not accepted, but he felt, with some justification, that on one or two occasions arguments in favour of Amendments had not been listened to very carefully; and that once or twice some rather brusque replies had been received. In fact, we had hardly got to work, on the first day in Committee, when I got the impression that we were being told that, if we did not behave ourselves, we should be sent to bed without any supper. It was that sort of thing about which I think the noble and 416 learned Earl was very properly complaining. I take a slightly different view, however, about making such things a reason for not coming here to debate these matters, because I feel that a constitutional point is involved. It is the duty of an Opposition to oppose, and to do so even if they are not receiving quite all that courtesy which they would like to receive, and which, I am sure, we shall receive in Committee on this Bill. And it is especially the duty of an Opposition to oppose when the Opposition happens to represent very nearly half the voters in the country, who have an absolute right to expect their case to be put by their representatives.
But there is a further point still. It seems to me that the Committee stage is a most essential part of our Parliamentary system, since it is the stage which compels the Government to think its Bill right through again from the beginning. That is peculiarly a duty in a House which rightly prides itself on being a revising Chamber. Still, one can only put forward one's argument in favour of an Amendment and hope for the best. As I have made one quotation from Captain Kennedy's Book, I will venture to make another. Captain Kennedy tells us that the noble Marquess's grandfather said:It is the duty of every Englishman, and of every English Party, to accept political defeat cordially.With that, I most cordially agree.
The object of my remarks is to try, if I can, to reinforce some of the arguments which have been advanced about the Board set up by this Bill. Just as the scheme was the essence of the Transport Bill, so the Board is the essence of this Bill. Some of us, including myself, thought that under the Transport Bill, the Commission had a very unworkable job imposed upon them. Similarly, under this Bill, I think the Board will have a very difficult job indeed to carry out. Indeed, I doubt whether, with the best will in the world, it will be able to carry out its supervisory duties. The Board is charged with the duty of—these are the words:promoting the efficient, economic and adequate supply under competitive conditions of iron and steel products.Of course, competitive conditions exist to-day. They were not abolished by 417 nationalisation. But these are very wide duties and very heavy responsibilities in respect of some 2,400 companies—is not that the figure?—which will come under the supervision of the Board.
The duties, in fact, are so heavy that I think the Board should have correspondingly comprehensive powers. And I doubt whether it has. For instance, it has the power to demand information from any of the 2,400 companies which I have mentioned, but not to demand it from the two organisations which import and distribute the raw materials of the industry. The Board can stop any development scheme which is likely to affect the production facilities of the country, but it cannot stop expenditure on works reconstruction, even if it thinks that that expenditure is not worth while. I do not find that these power are very closely or directly related to the administrative duties imposed upon the Board or to the supervisory duties which the Board is expected to perform.
Next, I should like to say a word about compromise. The noble Marquess, who has now left the Chamber, said that this Bill attempts to effect a certain compromise. Sonic time ago, I said that I thought it impossible for industry to carry on under a process of being eternally torn up and started again, and I recognise that this is an attempt to effect a certain compromise. But, having read the Bill, I think that the country is likely to be very disappointed indeed if it believes that although this industry is being returned to private hands, there is a Board which can ensure that the industry operates only in the public interest. I think that that is a fallacy, and that if the country believes it, it will be deeply disappointed. I think we may be sure that when the industry does revert to private hands, these private undertakings will be largely opposed to the Board's having any real powers at all. There are others who share that view. The Statist, in a recent issue, described the Board as largely a matterof political expediencyand said that it was unlikely to bein a position effectively to exercise the supervisory functions it has been authorised to performbut was likely to become:an ineffective nuisance or a rubber stamp for the trade associations.418 The Board replaces—or will replace when this Bill becomes an Act—a Corporation which had full powers over planning and direction. The Board, on the contrary, has duties, but not powers; it can restrain but not enforce development. It has no new powers over prices. It cannot enforce amalgamations.
A question which I should like to ask is: Who, in the future, is to be responsible for drawing up a major plan for the industry? I may have read the Bill too hastily, and I may not have "spotted" something in it; but I could not find who will have that responsibility of drawing up a major plan for the industry. Is it to be someone's responsibility, or is there not to be an overall scheme of that nature? I notice that the Board may set up an enterprise if no firm will do so, because there seems to be no hope of its being an economic proposition. It is a case of shareholder versus taxpayer. The shareholder must not take a risk; the taxpayer is expected to shoulder it. If, after the Board has started an enterprise, it becomes economic, does private enterprise take it over and profit from what the taxpayer has paid for? It seems to me that that is rather a case of: "Heads I win, tails you lose."
As I read the Bill, I felt that the Government see no reason for the Board to have any great powers, because they think that the industry can be relied upon to play the game. I would not for one moment cast any doubt upon that; I say only that I hope the Government will not be disappointed in those expectations. But I cannot help feeling that the Government realise that there may be disappointment, for if the two organisations which import and distribute the raw materials of the industry give cause for dissatisfaction, the Board may set up its own agency. If that safety clause is inserted, it seems to me that it is expected that some disappointments may be encountered. But is it seriously believed that, in those circumstances, considering that this Board is really a Board without any dentures at all, so far as I can see, the Board could set up an agency?
Is it contended that the supervisory Board, plus a Holding and Realisation Agency which is to take over and dispose of assets now in Sate ownership, will do better than the Iron and Steel Corporation? Why is it supposed that that combination will do any better than the 419 Corporation has done. The Board plus the Agency represents division, not integration. The Agency are to be responsible for running that part of the industry which remains at any time in their hands. Apart from that, I think they are driving members of the Agency to develop a split mind. I do not know what is the term for a mind split in three directions, but they might easily find that afflicting them. From where are the members of this Agency to be drawn? From what has been said to-day I understand that they will be financial experts, but they will also have administrative duties on their hands, and they may have no experience qualifying them to perform such duties.
As regards the duties thrown upon this Realisation Agency, they will have £250 million worth of securities to dispose of. I have seen a calculation that if they succeed in disposing of one-third of these securities before the next General Election they will have done very well. Is it really believed that investors are going to rush in to buy? At any rate I know someone who does not believe that—I refer to the editor of the Financial Times. On November 26 last he said:Mr. Sandys must be only too acutely aware that he is proposing a Bill to sell the steel industry when there are few signs that many want to buy it.So this Realisation Agency will have a very heavy job on their hands. I should prefer—and I believe many others share my opinion—to see these assets made the responsibility of the Board and the latter, in turn, made responsible to the Ministry of Supply. The Agency should be responsible for the financial side of the sales, but groupings and all administration should be the responsibility of the Board. The Bill seems to me to involve the Agency, to some extent, in responsibility for groupings, although surely that should be the sole responsibility of the members of the Board who will have experience of the industry which members of the Agency may not have.
I have concentrated on the Board as the weak point in the Bill—indeed, the more I think about it, the more I think it is a most curious Board. The Government can give it directions but the Board may not have powers which alone would enable it to carry out these Government directions. The Board is not financially 420 responsible to the industry but it can levy on the industry for its expenses—and for its failures, too. The Minister can impede the Board at every step, but it is noticeable that the Minister has little power over the Realisation Agency. The Board is responsible to the Ministry of Supply; the Agency are responsible to the Chancellor of the Exchequer. Why this division of responsibility? I repeat, if the public think this Board can reconcile private ownership with public control, they are going to be greatly disappointed and mistaken. I find myself in agreement with what Sir Albert Herbert, the great machine tool expert, wrote in The Times. He said:I question whether denationalisation of steel is worth while. It might be better to accept the fait accompli and avoid the bitter controversies and vast amount of work the Bill will involve.What is the complaint about the way the Corporation have been working? The noble Lord, Lord Teynham, said he would give us some reasons for thinking the Corporation have not been working well. I listened with great attention, and I really should like to know what is the criticism of the Corporation. In the debates on the Transport Bill we asked similarly to hear what was the case against the Transport Commission. The only thing we got was a complaint about three parcels from Welwyn Garden City which went astray. What are the specific complaints about the way in which this Corporation have been doing their work? Where is the evidence of that "dislocation, chaos and confusion" which were prophesied by the present Prime Minister. The public companies are producing 98 per cent. of ingot steel output, 94 per cent. of the iron ore output, and 97 per cent. of the pig iron output. Production in the industry is up by 9 per cent. over 1951, and will probably beat the 16¼million ingot tons of 1950. After seven months' work the Corporation were showing profits at the rate of £65 million a year. What is the charge against this Corporation? Not only should I like to know that, but may I ask for categorical reasons why it is expected that this Bill will make things better than they are under the Corporation?
§ 6.17 p.m.
My Lords, first I should like to say how gratified we are to find a new speaker in this House in 421 the shape of the noble Lord, Lord Jessel, who can speak strongly and argue on his feet. I hope we shall hear him many times more. This Bill has a touch of romance about it. To me it conjures up the vision of the steel maiden, seized by the wicked State ogre and kept in captivity by a gaoler, awaiting a fate worse than death. Then up comes the handsome and debonair knight who puts the gaoler to flight and releases the maiden and, in this Bill, is about to cut off the head of the ogre. I think the noble Lord, Lore Winster, has totally misread the steel situation. Nationalisation has not really started. We have managed to stop the rot. The handsome and gallant knight arrived in time. The industry was rapidly becoming more and more a State-controlled and State-managed enterprise, but we have arrived in time, and to all intents and purposes the industry is still being operated as under private enterprise. The Iron and Steel Federation have not yet disappeared and, of course, they will be in a position to make plans for submission to the Board, about which the noble Lord, Lord Winster, was so worried.
What I am anxious to find out is why noble Lords object so much to this Bill. I can understand the Marxists objecting to it because to them every hour of Parliamentary time not spent in transferring property or power from the individual to the State is time wasted. Their sound and fury over this Bill is quite natural. It sets back their progress for some years, their work and designs being frustrated for the time being. But what about the others, the non-Marxists? There are various lines of thought that have occurred to me in considering why they might oppose this Bill. I do not think the hoary old fable about the armament manufacturers creating war, about armaments being made from steel and the steel manufacturers creating war in order to sell their steel to the armament manufacturers, will wash nowadays. But there are some who might think that full employment in the steel industry is only possible under State ownership. The arguments of the noble Lord, Lord Ogmore, incline to make me believe that he has some ideas in that direction. But surely that is muddled thinking. To create employment you need orders. It is not ownership that creates orders; it is some form of stimulus to the steel-consuming 422 industries that is required, not ownership of the steel industry itself.
I have been thinking of what we should do if a slump came along, and I notice that the economists have started to think on those lines, too. The conclusion they seem to becoming to is that orders to steel-using industries should straight away be stimulated by the Government—again, presumably, orders for railway wagons, ships and so on. That is what maintains employment in steel, not State ownership of steel works for which there are no orders. In connection with slump, and so on, I notice in the Bill that the Board have power to fix maximum prices. I believe they should have power to fix minimum prices, also, and I intend to move an Amendment on the Committee stage to that effect—and I believe that I may have the support of the noble Lord, Lord Layton in that matter; we shall see.
I have not differentiated. The noble Lord has certainly given me a line of thought. I have seen it stated that the Board will lack the capital for development of the industry, and that argument has been advanced today. Capital formation to-day, of course, is a great problem. But it is a different problem in the two different categories—the fixed interest problem and the risk capital problem. The fixed interest is a much less acute problem than the other, because the present tendency in the nation is to save by way of pension funds, insurance policies and the big Government funds, such as the National Insurance Fund. These funds are, of course, habituated to invest in fixed-interest securities. But there is no doubt that there is a tendency for them to move away from that line towards a more risk-bearing form of security, particularly with some of the other financial institutions. In any case, if the industry is profitable, surely the industry should be able to provide a great deal of its risk capital out of its own resources. Of course, to-day taxation is enormous. I have no doubt that the speech from which the noble Lord, Lord Ogmore, quoted, while seemingly directed at some audience, perhaps in South Wales—I do not remember—was 423 really directed at the Chancellor of the Exchequer.
§ LORD OGMORE
I think it was largely directed at the insurance companies, as I read it. It is a quotation from the Western Mail. They were about the only people who Mr. Lever thought would have resources to come in.
That could be described as a side-cut at the Chancellor of the Exchequer. Why should they be the only people with resources to come in? Because the Chancellor of the Exchequer has looted the rest. In any case, is taxation of the risk-taker going to remain perpetually at the present level? At the moment, abnormal expenditure on armaments represents 3s. 6d. in the pound on the income tax. Is the expenditure on armaments always going to be abnormal? I hope it is not. That would ease the problem. But, in any case, the problem is surely no greater than that of any other industry. Every industry in the country is in exactly the same boat; they all have to raise capital somehow or other. Surely, this industry is on at least as good a wicket as any other, if not better than many of them. We have, I am glad to say, abandoned free trade, as my noble friend Lord Balfour of Inchrye pointed out. I cannot see that any Government in this country would ever again allow great plants and men to stand idle while steel came into the country from Europe or Japan. They would be forced to come to the rescue under modern conditions.
Again, we have the modern doctrine of high level of employment. What does this mean but a high level of activity in the steel industry? All Governments are committed to that. I feel certain that this industry has as good a chance of producing capital out of its own resources as any other. In any case, suppose it cannot. What is in the Bill? I read that there is to be possible provision of £150 million of permanent capital, £10 million of temporary capital, and the whole resources of the Realisation Account which have not been pouched by the Treasury. If those resources were left in the Realisation Account, the resources which are a counterpart to £224 million of assets, the potential capital available for this industry is quite immense. I do not think that that story will "wash" at all.
424 Another story we hear is that only the good plants will be sold. The purchase price of all these things was a function of assets and earning power as depressed by the threat of nationalisation. The sale price is a function of assets and earning power alone. If you subtract the poor assets from the good you get a larger price for the good—the balance is worth more. I, for one, hope that no great attempt will be made to sell the poorer assets. There is provision in the Bill for them to be leased. I hope that that will be found the most convenient method of dealing with plants which are obsolescent, because I believe that if they are leased it will be the easiest method of ensuring that they stay in operation so long as is really necessary, and pass away as soon as new capacity comes into being. It is the most painless method.
I am glad to see that the co-operative arrangements for the purchase of ore supplies remain. Of course, we are favourably situated for steel, with our plants near our coking coal, and in most cases near the sea for the receipt of ore supplies. The world is increasingly being scoured for large deposits of good quality ore which are near the seaboard. We ourselves are looking more and more to the Empire for this. This is an ideal way of Empire development, because the equipment used, the railways, the cranes and the port facilities, are our classical exports, and the result of the development immediately produces a 100 per cent. increase in the exportable capacity of the country where it is installed. I believe that there is a great future in that direction. If I had been told to draft an arrangement for releasing the iron and steel industry, I believe I should have come to something very similar to this Bill, and for that reason I give it my hearty support.
§ 6.30 p.m.
My Lords, the first spring blossoms have appeared on the trees, the buds are out and the sunshine has come. Apparently that has roused the blood of the noble Lord, Lord Hawke, and he thinks there is a touch of romance in this Bill. Well, I think the whole thing is absolutely fantastic, and I am extremely sorry for the very able Ministers in your Lordships' House who have to pilot this monstrosity through this House. It was shot to pieces and riddled 425 with criticism in another place with no really effective answer, because no effective answer was possible. This scheme is just not going to work, and I am going to add a few reasons to some of those already put forward.
For one thing, the Bill is extremely inopportune because, thank goodness, there looks like an improvement in the international situation which will have certain results, Suppose, if I could use the expression, peace breaks out in Korea—which everyone is profoundly hopeful will happen—the cold war becomes less frigid and there is a general improvement in the international situation. We may then find an acceptance of the American proposal made only a week ago that there should be one more attempt to reach an all-round reduction of armaments. That will put a stop to the present extravagant and colossal production of armaments all over the world. In that case, there may be a temporary trade recession; the beginnings of a slump, perhaps even a quite serious; slump, and a temporary falling off in the demand for steel. If this Bill is then an Act and in operation, we shall not have the broad national policy of the present Corporation made possible by keeping the industry in being and keeping it going until better times come, and we shall have another succession of Jarrows. The first thing the ironmasters will do, if there is a slump and a falling off in world demand, is to close down. They have always done that. They are not in business for their health, but for profit. That is the essence of private enterprise.
They cannot do otherwise. I do not blame them for a moment. Under the present dispensation the works can be kept going and kept in being and the men need not be dispersed. You need not completely demolish places, as was done in the days of Jarrow, and make it impossible for them to start up again in the national interest so that you can maintain a great steel industry which you require, ready for a revival of trade or in case of war. I submit to your Lordships that this is the worst time possible to make this change over.
The noble Lord, Lord Hawke, and other noble Lords, have referred to the raw material question, and your Lord- 426 ships know that in the Bill there are arrangements for carrying on the present policy of providing raw material for the industry. But the proposed Board will have no real executive powers there at all. It can function only if the supplies are short and, therefore, you wait until the trouble arises, then you try to meet it. May I give to your Lordships an actual example of what happened before the present Corporation was in being, before the 1949 Act? This is a personal experience and I hope your Lordships will allow me to give it. A couple of years before the 1949 Act was introduced, I went to Newfoundland to visit my noble friend, Lord Macdonald, who was then Governor. As an old miner he had taken a great interest in the question of iron ore supplies and other raw materials for Imperial use. He told me—I had not hard of them before—of the fabulous deposits of iron ore in Labrador, partly in his territory and partly in Canadian territory. I believe I am right in saying that it is agreed that they are the finest and greatest new supply of iron ore in the world. It had come to my noble friend's notice that the Canadians had not the capital resources to develop them, because it needs a railway down the St. Lawrence and great expenditure, and they were having to turn to the Americans in default of British capital.
I went on to Canada and I investigated the position. I saw the people who had the concessions, and it was perfectly true. They had been trying to get British capital to develop this greatest iron ore field in the world. They had failed, and they were having great difficulty in keeping American capital out. The American iron ore deposits are becoming worked out and the Americans are looking for iron ore everywhere. I came home and I saw my right honourable friend, the present Leader of the Opposition, and other Ministers, including my noble friend, Lord Wilmot, on this point—I think he will remember it—and I put this problem to them. Here was a great source of iron ore which could be kept within the Commonwealth, but there was no one to provide the capital. The great iron and steel companies in this country, even through their Federation, had no machinery for providing the immense capital required and nothing could be done. The opportunity was lost 427 and now the Americans are in there. I do not say that we shall not be able to get iron ore, but we could have had a much more sure and safe supply. I think I am right in saying that much the same thing happened in Liberia. It was British pioneering and exploration which discovered the iron ore deposits, but because there was nobody to take advantage of it I think that that iron ore field is lost to us as well. I have not the facts about that case, but with regard to the Labrador situation I have the exact facts, and I think they disclose a state of affairs which justified the setting up of the present Corporation, if nothing else did.
When the original proposal of the Labour Government was introduced to nationalise the iron and steel industry, I confess—and I have said so publicly—that I felt some dubiety about it. I was not quite sure that it was the right policy. But now that I have seen the workings of the Corporation and seen what has happened, I think it was completely justified, and that it is an act of political levity to break up and destroy the organisation which has been created. Nobody can say that it is a failure. I will quote the figures given in another place by my right honourable friend who was the Minister of Supply and who carried through the original Act which we are now destroying. I will quote only these figures, because they must be authoritative. They are the profits of the industry before nationalisation and afterwards. This is a point which no one on the other side in the other place has attempted to answer, and I shall be very interested to hear whether there is any answer to it here. In 1949, the profits taken over—that is to say. The profit-making capacity—was £42 million a year. In 1950 they were £53 million a year, and in this year they are likely to be about £75 million. Therefore, you have that spectacular increase in profits in an industry which, after all, has not been primarily operated for profits. It has been operated for the national interest but the profits have been made. If profits are a test of efficiency, you certainly have efficiency in the present set-up and organisation, and I repeat that it is an act of political levity, indeed, almost lunacy, to destroy it.
Now I have referred to the raw material situation, which I think is very disturbing indeed, because under the 428 Corporation we were beginning to open out new sources of supply of raw material and to organise the supply of the ore. I am not at all satisfied that, under the Bill now before your Lordships, the powers to do that remain. It is only when there is failure or shortage, only when there is another 1951, when shortages of raw materials almost crippled us and cut down the activities of the steel industry substantially, that the Board could act.
I should like to reinforce what was said by my noble friend Lord Wilmot on the question of finance. It is. I think, generally agreed that during the next five years £60 million should be, perhaps must be, spent in enlargement, improvements and developments each year. That is £300 million in the next five years. That would be raised in the ordinary way, if we had not this act of political madness to destroy it, on Government guaranteed stocks. Now, presumably, the companies will have to raise their own finance. I do not think I am far out in saying that there will be a difference of perhaps 1 per cent. or even l½ per cent. between the rate for Government guaranted stock such as the Corporation could issue and the price required to raise money on the money market by the companies.
Surely the noble Lord has misunderstood the situation. Is my inference not correct, that there is £150 million of permanent capital plus £10 million of temporary capital plus a Realisation Account, which could amount to over £400 million in all?
I am talking about money which has to be raised, not for re-purchasing plants but for enlarging and improving the industry—a five-years' plan in other words. That money will perhaps be raised now by private enterprise which so attracts the noble Lord. Lord Hawke—and it will cost more to raise by 1 per cent, or 1½per cent. than if it was raised by Government guaranteed stocks.
No, there is nothing about that. I should be glad if the noble Lord would be good enough to 429 tell me the relevant paragraph. If he is right I will be the first to admit it.
I will refer the noble Lord presently to the relevant clauses. They may be a little involved, but that is how I read them.
There is another aspect of the financial side of the Bill which my friends and I find very disturbing. It has already been referred to. It is the price at which the plants, presumably the more attractive financially, are going to be sold. In another place an Amendment was moved that they should not be sold at less than the compensation price paid, allowing for enlargements and other changes in the interim. This Amendment was rejected by the Government. I hope we shall have better luck with this particular Amendment in this House. What is laid down in the Bill is that there shall be "financially adequate consideration." That can mean anything. If it is a sellers' market, no doubt the price will be good; but if it is a buyers' market what is "potentially adequate consideration" going to be worth? And there will be pressure all the time—pressure for political reasons. The Government dare not come to Parliament and explain, or let it be known in the country, that they cannot sell, that they cannot find buyers; and there will be a pressure to sell quickly before we come back into office—which I hope will be soon—and undo this mischief, as we shall have to do. We shall have again to chain up the beautiful maiden of Lord Hawke's romantic dream—but I do not think she will suffer or be in worse hands.
No not for one moment would I think of that. I would not chain up any of the Ministers in this House. I am sorry for them, and I would express my sympathy with them for having to pilot through this House such a rotten Bill.
There is one other consideration which I venture to put before your Lordships, and that is regarding the powers of this Board. I have read very carefully what it says in the Explanatory Memorandum to the Bill and in the White Paper, and I agree with every word that has fallen from my noble friends Lord Wilmot and 430 Lord Winster. This Board, in effect, will have no real powers. The noble Marquess who leads this House said that this Board will have great prestige and considerable influence and that by persuasion and consultation it will be able to do everything that is required. But when you come to it, my Lords, what is required is power; and this Board will not have that power. It is only after its consultations and conversations have failed that the Board will go to the Minister, and then the Minister will go to the Treasury and finally something may be done.
Take the case which is provided for in the Bill, where the Board are not satisfied and so report to the Minister that production is not being increased or that improvements are not being made. What can be done? The Board, with the Minister's consent in consultation with the Treasury, can proceed to provide the extra or improved or more modern plant required. But then what staff will the Board have? What administrative machinery and what experts will they have? What will they have in these directions to compare with the present Corporation. On the other hand, is the endeavour going to be to keep the staff down, and is very discouragement to be given to the important experts not to take service under this body? We know what happened when the Corporation was set up; there was the greatest difficulty in persuading men of technical eminence, against pressure of their colleagues and friends in the industry, to take service under a Socialist Government in a nationalised industry. Will the same thing happen to the Board? Will they be able to build up a staff of experts and build up machinery adequate to the purpose? It would take a long time to build up this machinery and all the services needed. Will this body have the necessary machinery and staff to enlarge and improve as may be required in the national interest—and not only in the interests of private enterprise? It is said that this may be lone by companies which are to be formed. But it would take time to form these companies, get them over their growing pains, and obtain the necessary experts and staff. That will mean delay and loss of time, and the country will suffer in the meantime.
431 Those are only one or two of the objections which I have to put forward to this very inefficient and inadequate Bill. If we had not a clear mandate—as I have had to confess—for introducing the original Bill, I do not see how the Government can claim a mandate for introducing theirs. But they put it in their Election Manifesto. The Prime Minister, in one of his romantic moments, promised that the omelette should be unscrambled. Yes: and what was the result? Votes given for their policy were fewer than the votes given for ours. So if it is a case of mandates I do not think they have any particular strength in their claim. No, my Lords, this is a wanton Bill. I could say some hard things about political prejudice and spite, but I do not want to say them. It is a foolish Bill, and I am very sorry indeed for the able and long-headed men who adorn the Government Front Bench in their task of piloting this Bill through.
My Lords, I might make a small correction here. I said "up to £250 million might in certain events be available"; it is available only to those companies whose securities are held to a substantial extent by the Agency.
§ 6.51 p.m.
§ LORD WOLVERTON
My Lords, I rise to support this Bill, with one small exception. I regret very much that the foundries were included in the Bill. I do not think that it was necessary to include them. They are now excluded, I understand, from everything except the control of raw materials. I do not think it is a very good idea to legislate in that way. I should have preferred to see them out but, having fought the passage of the earlier Bill in 1948 and 1949, I felt that I must say just a few words to-night in support of this Bill. I took a certain amount of trouble to see what were the main reasons for introducing the Iron and Steel Act of 1949. That Act was introduced in this House by the noble Viscount, Lord Hall, who used these words, which I think are very important—I now quote from the OFFICIAL REPORT, Vol. 162, col. 985:I am not going to base the case which I shall submit to your Lordships on the question of the efficiency or otherwise of this industry. I make no charge that the industry is in- 432 efficient, for I have knowledge that in the main the present management of the British iron and steel industry is good; but it will be admitted that a substantial proportion of its plant is out of date and inefficient.The noble Viscount based his case on this. At col. 984 he said:There are only three ways in which this industry can operate. It is conceded on all sides that a return to unregulated, uncontrolled private ownership is completely out of the question. The memories of the inter-war years are still fresh in our minds. There must be no return to those conditions, when output was only one-third of what it is at the present time, when unemployment in this industry was 42 percent., as compared with 21 per cent. for industry as a whole, and when employers were almost bankrupt. The second suggested plan is that the industry should remain under private ownership, tightly organised within the Steel Federation, leaving it to wield an immense influence on British industry as a whole—and indeed, on the State itself—and to remain a vast monopoly or cartel possessing great powers over the economic life of the nation, but without any responsibility.This Bill before us to-day, as my noble friend the Leader of the House has said, is a "middle of the road" Bill. I think the Government have tried to meet that by introducing under Part II of the Bill a public control Board. It is true that the industry is to be returned to private enterprise, but it will be controlled by this public Board; and if one reads Part II of the Bill carefully, it will be seen that the Board has very wide powers.
The noble Viscount, Lord Hall, went on to say that he very much feared that the industry would not be able to finance itself in future. That is a point which the noble Lord, Lord Strabolgi, has just been raising. It is abundantly clear, from the speech made to-day by the noble Viscount, Lord Ridley, that in this great programme which was prepared by private enterprise in 1946—and I had the honour and privilege of seeing some of the work in this big undertaking in 1949, when the programme was well away; and the first stage has been completedone—one-half of the £250 million required (that is, £125 million) was able to be financed by the companies' reserves. I am certain that if there had not been nationalisation, they would have been able to find the money on the public market and would have had support from their shareholders for the other £125 million.
As to the future, I do not share the fears of many people that when this industry does go back there will not be 433 buyers for its assets, because it is the life-blood of this nation. It will be able to find the money that it requires for the next five years for the£350 million programme. With those few words, I should like heartily to support this Bill, as I say, with the one exception that I think it is a pity that the foundries were ever put in. However, I do not see how we can make any further form of amendment now without taking them out of the Bill altogether, because they are in only for the control of raw materials. But many of the big firms feel strongly about that. With those few words, I should like to support the Bill.
§ 6.56 p.m.
§ EARL JOWITT
My Lords, your Lordships need have no fear that I am going to make an elaborate speech. I shall occupy your Lordships' time for but a few moments—if only for this reason. The noble Lords, Lord Wilmot, Lord Ogmore, Lord Winster and Lord Strabolgi have all made such powerful speeches showing your Lordships how we on this side of the House regard this Bill that there is little that a person like myself, with no technical knowledge, can usefully add. I do, however, want to say something in the course of these few remarks, about our function on this side of the House. We are, of course, not going to attempt to divide against this Bill on Second Reading. I say that at once so that any of your Lordships who wish to go may regard yourselves now as free to do so. I should like to reply to some of the observations that have been made. The noble Marquess who leads the House, whom we are delighted to have conducting this Bill, was a little apt to caricature what we said when he said that we suggested that the Party opposite were doing something morally wrong in bringing in this Bill. I do not suggest for one moment that his amount of original sin is any larger than mine. I am sure that the quantum he has acquired since that date is probably much less than mine. It is not on the ground of any moral obliquity that we oppose this Bill. We think it is an unwise Bill. We think it is a Bill which is founded on doctrinaire principles and doctrinaire prejudices; we think it is a Bill which is almost certain to bring about repercussions in the fullness of time. Therefore, we think it is an 434 exceedingly unwise Bill. But there is no question at all of moral right or wrong.
The noble Viscount, Lord Davidson, who knows far more about this industry than I pretend to know (I look upon him as one of the great steel masters, in the best sense of the word), seemed to think that at the present time the industry was being run, or was in danger of being run, by a lot of gentlemen who were admirable civil servants from Whitehall. Let me tell him that I could not agree with him more fully than I do; as he and I well know, they are most admirable people in their place, but, if they are going to run the steel industry then heaven help us all! If he could make out that the Act which we introduced in the last Parliament but one had that effect, he would really score a point. But I deny it entirely. I cannot see how it can be said. The existing boards of all the companies—there are some ninety-odd companies—still have their staffs, their traditions and all the rest of it. I do not see any civil servants coming into the scheme at all. Possibly under the Board which is now to be set up we may see civil servants creeping in. I hope the Board will be composed of people who understand a good deal about this industry. Let me say here that I am confused about the position as between the Agency and the Board. If the Board is to consist of people who understand the industry, as I understand is the scheme, and the Agency are to consist of financial experts, which I also understand to be the scheme, why should the Agency be responsible for controlling and running businesses until they are sold off? Why not the Board? That is one of the matters which we shall have to consider when we come to the Committee stage.
Then Lord Layton seemed to think that competition is essential. Under the system we have got to-day competition is possible. But I think we are all agreed that overriding all competition, there must be some real measure of State control. My objection to the Board is that I think it is a sham, a mere façade. I do not think it has nearly enough power to do anything. Indeed, I think that if this is all the power it is to have, it might as well be cut out from the Bill altogether. I should like to see the Board greatly strengthened. In due course, we shall move Amendments with that object 435 in view. Lord Hawke said (probably he is right about this) that the body which will really run the industry will be the Federation. I strongly suspect that that is about the long and short of it.
My Lords, why do we think that we must have a really effective national control? I think Lord Ridley is the only person who touched on the point, but it is one which we have all to face sooner or later. In our condition to-day, if we are going to support a population of 50,000,000 in this Island, it is quite obvious that our industries have got to be as efficiently run as they possibly can be. I speak not of my own knowledge; I take my information from the Anglo-American Council on Productivity, who know the industry. They point out that…the greatest limitation upon productivity to-day is the size of the unit of plant.The average capacity, of the forty British steelworks making bulk steel in 1950 was about 325,000 tons per year. The industry is planning to increase its output of steel to meet a demand estimated at near 20 million tons, of which over 90 per cent. will be bulk steel. It follows that if all these steelworks are expanded or even retained it will not be possible to reach anything like the minimum size for efficient operation. Therefore it will be necessary for development and re-equipment to be concentrated in the works most suitably sited for expansion.They go on to add:This process is already under way, and is endorsed here"—that is, in this country—in the belief that it is essential for raising productivity and increasing efficiency. It will present many human problems, as must any change; but it is better to anticipate these problems rather than to wait for the economic death of the inefficient firms, coupled with a delay in the growth of the industry's efficiency.As I say, I speak without personal knowledge, but I believe that statement to be profoundly true. I think we have all got to realise that an immense human problem is here involved. It is the problem of Jarrow over again. I do not know at what point the situation comes when one ought to say, "Well, that steelworks should go"—with all that that means—"in order that we may concentrate our money on this steelworks here." Unfortunately, with the very limited amount of money in our possession, if we are going to get our steel industry really efficient, somebody having complete knowledge and complete advice has got to address 436 himself to that question, notwithstanding all the human tragedies that are going to be involved. As Lord Ridley pointed out, that somebody must, in the last resort, be the Government of the country. It would be intolerable, as I am sure everybody will agree, that the decision on whether you should close down this, that or the other steel works should depend simply upon the mere fact that some particular company is or is not making a satisfactory profit. You must look at it from a much wider point of view than that, and I find myself in entire agreement with the noble Viscount, Lord Ridley, in what he said about this problem.
At the same time, if I am right in thinking that this problem is already casting its shadow upon us, it is essential that the Government should not fall into the position into which this country fell over a somewhat comparable matter after the Great Fire of London. On that occasion, owing to the fact that there was a great site vacant, Christopher Wren had a chance of making a plan and of building; but that plan was destroyed because, not unnaturally—it being a feature of human nature—everybody wanted to protect his own little bit of land. Frankly, I am frightened lest, in the solution of the problem that faces this industry (I am not attempting to criticise or to say a word against its efficiency; it is a problem that confronts the industry), every one of these forty-odd steelworks should come forward and say, "Not us; let us do what we can," and between them all, in the chaos and confusion that results, you may lose the benefit of a clear plan.
I myself believe that that is the critical problem. I believe that what we have all got to try to do is to get the industry as efficient as possible. I believe, therefore, that we must put the industry in the hands of people who know how to run it, and not in the hands of civil servants. I believe that we had evolved a scheme whereby we had the shares, and consequently the control; and that, without interfering, leaving the running of the industry to the highly technical people who understand it, we had a possible solution. I deeply regret that, as it seems to me, that solution has gone. As I said before, I believe that this Board is an ill-thought-out and unreal thing, with no adequate powers at all to do anything—it is merely a fifth wheel to the coach. I 437 deeply regret that the scheme we evolved has been thrown on one side.
In so far as I have asked and tried to find out, I believe that the existing scheme was popular with the men who work in the industry. I have had no evidence to the contrary. I am not so impressed as was the noble Viscount, Lord Ridley, with the statements that some of these people made to him about the dread of State control or State management. I remember very well in the days of the Coalition Government when, for a time, I was charged with considering what we ought to do in regard to the electrical controversy. I met a large number of technical gentlemen in the electrical industry who all came and gave me their opinion that it was right that the industry should be nationalised. They all said, quite frankly, "You must on no account state my name. You must not mention my name, otherwise I shall have to bow the knee in the 'House of Rimmon.' In order to protect my bread and butter I shall go about saying what a terrible prospect this ugly nationalisation is." So I am not so impressed as is the noble Viscount with statements that have been made.
May I conclude with one word about Amendments?—the noble Marquess will not mind my saying this. I felt a little aggrieved the other day when I had taken great pains, as I thought, to indicate quite plainly what I thought was the duty of the Government and the Opposition with regard to Amendments. If I may quote my words, I said this (OFFICIAL REPORT, Vol. 181, col. 320):I entirely agree that no Opposition can expect to have Amendments on points of principle accepted. I will go further: I think no Opposition can complain if their Amendments even on points of detail are not accepted. The Government must govern. But what every Opposition are entitled to expect is that all their Amendments shall be carefully considered and treated as serious Amendments and that argument shall be met by counter-argument. That is the minimum…I think that is a perfectly fair and proper statement. What was my surprise to find that the noble Marquess only a page or two after I said that, I hope with clarity and resounding voice, was saying this (col. 346):But if noble Lords who have spoken here this afternoon really meant to argue—I hope they did not; I do not expect they did—that the Government should accept all the Amendments moved by the Opposition of this House, 438 however fundamental they might be, however disastrous they might appear to us to the future of tile Bill, merely because the Opposition here are in a minority and therefore deserve special consideration—if they meant that, I could not accept it and no Government could accept it.It is not only that I had not said any such thing; I said precisely the opposite and I say again precisely the opposite, I do not say for one moment that the Government are bound to accept any of our Amendments, either on points of substance or on points of detail. But for the reasons I gave, I very much hope that our Amendments will be carefully considered and looked at; and that, if there is an opportunity of going a little way to meet us, your Lordships will not hesitate so to do.
§ THE MARQUESS OF SALISBURY
As the noble and learned Earl has mentioned some remarks I made I think I ought to make my position clear. The noble Earl himself has quoted words he used which were, as always, moderate and measured words; but again and again it has been said in this House, by some of his colleagues, not that Amendments had not received sufficient consideration, but—and this was the complaint made—that they were not accepted. I have always said what the noble Earl has said to-day: that every Amendment has a right to consideration, and full consideration, in this House whether it is acceptable or not; and that is the essence on which we govern But the complaint that has been levied, so I understand, not by the noble Earl but by other members of his Party, is thin, whereas when the Labour Party are in power this is a revising Chamber, when the Conservative Party are in power it is a rubber stamp. That is not so.
As I understand it, what was said the other day was that they could not prevent its being a revising Chamber in the late Parliament because they were in a minority, but they put right the Amendments effected in this House when the Bill reached another place. I believe, however, that, in the event, in this Parliament this House hat, acted as a revising Chamber just as mach as, if not more than, it did in the last. I repeat, I did not complain in the least of the noble Earl's saying that Amendments should have full consideration. I agree with him: they should; and so far as it is in my power they always will, and in the 439 last Bill that was throughout the intention of the Government.
§ EARL JOWITT
I have no intention of going back to the last Bill. As the noble Lord said, how one compares this Bill with the last is a matter of opinion. My opinion does not coincide with his own, therefore I am wrong. But I hold to the opinion as I expressed it.
I think it was a pity, when the noble Marquess came to make these remarks, he did not pay some acknowledgment to the fact that I enunciated the principle in the way I think he would have enunciated it. I will not say that he is wrong, but I am unaware that anybody has suggested—certainly I think it would be undesirable—that any Government should be bound to accept any Amendment moved by the Opposition. I cannot conceive how any such argument could be advanced. I have never heard such an argument, and I did not know that it had been advanced. I shall be interested if the noble Marquess comes across a case. I shall do my best to convince any member of this Party, should he hold such an opinion, that such a claim is monstrous; that it would be the end of any Government. All I want of this Bill is that Amendments should be considered most carefully. I made no threats as to what is going to happen, but I think that, in the circumstances of today, if we can meet each other we should do so. I hope that our Amendments to strengthen the position of the Board and to alter the position between the Agency and the Board will receive the consideration they deserve. I forbear to deal with the matter again: it was so admirably dealt with by the noble Lord, Lord Winster, in his speech, with every word of which I agree. It shows the lines on which we hope that, refreshed and reinvigorated by the Easter holidays, the Government will give their kind consideration to Amendments to this end.
§ 7.16 p.m.
§ VISCOUNT SWINTON
My Lords, I should like to begin by replying immediately to something the noble Lord, Lord Strabolgi, said, because I heard that part of his speech with great interest and I immediately made the most careful inquiries. I was greatly exercised when the noble Lord said that the steel industry 440 had declined to make any investment in order to get iron ore from Canada, and that though he had come back and seen Ministers no result was obtained. I made careful inquiries about this, and I am told that the facts are these. The iron and steel industry was extremely anxious to make investments in Canadian iron ore. The place selected was Newfoundland, which is much easier of access for iron furnaces in this country than Labrador. What happened? The companies were most anxious to make the investment. They asked the then Chancellor of the Exchequer to be allowed to do so, but I am told that for eighteen months they were refused any dollars. I am not criticising the Chancellor of the Exchequer of the time. I am not aware what the exact exchange position was at that moment. It may have been a necessary decision on the part of the Labour Chancellor.
§ VISCOUNT SWINTON
The point whether iron ore was obtained from Newfoundland or Labrador does not make a great deal of difference: it is wise to get the iron ore from that place from which carriage is easiest. But the whole point, as conveyed to the House, was that the iron and steel industry would not make an investment in Canadian iron ore. That is not the fact. The fact, as I am informed, is that the iron and steel industry was only too anxious to make an investment in Canadian iron ore. But, for reasons which were unfortunate, but which may have been necessary at the time, it was eighteen months before the Chancellor of the Exchequer would sanction the transfer of any dollars to make that investment. On those facts, I am sure the noble Lord would not wish to charge the iron and steel industry of this country with negligence in a matter of that kind.
I am sorry that I did not make this clear. No doubt it is my own fault for not explaining properly. I was not accusing the iron and steel industry at all. There were a number of individual entities, but an organisation for that sort of thing did not exist.
§ VISCOUNT SWINTON
Of course it existed, as it exists to-day. Really the noble Lord, if he will forgive me for saying so, must get to know something about this industry before he criticises it. The industry has a complete organisation, a composite body financed by all the units in the industry for the whole purpose of bringing iron ore supplies to this country. I think that practically the whole imports of iron ore (the noble Viscount, Lord Davidson, will correct me if I am wrong in this) that come into this country are purchased and imported by B.I.S.C. (Ore). It was that composite co-operative body, representing the whole of the iron and steel industry, which was not only ready but anxious to make this investment in Newfoundland; and, as soon as the Chancellor of the Exchequer allowed it to make the investment, it did, in fact, make it. Those are the facts.
I am sure the noble Viscount does not want to misrepresent me. I am well aware of the existence of this buying organisation; but it is a buying organisation; it is not for developing untapped resources.
§ VISCOUNT SWINTON
On the contrary, it can and it does invest in the development of resources. I understand, in connection with this Newfoundland company, that a great deal of money is being invested in order to mine iron ore in Newfoundland and bring it to this country.
Then the noble Lord said, in effect, "Of course the Corporation, if it was not destroyed, was doing magnificent work in beginning to open up new sources of raw materials." I have made inquiries of the Ministry, and I am informed that the Corporation had taken no action at all in this matter. This has all been done by the industry's own central organisation B.I.S.C. (Ore). As the noble Lord's charges against the industry will no doubt be broadcast, I think it is only right that the House should have the facts.
§ LORD WILMOT OF SELMESTON
Would it not also be right to explain to the House what are the relations between the Corporation and -B.I.S.C. (Ore) during the last two years, and what steps the Corporation have taken to reorganise and improve it.
§ VISCOUNT SWINTON
If the noble Lord will put down a Question, I will do what I can to get him that information. I understand that in the last fourteen months the Corporation have been, so to speak, in a state of suspended animation. I am coming to that in the course of my speech. But I understand that no charge can properly be made against the iron and steel indusry of failure to develop and to get supplies.
Let me now come to the Bill. I think the very reasoned tone of this debate is a good augury that this Bill will have as agreeable a passage here as it has had in another place. I do not hail that so much as a victory for the Government as—as the noble Viscount, Lord Bruce, said in another connection—a triumph for common sense, though I must say (I am sure the House will allow me to say this) that my right honourable friend the Minister of Supply deserves a great deal of credit for his moderation in framing and adapting this I think there are a great many people—and not only on one side of the House—who wish that this industry had never been brought into politics, and who would be very glad to see it outside politics. No one, on any side, doubts the fundamental importance of the steel industry. As has been said, it is at the base of some of our most important industries, including some of our most important exporting industries, to-day. The real problem is how can we get the best out of it—or perhaps I should rather say hew can we enable it to give its best. Everyone, I think, agrees that there must be a measure of effective public supervision. That has always been accepted. It has been accepted by our Party, by all Parties, I think, and by the industry itself. The technique of public supervision and co-operation between the Government and industry was evolved and steadily improved before the war, during the war, and after it. But supervision must cover a wide enough field. It must cover production, raw materials, prices, research, and welfare. I entirely agree with the noble and learned Earl that it must be administered by a competent and representative Board—people who really know the industry, and its problems: producers, users, workers. And I think it is also important to bring in applied science. On this, I think there is agreement.
443 The real issue is whether nationalisation is necessary to get this supervision and to get an efficient industry. It is said, on the one hand (I want to put it fairly), that this industry is so important—the noble and learned Earl reiterated that in his closing speech—that it must be nationally owned. On the other hand—and this is the view which we hold—its very importance, its competitive character, its own variety, and the infinite variety of interests which it serves, all make it necessary that its firms should have the stimulus of individual initiative, of competition and of individual financial responsibility. Lord Wilmot, in a speech which, if I may say so, I thought was a first-class debating speech—it was a pleasure to hear, and it was none the worse for not being unduly long, as the noble Lord took the course of concentrating on a few arguments—said, in effect, that this Bill is quite unnecessary; and he asked what justification there was for interfering with an industry which was doing very well. It occurred to me—and no doubt it occurred also to other noble Lords—that the speech which the noble Lord, Lord Wilmot, made was a speech which he might well have made to his colleagues during their long and (as I understand) not altogether harmonious discussions on whether or not to nationalise the steel industry. Perhaps, indeed, he did make it then. I hope he did. If he did, I only wish that he could have prevailed.
The noble Lord added another argument, and it is one with which I must deal. He said that the steel industry must be nationalised because it is so important for defence. Of course I agree that it is. But that would be an argument for nationalising the aircraft industry. I do not know what the newest movements in the policy of the Party opposite are, and whether that is going to be one of the industries to be brought in. But surely the nationalisation of the aircraft industry would be a frightful disaster. Before and during the war, all the aircraft—Spitfires, Hurricanes, Mosquitoes, Lancasters: the aircraft that won the Battle of Britain, and later gave us mastery in the air—were the products of private enterprise and the brains of the designers in the private enterprise firms. To-day their counterparts—Hunters, Swifts, Canberras, the Delta bombers, the Valiant bombers, and, 444 in civil aircraft, the Comet—are all the products of private enterprise, private initiative, and private design. So I really do not think that an argument can be founded on defence.
Then the Act of 1949 split the industry in two unfortunate ways, as we see it. By substituting nationalisation for supervision and control, the Act narrowed that field of supervision. It included under national ownership a number of engineering activities—bridge-building, locomotive construction and so on—which had nothing to do with the basic industry of iron and steel, except that they used iron and steel in production. Thus forgings, bright bars, hot finished tubes and cold-rolled products were outside the range of control, though essentially steel products, because they were not nationalised, while, as I have said, firms engaged in structural engineering and the manufacture of mining machinery and locomotives were brought in because they or their parent firms were nationalised.
I must say a word about the foundries. Certainly we are going to have criticism from all quarters of the House, as we always do: it is quite the custom for the Government to be "shot at" not only from one side. I congratulate the noble Lord, Lord Jessel, on his maiden speech. I hope that his remarks will not always be directed quite so intensively against the Government, but we gladly welcome his intervention. We shall have an opportunity, no doubt, of considering this in more detail, but I should like shortly to give one or two arguments on the other side. Founders use exactly the same materials as are used by heavy steel-makers, and they use them in large quantities. That is an argument not for nationalisation but for bringing them under a measure of supervision. As it has reached us, the Bill recognises the special position of these firms. There are a great many small competitive units. It is important that, before noble Lords in any quarter criticise the Bill, they should read it and understand it. It may not always be easy to understand, but I can understand these clauses about foundries.
Take capital development. The noble Lord did not use this argument, but it was used by somebody, either in a speech or in a letter to the newspapers by some iron founder, that he would not be able to put up a shed without getting a per- 445 mit. There is not a vestige of truth in that suggestion. I suppose he was referring to the fact that large schemes of development would require the approval of the Board. These are the kind of schemes the noble Earl was talking about, developments like those at Margam and Trostre, which, incidentally, took place under private enterprise. Small improvements and enlargements will not require anybody's agreement. Nor are prices to be controlled. If the noble Lord looks at Clause 9, he will see that prices will be controlled only under monopoly conditions. Here, I might also reply to the noble Lord, Lord Ogmore, who, on the question of monopolies, said that the Agency, would create a statutory ring to avoid the Monopolies Act. The noble Lord generally reads his Bills, but he has not read far enough in this one. If he reads on as far as Clause 27, he will see that all companies, whether owned by the Agency or not, will be subject to the Monopolies Act, whereas under the 1949 Act nothing was subject to the Monopolies Act. I am sure he will withdraw that criticism.
May I also refer here to one argument raised by the noble Lord, Lord Winster—he will forgive me if I do not reply to all his arguments. I gather that certain features of the Board and the Agency are to figure in later debates, and I do not want to keep the House too long. But as I understand him, the noble Lord used one basic argument: that there is unnecessary duplication. In effect, he asked, why should not the Board do the work of the Agency? It is an essential and an integral part of our plan that their relations should be wholly separate, that the Board should stand in exactly the same relation in their functions of supervision to every company, whether the company becomes privately owned under the Bill or whether their shares remain vested in the Agency. If the Board were to carry out the functions of the Agency, if it were to have the ownership of any of these companies vested in it, then it could not occupy the same independent relationship to the companies which it owned as it would to the companies which stood outside.
To the more detailed arguments which the noble Lord raised, we shall no doubt come on a later occasion. Financial control, which of course the Corporation have, means control of responsibility, and 446 sooner or later—probably sooner—the suppression of individual initiative by the companies. As we see it, that is just the control we do not want. But the control we do want was much less effective under the 1949 Act. I have given examples. Prices could be controlled only where the Corporation owned. If there is to be control of prices, that ought to take place over the whole field, whether the elements are publicly or privately owned. I think that an independent Board of this kind will have better and more independent relations with iron and steel workers than if they owned the industry and were virtually their employers. Certainly labour relations in this industry have always been a model to the whole industrial world. That reflects equal credit upon the trade union leaders and upon the leaders in the industry.
Fortunately, nationalisation did not have time to get very far in its effects. The old impetus continued. Capital development and the acquisition of raw materials were the result of long-range plans, which were prepared long before nationalisation. The new plants at Margam and Trostre which I have so often heard rightly praised, were the result of private enterprise and private planning, private co-operative planning. The Iron and Steel Federation kept up their old central services in order to tide the Corporation over and, as my noble friend the Leader of the House said in opening, they served both the nationalised and unnationalised sections of industry. In consequence, firms have been able largely to retain their own boards, their own managements, overseas connection and good will, and their own initiative. That good will is tremendously important. There are firms whose names are household words all over the world. Their good will was built up by their own initiative and salesmanship. We shall not keep it by keeping the old name on the door. We shall keep it only by keeping the spirit and enterprise that made these firms great.
Quite inevitably, if it had gone on, the Corporation would have had to interfere more and more. The noble Lord, Lord Wilmot, said that the Corporation had interfered very little; and, indeed, had left most of the boards of directors alone. But we must remember that the Corporation had only eight months of 447 effective life. Noble Lords have talked about two years, but as soon as the present Government came into office the Board knew that they would be abolished. Indeed, the Corporation themselves, in their Report, at which I have been looking, point out that very soon the Minister gave them a direction which precluded them from interfering with the management and personnel of firms without the approval of the Minister. The Corporation themselves say, in paragraph 40 of their Report, that in the case of three companies they were in the process of changing the boards of directors, but that the change was not proceeded with because the Minister had given them a direction. I do not blame the Corporation for this, because you cannot tell them to take the whole of the financial responsibility, and make them responsible for all the shapes and sizes to suit every customer, and so on, as is laid down as a statutory duty in Section 3, and expect them not to interfere.
The noble Viscount, Lord Bruce, who has done so much for this industry, said that inevitably that kind of interference would go on more; that there would be increasing difficulties and differences between the Corporation and the directorates. As I have said, this is not a criticism of the Corporation. You could not give them those functions, and order them by Act of Parliament to discharge those functions—financial and detailed functions—and not expect to have the responsibility taken more and more from the individual companies. That is why we are acting in time. It is no blame to us. I think it is fortunate that we are able to act in time. There is an old proverb about shutting the stable door after the horse has bolted. Fortunately, here we can, we hope, shut the stable door in time.
§ VISCOUNT SWINTON
I did not like to use that word. I am obliged to the noble Lord, who for once has put me right. After the horse has departed—if I may use an anodyne word.
Of all the nationalisation schemes, I think this nationalisation of steel is the one about which even the nationalisers themselves have been most in doubt. We, 448 at any rate, always made it clear—and here we are at one with all the Liberal Party—that we should be bound to change it. We always made it clear that we stood for adequate supervision and control. I believe that a number of people supported nationalisation hesitantly, doubtfully, because they believed that nationalisation was necessary for supervision. Anybody who looks at Part II of this Bill can no longer contend that. On the contrary, I believe that everyone, looking at it impartially, would agree to-day that supervision under this Bill would be more effective and would cover a wider field. To-day, in the face of our need for exports, and increasing competition in every market, I feel sure that a large majority of people in this country are convinced of the need to restore to the iron and steel industry its old independence and initiative. That supervision and independence, that partnership, are the dual purposes of this Bill. I believe that both are equally needed, and I submit with confidence that this Bill will meet both those needs in what I am convinced is a fair, and what I trust may be a final, solution.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.