§ 4.17 p.m.
§ Second Reading debate resumed.
§ LORD WILLIS
My Lords, perhaps we could now wrench ourselves back to steel. In the last twenty years there has been a great torrent of words about steel. It has always struck me as rather odd that this hard, metallic, word "steel" should generate sometimes more heat and emotion than a B.B.C. Wednesday night play, or even George Brown. During the last few weeks I have been wading through a great mass of literature and copies of Hansard on the subject of steel because, unlike some of your Lordships, I began without any preconceived prejudice in favour of nationalisation or against it. I do not believe in art for art's sake; I do not believe in medicine for its own sake. Therefore, I do not necessarily believe in nationalisation for its own sake, although I am bound to say that when the noble Lord, Lord Erroll of Hale, talks about de-nationalising steel if the Tories get back—"Oh, the brave music of the distant drum!"—I wonder why he does not also mention the railways and the other nationalised industries—or have the Conservative Party completely abandoned these? Are they determined only to stick to this one particular industry?
I have not come down in favour of nationalisation just for its own sake, nor even because I think steel management is weak, although it has its weaknesses. I have not come down in favour of it because I think the workers in the industry are lazy and restrictive, although there are problems there. Nor have I come down in favour of it because the quality of our steel is poorer than anywhere else in the world. On the contrary, it is the equal. Nor even have I come down in favour of it because of the day-to-day selling arrangements or price per ton produced, because I think these can stand comparison anywhere else, but simply because nationalisation is the key to rationalisation, and without proper rationalisation the steel industry will not be able to compete.
Since noble Lords opposite are so strong about the question of competition, let me emphasise again that this is the point of the exercise. We want to rationalise the British steel industry 42 because it has to live in an increasingly competitive world with the giant complexes in Japan, the United States of America and Europe. It has to be more competitive, and that is the reason why we are taking these steps. I should like to congratulate the noble Lord, Lord Shackleton, on the arguments that he put forward in introducing this Bill. It saves me the necessity of making a very long speech, and I am not going to repeat them. But I want to comment a little on the line taken by some noble Lords opposite and some Members in another place on this issue.
It is a fact that on many important and serious issues noble Lords opposite reveal themselves as models of reason and logic and open-mindedness. I can recall many debates on social issues in this House in which I have been lost in admiration of the good sense that has been expressed in speeches of noble Lords opposite. But then we come to an issue like this and you can hear from here to Whitehall the crash of the shutters going down on their minds. It is a remarkable case of political schizophrenia, which is a state of mind marked by introversion and loss of connection between thoughts, feelings and action. The noble Lord, Lord Erroll of Hale, for example, commented on the managerial issues and said these things change, and I could not help thinking at that moment that I wish noble Lords opposite would change sometimes. One of the key symptoms of this particular disease is that the victim always accuses his opponent of the very sin of which he himself is guilty. Thus, noble Lords opposite, rattling the bars of their dogmatic cage, accuse us of being prisoners of dogma. It is not double think but treble think; it is not so much distortion of fact as murder of fact.
Look at the record. When the Labour Government nationalised steel the Tories gave notice that they would denationalise. They did so, regardless of what that nationalised steel industry might have accomplished, regardless of what progress it might have made. They said, "Irrespective of all that, when we get back we are going to denationalise because we do not believe in nationalisation." They were not prepared to stand on facts; they were standing on this dogma. Then they had a golden opportunity to prove the truth of their thesis that steel under free enterprise could reorganise 43 and rationalise itself. We have had sufficient facts shown in this debate already, and I am sure we shall have many more, and certainly sufficient facts shown in the various debates in the other place to show that in fact the steel industry did not do this. It certainly did not follow out the precepts of its masters in the Tory Party.
Moreover, the old leaders of the steel industry—and I stress the old leaders—did their utmost to sabotage nationalisation after the Bill passed through Parliament and received the Royal Assent. They were perfectly correct in their opposition to nationalisation when it was still being debated, but after that they continued their opposition, thus weakening the new Steel Board that had been set up. Is that democratic principle, or is it dogma? The younger and better leaders of the steel industry to-day have indicated in recent speeches that they have learned something from history, though one of them has shown he has not, and I hope he will be taken to task about that in no uncertain way.
Now, after 14 or 15 wasted years, we are trying to get to grips with the steel industry again; and what happens? The Party opposite come out with the same dogma against nationalization—no facts, no figures, but dogma. The Party opposite tell us we have no mandate, and this was referred to by the noble Lord, Lord Ogmore, speaking from the massed Liberal Benches. We had at the last Election a majority of nearly 100, and increased majorities in all the steel constituencies, or nearly all of them. If that is not a mandate, I should like to know what is. And the condition of the steel industry is, in my view, mandate enough.
Worst of all, we now have an official statement from their spokesman that tells us that if and when the Conservative Party get back they will once more denationalise steel, once more return to dogma. We may have a situation where a Conservative Government conceivably get back again in the year 2,000. Would this promise be remembered then? Suppose the nationalised steel industry of this country has a brilliant record: are you going to break it up? This shows the stupidity of the kind of dogma expressed. Yet we are the ones accused of dogma. 44 This is not politics; it is ping-pong. I find it rather sad to see some noble Lords opposite, whom I have respected so much in general debates but who have reverted to type and proved that under their ermine robes there are genuine 19th-century Tory hearts beating away.
I would say one word about compensation. I believe it is too high and too generous, and I should like the Government to look at it again. I got worried when I read that the Chairman of the Tory Party, setting up a new unit trust, had advised that investment should be made in some of the steel companies which were already being named as those that were going to be nationalised. I thought, "If it is good enough for the Tory Party we must be being far too generous." If the question of compensation went to arbitration rather than the principle outlined in the Bill, I believe we might have a fairer deal for the industry and the nation. As usual, the Labour Party has fallen into the trap of being too kind-hearted. But that is a thought I can live with, if we can get this Bill passed.
It has been debated and contested inch by inch in another place, not always responsibly. I have searched in vain for really constructive suggestions about how the steel industry might be organised to face the challenge of the 1970s. Apart from this suggestion and proposal of nationalisation, I have not heard them. I hope that in this House, at least, we shall show a small measure of statesmanship and pass it quickly and cleanly.
§ 4.28 p.m.
§ VISCOUNT MUIRSHIEL
My Lords, the noble Lord, Lord Willis, encouraged me a good deal in his opening remarks when he pointed out that he had approached this particular subject of the nationalisation of steel with an open mind. I thought for once we were meeting the perfect example of the floating voter, on this particular issue at any rate, and that he might still be willing to float the other way if his reason was appealed to, because he did say that the main reason for his coming down on the side of State ownership was that he was convinced nationalisation was the key to rationalisation. May I ask him (and I will try to develop this aspect in my own speech) what is the point of rationalisation, unless you can get really effective 45 management? And that is really the crux of what this argument on steel ought to be about.
The noble Lord, Lord Shackleton, made a most interesting, and gallant, if I may say so, attempt to justify this Bill. My noble friend Lord Erroll of Hale said the arguments had changed over the years, and he implied that Lord Shackle-ton had produced some new ones. I am sure he worded them afresh, but I must confess that all he said I seemed to have heard before (I mean no reflection on him) in relation to one nationalised industry or another. They are very interesting words, and they sound very attractive, until one gets down to the full implications of what State ownership means in a competitive industry of this kind.
I must declare an interest, as I am a director of one of the companies affected by the Bill, Colvilles, and the holder of a relatively small number of shares in that firm. But of course my interest in steel is vastly wider than that; it is the same interest that every one of us has in that particular commodity. By day, by night, bed and breakfast, coming and going, and sitting down, every one of us at practically every moment of the day is using one of the products of our great steel-producing firms. Clearly, it is of first importance to the whole nation that British steel Should be of the highest relevant quality, produced with the maximum efficiency, and that its price should be the lowest practicable and competitive with that of steels produced overseas. In brief, one must assume, or should be able to assume, that any Bill brought before Parliament which dealt with the organisation of the steel industry should primarily be concerned with just those objectives.
The noble Lord, Lord Shackleton, tried to establish that this Bill is concerned with these objectives. It is on this point that I would argue with him this afternoon. As a political issue, of course, the ownership of the nation's steel-producing units ought—I repeat, ought—to be relevant only in so far as ownership affects the national interest and efficient management; and I would suggest that these two, in a case like this, are completely synonymous, because no one in his sasses, in a free democracy, one would imagine, could deliberately opt for a principle of ownership which on all avail- 46 able evidence seemed likely to produce a less efficient form of management than that which exists. In that phrase "efficient management" I include all the social implications of good management.
But, what is this Bill about? As has been fully pointed out, it is largely concerned with the transfer of the ownership and control from the present proprietors and management to the State. No one at this moment knows—not after the speeches we have heard this afternoon, not after what was said in another place, and no one has been told over the last twenty years of argument—just how management under the State will be conducted in detail; or, what is more important, in what way management under the State can be made more efficient, and more truly democratic, if that is what one is searching for, than it is at present. The noble Lord, Lord Shackleton, made his case, according to his lights, for certain things being done at the top control, in relation to the top control, of the steel industry, and argued that nationalization was the easiest way to do them. He did not develop how management would be handled throughout the industry in the way that it must be handled if we are to have an efficient industry. We are really being asked to buy a notoriously unattractive pig in a very opaque poke. I apologise for that alliteration, but it is exactly what it is.
I admit, of course, that the steel industry must, unavoidably, be organised in large units, and I agree that the units may have to become larger. But State ownership is not necessary for that. I admit, too, that the industry is of such importance to the nation, economically and socially, that in modern conditions no Government can ignore what goes on in the industry; and since the days of I.D.A.C. no Government has done so. Of course, the fundamental trouble when the State takes over, when the State owns, is: who is left as the referee? Somewhere, without doubt, there ought to be some kind of body which can watch dispassionately and objectively over the actions, or inactions, of an industry of this importance to the nation. At the moment, as has been pointed out, the body that does this is the Government-appointed Iron and Steel Board; a body which, I would emphasise, is not the owner, which does not represent the owners and which 47 has no responsibility for the details of management. In future, if this Bill becomes law as it stands, no such body can possibly exist, and those of us who have watched Parliament's struggles over the years to find some method of supervising the existing nationalised industries know only too well that Parliament is no such body. Nor can it ever be.
This, I believe, leaving all political theory behind, or aside—which is the place one generally leaves it, although I prefer to leave it right behind—the crucial issue in this Bill is just what I have been setting out. When the State owns, who remains as the referee? I might venture to add that a good description of this problem was put years ago in the words of a famous song:Who takes care of the caretaker's daughter, While the caretaker's busy taking care?".It is not strictly relevant, but it has the right idea behind it.
My Lords, who does own the industry at this moment? And what influence do the present owners of the industry exercise over management'? These are relevant questions, and I think they are worth a certain amount of consideration. I have made some researches, but my researches cover only the firm with which I am connected. But I would submit that even they are worth considering because they have some interest.
The total number of holders of shares and stock in Colvilles at the latest available date was, in round figures, about 41½ thousand. The total number of ordinary shareholders was 34½ thousand, of whom no fewer than 33½ thousand held less than 1,000 shares, and the average holding in that particular group of holders was just less than 200 shares. Sharing the balance were 1,267 holders. These include some large holdings. Who are they? They seem to be made up of insurance companies, banks, limited companies, trust companies, pension funds, universities, religious bodies, and what I think are generally known as institutions. If one contemplates the ultimate ownership of all these larger holders of shares in Colvilles, one realises that the ultimate spread of ownership in Colvilles far exceeds the 40,000 direct holders: it must run literally into hundreds of thousands. That is only one company. Taking the whole lot of the British steel-producing companies, ownership of the British steel 48 industry must therefore be spread over an already astonishingly wide section of the community.
How do these owners exercise influence over management? How do they keep a check on efficiency? Can they do it? If they can do it, cannot 55 million men, women and children do it just as effectively?—because they are going to be the owners when this Bill goes through. What are the methods? In another place my next remark would, I suppose, be greeted with laughter, but I know that will not happen to me in this House. There can be letters to the chairman of the company and questions at annual general meetings. These are by no means ineffective. But, of course, the real and constant check on the efficiency of management is the willingness of individuals and those responsible for the running of great institutions to invest their money in the shares of a company, and the resulting movement in the shares of the company. Let the efficiency of management be in doubt; let the wisdom of management's decisions be seriously questioned, then neither the great institutions nor the individual members of the public are going to keep their money in such a firm, Management will have to change its methods or its personnel, or someone else will take over who can do the job better. Certainly, with management such as I have described no such firm will be able to raise new capital for modernisation or for expansion. In other words, even with the largest firm the existing system provides a constant and remarkably sensitive check on the efficiency of management—in addition, of course, to the price of the product and the profitability of the company, which is the more obvious question.
Where do we go from here if this Bill becomes law in its present form? What substitute can be devised to take the place of this sensitive system? Is it an overloaded Minister? The noble Lord, Lord Shackleton, I think used the expression that the members of the Corporation would be responsible to the Minister and, through the Minister, to Parliament for the efficient running of the industry. Really! Can an overloaded Minister see to it that the steel industry, with all its intricate processes and different products, is being efficiently run? Can a Government Department do it? Can a consumers' council do it? I ask that most 49 deliberately. We have had experience of different forms of consumers' councils in all the nationalised industries. While they can do some useful things, I doubt whether anybody would say that they are the type of body that could supervise the efficiency of an industry. And I have already given my own view on the ability of the Houses of Parliament to do it. The only possible remaining check is the price of the product; but once the State owns and controls there are too many ways, certainly in the short term, in which even this ultimate check on efficiency becomes obscure.
This argument can obviously be developed indefinitely, and I will resist the temptation. But there is one question which one must ask, because it acutely affects the efficiency and the speed of decision-making in the industry. With all the experience of existing nationalised industries, can any Member of the Government explain what the true relationship, not just the statutory relationship, of the responsible Minister under the Act should be, or, most important, will be, not only to the Corporation but also to the subsidiary groups or bodies which must inevitably be set up to run the industry? Can any device be found which will prevent simple politics, quite inevitable and proper in a democracy, interfering with the running of the industry? It simply is not good enough to use the old phrases—Minister's powers confined to financial control; Minister able to give only "general directions in the national interest"; "no interference in day-to-day running of the business", and so on.
Anyone who has been responsible to Parliament for a nationalised industry knows only too well that the statutory body cannot avoid looking constantly over its shoulder at the political implications of its possible decisions; nor can any Minister, certainly any Minister who wants to survive, ignore what he may learn of actions contemplated which are likely to produce sharp public reactions. I am talking of the hard facts and realities of life. As those of us who have had to deal with these matters know only too well, political interference in the detail of management sooner or later becomes virtually unavoidable. While the political process in a democracy is a very good thing for many purposes, I doubt whether any dispassionate adviser would 50 conceivably recommend it is a sensible method of running a highly competitive industry.
As an example of what I am trying to say, to this day the great British public remains convinced, as I do, that the Minister of Transport is personally responsible if the 5.15 p.m. train is overcrowded, dirty and late. And so, let us face it, she is. But what can she do about it? If she is not responsible, it is remarkably difficult for the ordinary member of the public to find out who is. The point I am making, and I will repeat it, is that no matter what is written into the Bill the Minister cannot and will not remain divorced from the details of management, and I need not re-emphasise what that can mean.
The fact is that this Bill solves not one of the problems facing the steel industry—and, Heaven knows!, there are enough of them—but, on the contrary, presents endless new problems, the great majority of them concentrated on the critical function of management. If this Bill must go through, our sympathy cannot fail to go out to the members of the Organising Committee who, one must assume, are struggling with the implications of the precise problems I have been trying to describe. One can only urge that, whatever operating groups may be evolved, they should have the maximum decision-making left to them. One can only urge that these groups should be so constructed so as to be truly competitive one with the other and able to offer competing service to a reasonable degree in price, quality and in ingenuity of management. And most important of all, to my mind, I hope that profound thought will be given to the problem of political interference in the management of an industry which is not a service industry, but one on which the competitive ability of a great proportion of British products must depend.
I do not believe that this problem can be solved. It is largely for this highly practical reason—and I assure the noble Lord, Lord Willis, that it is not for reasons of dogma—and not on any grounds of abstract political theory that I remain an unrepentant opponent of ownership by the State of any form of competitive industry.
§ 4.45 p.m.
§ LORD PEDDIE
My Lords, I will endeavour to be brief, but in view of 51 the comments which have been made by the noble Viscount, Lord Muirshiel, I am inclined to disgard much of my introductory comments in order to reply to some of the statements he has made. Those statements provide a completely erroneous basis, in my opinion, for much of the opposition to nationalisation. I am sure he will forgive my language when I say that I was amazed at the effrontery in asking how, on nationalisation, good management could be maintained—as though the whole conduct of an industry was vested in the people who were elected to its boards of management or boards of directors, or was dependent upon the 41,000 investors in a particular company.
My reply to the noble Viscount's comment in regard to management is that, in my experience, management as a consequence of nationalisation has improved, rather than deteriorated. One can quote, for instance, the mining industry and the quality of its management to-day as compared with the days when it was split into a multiplicity of small, private units. We have a nationalised mining community where management, not private directors, has been able to introduce the first automated mine in the world. We have a gas industry, whose quality of management and degree of initiative nobody, no matter how prejudiced he may be, could possibly dispute. Those qualities are far greater than ever they were in the old days of a variety of small private gas concerns.
My own personal view—and I am sorry if I get worked up about this question—is that the comments we have heard in the last speech are an insult to the men and women who are working in those industries, working for their living and giving qualities of management to those industries. Does the noble Lord suggest that the replacement of the 41,000 shareholders by 40 million or so future shareholders will mean that the quality of management will fall and that individuals will give less than their best because they are working for the nation rather than for individual shareholders? Surely the noble Viscount would never suggest that the quality of management must fall because the public interest is particularly involved or because the 52 nation takes over. I am sure that would never be said by any person who has knowledge of all the circumstances.
§ VISCOUNT MUIRSHIEL
My Lords, I hope that it is in order for me to answer the question which has been put to me. The noble Lord must realise that I was not casting any reflection whatsoever on the future actions of management. The whole point of my speech was to bring out that ultimately there must be some tests which are applicable. I do not mean going round and seeing whether a man is giving of his best. I have worked with the nationalised industries myself and I have the highest regard for the work done by the people running them to-day. My whole argument was to point out that if you take away—and let us face this old-fashioned phrase—the tests of the market place, no one in any country has yet devised another method of judging whether one firm is functioning better than another, whether one section is functioning better than another. That is the whole point of my argument.
§ LORD PEDDIE
My Lords, I thank the noble Viscount for a very substantial modification of the views which he originally expressed. So long as we have got that out of the way, and we realise that management can be as good and possibly better under nationalisation, then at least we have moved a little step forward in the debate.
Secondly, the noble Viscount said that he would agree that the units should be larger. With that I, and I am sure everybody on this side, would agree. That is what we are talking about. But what has the industry done about it over the past years? What have they done about it over the period of years when they knew that nationalisation was imminent? It is all very well to come along to the House now and state that the units must be larger, and by implication indicate that private enterprise can undertake that job, when there is the living evidence that private control has done nothing at all to create the larger units which both sides of the House recognise are vitally necessary if the industry is to survive and meet the competition from overseas. I make no apologies for this diversion from my original comment, and have sought merely to deal with what are two basic fallacies in the arguments advanced by noble Lords opposite.
53 I should now like to deal with another point which is of considerable interest and which was raised from the Liberal Benches. The noble Lord, Lord Ogmore, made reference to the fact that all the ideas with regard to the nationalisation of steel are prompted by political considerations; in other words, it is a doctrinaire expression. But the noble Lord, Lord Ogmore, knows that from earlier days, as well as I know, from the time when he was standing upon platforms urging its necessity in the national interest, and as a Minister—we will forgive him that, or rather we will forget it—he advocated that there should be nationalisation. He recognised then, and I am sure he must recognise now, that this is no question of doctrinaire expression. It is part and parcel of the very philosophy of Labour Party thinking.
Noble Lords opposite are entitled to their point of view. The point of view which they express to-day is consistent with the philosophy they hold and which they have held for a long period of time. They believe, and they are entitled to believe, that private control of industry is in the best long-term interests of the people who own the industry and of the nation at large. The Labour Party has never felt so. Therefore the decision to nationalise steel is not a doctrinaire expression but is a fundamental part of a belief that such is necessary if we are to secure the economic development of our nation.
I would remind noble Lords opposite that the Labour Government was elected for the purpose—no matter how one thinks it has done the job, at least it was elected for the purpose—of attempting to revitalise the nation, to revitalise the economy. The Labour Party has always believed, as noble Lords opposite have believed, that the steel industry is a vital part of our economy. It is impossible for any Government, regardless of its political complexion, to be able to "kid" itself that it can control the economy and at the same time leave one of the most important—indeed, the most important—basic industries completely to private enterprise. Not even noble Lords opposite believe that. They have never rejected the idea that there should be some measure of control over a basic industry—the steel industry. They have never rejected that idea over the past thirty 54 years. But do not let us hear any talk about doctrinaire expression. The Labour Party and the Labour Government had a clear mandate to nationalise steel.
I would remind noble Lords of another point. The argument has been expressed, and it has been implied in the debate to-day, that the public at large are not thoroughly acquainted with this problem and they do not fully accept all the implications of the nationalisation of steel. But I am going to say—and I defy any noble Lord opposite to challenge it—that there is no aspect of Labour policy which has had applied to it so much public scrutiny as has the nationalisation of steel. Indeed, between November, 1963, and October, 1964, the British Iron and Steel Federation spent £620,000 on anti-steel nationalisation propaganda. During 1964 individual companies spent a further £638,000.
Now I am not objecting to that. I have even conceded that they are entitled to do so. All I am saying is that there was ample opportunity given for the whole of the nation to see and to hear all the arguments against the nationalisation of steel. Yet, in spite of that, in spite of spending more than four times as much as the total amount which the Labour Party spent in the last Election, the result was that in the 30 main steel constituencies the average swing from Conservative to Labour was 4.4 per cent., or 0.8 per cent. greater than the national average. Therefore do not let us have the argument that the general public are not behind this proposal. In those areas where the people are more concerned with this question of steel they gave even greater support to the nationalisation of steel than the average in the community at large.
But so far as it is humanly possible in my comments upon this subject, I want to keep away from political considerations. It is not easy, but I will try to do it. I will try to do it because I honestly believe that the major purpose behind the intention to nationalise steel is economic. Both sides of the House agree—they have said so—to the necessity for rationalising the steel industry. The noble Lord, Lord Ogmore, said, "Let us rationalise it, but do not nationalise it." I should like him to tell me to what extent there has been rationalisation over 55 the past few years. There has been no indication of any attempt to rationalise. The basic objection to the industry to-day is that the production units are too scattered and too small. A modern plant needs for efficient production, to be able to produce at least 3 million tons of crude steel a year. Yet there is only one British plant which has achieved this; and the Germans are to-day talking in terms of units of 6 million tons.
What is more, noble Lords opposite who have had some experience of the steel industry know that to-day the firms simply refuse to specialise, and because of that there is added cost to the industry. In the North-East there are three firms which all produce plates. South Durham, probably the most modern, complains that, because of the other two which are producing plates, they have to run at less than full capacity. If we concede the idea that large basic industries have a responsibility only to themselves, all well and good: but we do not accept that philosophy. We believe that the major basic industries have a responsibility outside that to their own shareholders. They have a responsibility to the nation as a whole. The whole of our economy is dependent upon the efficiency of industries such as the steel industry. Therefore, no Government worth their salt could possibly tolerate a continuing situation in which a major industry such as the steel industry was in a state of perpetual disability as compared with its foreign competitors.
We have heard from both sides of the need for reorganisation. The Iron and Steel Board has indicated that the industry needs to re-organise itself into fewer but larger units; and their own technical studies—that is, studies which they made themselves, not studies made by the Government—prove the point. Yet, as I said a few moments ago, during the whole of the period that this matter has been under consideration not a single proposal has been put forward by the steel industry to deal with this problem. For thirty years there has been a measure of public control, but the present arrangement of private ownership under a measure of public supervision has failed. Would noble Lords opposite challenge this statement? Would they dare to advocate the complete elimination of 56 public control?. Would any noble Lord opposite say that at this time and in this state of affairs a situation exists in which the steel industry could be run without any vestige of public interference, if one likes to use that word? Of course he would not. A noble Lord opposite shakes his head: he accepts the truth of this statement. We have been able to demonstrate over this period that the measure of public intervention has been inadequate. It has been of a negative character. It has not been of a character which has been positive and has urged the industry to improve its methods. It has been restrictive. It has been neither good for the industry nor for the State as a whole.
Now I turn to my last point, and that is on the comment from noble Lords opposite that nationalisation, or public ownership, tends to destroy initiative and enterprise. More than one noble Lord said that. Let us have a look at that argument, and let us apply that argument to the experience of the steel industry itself. What has been the most revolutionary happening in the steel industry in recent years? It has been the oxygen method, introduced by the Austrian nationalised firm of Voest in 1953. It was not taken up in Britain until 1960—and, then, by whom? It was by the nationalised firm of Richard Thomas and Baldwins. So do not let us have any talk about destroying initiative. It is true that it has been taken up by the industry, but as an indication now of something that was needed. But a new idea was created by a nationalised industry, and years later was taken up by a British nationalised firm but ignored for a long period of time by private firms, who claim to be proud of their initiative and experimentation.
There is also the question of monopoly. Noble Lords opposite do not like nationalisation because it is monopolistic. I think one is more likely to find greater monopoly under private control than under State control. But in this case consumers are free to buy from non-nationalised firms; and, what is more, there is no restriction upon imports. When we look at the situation to-day, we see that there is little or no competition in the steel industry. For a long period of time the industry has fixed its prices at home, and has sought at least to 57 reduce competition abroad by international price agreements, some of which, as your Lordships know, have been condemned by the Restrictive Trade Practices Court.
Finally, the critics have argued (and the noble Lord opposite made this statement) that it would introduce bureaucratic control. One has only to look at the make-up of the steel industry to-day, with 18 layers of control: bureaucracy, from top to bottom, without any shadow of doubt. The organisation of the steel industry under so-called private enterprise is completely cumbersome; and, indeed, far from making it more bureaucratic, without any shadow of doubt nationalisation would simplify the structure.
Therefore, my Lords, regardless of the political considerations and regardless of the dedication that some of us on this side of the House may have towards particular ideals, I am personally convinced that here we have an industry of vital importance to the economy of this country, and I believe it is not only the right but the responsibility of any Government to make absolutely certain that that industry is run along such lines, determined by such organisation, as to be able to employ the industry in the best interests of the economy and not merely in the interests of a small section of the community.
§ VISCOUNT MASSEREENE AND FERRARD
My Lords, before the noble Lord sits down, can he answer me this question? If, as he said in his speech, management in the nationalised industries is so much more efficient than management in private enterprise, why is it that in so many nationalised industries we have such great financial losses? The accounts of the railways last year show a loss of, I think it is, another £120 million. We have already written off, I think it is, £1,200 million—and so the saga goes on. There are the airlines, and I could quote plenty more. Perhaps the noble Lord could tell me why?
§ LORD PEDDIE
I can answer the noble Viscount by applying it to steel. Colvilles made a loss of £4.7 million on their strip mill, and that strip mill was less than half the size of the nationalised one. So I am sure the noble Viscount will not accept the idea that nationalised 58 industries are the only ones that make losses.
§ 5.8 p.m.
§ LORD CLYDESMUIR
My Lords, I rise with some trepidation to address your Lordships, being very much an absentee, unfortunately, from this House. I received a certain amount of encouragement, however, when, on looking at the the records of past debates, I found that my father had taken part in a similar debate in 1949, when the Second Reading of the Steel Bill of that date was being discussed. I must also at the outset declare an interest, in that I am a director of Colvilles. The noble Lord, Lord Peddie, referred to the loss which they made on their strip mill operations last year. He did not refer to the fact that they made a profit on their other operations.
The points which I should like to make really arise from my own position, first, as a director of Colvilles, one of the companies affected, and from having, as a result of this appointment, a certain practical knowledge of the industry; secondly, as a member of a family which 96 years ago founded what is now a modern and well diversified group responsible for the bulk of Scottish steel-making capacity; and, thirdly, as Chairman of the Scottish Council (Development and Industry), an organisation which has earned a reputation for expertise in dealing with Scottish affairs, particularly on industrial and economic grounds.
I have been concerned to read in the Press, and to hear of the remarks made recently in Government circles, that there has been a change in attitude on the part of the leaders of the steel industry. It has been suggested that the managements of some of the companies scheduled to be taken over have somehow been won over to the acceptance of steel nationalisation as being in the best interests of the country. This is definitely not the case, and I feel it must be said for the record. The managements of the steel companies affected have never shifted their ground, nor have they given any indication of the acceptance of nationalisation as being the most efficient long-term method of 59 running the steel industry in this country. What they have said—and perhaps this is the point that has been misconstrued or misunderstood—is that, having stated, in their belief, that nationalisation is bad in principle and in practice, if the present Government proceed with their measures, they, as responsible men, will, in the best interests of the country, of their companies and of their work people, do what they can in the new context to achieve an organisation best suited to serve the interests of the nation.
Speaking from my personal experience of the steel industry, and also as a person who has some knowledge of regional planning, I am most concerned about the future control of the industry. Noble Lords on both sides of the House have referred to this and it has been discussed at some length; but I feel that I must make my own contribution to this point. In the steel industry we are dealing with a completely different problem of control from that, say, of the nationalised railways or electricity boards which are basically public services or utilities. We are dealing here with commercial undertakings which have to fight for their existence, being subjected to all the rigours of international competition. The future success or failure of the steel companies, or groups of companies, is also going to have a very marked effect on the regional development plans of the country as a whole. I am quite convinced, both from the efficiency of the companies or groups and from the effect on regional growth, that we must most strongly resist policy-making and administrative and commercial domination by a top-heavy, central authority for the whole steel industry.
May I turn to Scotland for a moment to illustrate this point? The Scottish steel industry has been called the mainspring of the Scottish economy. This is as true to-day, in terms of it serving a greater range of modern industry, as it was in the past when Scottish steel was mainly concerned with serving the shipbuilding and heavy engineering industries. Steel is a key industry, linked very closely with the tempo of industrial growth. The removal of policy-making responsibility from Scotland would be extremely harmful to the industry, and these effects would also spread far beyond 60 and into a whole range of other industries which, taken together, form the backbone of the Scottish economy. A second but no less damaging result would be the fact that, where local autonomy and policy-making disappeared, we should also see the disappearance of the policy-makers. This would have a weakening effect on the whole bouyancy, energy and strength of the Scottish community as a whole.
Scotland is short of policy-makers in industry. This is partly due to the arrival of companies from the South and overseas, and in the majority of these cases policy-making remains outside Scotland. The growth of a community depends very much on the inter-action, on the spot, of policy makers in different companies. Centralising the policy control of nationalised steel outwith the steel-making regions would have the effect of removing one of the main power centres of economic growth. It would also run counter to the Government's stated regional polices.
Let me take two examples, again from Scotland: the National Coal Board, which dismantled its area structure in Scotland, has no policy-making function there at all; the Forestry Commission, which was centred in London, has now moved largely to Basingstoke, and has taken staff and responsibility from Scotland. Both are detrimental to the Scottish economy. As a counter to that, one has the example of the Central Electricity Generating Board (which controls the English Generating Board) which has left the Scottish Board largely autonomous in the policy-making sense; and this has proved a real source of strength in discussions and negotiations concerning new industry starts in Scotland.
In a broad sense, it is important to Scotland that an industrial unit as large as the steel industry should have people at its head capable of making decisions without always having to refer to a higher authority elsewhere. More specifically, the ability to do so imparts a flexibility to local operation which, in the experience of the Scottish Council, has been vital to the success of the establishment of a number of major new industrial operations in Scotland. I think similar examples could be taken from other regions in the United Kingdom. This has been possible because at product 61 and market level. Scottish steel-makers have been able, thanks to their past independence, to seize opportunities quickly and to meet the requirements of potential users without delay, without having to go through the whole long rigmarole of referring back to some central, large, top-heavy body miles away.
If industry in Scotland is going to be deprived of this function, future judgments will tend to be made purely in terms of the maximum efficiency of the national industry as a whole without regard to the needs of the local consumers. This could be said also, perhaps, of the North-East coast or of Wales. In addition to advocating the highest possible degree of automony for the various steel groupings throughout the country, I would also express the strong hope that it will be possible for company names to be retained under the new State ownership.
§ SEVERAL NOBLE LORDS: Hear, hear!
§ LORD CLYDESMUIR
I do not think that people who are not in close contact with the commercial world realise just how much importance a company name can have. This holds good not only in the case of local customers who may have had dealings with a company for many years, but also in international trade with individual companies and larger trading organisations overseas. I have had personal experience of this.
My Lords, may I conclude with a further reference to the problem of control, and to the timing of the possible changeover. I sincerely hope the Minister and his advisers appreciate the great complexity of this industry; that if and when the time comes for control to pass to the new Corporation there will be a team of men capable of exercising the necessary judgments and that they will have the staff and proper communications set up in time to allow them to carry out their tasks effectively. It would be fatal for the industry at the present time if there were to be a period of indecision or a lack of proper communication. The steel industry has a vital role to play in helping this country's economic recovery, and it would be a disaster if the industry were left like a great ship in a storm, whose steering gear has been disconnected, and whose officers neither have the experience nor the expertise to regain control.
§ 5.20 p.m.
§ LORD BLYTON
My Lords, I rise to congratulate the Government on the introduction of this Bill. In another place all the possible arguments have been put forward against the Bill, and the noble Lord, Lord Erroll of Hale has put them forward to-day. The Bill had a long Committee stage in another place; there was a long Report stage. Discussion was not guillotined, a procedure often used by the Conservatives in respect of controversial Bills when they are discussed in another place. My Lords, there has been a great change in Tory policy since 1964. When they were in Government and during the General Election in 1964, the Conservative Party and the iron and steel industry defended the present set-up in the privately owned sector and spoke in glowing and approving terms of its policy and record. When the Labour Party came to power in 1964, during the first debate on iron and steel in another place Mr. Iain Macleod admitted what had never before been admitted: that everything was not right with the steel industry. It is now conceded that there is a considerable need for a radical reorganisation and rationalisation of this industry. It is now seen that the 1953 Act was grossly defective. All this is admitted now, but only since the Party opposite has been defeated twice at the polls.
All the arguments against the Bill would have been appreciated more if, during the period when they were in power, the Conservatives had done something to deal with the structure of this industry which, as everyone knew, needed reorganising. In the long years of Tory rule the Party opposite were aware of the urgency of this need to deal with steel. Anyone with knowledge of the industry pointed this out repeatedly, yet nothing was done. I can only assume that the reason was a great political reluctance to interfere with private industry except in order to give it financial help. But, whatever the reason, the fact remains that no solution of any sort was put forward; not even the one which they now advocate of a reconstituted Iron and Steel Board. I think, therefore, that they cannot be surprised that the Labour Party, having gained power, have brought forward this 63 measure to bring about a structural change in the iron and steel industry.
It is not as though the Party opposite had not had plenty of time to effect a change, or that they lacked the opportunity to do so. I remember the arguments in another place over the de-nationalisation Bill. We said then that the powers given to the Iron and Steel Board were not sufficient and were too negative to bring about any effective control over the industry. We argued that the Board which the Party opposite had created should possess positive powers, so that it might bring about the changes and reorganisation that might prove necessary. But the then Tory Government said, "No", and would not meet the Labour Opposition in any way. That is why the industry to-day is in such urgent need of reorganisation.
The then Conservative Government had a good chance to group the industry effectively when the companies held by I.S.H.R.A. were sold back to private enterprise, but they did nothing. Therefore the arguments advanced by the Opposition to-day have very little validity, due to the fact that when the Party opposite had the opportunity to do something, they did nothing at all. If, as everyone knows, there is need to reorganise and rationalise, that cannot be left to the steel industry to do. The industry had 14 years in which it could have done so. It knew that the Labour Party said that there should be public ownership, but this did not spur them on. The industry could have done something, as their foreign competitors did, but they did not even start the job. It was only when the Labour Government decided that public ownership was the way to ensure the rationalisation and reorganisation of the industry that a move was made. Despite the threat of nationalisation over the last 15 years at least, no proposals came from the industry until May 10, 1966, nearly two years after the Labour Government came to power—apart from the proposals of the Benson Committee with which I disagree, and even these came too late because the decision to bring the industry back into public ownership had been taken. We had two General Elections in which to get a mandate to carry this out.
64 I remember the debates in 1953 on the denationalisation Bill. We were told then by Mr. Duncan Sandys that the Government accepted that State interference was necessary to keep private enterprise serving the nation. He claimed that by setting up this Board the Government had provided an effective instrument to ensure that the public interest was safeguarded. Far from having provided an effective instrument for safeguarding the public interest, this Board has undoubtedly failed; not because of its members but because of the reasons which we gave at that time: that with the powers which it was given and which we considered totally inadequate it could not do what was required.
What were the powers? The Board was required to maintain competitive conditions. I listened carefully to the speech to-day by the noble Lord, Lord Erroll of Hale. The noble Viscount, Lord Chandos, then Mr. Oliver Lyttelton, said in 1948:But we believe that the prices charged by the industry should be subject to Government supervision and approval. The idea that the industry is able to throw dust in the eyes of the Government in matters of prices is too ridiculous to require examination."—[OFFICIAL REPORT, Commons, 15/11/48; col. 95.]But this is exactly what the steel industry did. Members of the industry admitted that ever since 1953—and this was admitted before the Restrictive Practices Court—while they maintained a façade of competitive prices there was none in the industry. These were the men with technical knowledge and experience of the industry, who claimed that it was not possible to operate on the basis of competitive prices. The Board was set up to provide competitive prices and to ensure the interests of the public. It failed, as was shown before the Restrictive Practices Court.
It was not only a matter of prices. There was little, if any, competition in quality between the similar types of steel produced in the industry. This was borne out by Mr. Judge, chairman of Dorman Long & Company, who told the Court that opportunities for quality competition in the heavy steel products were fairly remote. The Board, set up in 1953 by the Tories, was to ensure the efficiency of the industry on de-nationalisation, and I have seen the Reports of the Board in 1964 and 1966. The 1964 Report pointed 65 to the need for greater efficiency in use of manpower and for changes in the structure of the industry, with greater concentration of its units. It referred to the need for a more determined effort to eliminate obsolescent capacity of all kinds. The 1966 Report again referred to this. The Board drew attention to the way in which the industry, with its proud record of creation and innovation, had fallen far behind European countries in introducing modern methods.
I am not saying that the whole of the industry is inefficient. There are some good steel producers; but, by and large—and there is no doubt about this—the industry has failed to live up to the needs of the national economy and the public interest. We cannot go on like this. Year after year we have had reports, recognitions, admissions, that the industry requires a vast reorganisation, including the reorganisation of its manpower, without anything having been done by previous Governments. At least this Bill attempts to grapple with the problem that we face after all these years. The Board as it exists to-day cannot solve them, with private interests operating within the industry. The Board's 1966 Report states clearly that its powerscomprise a weak veto on company development schemes, and a right to fix maximum prices, and all these powers are passive and negative in character.The Report further says thatthey have not proved to be as effective as was hoped in stimulating efficiency, nor can they be used to force industry to adapt itself to present-day requirements.How can the Board be an instrument to protect the public interest, as was claimed for it in 1953?
As I read the debate in another place, the Opposition propose a Board with stronger powers that would provide maximum competition and opportunity for those in the industry to exercise judgment based on their experience. But the last Board, as I have shown, was set up to do this. That Board had 13 years in which to do it, but they had not the powers; and now we face the situation of this country lagging behind other countries. The Board proposed by the Conservatives would have left the steel industry in private hands and their powers would have been increased. But if, as Sir Henry Benson proposed, 16 out 66 of the 26 members of the Consultative Council are steel masters, then their loyalty and responsibility will be to the shareholders and not to the public interest. I am pleased that the Minister turned down this idea. Nor do I consider that adopting the Conservative suggestion would solve this problem, for we have tried it before. The question I ask is: why could there not have been rationalisation with the steel industry's active participation during the time the present Opposition had power? It would have been a more convincing argument for them against public ownership if they had put this house in order and had reorganised the industry into bigger units; but they left everything to the last moment, until their proposals were too late to be convincing.
We are told, of course, that this is a doctrinaire Bill, and that it is brought forward to appease what is called the Left Wing of the Labour Party. I agree when it is said that it is doctrine that has bedevilled the steel industry since 1950; but it is the doctrine of the Tory Party. We have known at least since 1951 of the obvious need for structural reorganisation. It was understandable, in political terms, that the Opposition should denationalise the industry in 1953, but the manner in which it was done missed any remaining opportunity for sensible grouping of the industry. They sold off the works at Scunthorpe and in the North-East, and small producers were left to languish without a link with any of the larger firms. This policy not only cost the taxpayers money, but, what was more important to the future of the industry, perpetuated the fragmented company structure of the 1930s to meet the challenge of the 1960s. It was the attitude of the Tory Party in the 1953 debates that they would stand or fall on its solution of combining a degree of central supervision with private ownership; and now their admissions of the need for structural change are admissions of the failure of the 1953 policy, which no one seems to defend to-day.
We must have plants with over 4 million tons capacity. There is not one in Britain to-day, and our competitors have a start on us in the race for world markets. The task is a dual one: first, how to achieve the necessary changes in 67 the organisational structure to secure the large plants we will need in the years ahead; secondly, because of the high level of investment in the smaller and often modern plants, precluding the premature scrapping of plants, how to integrate the running of them in the short and medium term in order to get the best use of the capital investment we have in plants of this kind. I believe that in this Bill we have the opportunity to organise the use of the present plant and investment to maximum advantage in the short term, and more quickly than in any other way. We shall be able to plan our long term without the pull of divided interests and loyalties, and foremost in the activities arising out of this Bill the public interest will come first. The European countries are responding in different ways to the challenge which confronts them in the markets of the world. This Bill will be more speedy and effective. It will allow us to catch up on the ground we have lost, and to go ahead.
Another argument against the Bill is that it will make it more difficult to enter the Common Market. Everyone knows my attitude on Common Market issues, and others who disagree with me are entitled to advance their arguments on this aspect. All I have to say about this to-day is that if the conditions of entry into the Common Market are such that an elected Government with a mandate to bring into public ownership their great industries are prevented from doing so, then it adds great weight to the attitude I take on Common Market issues. It goes to show what I have always said, that internal control and planning of our own economy is not synonymous with the Treaty of Rome.
I welcome especially the part of the Bill which deals with the participation of the workers in the industry. I hope that by experience we shall see many men in the steel works get more inner knowledge of the managerial side than was the case in the past. Apart from the safety and welfare of the workmen, the scope is extended for workers in a consultative capacity to deal with the efficiency of their works. This industry will face great difficulties, which are more likely to be overcome with the help of a plan (which this Bill gives), and if managements explain and discuss 68 with the people working in the industry what changes are to take place it will help to overcome many problems in the transitional stages. In this connection, it is essential that the men who are to serve on the Organising Committee and the National Steel Corporation should be people who will work to make public ownership a success. It is important that the Minister should select men in whom the workers can have trust.
I read the Second Reading speech of the Member for Vauxhall, Mr. Strauss, who was in charge of the nationalisation of steel Bill in the former Labour Government. It is interesting to read how, after his Bill became law, some people made strenuous and continuous efforts to sabotage it. He shows how those mainly responsible for the operation of the industry immediately set out to sabotage the industry as much as they could at every point, and tried to destroy its effectiveness once it had been brought into public ownership.
While I want to see the best men for the National Steel Corporation, we must protect ourselves against are currence of this kind. In view of this—and I speak now to my own Front Bench—can we afford to keep the vice-chairman of the organising committee, Mr. Macdiarmid? Can the Minister retain this gentleman, in the light of his public pronouncements at the shareholders' meeting of Stewarts and Lloyds, a firm which we are to take over? Surely he ought to resign, or else the Minister must dismiss him. In the light of his speech, can we expect that he will work to make a success of this industry under public ownership? He has said that the Bill is bad, and that the industry will not be a tax-paying, but a tax-eating enterprise. He also said that Stewarts and Lloyds will rise again from the ashes—and this, presumably, means from the ashes of nationalisation. I do not mind in the least his attack on the Bill, but I question very much whether his efforts will be to make a success of the Bill when it is on the Statute Book.
Mr. Macdiarmid's speech means that the steelworkers will have no faith in him, and will always be suspicious of him. It was a declaration of war on public ownership. And yet he is put in the position of operating something which he detests. With jobs of this character we who have been Socialists all our lives 69 do not mind what politics a person has so long as he is prepared to carry out the objects laid down in legislation. How can Mr. Macdiarmid carry out sincerely the object of this Bill when he is so terribly opposed to it?
When we nationalised coal, electricity and gas, the men who were appointed to run these industries carried out the objectives of the Acts; and I remember that in those days the Tories called these men Quislings. The Minister should be made aware that, since the publication of this speech, there has been great concern among the steelworkers and in the Labour Party throughout the country. The appointment met with some hostility from Members of Parliament; the Minister defended it, and it was generally accepted. Now it is impossible. I ask the Minister to bring Mr. Macdiarmid's appointment to an end. No good Government appoints a General in war to carry out an operation which he is against; and the same applies here. Let the Minister learn the lesson that Mr. George Strauss learned when he was Minister of Supply when he first nationalised this industry. It will be monstrous if this man is allowed to carry on, and it could well he dangerous. When the Bill is law it will be a tragedy if over the years its contents are sabotaged while waiting for a change of Government. I hope that the Government will at least take note of the few words that I have had to say on this particular issue.
I regard the compensation proposals as generous. All the articles which have been written by people who can assess these matters, in the Financial Times and elsewhere, describe the proposals as good. They have said that the compensation terms are encouraging, and that they have encouraged people to buy shares. There could not be a better test than that. Even Mr. Macdiarmid, who called the compensation terms despicable, told his shareholders that the value of Government stock which they will receive will show a capital appreciation of 75 per cent. on the original investment.
In supporting this Bill, I consider that we have the opportunity of a new beginning for this industry. The uncertainties will go, and we can look forward to making this industry one that serves the whole nation, and one which will provide a good standard of life for the people 70 who work in it. For years we have advocated the advantages of public ownership for steel. It is realised by all that if things went on as in the past the effects on this industry would be serious. Our duty now is to build up this industry by co-operation between Government, management and men, and to prove to the world that public ownership is not an out-dated idea, but is the only way to deal with the problems of steel.
It was a tragedy that steel was ever denationalised. But for this we should not be facing the problems that we face now. However, I am confident that this Bill will give the impetus needed to ensure an efficient industry, capable of competing in the world, and that it will be conducted in the interests of our nation.
§ 5.48 p.m.
My Lords, in addressing your Lordships this afternoon I, too, must declare an interest, as I am a director of a company which the noble Lord, Lord Blyton, who has just sat down, knows well enough, the Consett Iron Company. Having declared my interest, I would ask your Lordships to accept my assurance that my financial interest in that company is very small indeed; in fact, if measured by the compensation terms in the Bill, it is under £200. So I hope your Lordships will accept from me that anything I may say—and I shall say something critical of the compensation terms—will in no way be motivated by personal interest.
I want at the outset to make my position absolutely clear, and to say this: my overriding interest in this matter—and I am sure it is the same interest of everyone in your Lordship's House—is that we should have a first-rate steel industry. That is the only thing that matters. I am not particularly interested in ownership, as such, whether private or State. My interest in ownership is concerned here with the profound influence that ownership can have on a correct determination of organisation. It is on organisation of the industry that I want to spend most of the time that I shall be addressing your Lordships.
I should like first to say a few words about compensation, because, quite frankly, although one might think that compensation and organisation are two quite separate things, they are interrelated. I take a very different view from 71 some noble Lords opposite in saying that I do not think that Stock Exchange values for compulsory purchases are generally right or proper; and I think in this particular case that is more than ever the fact. The basis of compensation is to be, as we were told by the noble Lord, Lord Shackleton, prices over two alternative periods, and in particular over a five-year period, when the weakness of the industry, as measured by its inadequate reserves, was due to the fact it was quite unable to build up proper reserves owing to the statutory maximum price system under which it had to work, a system which took no account at all of world market prices.
The industry was thus prevented in those earlier years under the Steel Board from building up the good reserves it needed, which would have helped it enormously when it came to having to contend with the severe economic strains that not only the British steel industry but steel industries the world over have had to contend with. When one takes that failure to be able to build up reserves because of statutory limitations, and adds to that the threat of nationalisation and other Government economic measures, I think one can only come to the conclusion—at least I do—that the basis of compensation worked out in the Bill is neither fair nor, I would go so far as to say, moral.
The terms mentioned in the White Paper just a year ago seemed at the time to many of us low enough. But for a British Government to go back on their word and to introduce, as they have done in this Bill, a lower rate of compensation—evenif, as I admit, circumstances have changed somewhat since the White Paper was published—seems to me highly improper.
May I illustrate what I am trying to say with a few figures? The Financial Times of July 2 last year gave some interesting figures which I think are illuminating. For the nine companies covered in the Bill whose shares are quoted, the total equity of net asset values was £567 million; whereas the total equity compensation is only £352.3 million. Your Lordships may very well say, "That is all very well, but surely in those assets are a great number of 72 redundant assets that are of no value at all". It is certainly true that in the industry there are a lot of old assets that would probably not be of great value, but I think another factor has to be borne in mind. My noble friend Lord Erroll of Hale referred to this. He quoted the figure of private investment in the industry in the last ten years as £1,000 million. I will go further and quote the figure for the last 20 years, in which the industry, with its own money, not Government money, has invested some £2,000 million. If one takes that and then considers how the net asset values and balance sheets are arrived at, one finds that the old redundant assets, what might be called not very good assets—though they have been very cheap producing assets, but that is by the way—are certainly written down to nothing at all, and these figures of assets I have quoted will almost certainly be based on the values of the modern assets, to which the £2,000 million to which I have just referred relates.
If I may come down to even smaller figures, I think it will help if I quote the case of the Consett Company, of which I am a director. If we go back to 1955, when the company was denationalised, we find that the price at which the public bought the £1 ordinary share was 25s. 6d. I have no doubt whatever that the average purchaser of those shares bought them, not by way of speculation but as along-term investment. They were small people as well as large institutions, as others have mentioned. Since then, the same company has invested in very modern capital equipment £31½ million, and to-day it can be reckoned that the net asset value per £1 ordinary share is 48s. The compensation price as calculated according to the White Paper worked out, not at 48s. but at 19s. 10d., and the compensation terms as now worked out according to the Bill give the figure 15s. 8d. Of course, those figures pay no attention whatever to the loss in value of the pound sterling. So I do not think I need say any more to make the point that I do not share the views of some noble Lords who say that these compensation terms are too high, that they are generous. I think they are not, and that the figures I have just quoted will bear me out.
73 However, may I move on and say something about organisation? I do not believe, first of all, that the affairs of the steel industry are quite so devastatingly bad as one would have gathered from the noble Lord, Lord Blyton, who spoke last, from whom one might have gathered that the industry was in a very bad state indeed.
But I would say that, whether we look at the industry from the point of view of human relations in industry, or from the point of view of investment, to which I have just referred, or from the point of view of capacity, the availability of steel—from whatever way we look at it, it has not been too bad, despite having to contend with the problem of maximum prices to which also I have referred. But, having said that—and in saying this I know I at once lay myself open to the charge of being altogether too complacent, and I would say that complacency is something no industry at all, whatever it is, can ever afford, because if it becomes complacent that is the beginning of the end—I have no doubt whatever that the steel industry could be improved in a great number of ways. Of course it could. And should be, all the time. Indeed, the Stage One Report of Sir Henry Benson's eminent committee itself says that.
My own personal great regret—and here some of my noble friends on this side may not necessarily agree with me—is that action was not taken by the industry to set up such a committee very much earlier to consider this matter, instead of, as it must have appeared to be to the general public, at the last moment when nationalisation was threatened. I should have liked to see that done much earlier. Nor should I have blamed any Government, of whatever colour, if they had, for want of such a committee being set up earlier, put on some considerable pressure to bring that about.
My Lords, may I be allowed to make a personal comment about myself? My own record in connection with two other industries, which I think most noble Lords will regard (I hope I am not treading on anyone's toes) as something of problem industries, shows that I am by no means 74 afraid of change. I regard change as both healthy and stimulating, and indeed as necessary. Nor am I necessarily opposed to some measure of public control, and perhaps even a modest amount of public ownership, if that is shown to be absolutely essential in the legitimate public interest. What I do blame the present Government for in this Bill is that they appear to have been largely unaware of, or at any rate to have disregarded, the considerable change in thinking in the commercial and industrial world that has been going on for the last fifteen or twenty years. This change in thinking has more and more accepted the importance of the relationship between the private sector of industry, the public sector of industry and the Government. This has been going on all the time, and whatever the reason for this change (and I should myself put it down to advanced technology more than anything else, with all the consequences that flow from that), I do not think it has been recognised by the Government.
Perhaps I may quote an example of what I have in mind, which I think is quite illuminating. It may be only a straw in the wind, but I would suggest to your Lordships that it would have been entirely unthinkable, twenty years ago, that a nationalised industry should be allowed to have any form of membership with the then great private industries' body, the Federation of British Industries. Yet what is the situation to-day? In the Confederation of British Industry nationalised industries are welcomed as industrial associates; they pay their full subscription, and can, and do, play a valuable part. Surely that is evidence that thinking on the association between the private sector and the nationalised sector is changing. Yet what does this Bill do? This Bill, if I may say so, is based, without any shame at all, on a very old vehicle—not a vintage vehicle, but the 1949 Steel Act which we debated in your Lordships' House, though, not, I think, in this particular Chamber. I was given to understand (indeed, I think the noble Lord, Lord Shackleton, said this himself), that the whole concept of the present Government was to be a Government of advanced technological ideas; yet to me this Bill discloses a level of thinking which is completely barren of new ideas.
75 I should have thought that if Her Majesty's Government had really been intent on saying to themselves, "We must have a first-rate steel industry", and if they were anxious to provide that, they would have got together with the industry and thought out something really imaginative. I think that my noble friend Lord Erroll of Hale said something on the same lines. I believe that, if that had been done, the industry would have welcomed this programme, together, perhaps, with a stiffened or strengthened Steel Board. The Steel Board has been criticised this afternoon for its ineffectiveness. But we all live and learn, and if the two sides had got together with a strengthened Steel Board I am sure they could have evolved a sort of amalgam, making the best use of both worlds. The dynamic enterprise that is possible in private ownership, together with the solid support and control of State resources, would have produced something worth while, which I think we could all have accepted. It is interesting to note that it is just over a year ago that the steel industry itself went to the Government and offered them State holdings in the companies. To my mind it was a disaster when that approach was turned down with contumely, without any serious consideration apparently being given to it at all.
I have no doubt that in this country we have a remarkable aptitude for making effective compromises, and I believe that something could have been worked out which would have been a source of admiration at home, instead of a source of apprehension, and would have been greeted by people overseas with the remark, "Here is something good that Britain has produced". If this had been the approach I think it would have been dealt with by the Government and by industry getting together to study the organisation first, in order to see what, if any, legislation was required. It may be that they could have achieved what they wanted without any legislation, but that they would have tried first to get the organisation right and then followed it up with the legislation; whereas what in fact has happened is that the legislation has come first, as a sort of blank cheque, and the idea of organisation obviously is coming second, because it is included in Clause 4 of the Bill. In other words, 76 this is an excellent example of the cart before the horse.
I want to make one point quite clear because I realise that I might lay myself open to the accusation that I was asking for the organisation to be part of the Bill. Here I think the noble Lord, Lord Shackleton, was absolutely right when, in describing the Bill, he explained why the details of organisation were not there. However, I still think we should know what the initial organisation would be. The point (and here again I agree with the noble Lord, Lord Shackleton) is that it is no use putting the organisation in the Bill because the organisation must be infinitely flexible. The sort of organisation that is likely to be right on vesting day will almost certainly need considerable modification during the first few years. This is one of the reasons why I believe private enterprise has the advantage, because in my experience it is much easier to adjust private industry than to adjust a State-owned industry, with all the formalities and difficulties, and maybe even legislation or statutory orders, necessary to bring about the changes.
I am quite sure that if the Government had approached the problem in that way, something effective could have been produced, and it would have been produced in such a way as to safeguard what, to my mind, are the absolutely essential foundations on which any industry ought to operate. Perhaps I might say just a few words on what I have in mind in this connection. The White Paper of April, 1965, in paragraphs 25 and 26, indicated that the various companies would probably be grouped in certain ways, and I think I am right in saying that the noble Lord, Lord Shackleton, repeated to-day that this was the broad intention, that there would be groups of companies around the country, however the grouping might be arranged. That is a matter of detail.
On that assumption my first point is that the groups must be allowed to exercise real individuality and the maximum possible degree of commercial autonomy. They must be relieved in no way whatever of having to operate against genuine competition at home. Noble Lords have questioned whether there is that competition, but I still maintain that they must have genuine competition at home if they 77 are to be able to meet the very pronounced competition overseas. They must be subject to the healthy and searching effect of all the usual financial disciplines which those of us who have been associated with industry know are absolutely essential to keep all of us on our toes, even though those disciplines are sometimes extremely uncomfortable. We do not want any feather-bedding. But I suggest that in a State-owned industry these conditions must be hard—I will not say they are impossible—to create. It is only the tough, economic climate you are likely to get at group level, as opposed to the National Steel Corporation level, that will create what I think has been implicit in what many noble Lords have said, that is, the enthusiasm that is necessary, not merely at the top, but right down the line.
Yet, what have we been told? All we know from the Bill is that there is to be one shareholder. We do not know how the organisation will operate. It could be that it will operate as a single, inflexible, monolithic organisation, that would cut right across the conditions I have briefly indicated as my view for a healthy industry.
§ LORD SHACKLETON
My Lords, if I may interrupt the noble Viscount, may I say that I have been following his remarks with great interest. From what I have said I should not want to commit the Steel Corporation to any particular form of organisation. I suggested, for example, there are other possible ideas. But I see no reason why any of the criteria, the sanctions and stimulus—which, as he says, operate in industry, which can include publicly-owned industry, although my experience is wholly in the private industrial field—should not apply in the new Steel Corporation.
I am grateful to the noble Lord for that intervention. It remains to be seen how possible it will be to bring this about. It is a very difficult thing. On matters of broad financial policy the Corporation must have the powers of a shareholder, but on every other aspect of direction and management I would hope that they go much nearer to decentralisation of the groups. I would say this to the noble Lord: I hope that the noble Lord, Lord Melchett, will approach this problem by keeping the 78 Corporation itself very small indeed. Presumably, it will have various functional departments—for instance, an engineering department—but I would hope that these functional departments will be regarded more as advisory to the group organisations and not executive. It will be absolutely no good if local executives have to refer to functional superiors a long way away matters which, in a management capacity, they should be able to answer for themselves, and then have to operate on decisions from above with which they neither agree nor think to be right.
I have no doubt that the noble Lord, Lord Melchett, and his team will inevitably acquire a tremendous degree of enthusiasm to get this going. I have had something of a similar experience myself. But I urge him to resist the temptation, which I believe would be a very genuine, strong temptation, of trying to drive the whole industry from the centre on too tight a rein. That could be fatal. Authority and responsibility are indispensable ingredients of enthusiasm, and if you want to engender enthusiasm down the ladder you must grant authority as well. If the noble Lord and the Minister would go for some sort of loose organisation, fully decentralised, as I have been trying to indicate, for my part it would go some way towards mitigating the apprehensions I have. Having said all that, I am afraid that one comes to a rather depressing conclusion, because I still maintain that the Bill, as at present introduced, has been introduced more as making industry a political pawn.
§ THE EARL OF LONGFORD
May I ask the noble Viscount what he means? What would be the political motive for doing this unless it was to win votes, which I think the noble Viscount would hardly argue would be the case.
My Lords, the Government might have done this to please some of their supporters. That is my feeling. I should have thought that if they had resisted the pressure and had done as I have tried to indicate—first of all, find out what was wrong with the industry, decide the organisation and then decide the legislation—it might be that they would come to the same conclusion in the end. But they have put the cart before the horse, and made 79 ownership first—which I do not think is the correct measure of organisation—and organisation second. I would put organisation first and ownership, maybe, second.
The Bill will go through and, despite what has been mentioned, very regrettably I think, this afternoon, I am quite sure that once the measure is on the Statute Book all those who have a concern in the industry will do their utmost to make it work. It has got to work. We cannot afford to have a steel industry that does not work. I should therefore like to finish on a somewhat more optimistic note. I should like to congratulate the Minister on one point, that is, on the choice of the noble Lord, Lord Melchett. He is one of us.
§ LORD SHACKLETON
When the noble Lord says "he is one of us", does he mean one of your Lordships, or does it have a more sinister meaning?
The noble Lord is one of your Lordships' House. I am quite sure that he will find it a mammoth job. I wish him well. From my brief personal experience of his work elsewhere, no one could have been better chosen, and I wish we had more like him.
§ 6.18 p.m.
§ LORD MITCHISON
My Lords, your Lordships would no doubt wish me above all things not to speak, but if I do at least that I should be short. I will do my best. If the noble Lord who has just sat down will excuse me, I will not follow him into the question of compensation. Perhaps there may be some other opportunity of dealing with that point. May I begin with a fairy story? It is about the Liberal Party. They once had a Yellow Book. They have forgotten all about it. It contained a great deal which now they would find too shocking for words. It is a pity they have dropped it like that. It was better than some of their modern doctrine, and showed, I think, a better understanding of the possibilities of industrial democracy.
§ LORD MITCHISON
I am most grateful to the noble Lord, and I am sure that it will be a very entertaining debate. This seems to me to be a debate which is really not about industrial organisation, but about questions of power and politics. The Liberal Party also, I think, had a song which saidGod gave the land to the people.They would have to add nowbut some steelworks to a few well-heeled families.One must face the facts about the steel industry. It is not governed by its shareholders—there are too many of them, for one thing; it is governed, in fact, by the directors. When one looks into the principal companies in the industry, including the 13 that are to be nationalised on this occasion, one finds a certain overrepresentation of some families who have old connections with the industry.
§ LORD MITCHISON
That is the fuedal system. I thought we had got beyond that a little. But there we are. I am not being rude to any of them. I am only saying that I do not think they are quite the right people to run an industry of that national importance. I am sure that noble Lords understand quite well that there is nothing personal in that remark: but this is a matter of public policy and interest.
Whether or not there is any connection, I do not know, but the industry has done quite badly. It has slipped back in competition with other countries. The imports of steel to this country have been rising, and the exports have been falling; and, while steel prices are about the hardest things in the world to compare fairly, I do not think there is any case for saying that in the production sense, it is now a cheaper industry than it used to be. And I think it is fair to say, as was said below, by the representative of the Ministry concerned, that our productivity has fallen badly in comparison not only with American productivity but also with that of other European countries. We used to be up at the top of the league; now we have gone back.
I do not think there can be much dispute about this because, after all, the 81 Benson Committee were appointed—no doubt at the last moment, and no doubt with the threat of legislation hanging over the industry—in recognition of the fact that there was a good deal wrong with the industry. If one looks at what is technically wrong (it is not easy for those of us who have not spent our lives in steel to get it right all the time), I think there are two points that emerge quite clearly. One is that we have not kept pace with the size of the units which are required for modern steel production, and therefore have lost the benefit of the economies which result from larger units of production. That, too, goes for the companies themselves, though that is a different point. The second point which emerges, I think, is that we have been bad, not so much in undertaking research as in applying it. I know that there is a case to be made on this. If one looks at the Research Report in 1963 from the Board one sees the sort of reason for it. But it has been an unfortunate history, and the noble Lord, Lord Erroll of Hale, happened to hit on a case. He started a little on the wrong leg, I think, but we got it finally.
One of the most important developments has been the use of oxygen injected at the top when the metal is being dealt with in the furnace. This process was discovered, I think, in Luxembourg or Belgium, and was first applied on a large scale, or at least on a workable scale, in a State-owned works in Austria. And it is sheer nonsense to say that State-owned works are any worse run than a privately owned works: only people who are quite blind to the facts continue to hold that kind of doctrine. The process was applied there in, I think, about 1949.I think that the noble Lord on this side did not get the date quite right. It did not actually sink into the British mind for quite a long time. Finally, Richard Thomas and Baldwins started it. I spent nineteen years as a Member for a constituency which included Corby, and I got a great deal of liking for Stewarts and Lloyds, much as I disagreed with them over many things. They were extremely slow about this. They said, "You cannot use this with the high-phosphorus Northamptonshire ores". Then it was discovered for them—not by them—that all one had to do was to put in some powdered lime at the top. That is what they are now 82 doing. The result was that they built an enormous, expensive new plant to do just this thing: to apply the practical discovery of this State-owned industry in Austria.
The industry in this country has been slow on the uptake, and the rest of the world had not been so slow. The result was that, on that particular point, and as a result of their not being up to date and modern about it, and not being prepared to see how important it was, this was one of the things which contributed substantially to our slipping behind. There is no point in saying that we in this country have spent a lot more on research than we used to. No doubt. But so we ought. In any case, we have been slow about it. Therefore, I feel that one has a case for saying, much more strongly than one could have done in 1949, that the industry itself is in sore need of reshaping.
I turn from that to what seems to me to emerge from all this. We had from the Front Bench opposite—and not only from them, because it was given in another place too—a remarkable indication of what they thought was a really good industry. In their view it consisted of percentages of profits; and because the percentages of profits in nationalised industries were low, clearly, they said, they did not work. My Lords, this is really a fantastic fairy tale. Let us have a look at this for a moment. First of all, let us take Richard Thomas and Baldwins, which is the example always given. What happened is this. When steel was denationalised in 1953 the big companies were offered, in one form or another, to the public, and naturally the public bought back the good ones first. Richard Thomas and Baldwins never succeeded in finding a buyer. The reason they did not succeed was not that they were nationalised but that they had been, and still were, the most unsuccessful. It had nothing whatever to do with the question of whether they were nationalised or not. I think the position has changed quite a little since then. But that was the reason; and that sort of comparison is completely bogus.
Moreover, where do we get to over this? Take nationalised electricity. If you want to produce the maximum return on the capital invested, you increase the charges and you mulct the consumer. The 83 fact is that in one firm or another a good many of these nationalised industries have been conspicuously successful in keeping down their charges to the consumer. Therefore, I say with confidence that we can argue about this until all is blue. But this is the wrong kind of test of what is needed. The real test is whether the industry can in fact supply the services which are required by the community. On that test, as I have pointed out, the steel industry has done rather badly.
There is another way of looking at that too. The steel industry has been working for quite a long time at something like two-thirds or three-quarters capacity. I think that probably in the nature of the case it is an up-and-down industry—technical, if you like to call it that, although I am not quite sure that that is the right word. One of the hardest things about it seems to be to decide what sort of capacity is wanted. Clearly, the private steel companies have an interest here. It is in their interest always to keep the capacity pretty low, so that they can sell all they produce in steel and thus do not have long and unprofitable periods of working on part capacity. I do not think that is the right way of looking at the matter in the national interest. I would say that one of the major points which make it necessary to have a nationalised steel industry is the question of comparing the economic position of the country and the extent of capacity or additional capacity required in the steel industry.
§ LORD WINDLESHAM
My Lords, the noble Lord mentioned an earlier intervention of mine. I have followed his argument carefully, and perhaps I may put this to him before he goes on to another point. He said that the profitability of the companies in public ownership, as against the profitability of companies still in private hands, was not, in his view, a fair test, and he thought that the capacity and use made of capacity was a better one. Could the noble Lord help the House on this matter? If one looks at the production of R.T.B. in 1963, for example, along with that of the United Steel Companies, the production of those two companies was almost the same, £3.3 million for the one as against £3.4 million for the other. Yet the profitability of United Steel was more than double that of R.T.B., and the capital employed in 84 R.T.B. was half as much again, £224 million, as in the United Steel Companies, £146 million.
§ LORD MITCHISON
All the noble Lord is saying is that Richard Thomas and Baldwins was a less profitable company. All I would say to him is that that is exactly the reason nobody bought it back. It is as simple as that. He need not go into technical dissertations as to why it was less profitable. The fact is, as I say, that it was not bought back by private industry because it was less profitable. All the steel companies at that time had been nationalised—it was not due to that.
§ LORD WOLVERTON
My Lords, in fairness, I would say that since that date a large amount of public money has been poured into Richard Thomas and Baldwins to build their great new works, and in the last four years it has lost £30 million. It has had all the necessary capital pumped into it by Her Majesty's Government.
§ LORD MITCHISON
I feel inclined to say to the noble Lord that only a—I will leave out the next word—would really suppose that that had anything to do with its being nationalised or not. I have never been able to see this point. It is no use trying to persuade me about it; I am getting too old to be persuaded.
I turn from that matter to deal with the question of power in this industry. Large chunks of the steel industry moved from the coalin Wales to the ore in Lincolnshire and Northamptonshire. That move was a social change of the greatest importance, not only to South Wales which suffered intensely from it, as anybody who has been to that part of South Wales has seen, but also, on the credit side, to what happened in Lincolnshire and Northamptonshire. That was a major change of a technical character which had enormous social consequences. I agree entirely with those noble Lords who have said that this is an absolutely basic industry. One could not have a better illustration than what has happened to it in the past. Then, having done that, they started to work the ore in the long belt of gradually decreasing value which stretches roughly from the Wash southwestwards. They stopped at about Oxfordshire. The point where one stops working that ore is not only a business 85 decision, but a decision of the greatest social and economic importance to the country as a whole. It makes all the difference. It would not make such a difference in a small industry, in an industry which is less basic than the steel industry. But in the steel industry what happens to the main movements in it is a matter not for the quest of private profit, but for consideration in the light of the economy and the requirements of society as a whole. These are, therefore, matters to be decided by the Government of the day.
We were told that what we want is a first-rate steel industry, the best steel industry, and so on. When one looks at what that involves, it is not merely a question of efficiency but of what is the right thing to be done in certain circumstances. However much power one may seek to give to directors of steel companies or anybody else in a democratic country, it is the Government, and only the Government, which ought to decide that kind of thing. Those who seek to subordinate it to questions of private advantage or power in private hands are, I believe, doing a grave disservice to their country. It is a disservice which is particularly dangerous at a time when the world is changing around us, when other countries are developing, when the whole fabric of our civilisation is growing and changing, and when, as I see it, mistakes and narrowness of mind now may lead to untold trouble in the future. It is because I believe this to be a question of power, and a matter for social and economic decision in the interests of the country as a whole, and not merely a question of how one runs one particular industry, that I feel it must rest with the Government of the day. Given that conclusion, this seems to me to be the right kind of Bill.
With great respect to noble Lords who sought to put more into the Bill, I feel that they had not worked out what it was they wanted to put in. This Bill is simply a frame into which those matters are to be set. I was glad to hear tribute paid to the noble Lord, Lord Melchett. Those involved in consultation with the Government of the day will seek to get out the best scheme for the running of the National Corporation and the industry as a whole. That must be right. One could not try to put more than that into the Bill when dealing with a subject of this 86 complexity. I hope that I have not taken too long, and I hope your Lordships will feel that those of us who think this industry ought to be nationalised do so because we believe, as earnestly no doubt as other Lords believe the opposite, that it is right in the interests of the country, and I venture to say in the interests of the world at large—and is ultimately right in the interests of the men and women who live in the country, including those who work in this industry who have no doubt what they want in the matter. The iron and steel workers have been perfectly clear about it, and their views are of some importance.
§ 6.38 p.m.
THE MARQUESS OF ABERDEEN AND TEMAIR
My Lords, following the usual custom, I will declare my interest in this matter of the Iron and Steel Bill. I came into the steel industry in 1943, and retired from it in 1962 and, therefore, I had an intimate knowledge of what was happening in the industry during the whole of that period. I did not intend to mention the name of the company, but as several other noble Lords have mentioned their connections, I will mention that the name of the business was Hadfield's. The experience I had there, having now retired as an octagenarian with very happy memories of the industry, was of a closely-knit collaboration in the industry at all levels.
I was a member of the Executive of the British Iron and Steel Federation. The members of that Executive were leaders of their industry, in each case competing very actively against each other, but always with the greatest friendship, and with a happiness in meeting at frequent intervals—almost like your Lordships'House—a friendship which one could maintain throughout. That feeling went right through the industry down to the workpeople on the shop floor operating the furnaces; and there was always a pride in the fact that there were no strikes and that there was great friendship at all levels. I know that we hear of strikes, stoppages and so on in the steel industry—it makes a very fine heading to a column in a newspaper—but if you look into them you find that they were due to misunderstandings with the industries which provided the ancilliary undertakings—the repairs to furnaces, the finishing-off of certain items made in a 87 firm such as that to which I referred, where there is also a great deal of engineering work, and so on.
I will give an example. What goes on in a steel works is not generally realised. Often a visitor will come who has never before seen a steel works, and he is always amazed, not only at the wonderful apparatus in the works, but at the pride in achievement of the people there. It gives a person a new outlook on what industry can be. I can think of the case of a young man who had never before been employed in a steel works. He was always changing from one place to another because he could not settle down and did not feel that he was appreciated. I do not know whether it was by chance, but he came as a labourer on the open hearth shop floor. After a time he said, "Well, I have never had anything like this. I am made to feel that I am of some use and I feel happy here, which I have never felt before." He referred to the manager of that department and said, "I feel that Mr. So-and-So is a gentleman." What he meant was that he was always being encouraged, and was not being set down as someone inefficient and of no use.
The time when I was in the works included the war period, and we were very busy on war production. Of course, that applied all through the industry. But at that time we were subject to destruction by enemy bombing, so there was no great move to increase the individual works. But in America they were out of bombing range, so great increases took place there. The German steel works were largely destroyed, so when peace came they started from scratch and had everything new. Those are the differences which are sometimes referred to and which make people feel that we are behindhand.
I can remember very well when we had a British Exhibition in Moscow. The British Iron and Steel Federation had a very fine stand of their own. That was at the time when Mr. Khrushchev was the leading person, and when he came on to the stand he said, "I realise that all the systems of steel-making which exist to-day were started in your country. It is true that we have taken them up, enlarged them and improved them, but you were the originators." That is quite dif- 88 ferent from what is so often suggested: that we are no use at all, and that we have to make excuses for not being as good as other countries. Other countries think very highly of us, and we should be proud of that and work up to it.
After that time developments took place, but ever since there has been any idea of steel-making, quite early in the century, it became a sort of dogma—se the word—in the Labour Party that steel ought to be nationalised. There was no particular reason for it, but there it was. An Iron and Steel Bill was introduced in 1949, and I will show in a few moments how very similar it was to what we have to-day. When that Bill was under discussion, visitors to the works sometimes asked the men, "What do you think of this?" The answer was, "Well, it does not make much difference to us. So long as we have the same management we shall be all right." They were sometimes asked about voting, but of course they voted Labour. They were not going to vote differently just because of one Bill, and that has been so all the way through. There has been a tendency to say that there was a vote in favour of the Bill, but that was only one Bill which was suggested in the general programme.
I must say that I am inclined to-day to feel very sorry for the Government. They have missed an enormous opportunity. As my noble friend Lord Rochdale has said, it would have been so easy to say, "Now here is this rationalisation which everybody here and in every other country is so keen about, and it can be proceeded with with the help of the Government." But as my noble friend said, there was always an unusually large majority—a strong Left Wing, as it is called—from the early days, from the beginning of this century, which had this idea of steel nationalisation. So I believe that the Government were compelled to push in the direction of nationalisation. To do that, it was decided to purchase seven great companies at an enormous cost. Is it £500 million or £600 million? I do not know. But that money has to be found at a time of great stringency, instead of taking the opportunity to encourage rationalisation.
Mention has been made of the Benson Committee. That Committee produced a very fine scheme which has been stopped because of nationalisation. 89 Nationalisation first became possible in 1949, though one Party had always been keen about it. In my experience, that period of nationalisation did not do very much harm. The first reason for that was that the companies in the Schedule, which amounted to hundreds, kept their individuality; they had one shareholder instead of a number. That state of affairs did not last very long, because there was a change of Government. But, in spite of what had been said about the disposal of companies in one piece, there was no difficulty at all in going to the market and obtaining new quotations. Those companies found that there was great competition for their shares. Here I must mention my own company again. A great many of the workpeople bought shares, and to this day more than half of those who attend the annual meetings are employees of the company. I say this to show the enthusiasm which could have been used without the waste of a tremendous amount of money at this time of stringency.
A good deal has been said in the last few weeks about the fact that Mr. Macdiarmid (and his name has been mentioned) has undertaken to be the vice-chairman of the organisation which has been set up to advise on the running of the industry. The explanation is shown in his chairman's statement and in the statements of the chairmen of several other companies: that the main thing is to keep the industry going, even if one does not feel that the best way of doing that is by nationalisation. That shows the spirit in the industry and the wish to keep it going and to be proud of it, while at the same time doing everything possible to resist the industry's becoming a political shuttlecock. In 1949 I made a public speech on this subject, and I happened to be able to turn it up. I found that what was said then was very much the same as what is being said to-day—the great difference being, as I have said, that the number of companies then involved was large.
Another reason why I feel sympathy for the Government is because, if one looks at the speech of the Minister of Power on the Second Reading. of this Bill—and I think I may quote him, as he is a Minister—one sees that, on July 25 last, in column 1223 of the Commons OFFICIAL REPORT, he said: 90I must begin by apologising to the House. Had I realised that the exclusion of so many steel companies would cause so much trouble I could have reconsidered it and included the lot.I suppose that, in a way, that is typical of the position into which we have got. It is unfortunate, but I suppose inevitable, that there are few subjects upon which it is more difficult to get a rational discussion than the future of the British steel industry. The Minister ended his speech by saying, at column 1241:This Bill is no irrelevant genuflection to any dead dogma of the past…Most of us feel that that is exactly what it is.
One aspect of this matter which has always troubled me is that the steel industry has been attached (if I may use that word) to the Ministry of Power. Over all this time the Ministry of Power has been responsible for the nationalised industries, so-called. I am sure my noble friends will remember how the steel industry referred constantly to the Board of Trade because, being an export industry and a manufacturing industry, it had to work with the Board of Trade. People may have felt, "Well, there it is; it is just one of the industries under the Ministry of Power, so it may as well go just like that". I am sure it has not been fully compared with those industries which are in fact not industries at all, but services, and which have the reputation, at all events, of not being very good at making money. And there is no reason why the steel industry, on being nationalised, should make more money. If there is only one shareholder there are, of course, no shareholders to complain at an annual meeting if there is a loss.
I have mentioned the British Iron and Steel Federation and its composition. It has had its charter slightly altered recently, but all through, the work of the industry, to which I have referred, though not exactly controlled, is managed by that Federation. They have a wonderderful staff. Their loyalty, their efficiency and their collaboration have made it possible for the steel industry to be what it is. Under this Bill that great Federation will be broken up. The Minister has said that he hopes a special organisation will be set up to cater for those firms which are not in the list, which are not among the fourteen. From what he has said, I am sure 91 he means to make it as easy as possible for that staff to be engaged and to go on feeling that they are of real use, as they indeed are. I am sure the Minister is sincere about that. But, of course, there may be another Minister—we do not know—and she or he might have a different view. But there it is. The other organisation which has been mentioned is the British Iron and Steel Research Association. That is in a slightly different position. It has wonderful research laboratories in Sheffield, in Swansea and in London, and it enjoys a very high reputation throughout the world, being in close touch with similar research organisations in other countries.
I would end by saying that this Bill depends very much on the 1949 Act. There are 64 clauses, and 33 of them, I think, refer to that Act. In addition, there is the 1953 Act, to which reference is also made. I have turned up a record of what I said in a speech I made at the time the 1949 Act was a Bill. My closing remark was:We do not like it, we do not want it and we will not have it".We did have it, and we did the best we could. I said then that what we were determined to do was to be true to the industry, and that it was not illogical that we should do everything possible to make the industry a success. I would say today that what is certain is that every man at the furnaces, be they open-hearth, electric arc or converters, will be loyal to the industry and will do his best to be worthy of the task he has.
May I quote from the closing, farewell article of Mr. Edward Senior, who retired as Director of the Federation? It read:The Industry is now to be confined within the disciplines of political theory. This I find saddening, just as we glimpse through the opening door the wider opportunities of more effective economic disciplines of greater competition within the European group. However the form and the organisation of the Steel Industry may change, never will its service to the country and the economy.So now this Bill is before your Lordships. We have to accept it that the nationalisation scheme will take place; but we must do our best to make improvements by suitable Amendments.
§ 7.1 p.m.
§ LORD WELLS-PESTELL
My Lords, I hope that my noble friend, the Deputy Leader of the House, will not think me presumptuous if, as a Back-Bencher, I congratulate him on his forthright and vigorous advocacy of an essential piece of what I believe to be sound Socialism. I only hope that my next remark will not get me into any trouble. There are times when some of us feel that the velvet glove approach softens—I had better not say "stills"—the voice of Socialism in this House; but that could not be said to-day. For one in my position on the list of speakers to-day, when this debate has been going on for over four hours there is not much left to say; but I will try not to go over the ground which so many noble Lords have covered. I want to make it perfectly clear that I have no connection whatever, directly or indirectly, with steel; but I have spent some time as an observer in some steel works since I have been a Member of your Lordships' House and my reason for speaking to-day is merely to say, as shortly as I can, how I see the position.
I think everyone accepts that the iron and steel industry occupies a dominating position in our economy. I feel also that there may be general agreement among noble Lords that something is seriously wrong with the steel industry. I think this is borne out by the recently-published Report by the Special Development Co-ordinating Committee of the Iron and Steel Federation to which a number of noble Lords have referred. This Report recommended the reshaping and re-equipping of the industry within the next ten years. One would imagine that the industry itself would not make such a suggestion unless it were absolutely essential. That Committee was of the opinion that, by 1975, six or seven integrated steel works, those making steel from basic materials (coal and iron ore), together with two or three large non-integrated works, those processing scrap steel, could provide well over 28 ingot million tons a year. That Committee made it clear that by the reorganisation and the integration of certain steel firms there could be a considerable improvement in production. If there existed a sincere desire on the part of the industry to be really efficient, 93 people like myself, outside the industry, find it difficult to understand why it did not arrive at that conclusion very much earlier.
But, within a matter of weeks, plans for a massive merger of three of Britain's major steel companies—already capable of making nearly a quarter of the nation's steel requirements—was made known. I feel like asking: had the industry only then become aware of its inadequacies? It would seem to me, and to many others outside the industry, that the threat of nationalisation, which we all know will shortly become a reality, stampeded the industry into making an eleventh hour attempt to put their house in order. I say, with great respect, that it was an action which the industry should have taken years ago. For years the industry—and, for that matter, the whole country—has clearly known the attitude of the Labour Party towards steel. We nationalised it once and we made it perfectly clear that, if it were denationalised we would nationalise it again.
I thought that the noble Lord, Lord Erroll of Hale—and I hope I am not doing him an injustice—was rather contemptuous of the nationalised undertakings; I though the tended to dismiss them almost with the wave of a hand. But I would ask him and other noble Lords to look at what some of the nationalised undertakings have been able to do. If we look at the achievements of the Electricity Council to-day we find there has been a 98 per cent.—in fact, almost 99 per cent.—rural electrification. Electricity has been taken into farms in the Highlands of Scotland and the uplands of Wales and into the little country areas—and not only into the farms but into the dwelling houses. I say, with the greatest respect to the noble Lord, that this would not have been possible and would not have been done under private enterprise, for it would have been too costly they could not have found the money. I think this may well apply to the steel industry—although I am the first to admit that I am not an authority in these matters—and that the Party of the noble Lords opposite believes it does apply.
My Lords, this is not just a piece of doctrinaire Socialism; but, of course, it has political implications. It was, I think, the noble Marquess, Lord Aber- 94 deen and Temair, who said that no particular reason was given for the nationalisation of the steel industry. But we did not have to give a reason. I am a convert to Socialism; but I have been in the Labour Party a good many years—far more years than I care now to remember.
THE MARQUESS OF ABERDEEN AND TEMAIR
My Lords, I hope the noble Lord will forgive me for interrupting him, but what I meant to say was that there was no need to mention a reason because there was no reason. It was the dogma without a reason.
§ LORD WELLS-PESTELL
With the greatest respect to the noble Marquess, I say that in our view there was every reason—I repeat, every reason—to feel that something of basic necessity to our economy is so important that we cannot take the risk of leaving it in the hands of private enterprise. It is quite wrong to think that this has been done for no other reason than to placate a few members of the Left-Wing element of the Labour Party. This is a sincere attempt by the Government to do what they think right and essential in the interests of the United Kingdom: that is, to bring under public control an industry which is of supreme importance to our economy. For this reason, and for no other, we are doing it.
A good deal has been said to-day about the effectiveness and efficiency of the steel industry. If your Lordships will allow me, I should like to quote from The Times of July 2:Over the past years the steel industry has not been operated in a markedly efficient fashion. The quality of some products has been poor, British steel has not been as competitive in world markets as it should have been.This may be true or it may not be true; it is a quotation from The Times; but I think many of us realise to-day that the industry needs to be reorganised and rationalised. Those of us who have attempted to make some study, albeit without very much experience, realise that there are far too many plants in this country and perhaps too many on the managerial side, and possibly there may be too many workers in the industry itself. Another question we have to ask ourselves is: if the industry needs to be reorganised and rationalised, is it, as at 95 present constituted, able to bear the financial burden involved? We must face the fact that there is a poverty of capital. We have found this in other industries which have become public undertakings. I ask your Lordships earnestly to ask yourselves whether you think the industry can afford the capital necessary for undertaking such a basic operation as is needed at the present time.
If the industry had really been concerned with efficiency and effectiveness it would have undertaken years ago the kind of merger envisaged recently by Dorman Long and South Durham. It is precisely the kind of change which critics of the industry, and, if I may say so, critics of nationalisation, have been urging for the past twenty years. But the industry was content to turn a deaf ear. It was content, or seemed to be, to let things remain as they were. Now in the foreseeable future it is to be done for the industry—always assuming that the Minister succeeds in finding the right people for the top positions. I wish to associate myself strongly with what was said by my noble friend Lord Blyton about the Vice-Chairman. If what was said is indicative of what the Vice-Chairman thinks, the Minister, in my view, will have to reassess his fitness and his suitability for the job which it is envisaged he shall do, and I should like to make that point strongly.
My Lords, the need for change in the industry has become apparent because of the growth and reorganisation of the steel industries in several other countries. This point was referred to by my noble friend Lord Shackleton. The German steel industry is to be reorganised into four cooperative organisations which will in turn take over the administrative functions of individual companies, as well as control investment production and sales. The French industry is to reorganise itself into three units, two of which will be able each to produce more than 7 million tons—
§ LORD MERRIVALE
My Lords, may I interrupt the noble Lord to ask him: does he consider that the French method of rationalisation is nationalisation in any way?
§ LORD MERRIVALE
My Lords, the noble Lord, Lord Wells-Pestell, is absolutely wrong. I am sorry to say so—with the greatest respect. But I will come to that point in my speech.
§ LORD WELLS-PESTELL
My Lords, two of these companies will each be able to produce more than 7 million tons, or twice as much as the largest British company. As my noble friend Lord Shackle-ton told the House, we are faced to-day with five companies in Japan, eight in the United States and nine in the European Coal and Steel Community each larger than the largest British company. Because we in the Labour Party recognise the importance of this industry to our economy, we feel that we have to face the fact that the industry must be brought under public control, since it is doubtful whether private enterprise can achieve what we feel is needed for the industry.
It may well be that the managing director of production at Dorman Long had the answer when he said about the steel industry in November, 1962:We are undoubtedly too complacent and resistant to change, believing that things will carry on much the same as they have always done, a silly view at any time hut with the greater competition from the Continent, a very dangerous one.We have to face the fact that in some areas there has hardly been any progress at all; in others, there has been a refusal to specialise. The industry has invested about £1,100 million in the past decade. I think that the noble Viscount, Lord Rochdale, put it at £2,000 million in the last 20 years, and, with respect. I would not disagree with that figure. I think it only reasonable to ask what we have got for what has been invested. In research, expenditure has increased a little in the last year or two. The noble Marquess, Lord Aberdeen and Temair, said that we have a wonderful research department. I challenge that. I apologise to your Lordships for not being able to give the date, but I have here a cutting, which is not very old, from the Sunday Observer. The headline is, "Britain lags in world steel research race". It just is not accurate to say that we have got a wonderful research department. In point of fact, we are well behind the rest of the world, when it comes to research in the steel industry.
97 My Lords, along with other Members on both sides of your Lordships' House I realise that we shall not achieve very much by arguing and discussing what is wrong with the industry. The important thing is to know what we are going to do about it. I believe very sincerely that the solution lies in nationalisation and bringing under public control those firms which, with their subsidiaries, are responsible for producing over 90 per cent. of our steel. I do not believe that nationalisation is the anathema to the Party of the noble Lords opposite that they sometimes make out. They have not sought to denationalise the coal mines and the railways—but, of course, we know that neither of these two concerns was profitable in terms of money. Perhaps steel presents an entirely different problem. If the noble Lord, Lord Erroll of Hale, is right when he says that nationalisation of steel will make it more difficult for us to get into the Common Market, then, if I could do so, I should support this Bill even more.
§ 7.20 p.m.
§ LORD FERRIER
My Lords, my contribution to this debate will be brief, but in two distinctive complementary parts. First. I would complain that an important and controversial debate of this nature is being held on a Monday. I speak as a Peer whose habitat is some four hundred miles away. I noticed when I came into the House that the Benches on the Government side were thinly occupied. I protest that it is unreasonable to demand Monday and Friday sittings by Peers who give—yes, give—of their time to the work of Parliament.
§ THE EARL OF LONGFORD
My Lords, the noble Lord has every right to take this view. There were protests on Friday about taking an important subject on a Friday. If we are not to take them on Monday we shall confine ourselves to three days a week, and I do not think that there is any Divine ordinance which says that the House of Lords must sit for only three days a week.
§ LORD FERRIER
My Lords, perhaps, we may talk about this. I have a constructive suggestion to make, but I feel bound to make this protest because I believe that it is unfortunate to have a debate of this importance on a Monday. 98 Nevertheless, inconvenient as it is for many of us to come five days a week, which means leaving home on Sunday night and getting back on Saturday morning, I found it impossible to resist the command of my conscience to speak out against any further nationalisation. This is not a dogma; this is the fruit of some measure of experience, regarding which I will not weary the House. But I did not accept the responsibility of a Life Peerage to stay away from your Lordships' House or keep silent in a debate like this because there is nothing more to be done about it. Here we have in this Bill a sort of totem pole, indicative of some ancient tribal rite. At the top of the Explanatory Memorandum, page 1, line 1, are the words, "to bring into public ownership"—an anachronistic skull-and-crossbones right at the top of the pole. I believe that what is meant is to bring under State ownership and control. I cannot see why that is not said, except that the other is so old-fashioned.
I regret that I missed the beginning of the speech of the noble Lord, Lord Shackleton, but I noticed that he continually used this phrase. Its use in this connection upsets me. The iron and steel industry now is owned by the public. In his speech, the noble Viscount, Lord Muirshiel, outlined his views on this aspect. Apart from direct investments, which are very great—I am not interested myself—millions of people have life assurance policies, and I wager that few, if any, of the Life Offices have not in their portfolios shares in one or more of the companies in Schedule 1. I do not know whether it is appreciated that the total of sums assured in terms of life assurance averages £690 per head of the whole population. Other investors have invested in unit and investment trusts, all of whom have shares in the industry, as also have institutional investors.
The industry is publicly owned now, and the shareholders have more word in how to run the industry than they ever will under nationalisation, either in the form of the Bill which is before us or in the form of the other nationalised industries, in the control of which the public, who own them, cannot get a word in edgeways. It is inevitable that this Bill will receive a Second Reading. To refuse it would 99 only make the present confusion worse confounded. Of course, it is the threat of nationalisation over the years which is the main reason for the steel companies' present shortcomings.
State management and control have failed to make the grade in a competitive world, no matter how effective day-to-day operations may be—and some are not so effectively run at that. I believe with the noble Viscount, Lord Rochdale, that some middle course is the right one, some rationalisation which would include a measure of State participation, but quite distinct from nationalisation, which, as proposed in this Bill, would preclude the sort of rationalisation I have in mind. Perhaps some kind of middle course, as suggested by the noble Viscount, will ultimately be the outcome. I regard his constructive speech as most valuable. When the noble Lord, Lord Shackleton, intervened, I felt like saying that I could not see his suggestion as coming within the four corners of the Bill as it stands to-day.
The noble Lord, Lord Peddie, urged that we should keep away from political questions. I agree with him, but let us face the facts. What about Coal Board management? Excellent, no doubt, but the fact is that coal is being priced out of use, certainly in the domestic field. Here I declare an interest. As a consumer I cannot get the coal which I require for the apparatus which I have in my home. I rather wish I had been disloyal and gone over to oil, like many other people. And what about the fully-automated coal mine? It is not being operated at capacity yet and it lay idle for months, even years. As for the railways, where are the liner trains and where are the profits?
The noble Lord, Lord Mitchison, suggested that directors do not represent shareholders. I think that he is going too far. Within the scope of the Companies Act shareholders in privately owned industry have a better share in saying how their undertaking will be directed and managed than is ever likely under nationalisation in terms of this Bill. I assure the noble Lord that just as he believes earnestly in the other direction, I believe earnestly that this proposal is basically a mistake in the interests of the nation as a whole.
100 The noble Lord, Lord Wells-Pestell, referred to rural electrification under nationalised electricity. Of course he appreciates that the first rural electricity scheme in the world was introduced by private enterprise in Southern Scotland, as was the first hydro-electric undertaking in Britain, and the second pumped-storage undertaking in the world. I will not go on about electricity supply, although it is a subject with which I am well acquainted in another country where we succeeded in getting some sort of rationalisation, some integration of control between the State and private enterprise which is working satisfactorily to this day.
I feel that this reactionary proposal has been a central feature of Socialist policy for years, and this is a fact which cannot be gainsaid. At the same time, other noble Lords have said—and one hears it up and down the country—that people are losing interest in the whole thing. They accept it as a fait accompli. But that the people so accept it to-day is, I think, as true as it is true that a rabbit accepts the situation when a weasel mesmerises it with its antics. So marked is this situation that people up and down the country, as one noble Lord has said only to-day, feel that even the steel managements themselves are unable to take a firm line in the matter. This, of course, is not the case.
It is my hope and prayer that this House may be able at the Committee stage to mitigate the most disadvantageous features of this Bill, especially in the direction of some sort of check or control, some referee, some system whereby the actual shareholders, who are the people, will be able to have more control over what is done than they are ever likely to get under this Bill. As I sit down, I ask: why is the Committee stage set down for a Monday?
§ 7.32 p.m.
§ LORD TAYLOR OF MANSFIELD
My Lords, the noble Lord who has just preceeded me opened his speech by saying that he had come here to-day to speak against nationalisation. We appear to be cancelling one another out, for my reason for taking part in the debate is to speak in support of this Bill, and to welcome it most heartily, because I believe most sincerely in public ownership of our basic industries.
101 The noble Lord made reference also, to coal; and this is a subject which always attracts me. He spoke about this commodity being priced out of the markets. I would ask the noble Lord to consider some of the burdens that have been imposed upon the National Coal Board. Take coal royalties, for instance. Until 1990 the National Coal Board have to meet this liability. Then, take the case of subsidence. This is increasing every year, and the figure with which the Coal Board have been saddled has now reached the astronomic height of £10 million a year. I do not want to make this into a debate on coal, but the noble Lord provoked me when he made reference to it. He then made some reference to the automated colliery in Nottingham, from where I come, and said that it is not yet fully operative. This is quite true. There have been difficulties, and there has been a lot of capital expenditure. It is an entirely new experiment. Perhaps I might pass on the information to your Lordships' House that production has now commenced at the new Bevercotes Colliery, which, owing to the initiative and expenditure of capital investment by the Coal Board on behalf of the nation, will be the most automated pit in the world.
The Bill before your Lordships' House has evoked a great deal of interest. It is an interesting Bill. It is also an important Bill. The degree of controversy about it is no less than its interest or its importance; and I would submit to your Lordships that in a free society like ours, with a mixed economy, it could not be otherwise. During the passage of the Bill through the other place the Minister made reference to the fact—and I believe that this is some indication of the interest taken in the Bill by Parliament itself—that the Committee stage occupied 2,590 columns of Hansard, and the Report stage lasted 20 hours and 50 minutes. So one could go on to indicate the interest that has been evoked in Parliament by the Bill before us to-day. And not only has this happened inside Parliament; it has happened outside, as well. A variety of opinion has been expressed, not merely upon the principles but also upon the proposals in the Bill.
I calculate that one thing emerges from the multitude of voices that has been heard about taking over into public 102 ownership the steel industry, and it is this: that all is not well with the existing state of organisation and the structure in our British steel industry. The various channels of communication which are at our disposal, if one takes the time and trouble to listen to them, have not been hesitant in pronouncing judgment on the existing state of organisation in our steel industry. Sections of the Press, some steel owners themselves, and even the Iron and Steel Board, have joined the great multitude of voices commenting on the state of our steel industry. This industry has been pinpointed in pamphlets, speeches and articles in the Press—not just for the last few weeks, or the last few months, but for a number of years—and since the White Paper and the publication of the Bill before us to-day many of these different channels have pronounced their judgment on the organisation and structure of the steel industry.
I should like to make one or two quotations to place on record the judgment of these various channels of communication. I refer, first of all, to the article in The Times of July 2 last year, to which my noble friend referred. It said:The steel industry over the past years has not been operated in a markedly efficient manner.Then, the Guardian, on the same day, said:The steel industry must rationalise or perish. This is the harsh economic, nonpolitical, undoctrinaire reason for reorganisation. The case for nationalisation is stronger to-day than what it was in 1949.The following day, the Observer used these words:The case against the Government's Bill"—that is, this Bill—would be much more persuasive if either the Conservatives or the steel masters had produced a convincing plan for bringing about the industry's much-needed rationalisation without full-scale public ownership.What about the Iron and Steel Board themselves? This piece of machinery was the child of the 1953 legislation when the steel industry was denationalised. This is what they say:The Board have long been of opinion that the industry needs to he reorganised into fewer but individually larger units, equipped with a plant of greater size than is generally the case at the moment. Technical studies undertaken 103 in the Board's organisation certainly support the view that great advantages are to be derived from the concentration and the reorganisation of production.Evidence of this nature, coming from the sources it does, indicates, in my humble submission, that "all is not well in the State of Denmark". Such evidence, less in volume maybe, is not unlike the evidence that was given about the coal industry in the years from 1919 until 1947.
So far as I am able to discover from maybe my limited investigations, the expert evidence, certainly respecting the structure and organisation of the steel industry, is in favour of a change. I admit to your Lordships—and I make no apology for it—that I am in favour of public ownership; and the best change that can come about so far as this industry is concerned is proposed in the Bill that is before us. There is not complete unanimity upon this, I know, but for some kind of change there are not many dissentient voices. The percentage for maintaining the status quo is, in my humble submission, very small indeed. This is where the nub comes. This is where the differences begin to arise: not that something shall be done, but how, and what, and when?
There have been years of procrastination. The steel owners, the post-1953 Governments up to 1964, have done little to improve the structure and the organisation of this all-important basic industry of steel. As has been pointed out in many speeches during the debate to-day, great changes have taken place, still are taking place, and are likely to take place, in the United States, in Europe, and in Japan, enabling them to compete more favourably. This Bill, as I see it, is to end the procrastination which has bedevilled this industry now for a very long time.
In my view, this Bill provides the best way of meeting the challenge made by those who know the industry much better than I do. Those who have given detailed study to the structure and the technicalities, and also to the challenge of other steel producing countries, have come to the conclusion—rightly, in my view—that the best and most effective way to meet that challenge, both internally and externally, is to take the industry into public ownership. And upon this course, 104 I believe rightly, the Government have decided, and I welcome this Bill in your Lordships' House to-day.
I do not want to take too long at this late hour, but there are one or two observations I should like to make about some of the provisions in the Bill. I think I will confine myself, if I may, to three, and they all begin with C: compensation, consultation, and the setting up of the Corporation. First, compensation. May I say just a word about this—and may I assure your Lordships that I am no financial wizard? But I do know this. In my lifetime, whenever public ownership has been proposed, it has always been a vexed question, and it has not been an easy question to answer. It has not been a small hurdle to surmount. There has always been a diversity of opinion. It was the same with coal royalties in 1937; it was just the same when the coal industry was nationalised in 1947, and it is the same again so far as this Bill is concerned.
The history of the arguments about public ownership reveals one thing: that there are always some Oliver Twists who are crying for more. Fair and adequate compensation has always been a principle of the Labour Party in taking over the basic industries into public ownership. My own belief—and I pass it on for what it is worth—is that some cases have been more than fair and some cases had been more than adequate: if I may digress for a moment, when compensation was not based on shares quoted on the Stock Market. So far as the taking over of property was concerned, the National Coal Board took over a lot of junk and rubbish in 1947. However, on this point there is evidence, according to the debates—and I have read most of the speeches both on Second Reading and on Third Reading in another place. The Minister indicated that the Government, in their decision so far as the terms of compensation were concerned in taking over the steel industry, are fair. Personally, on the figures which he produced in another place, I think the terms are over-generous.
May I now say a word about consultation? I have been connected with one of the heavy industries—coal—for the whole of my life. My experience has taught me (and I remember the 1912 coal stoppage and the 1921 and the 1926 stoppages) that 105 in any industry, whether it be private or public, good industrial relations are of great importance. Particularly is this so in this steel industry, with its complex and complicated techniques, where there is an interdependence from the top of the pyramid right down to its base. To ignore the need for consultation in modern industry, be it private or public, is fatal to its best interests. What there should be, and I believe what is growing, is a feeling of "togetherness" in our modern industry. That is most important. As I see it in this Bill, consultation is a step forward as compared with the principles of consultation that were laid down in some of the previous nationalisation measures. Consultation must mean more than the making of complaints and getting answers from the management. That is not consultation at all.
I should like to quote the Minister in another place, on the Third Reading of this Bill, when he said:a relationship…wherein the workers themselves take part in the formulation and production of ideas and become involved in the decisions which have to be made".—[OFFICIAL REPORT, Commons: 26 /1 /67, col. 1801.]That is the consultation that I believe we ought to have and that I hope we shall get when the steel industry is taken into public ownership.
May I now say one or two words about the Corporation itself? It is not an easy matter for any Minister to decide the personnel of the board. I must say that last Thursday morning, when I read the statement of the chairman of Stewarts and Lloyds at the annual meeting of shareholders, I was surprised, I was shocked and I was concerned at some of the things he said. One did not mind his saying that the Bill was bad. That is his opinion—all right. But when he, as one of the deputy chairmen who is to take part in the running of this industry, went on to question the sincerity of the Government in the introduction of this Bill, my reaction was that it was going much to far. If one had the time one could read at great length from the statement that he made less than a week ago. He talked about the Government's not being concerned with long-term stability in this industry and the purpose of this Bill as being to provide a Parliamentary circus for the Government's adherents who were in revolt because their bread was becoming scarce. I think that is 106 pretty awful. Then he said, "This company will rise again from the ashes", and, as my noble friend, Lord Blyton, said, surely he meant the ashes of nationalisation; the phoenix of Stewarts and Lloyds would be rebuilt. I think this gentleman wants not only Good Friday, so far as this Bill is concerned, but Easter Sunday as far as Stewarts and Lloyds are concerned. I think he should reconsider his position.
Frankly, if I had given expression to sentiments of that kind and I was going to take part in the activities of the proposed Corporation I should certainly have my hand on my heart, at any rate; and if he is not prepared to reconsider his decision in regard to becoming deputy chairman, then, in my humble judgment, the Minister should take action. I say that for two reasons. First, in the light of the statements that he has made and the sentiments that he has expressed in regard to this Bill, he will be suspect and non persona grata in the steel industry. If Mr. Macdiarmid is not prepared to do what I consider to be the right, proper and decent thing, then the Minister should take steps to see that a man whose heart is not in the business, whatever his technical and organisational abilities might be, should not be deputy-chairman of the Corporation.
Finally, I should like to say that I give this Bill a welcome. The steel industry of the future, under the ægis of public ownership, has my good wishes.
§ 7.57 p.m.
§ LORD MERRIVALE
My Lords, the noble Lord who has just resumed his seat will not expect me to follow up some of the remarks he has made, because we view this problem from diametrically opposed points of view. I must say that the Government's case for nationalising steel is difficult to understand. It appears to rely mainly on the argument that the steel companies are far too small to take advantage of the latest techniques of production and direction, and that the necessary rationalisation recognised by the industry can be achieved only by nationalisation. No arguments can be put forward that the industry is a natural monopoly, like gas, electricity or the railways. It is not beset by social problems: nor is it a public utility. It is certainly a Socialist illusion to suppose that State planning will secure greater 107 advantages in investment, in capacity, in production, in marketing and in exporting.
As for the indictments that the steel industry as at present constituted cannot finance expansion, and cannot be subjected to price competition, I feel that this could be most usefully viewed in the light of what is at present being done in France under the Plan Professionel which was signed in Paris on July 29 last. This State steel industry agreement inaugurated a completely new formula of planning—or planification, to use the French word, and of concerted effort between one branch of industry, which has shown cohesion and realism and has agreed to make structural changes, and the State, which, taking note of the pledges given by the industry and deciding to control their implementation, has agreed that certain facilities will be provided, particularly in the realm of long-term credits at a preferential rate.
The important aspect of this convention is that the basis of this planning is essentially contractual. Indeed, it represents a major step in France's effort of elaboration of a political economy in a modern democracy. Therefore we see developed in the past few years close consultation and understanding between M. Debré, the Economics and Finance Minister: M. Marcellin, the Minister for Industry, and M. Jacques Ferry, the President of the Chambre Syndicale de la Siderurgie Française, which is the equivalent of the British Iron and Steel Federation. This consultation and understanding have culminated, following, as I said, over two years' reflection, in the signing of the convention and in a joint Press conference which took place at the Ministère des Finances on July 27, last. Particularly for the benefit of the noble Lord, Lord Wells-Pestell, I should like to quote the remarks made at that joint Press Conference by M. Jacques Ferry. He said—I am translating:As President of the Chambre Syndicale de la Siderurgie Française I should like to say how satisfied I am with the agreement that has been reached between the State and the French steel industry.And then, further on:Thus, within the framework of this convention and to its advantage the French steel undertakings maintain the essential elements of freedom of a private enterprise.108 And still further on he added:I consider this agreement to be a happy solution.With regard to this convention, as the noble Lord, Lord Shackleton, mentioned in his opening remarks the question of the dogma of nationalisation, and also the dogma of private enterprise, possibly this French convention might be considered to be a halfway house between the two. In fact, it might to some extent meet the point of the noble Viscount, Lord Rochdale, and my noble friend Lord Ferrier.
On the other hand, what do we do in this country under a Socialist Government? In spite of the fact that the whole United Kingdom steel industry had accepted the need for rationalisation into larger units; in spite of the fact that the industry had set up its own development co-ordinating committee (the Benson Committee, whose Stage I Report came out on July 23), we see that the Bill for the nationalisation of steel had its Second Reading two days later. There, in the Benson Committee's Report, were clearly laid out the industry's proposals for rationalisation; and all the Minister can offer—and the noble Lord, Lord Shackle-ton said much the same—is the statement that he hopes that Sir Henry Benson and the members of his Committee will be willing to assist the Organising Committee, whilst he ("he" being the Minister) recognises the value of their work. That is, I must say, a very curious form of consultation, and a very strange way of concerting the powers of the State with the needs of the industry in the national interest.
No doubt the noble Lord, Lord Shackleton, or the noble Earl who is to wind up will have read the article "Rationalisation in France" which appeared in the last month's Steel Review, as well as the Plan Professionnel which came out in the same Review last July. In fact, as I believe the noble Earl, as a former Oxford don, must surely speak French, I shall be delighted to hand him a copy of the Convention which was signed on July 29 by all the parties concerned, and also hand him a script of the joint Press conference which took place between M. Marcellin, M. Debré and M. Ferry, where he will read the complete details of what the French Government proposed. And if he will consult the 109 noble Lord, Lord Wells-Pestell, he will see in effect what M. Debré did say, which is neither étatisation—that is, State-control—nor laissez faire.
§ LORD MERRIVALE
My Lords, I am grateful to the noble Earl for that remark. There is more than that in the remarks of M. Michel Debré, I can assure the noble Earl. What stood out very much during the whole period of the negotiations prior to this agreement which was signed was, I was told by a friend of mine, who happens to be M. Jacques Ferry, the close collaboration and the joint consultation that took place I must say that as President of the Chambre Syndicale, the equivalent of the British Iron and Steel Federation, he played a leading part between the Government and the French steel industry, and I feel at this stage that if, in effect, the British Iron and Steel Federation had been given the opportunity to act in a similar way between the steel industry as a whole and the British Government they might have reached a solution along the lines of the French system, which is rationalisation without nationalisation and which might, in the end, have been more satisfactory than the nationalisation that the British Government envisage.
I turn now to the monolithic aspects of the National Steel Corporation. As the noble Lord mentioned, the Bill does not lay down in any detail the organisation of the industry after nationalisation. He went on to say that the Government's intention is that there should be competition between, certain groups. Even if it is intended that the National Steel Corporation should operate as competing groups, on the Italian principle, for instance, even with minimal central control, does the noble Earl really believe that anyone on the Continent will be taken in by this, solely on account of the fact that there will be just one shareholder controlling some 22 per cent. of the capacity of the combined European Coal and Steel Community and United Kingdom markets? The largest Italian group represents only some 8 to 10 per cent. I believe I am right in saying that the 110 Treaty of Paris of 1951 was so drafted as to make compliance with its terms possible only for a miscellany of individually operated groups, each representing in practice not more than 10 per cent. of the total Community capacity.
In view of this country's praiseworthy desire to enter the Common Market, whether this huge mastodon which is to be set up operates as a monopoly or as a cartel seems to some extent irrelevant so far as the opposition that is bound to come from certain members of the Six is concerned. That will come, I imagine, under Article 66(2) or Article 65 of the Treaty of Paris. Does the noble Earl really think there will be no reaction on the part of France, for instance? Does he really believe that M. Jacques Ferry, as President of the equivalent in France of the British Iron and Steel Federation, will quietly, without a murmur, without any reference to the French Government, without any reservations, see this one-shareholder, overpowering competitor enter the European Coal and Steel Community? I think not. My impression is that there could be a reaction fairly soon.
In conclusion, what seems fantastic is that the Government, in order to satisfy some old-fashioned Socialistic doctrinal principle, should have chosen this non-collaborative method to rationalise this basic industry and to repair any defects there may be in the present powers of the Iron and Steel Board rather than adopt a modern formula based, for instance, on the contractual principle which has been adopted in France; and I should be interested to have the views of the noble Earl as to how effective he thinks this type of convention can be from the French national point of view. I feel, too, as has been mentioned by one or two noble Lords, that our entry into the Common Market may to some extent be unnecessarily impeded with such a set-up, and that the negotiations for our entry can be protracted by the setting up of what I may call this large mastodon. I would end by quoting one sentence to the noble Earl. It seems to me a pity that the Government do not have what I may call the wisdom of M. Michel Debré. The French Economics and Finance Minister said on July 27 last year at the Press conference to which 111 I have referred—I quote this translation of his words:There is not on our part, for any industry which may be in difficulty, only one hypothesis: that it should become a State-owned industry.
§ 8.11 p.m.
§ LORD ROYLE
My Lords, it is late, and I shall do my best not to repeat anything that has been said during the course of this debate. I will start by saying that since the Tories denationalised the steel industry, I have been waiting impatiently for this Bill, and therefore I welcome it with as great an enthusiasm as anybody in this House. At the end of the war it was apparent that the steel industry had to work for the nation instead of for private profit. Two wars had proved that it was dangerous to allow the sinews of war to be in the hands of profit for the sake of profit, and it was proved that the great steelmakers had their hands stained with blood through the international ramifications of the industry of which steel is the basis.
If at my time of life I were to analyse my thoughts from the early 'twenties after serving in the First World War, what I learned about international steel and the armaments industry probably did more to bring me into the Socialist Movement in the early 'twenties than any other fact. The association, which amounted almost to a consortium, between Krupps, Bethlehem and Vickers resulted in terrible carnage, certainly in the First World War. Without any economic conditions at all, these facts justify these industries being brought under State ownership and control. In this, as in other matters, the Conservative dogma brought about denationalisation when the industry was beginning to benefit from State ownership and was moving and working in the nation's interests, and in those interests alone. Now we start all over again. Therefore, I support the Bill and welcome the legislation.
This is where I am going to be completely different, because I want to concentrate on a particular item which has been mentioned but briefly this afternoon. The Minister has decreed that, while the largest companies are to be taken over into his control, many smaller companies will remain independent, still working, I hope, in the interests of the nation. My 112 noble friend Lord Shackleton devoted a substantial part of his opening speech to references to those who will continue to be independent organisations. Therefore, I want to devote the rest of my remarks to one such company. It is a strange thing that the company I am about to describe has a greater hope under the new Bill than it had under the 1953 Act. I am referring to the Millom Hematite Iron and Ore Company of Cumberland.
May I, as briefly as possible, tell a story which is critical of the larger companies and of the existing Iron and Steel Board? I hope to show how the "big boys" behave towards their little brothers. During the past few years the British Iron and Steel Research Association have experimented with a completely new and revolutionary system of steel production—for brevity I will call it the spray system. It is fairly well known now. I have not the time to describe it, even if I had the technical knowledge. For the purposes of my argument it is sufficient to say that when the process was perfected all the companies connected with B.I.S.R.A.—they were the large ones; almost all of them—had the opportunity to try it out. They were not interested; they showed no interest. In spite of its great advance in economic saving in steel production, they still seemed to be committed completely to existing methods.
This process puts in the shade the great Austrian L.D. process which has done so much to establish the economy of that country and other countries. I wonder whether a nationalised steel industry would have failed to show interest! The lack of interest by the large companies is as great an argument for this Bill as any that could be produced. But at Millom there was a much smaller company producing pig iron from indigenous ore. It employed about 1,000 men from the small town of Millom, with a population of 9,000 or 10,000. This town is isolated from any other industrial area by sea, lakes and mountains, and is wholly dependent on this plant. The firm had struck a difficult time, due to the importation of pig iron from Scandinavia, Eastern Europe and from South Africa.
In passing, may I say that in my view there is a close relationship in politics here, because my information is that Southern Rhodesia is exporting pig iron to South Africa and South Africa is 113 sending her pig iron to Britain. Cheaper labour in ore mining and pig iron production in the countries I have mentioned brings about a cheaper price. In my view, this comes near to dumping. Two out of three blast furnaces were shut down in Millom, and unemployment and rendundancy resulted. It appeared almost as though the town was dying—a modern Jarrow.
A brilliant, youngish managing director, with experience in South Wales and in India, saw the B.I.S.R.A. process, and at the expense of his own firm he installed a pilot plant. It is a resounding and unqualified success. This is admitted by everybody who knows anything about steel production. The national and scientific Press have been enthusiastic. Articles have appeared in The Times, the Daily Telegraph, the Financial Times, the Guardian, the Observer, the New Scientist, the Statist, and note, my Lords, the Steel Times, the industry's own paper. Millom applied to the Iron and Steel Board to expand to a full plant—a works to expand, a town to he saved. The Board deferred the decision in a way which amounts to a refusal—in these days, when the cry for technological advance is so clear. It was the Board who turned it down. It was not the Minister, in spite of what the noble Lord, Lord Erroll of Hale, said. As I tried to say in an intervention, Millom have appealed to the Minister against that decision and are waiting for a reply. So it is obvious who turned them down, and I say this without any fear of contradiction: it was the existing Iron and Steel Board who turned down their application for expansion. It would appear that they were passing the buck to the Minister, who will have the powers under the new Bill.
At this late stage of the activity some of the larger companies are now having a look at the new process, I believe in an endeavour to cut out Millom from extension, they being new in the steel production field. The Times newspaper said:This is the most exciting new development in world iron and steel production for many years. It is being held back from commercial development by the Iron and Steel Board. World-wide interest has been aroused.The kiss of life to the steel industry could be slow, lingering death to Millom if they are not allowed to proceed. I 114 want to say as strongly as I can that justice demands that the initiative they took should be rewarded. Millom is scheduled for industrial development under the 1966 Act. There is therefore some responsibility lying with the Board of Trade. I cannot believe that my right honourable friend, Mr. Douglas Jay, will let Millom die. It would cost a million pounds to set up expansion, with £400,000 working capital, much of which the company can raise. It would cost much more in redundancy and unemployment payments, and the removal of a thousand families, plus the loss to retail traders in the town, and all the resultant misery.
This is such a technological advance that the Minister of Technology must be interested, and since Millom are the pioneers they must have priority in that interest and help. But the main burden falls upon my right honourable friend the Minister of Power. He can overrule the Iron and Steel Board. Using this Second Reading debate on this new Bill, my appeal is that this small, independent company may have its chance, preferably now, and certainly under the new Bill with its new concept. A works, a town, 4,000 inhabitants can be saved; and at the same time a revolutionary process can be expanded for the wellbeing of the industry and the nation as a whole. It is important to notice in our arguments for nationalisation that this has happened under the old régime. It is a strange commentary that the new régime, nationalisation, could save Millom and others like it from the old so-called independent régime. Ye Gods, they talk about competition! It looks as if they are terrified of it.
I apologise for concentrating on this one subject in this debate. I have no financial interest, but I have seen the plant producing steel at Millom and I know the conditions of the area and its people. I feel very strongly about it. My appeal to the Minister of Power is to put right what the Steel Board have done wrong: give Millom the green light. This consortium of three Ministers—Power, Technology and Board of Trade—have it in their hands. And knowing all three of them so well and for so long, I am confident in my own mind, and I hope that confidence is justified, that they will not let Millom down. I hope, at 115 least, that I have been different in this debate.
§ 8.25 p.m.
§ LORD AUCKLAND
My Lords, wishing to be as fair as possible, as I always seek to be even in the most controversial legislation, I would at least say that the Party opposite have never made any secret of the fact that they want to see this industry under State control. They did this in 1949, and they now seek to do it again. Co-operation between the two sides of this industry will be vital for the steel industry's future. I, like many noble Lords, have no professional contact with the steel industry. I am not even a shareholder, but I have been round a steel works, one of the great steel works which is about to be nationalised, and also have been round a steel-making plant which is to remain under private ownership.
I went, I hope dispassionately and with no particular preconceived ideas, but having been round one of the great steel works in Rotherham I came hack with several impressions. The first was that this particular company had obviously poured a great deal of capital into its works, into equipment, foundries, machinery and even computers. I do not seek at this late hour to go into figures of productivity, but one significant thing I noticed was the excellent relations in this particular works between management and men. In my own line of business I deal with both private companies and nationalised undertakings, and I would immediately say that those who work in the nationalised industries do so with no less and no more will than others. They see it as a job, and I believe that their attitude is that nationalisation has been carried out through Act of Parliament and therefore they have a duty to perform. I believe this will be true of the steel industry in future.
One point which has been made is that there should be more central control of the steel industry. I have been looking through the 1953 Act which has been criticised by noble Lords opposite—and they have a perfect right to criticise it. In Section 15(3) of that Act there is a directive that the Minister may by notice in writing require information as to the costs of production and other matters 116 concerning the steel industry. In other words, that Act is not the laissez-faire concern which it has been made out to be in some political circles. I am not for one moment suggesting that the steel industry is perfect at the present time. It may well be that there are changes to be made. But what we have to consider, and what has already been considered by those concerned with all sides of the industry, is whether the new set-up will bring these changes about, and I want very briefly to give one or two reasons why I do not think this will be so.
As I understand it, there will be one centrally controlled Steel Corporation. Steelworks range through various parts of the country, from Motherwell in Scotland to Scunthorpe in Lincolnshire and Corby in Northamptonshire, not to mention the great steelworks of Sheffield, Rotherham and Consett. In the service industries, such as the railways and the electricity industry, there are regional boards where there is at least some element of competition between the regions. What worries me about this Bill is that little opportunity is to be given for the various steel concerns in the regions to have any chance of competing, and I should like the Government to give some thought to this.
As has already been mentioned, the 12 great steelworks are to lose their names and identity. In another place this gave concern, I think, to all sides of the House. I hope that the Government will also give further thought to this, because I feel that the one title of the National Steel Corporation will not go down well with our competitors, particularly in the European Economic Community or, indeed, with the component companies.
I understand that the Government are to bring in a new clause to cover some of the subsidiary companies and some of the smaller companies which will be using components manufactured by the companies which are coming under control. This is vital, because if there is delay in delivery it will surely create difficulties, particularly if there is central control.
A good deal has been said about the efficiency of the electricity and gas industries, and the fact that the Conservatives did not de-nationalise them. These 117 are service industries. It may well be a lair point that singly they would not have the necessary capital to bring in schemes, such as the Hydro-Electric Board's schemes and other big rural electricity schemes. But neither do nationalised industries seem to have the power to contain fuel crises in times of extreme temperatures in this country. I do not seek necessarily to make that as a political point. To some extent failures like that could occur under any system. But is there any guarantee that under nationalisation we shall not get similar problems, particularly delivery problems, with the steel industry?
So far as consultation is concerned, this is of course very vital. As I understand the Bill, there are to be trade union representatives on the boards of management. I have no quarrel with this, but I wonder whether the converse, which I think is important, will also be true. I believe that management should have some representation on the union side, because one will then get far more satisfactory consultation. Surely this could he properly tried out in this new revolutionary set-up.
There are other considerations which do not seem to be in the Bill. For example, there is the training of technicians for the industry. What incentives will there be in the Bill for graduates to go into the steel industry? How will the training be run? Will the National Steel Corporation have responsibility for this? Admittedly, these are Committee points, but they are points which I think the Government should consider.
Finally, Clause 36 of the Bill seems to me to be an absolute classic of vagueness, because the Government do not appear to have given any thought to the location of offices. Shall we have regional offices in Sheffield, in Lincolnshire and in Lanarkshire, where the great steel companies are situated, or shall we have to rely on an enormous central office in London with all its problems of communication? I, for one, have no wish to attack this Bill purely on political grounds. If it goes through Parliament, as it seems it will, it will be for both sides of the industry to co-operate as best they can, and at least to make the best of what will be a very difficult job.
§ 8.39 p.m.
§ VISCOUNT MASSEREENE AND FERRARD
My Lords, unlike my noble friend who has just sat down, I have every intention of attacking this Bill politically. I must first of all declare no interest in the steel industry; I do not own even one share. But I have one great interest, and that is the welfare of the nation; and I sincerely believe that this Bill is a retrograde step. It is out-of-date, doctrinaire Socialism. I had hoped, but in vain, that the Socialist Party had grown up in the last few years, but I am afraid that my hope has been destroyed by this Bill.
As I pointed out in an intervention earlier in this debate, 90 per cent. of the steel-producing capacity in the Free World is in private hands. It therefore seems the height of madness to bring this nationalisation Bill forward at this particular time, when British industry is fighting for survival in the markets of the world. It surely is irresponsible: and it will give very cold comfort to those international sources which have lent us money. I have spoken to several foreigners, and they all assure me that the opinion abroad appears to be that when the steel industry of this country is nationalised it is going to harm the competitiveness of British industry abroad. It is true enough, of course, that Her Majesty's Government can, by a huge subsidy from the taxpayer, make this industry competitive abroad; but at what a cost in taxation and consequent inflation!
What really frightens me, however, is that this is the first time that any Government of this country have sought to nationalise our greatest manufacturing industry—in fact, any manufacturing industry. In the past, we have had some of our service industries nationalised, and we have had the coal mines nationalised; but that is quite a different matter. The record of the nationalised industries, from the point of view of their balance sheets, has been deplorable. The majority of them have been severely in the red. But if this great manufacturing industry is not efficient, it really will be a national disaster. It is bad enough if a service industry is not efficient: it is a great strain on the economy, of course. But if this great exporting industry is not efficient, it will affect every man, woman 119 and child in this country. It will affect the standard of living of all of us. This is a very serious matter. If Her Majesty's Government really want their economic policies to be taken seriously abroad, it is surprising that they should have brought this Bill forward. But, of course, wonders never cease. I never cease to be amazed by the antics of Her Majesty's Government in regard to the economy of this country—and I mean that perfectly seriously, although I may smile.
We have heard from several noble Lords opposite that the steel industry is not efficient. I heard my noble friend Lord Erroll of Hale say that in 1965 the steel industry increased production and increased exports, and that the import of steel into this country during that year was considerably below that of the previous year. Can one really call that inefficiency? The Government have brought forward no coherent excuse for the nationalisation of this industry. All they can say is what I heard the noble Lord. Lord Mitchison, say. He quite astounded me. I understood him to say that in his opinion no private individual or private organisation should have any financial power in this country at all. That seems amost extraordinary statement to make. Even the Soviet Government are now inclining away from nationalisation in certain spheres.
To turn for a moment to the Bill itself, I am extremely worried about Clause 2. The noble Lord, Lord Shackle-ton, told us (I have a note here of what he said) that we need not be worried about Clause 2 being a back door to the nationalisation of every form of industry, every form of business activity, in this country. It is all very well for the noble Lord to say that—and,of course, he is utterly sincere in what he says; but the fact is that, if it becomes law unamended, Clause 2 will give the Government the right, so far as I can see, to indulge in, and nationalise, every form of business activity in this country. They will be able to have shops; they will be able to have every form of manufacturing industry, such as breweries; and they will be able to have hotels—they already have hotels, of course—and even newspapers. This is a very serious matter. The noble Lord, Lord Shackleton, smiles; and I am sure that he sincerely hopes, as he said, 120 that it will not be back-door nationalisation. But once these powers are on the Statute Book they are there—I do not care what any Minister says: they are there.
The other thing I am very worried about is the Common Market. I have not been here for all the speeches, although I have for almost all of them, but I have not heard this aspect mentioned so far. I understand that, under the Treaty of Paris, no group of steel companies—a corporation, or whatever you may call it—may have more than 10 per cent. of the productive capacity of the community. In the case of the nationalised Steel Corporation, I understand, the capacity is going to be between 22 and 25 per cent. of the whole capacity of the Community. How is the High Authority under the Treaty of Paris going to like that, owing to the dominant position which the Steel Corporation will have? The High Authority will be able to dictate prices and dictate production programmes. In fact, it will turn the British Minister of Power into a mere puppet. How is the Minister of Power going lo like that?
Another thing that has struck me is that we have heard a great deal from the other side about not trotting forth the dogma of private enterprise. I intervened when the noble Lord, Lord Peddie, was saying how much more efficient the management of the nationalised industries was than the management of private industry. I say that this is not shown by their balance sheets; and if you are dealing in commerce you must go by the balance sheets. With the steel industry organised in this vast Corporation how is there to be financial and commercial discipline? I do not want to go into the point at length, but we all know that if an industry is nationalised and protected from the hard world of the free market, it is impossible to get this commercial discipline. At this point I should like to repeat a plea that has been made by other speakers, that the various groups in the Steel Corporation be allowed, if possible, to retain their independence and also that famous names such as Dorman Long and Colvilles will not be done away with—because they have great traditions and carry a lot of goodwill.
My Lords, I should like to say a word or two about the private sector 121 which I understand occupies about 10 per cent. of the whole of the steel industry. The noble Lord, Lord Shackle-ton, assured us that there would be no discrimination by the Steel Corporation against the private sector; but as the Bill is drafted I am not too happy that that cannot happen. It is true, as the noble Lord said, that any company in the private sector can appeal to the Minister. But, with great respect, the Minister is a politician. I should like to see an umpire, removed as far as possible from politics—though I recognise that this would be difficult—to whom the private sector could appeal.
My Lords, to sum up, I think that this is a shameful Bill. I do not agree with the one or two noble Lords on this side who have rather "run along with it". The real reason why the Government, the Socialist Party, want to control the steel industry is the power that goes with it. They are after the power. I am quite convinced that when they have the steel industry, and the power that goes with it, there will be increasing taxation at home to pay for the losses; they will have a stranglehold on the economy which will affect every one of us. We all know what to expect if that should happen anyone who has been behind the Iron Curtain, to any of the Socialist countries, knows of the lower standards of living. I foresee that in ten years' time, or even earlier, every man, woman and child in this country will regret the day that the Socialist Government were ever voted into power to take over this great industry.
Before I end, I should like to say something about compensation, because two or three noble Lords opposite have said that the compensation proposed is far too generous. I should point out that, under the threat of nationalisation, the shares in various steel companies have been considerably depressed on the stock market. My own view is that the compensation ought to be at least £100 million greater; for if these companies were sold on the open market, with no threat of nationalisation, they would probably get that extra amount. The shareholders are to be handed Government bonds; to be handed paper. We shall see in a few years' time what that paper is worth. We have seen so many Government loans and Government bonds depreciate over the years, sometimes by more than a half. 122 In five or six years' time the public in this country will probably wake up. My Lords, I have spoken long enough. My noble friend Lord Windlesham has done a tremendous amount of work on this Bill, and I know that he is very anxious to get to his feet.
§ 8.59 p.m.
§ LORD WOLVERTON
My Lords, I am the nineteenth speaker in this important debate, and I can assure the House that I shall be very brief. I am also the last Back-Bencher to speak in this debate. I spoke 19 years ago on the first nationalisation of steel Bill, and to-day I looked up what I had said then. Nineteen years ago I opposed the Bill; and I oppose it now, because I think it is not necessary. I believe that some further form of rationalisation is necessary, but I think one could achieve that without complete nationalisation.
In the concluding remarks I made 19 years ago—not in this Chamber, but in the smaller one; for the House of Commons used this Chamber while they were rebuilding—I said that I should like to refer back to the speech made by the Lord President of the Council in Toronto. The Lord President of the Council in those days was the late Lord Morrison of Lambeth, in those days Herbert Morrison. He said (I think it was in 1946) that it was up to the nationalisers to prove their case. I asked whether the case had been proved. I did not think it had been proved then, and I do not think it has been proved since, because the proof of the need for nationalisation would be that the steel industry, which has been in private hands since a Conservative Government denationalised it in 1953, had let the public down. I do not think the industry has done that in any way. Prices have been extremely competitive compared with those of foreign steel companies and, as has been said to-night on several occasions, since 1945, the end of the Second World War, the industry has spent something like £1,900 million on improvement to plant and on the provision of new plant. Since 1956 it has spent over £1,000 million.
In the Benson Report it is stated that up to 1962 (or perhaps it was 1963) 73 per cent. of the new capital ploughed back into the industry came from the industry's own resources. Since that date, 123 under the threat of nationalisation, the industry has not been so prosperous and has been able to plough back only 47.6 per cent. But it shows that the industry was providing a large amount of this large sum of money from its own reserves and making good profits until two or three years ago. When trade picks up again, as eventually it is bound to do, naturally the steel industry will make good profits again, and I think it is entirely wrong to say that the steel companies cannot finance the rationalisation which is thought to be necessary.
My Lords, I am not certain that very large units will be necessary, following the great improvements in steel-making about which we have been told, including the new Austrian system. It may be possible to have smaller units and a greater efficiency in steel-making. But even if it is found necessary to have larger units, I think that the industry could find the money as it has done so far. If the industry was left in private hands with Government control and, if necessary, Government help, I think that would be a good arrangement. A Conservative Government helped Colvilles and, with the provision of £50 million, a strip mill was set up in Scotland. At that time Colvilles had excellent plant for producing plate steel, but they did not have a strip mill and, therefore, the motor car industry or the making of refrigerators or other products using sheet steel had no place in Scotland. Up to a year or two ago the company was making a profit on its strip mill. The strip mill is not now making a profit, though the undertaking as a whole is; and a greater prosperity has been brought to Scotland. I do not think it was necessary to put all the plant in South Wales, or to pour all the money into the nationalised industry of Richard Thomas and Baldwins. That company put in a new strip mill which has not been financially successful, and they have lost something like £30 million in the last four years. It might have been something like £39 million had they not converted prior stock, which was interest-bearing into ordinary stock.
My Lords, I do not support this Bill. I feel it is entirely unnecessary. I think that there should be more rationalisation and, if necessary, more help; but, as my noble friend Lord Merrivale has said, 124 it should be on the French system. Financial help could come from the Government without the need to take over the whole industry lock, stock and barrel. I am certain that once the Government nationalises the steel industry they will break up the great companies. The Government will say, "Last time, when we left the companies as they were and changed only the ownership of the shares, it was too easy to put the industry back into private hands." Therefore they will break up the companies and make it impossible for industry to be returned to private ownership.
Instead of the great names like Dorman Long, Colvilles and John Summers, we shall have the Northern Region Steel Area Board, the Western Region, and so on, organised from a large head office in London, and I think that will be a great pity. The great names like Dorman Long, Colvilles and South Durham Steel are known all over the world, but I fear that they will disappear and we shall have the British steel industry organised on a regional basis. I know that some of the steel works are very worried about this and about whether they will be left out. There is the great firm of John Summers, which has a magnificent works near Chester, which I visited two or three years ago. I understand that this firm is very worried, in case it will not be big enough to be put into a region, as it stands in a rather isolated position to other works.
I cannot support this Bill at all. The Government might have thought out some better way of doing it. All the money that is going to be poured into the industry will have to come out of taxation. The National Debt is getting to a size where it is difficult for the Government to raise large sums on the open market, and therefore money lent to the Steel Corporation will be below-the-line loans and come out of further taxation of the British public.
§ 9.9 p.m.
§ LORD WINDLESHAM
My Lords, rather than try to summarise everything that has been said in this debate, I think it would be more helpful if I emphasised some of the fundamental arguments which lie behind the criticisms that have been made from this side of the House, so that the Government will be left in no doubt about why this Bill is objectionable to us and many others outside the House. 125 Before doing so, since we shall be debating the Bill for some time on its different stages, I should make clear I have no interest to declare in the steel industry, financial or otherwise, nor do I stand to benefit, if that is the word, from any of the compensation terms.
I begin my remarks with the contradiction that lies at the heart of the Government's case. This Bill takes into public ownership the 14 principal companies concerned with the production of iron and steel. It does not say how the industry is to be organised after nationalisation. That is to be left to the National Steel Corporation and the Ministry of Power. The Minister of Power has made it clear repeatedly in the House of Commons debates that he does not want the Corporation to be bound by Statute on its organisation.
As we have heard this afternoon, an Organising Committee, under the chairmanship of the noble Lord, Lord Melchett, was set up last autumn, and for the past four or five months the Committee has been meeting and considering the future structure of the industry, as well as the practical arrangements for the establishment of the Corporation and for the transfer of assets from the 14 companies to the Corporation. Parliament has had no information on the Committee's thoughts, although in this respect the readers of the Sunday Times have been more fortunate. On January 29, the Sunday Times reported—and if it is inaccurate no doubt the noble Earl the Lord Privy Seal will tell us—that the Committee had already given the Minister its first suggestions on how the industry should be run. Two main points had been decided on:First, steel will be organised on the basis of groups of plants with considerable operating flexibility, unlike the wholly centralised control of coal or railways. But secondly there will be full financial control from the centre and in particular central decisions on pricing policy.Such inquiries as I have made within the industry suggest that this report is accurate. If this is so, it is important, because the approach implied, which is in line with what the noble Lord, Lord Shackleton, was telling us, is very similar to the analysis made in the Benson Report, the Stage I Report of the Development Co-ordinating Committee of the British Iron and Steel Federation, to which reference has already been made. 126 The Benson Committee proposed a regrouping of the industry's resources, which would include closing down 9 million ingot tons of plant capacity over the next 10 years, and a concentration into larger and more rational units. This Committee, made up half of steel men and half of independents, is still in existence, proceeding with the second phase of its inquiry, and is understood to be cooperating with the Melchett Committee.
So this is the way the steel industry is heading. We have heard several times this afternoon references to the merger between Stewarts and Lloyds, South Durham and Dorman Long. If this is the direction in which the steel industry is going, the question that has to be faced is: Why is nationalisation necessary? True the Sunday Times report said that decisions on pricing policy are likely to be taken centrally. But price control, as we have already heard, is exercised now by the Iron and Steel Board. Pricing in the steel industry has been controlled by one form of public device or another since the 'thirties.
Leaving aside all the doubts about the quality of management attracted by the nationalised industries—and the noble Viscount, Lord Muirshiel, spoke most effectively on this question of management, and how essential the management element is in a commercially successful business—and the lack of commercial disciplines generally displayed in the nationalised industries under public ownership, there is one question which nobody has yet mentioned, so far as I know. I do not think the noble Lord, Lord Shackle-ton, mentioned it, and I do not know whether the noble Earl the Leader of the House will do so. That is the question of servicing a very substantial debt incurred as a result of the compensation paid to the shareholders in the fourteen companies.
In the same report in the Sunday Times of January 29, 1967, it said this:In the year 1965–1966 profits attributable to the equity shareholders in the nine quoted companies being taken over by the Government totalled only £14 million and are expected to he even less in the current year, thus giving no hope of fully servicing the £352 million compensation being paid for that equity.To that has to be added another sum, estimated at the order of £95 million, in compensation for the four steel-making 127 subsidiaries of G.K.N., Vickers and Tube Investments. Then there is a large sum of over £100 million in compensation for prior charges. So a figure of between £550 million and £600 million total compensation is arrived at.
Therefore, why nationalise? This is the question that must be answered. Does the noble Lord opposite want to interject? When I offered him some figures earlier he swept them aside. But if we are to have a realistic discussion about the position of the steel industry, the argument must turn on a certain number of statistics which so far have been published in the Benson Report; and I am sure that when the review referred to in the Bill is published there will be a great many more. But if this is to be a realistic debate on the nationalisation of the steel industry, then we must make use of what statistics there are.
I come back to the question: Why is nationalisation necessary? Why employ this blunt, insensitive form of public control when the sort of reorganisation the Government want to see is already beginning to take place? The Minister of Power argued in the House of Commons, and the noble Lord, Lord Shackleton, argued here to-day—it has also been raised by one or two other noble Lords in the debate—that this would not have happened "without the stimulus of nationalisation". I do not accept that, and I do not believe other noble Lords on this side do. It is remarkable that the Benson inquiry was carried out at all, in spite of the prospect of nationalisation. But whichever view is right, if this is the shape of future development in the steel industry that the Government want to see—one that is more or less in the direction in which the steel industry is now going, however late and for whatever reason—why is nationalisation necessary to-day?
Some alterations might have been needed to the system of pricing—that will not be disputed—in a period of surplus capacity, increased competition from abroad and falling profits. But the Iron and Steel Board is there. If it is not capable of exercising the public control that is now necessary in changed conditions, or if the powers are not adequate, then the powers could be changed, or a new authority could be set up. Therefore, 128 why is State ownership so essential to the reorganisation of the industry?—which is what the Government tell us is the reason for going ahead with this Bill at this time.
The Minister of Power on the Third Reading in the other place on January 26, 1967 (col. 1812), in a revealing passage, has already begun to prepare the way for bad results. He said:The next year or so will be a difficult time for the industry and the Corporation's initial results may well be rather depressing. I had better get on the record now.If I may say so, the reason why the Government are now in this jam, and why the Party opposite are now in this jam—and it has been well demonstrated in the debate this afternoon—is that they have changed their ground. In order to impress opinion, in order to get the Bill through, the argument has been couched at the level of the need to reorganise the steel industry, to rationalise it in a way that will make it competitive in the world markets of the 1970s.
Mr. Marsh, in Luxembourg on January 13,as reported in The Times on January 14, said:… the British Government's decision to take this industry"—he was referring to the steel industry—into public ownership was prompted wholly and solely by the desire to see the industry organised into fewer, bigger, more efficient units".That was the reason given by the Minister of Power, described by him as "wholly and solely" the reason; and it is in line with what the noble Lord, Lord Shackleton, said in introducing the Bill in your Lordships' House this afternoon.
It was not always so. Something else has run through one or two of the speeches we have heard from the Benches behind the noble Lord opposite this afternoon. What about "the commanding heights of the economy" in 1959? Not only Mr. Bevan and the far Left were taking this line. In the debate on Second Reading of the Iron and Steel Bill in 1948, the then Lord President of the Council, known later to Members of your Lordships' House as Lord Morrison of Lambeth—not a man of the far Left— spoke more than once of "socializing" the steel industry. This came up in what various noble Lords opposite had to say 129 in the debate to-day: "I am a Socialist. I believe in public ownership".
Well, that was an argument used by the Lord President of the Council at that time. Later on—this is from the House of Commons Hansard, November 17, 1948, columns 492–93—the Lord President of the Council said that the measure wasnot only a Bill"—he was referring to the Iron and Steel Bill—for the transfer of the ownership from private ownership to public, but it is also a Bill which will not only give greater dignity and freedom to the work people in the industry, but will represent an act of emancipation and a charter of advance for management and technicians as well.My Lords, Lord Morrison of Lambeth had been a Member of a Sub-Committee of the National Executive Committee of the Labour Party in 1929, which successfully recommended to the Annual Conference of the Labour Party that year a re-wording of Section 4 of Clause IV of the Party's Constitution setting out Party objects. As amended in 1929, Section4 of Clause IV, which still stands to-day, and to which all Labour Members of Parliament are required to subscribe—and with which the Minister of Power in the Second Reading debate in the House of Commons charged Mr. Donnelly, who was opposing the Government's measure—says this, and some Members of the Party opposite may need to be reminded of it:To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may he possible, upon the basis of the common ownership of the means of production, distribution, and exchange and the best obtainable system of popular administration and control of each industry or service.Let us make no mistake about this.
§ LORD WINDLESHAM
This is relevant. I am pleased that the noble Baroness and others are echoing those fine words. Your Lordships may remember that the Labour Party in 1959 made efforts to remove that clause, or amend it, and the conflicts that were caused. I raise this point now solely because it has been said by the leadership of the Party opposite that this Bill is being introduced strictly for purposes of rationalisation, in order to reorganise the industry. Yet public ownership for its 130 own sake goes right back to the roots of the Labour Party.
§ LORD WELLS-PESTELL
My Lords, may I ask the noble Lord where there is any inconsistency? The Labour Party have made it abundantly clear over many years that the reason why they want to take the basic industries into nationalisation, under State control, is that the history of so many of them shows that they are incapable of rationalisation and proper organisation.
§ LORD W1NDLESHAM
The noble Lord will have to look at what is proposed when the review of the industry referred to in the Bill comes out. I think he will find it is going to be something not too dissimilar from what the industry itself is proposing, with certain changes in the central powers of the Corporation itself—control of pricing, research, development and production, and so on. Whether this is because of the threat of nationalisation, or for whatever reason, if the industry is already itself heading in the direction the Government wants, why is nationalisation necessary? Why do we need to accept an interest payment of about £30 million to £40 million a year, simply to secure ownership of the assets? My case is that there are other ways, easier and more effective, of doing precisely what the Government want to do, without ever taking over the assets.
§ LORD WELLS-PESTELL
My Lords, I do not want to keep on interrupting the noble Lord, but the whole point of the speeches on this side of the Chamber is that they just did not do that until the Government made it perfectly clear that plans to nationalise were afoot.
§ LORD WINDLESHAM
My Lords, that would be a classic case of "I told you so." If you can achieve your aim without nationalisation why incur a debt of £582 million just in order to be right?
§ LORD MITCHISON
My Lords, I wonder whether I might just ask the noble Lord a question? I have never quite understood what the Conservative Party's view about Election pledges was. Do they think they ought to be kept or not?
§ LORD WINDLESHAM
My Lords, I will not follow the noble Lord on that. In fact I will now leave the point of public 131 ownership. I hope that the noble Earl the Leader of the House, when he comes to reply, will deal with these political criticisms which we have made, because in one interjection a little earlier he indicated when it was suggested the Government were nationalising the industry for political reasons—well, that is what I understood him to say—
§ LORD WINDLESHAM
My Lords, may I now come to the second major question, Europe, which has been referred to by my noble friends Lord Merrivale, Lord Massereene and Ferrard, and one or two others. We are now faced, for the second time, with the decision whether or not to enter Europe, and we find the Labour Party resolutely looking backwards into the past instead of forwards to the future of Europe and of the steel industry in the Common Market. Let us look at what the Prime Minister said in Strasbourg on January 23, as reported in The Times on the following day. He said this:Those of us entrusted with the responsibilities of Government have the challenging duty—and it is an exciting one—of leading an impatient generation. It is a generation impatient of the mumblings, bumblings and fumblings of what has too often passed for statesmenship.The Prime Minister can hardly have been thinking of steel nationalisation when he said that.
It will, as history will—for this new generation will write the next chapters in that history—it will condemn beyond any power of ours to defend or excuse, the failure to seize what so many of us can clearly see is now a swirling, urgent tide in man's affairs.It we do fail—I want this to he understood—the fault will not lie at Britain's door. But the cost, and above all the cost of missed opportunities, will fall, and, in increasing measure, on every one of us.That was at Strasbourg.
Back at home, how does the Iron and Steel Bill 1967 measure up to these fine words? The first point to make clear is that the issue of ownership as such is immaterial to membership of the Common Market or, in this case, of the European Coal and Steel Community. Part of the Italian steel industry is nationalised, and 132 under the Treaty of Paris, signed in 1951, it does not matter whether the assets of the industry are owned by the State or by shareholders. What does matter is the actual operation and control of the steel industry, and here there are most definite requirements.
The European steel industry is based on a number of competing groups, each of which is individually operated and none of which represents more than 10 per cent. of the total Community crude steel capacity. The High Authority recently held up a merger in Germany of three companies—the Phœnix, Rheinruhr and Thyssen merger—for almost two years because the combined companies would have a capacity of about 8 million tons. Yet here we are talking about a British National Steel Corporation which is to operate, in the words of the former Minister of Power, Mr. Lee, on May 6, 1965 [OFFICIAL REPORT, Commons (col. 1581)] as:A single unit of direction with a capacity of about 30 million tons of crude steel a year".That would amount to between 20 and 25 per cent. of the capacity of the combined market of the United Kingdom and the Coal and Steel Community. The Treaty of Paris, in Article 66, on page 31 and elsewhere, does not allow a "dominant" position to any single unit. The interpretation which has been given by the High Authority to this phrase is not more than 10 per cent. of the total Community production. Yet here we are faced with 20 to 25 per cent. That being so, it is difficult to dissent from the conclusion of the Financial Times on November 23 last, thatunless the National Steel Corporation takes the form of three or four competing and largely autonomous groups, it could become an important stumbling block to Britain's entry into the Community.That was the Financial Times comment, in an article headed, "U.K. and E.E.C.—Industry", on November 23, 1966.
The fact that the consequences of this Bill will be incompatible with British membership of the Common Market is accepted by the Minister of Power. Between the Committee stage and the Report stage he went off to Luxembourg to discuss with the Coal and Steel Community the problem of a State-owned British coal industry and the prospect of a State-owned British steel industry. 133 When he came back, Mr. Marsh said he accepted that the Bill "presented difficulties" in this respect and that if an application for membership took place those difficulties would have to be negotiated. His remarks on that subject can be found in the House of Commons OFFICIAL REPORT for January 19, cols. 696 to 697. Therefore, we are now presented with the spectacle that, at the very moment when the Prime Minister is touring Europe, pledging his devotion to the European ideal, his Minister of Power—who in the past was one of the less ardent Europeans in his Party—is busy setting up what is accepted as being a new obstacle to membership. And this will no doubt leave an awkward question in the mind of anyone in Europe who studies closely what the Government are doing here, as well as what they are saying in Strasbourg and elsewhere.
I do not want to say anything more this evening about some of the very important matters which have come up in this debate. There is the question of the wide-ranging powers of the Corporation under Clause 2—diversification into many different activities besides iron and steel; the position of the substantial private sector and the relationship between that and the N.S.C.; the effects of an artificially depressed salary structure on managements, especially in the middle levels; and the belief of the noble Lord, Lord Mitchison, that profit is not to he taken as an indicator of efficiency—a view which I should have thought boded ill for the Corporation's future.
§ LORD WINDLESHAM
My Lords, I offered the noble Lord some figures—I do not want to go into them again—on the relationship between Richard Thomas and Baldwins and the United Steel Companies, offering him the comparison of the capital employed in both companies, the output of both, their production, and their profitability; and there is no doubt one shows up much better than the other. He told me there were other considerations than profit which one can use to judge enterprises of this sort. But these are questions which can and will be debated on further stages of the Bill and elsewhere. All I would 134 say, in conclusion, is that the Government, in persevering with this irrelevant Bill at this time, in spite of everything that has been said against it, from the Labour side in another place as well as from the Opposition side in both Houses, have shown themselves more concerned with the past of their own Party than with the future of the steel industry.
§ 9.36 p.m.
§ THE EARL OF LONGFORD
My Lords, I hope the noble Lord who has just spoken will not think me unduly patronising if I congratulate him on an excellent speech and assure him that old friends of his father—and there are many in this House—have been delighted with the progress which the noble Lord has been making so rapidly. It has been a most friendly debate, initiated most effectively by the noble Lord, Lord Shackleton, who managed to inspire his friends without annoying his opponents, which no doubt is the definition of a perfect Parliamentary effort. The noble Lord, Lord Erroll of Hale, began extremely well with some of the happiest of his jokes, and finished in a most statesmanlike fashion by advising his supporters to let the Bill through. In between there was not all that much to go on with. But I think if two parts of a speech are good—indeed brilliant, at the beginning and the end—why must we bother with the rest? At any rate, we all enjoyed his speech as always.
This has been a different kind of debate from that of 1949. I am glad that there are one or two veterans from those days and from the debates which began in 1946 and went on for several years. There are the noble Lord, Lord Wolverton, the noble Viscount, Lord Rochdale, and of course I myself, and one or two others. In those days one most respected Peer, whose name I will not give because he is not with us to-night, but a leading figure on the side of the Opposition, denounced the nationalisation of iron and steel as "a definite step towards Communism". That has not been said to-day. I see the noble Lord, Lord Ferrier, nodding his head, but I do not take that to mean assent; he is perhaps confirming my recollection.
On the whole, we have had some fruitful speeches and there has certainly 135 been nothing about which anybody could possibly take offence. The noble Viscount, Lord Rochdale, who is a real authority on industry, let slip one remark which was slightly immunized by the noble Lord, Lord Windlesham, when he referred to it. The noble Viscount, Lord Rochdale, said that he was afraid that we had been treating the iron and steel industry as a political pawn. I asked him what he meant by that. He said that we were proposing to treat it according to the ideas of our supporters, or some of them. I do not know what a Government are supposed to do. No doubt they should try to please their opponents and neutral opinion, but they must occasionally give effect to their own principles; and anybody who has listened to the speeches from our side to-day will realise what I mean.
We have heard powerful speeches from my noble friends Lord Blyton, Lord Wells-Pestell, Lord Taylor of Mansfield, Lord Mitchison and Lord Royle, who has apologised for having to leave us, and Lord Peddie, and of course Lord Shackle-ton. If anybody now supposes that we do not believe in what we are doing, that we are trying to placate some hypothetical Left wing, then they are living in some other world. The truth is that we think this is in the interests of the country. We have thought this for many years. It has been part of the official policy of the Labour Party since 1935, just before I joined the Party. Since then there have been eight elections of which we have won four and lost four, winning the last two which, I suppose, are the relevant ones. I can only assure noble Lords that we are not doing this to win votes. Noble Lords opposite—we have not heard much of this to-day; it was suggested elsewhere—always say that this is not at all popular. So we are not doing it to curry favour with the public; we are doing it, it is said, for some mysterious reason not disclosed. The truth is that we think this is right.
We have a very strong mandate for doing this. The noble Lord, Lord Ogmore, denied that we had any mandate. He said that the votes of the Conservatives and the Liberals came to more than the votes of the Labour Party; therefore we had not got a mandate for this and, I assume, that we had a mandate 136 for nothing. May I point out to him that no Government since the war has won a clear majority of the votes of the country at the Election? Therefore, on the argument of the noble Lord, no Government, in a sense, has any mandate for doing anything at all.
§ THE EARL OF LONGFORD
May I finish this sentence? The noble Lord was very stiff with me, but I am going to be very placatory to the noble Lord, when I finish this sentence. We say that, according to the British Constitution, the Party that wins a clear majority of seats in the House of Commons is given a mandate by the country—not only the right but the duty to give effect to its Election policy.
§ LORD OGMORE
My Lords, I said twice, once in my original remarks and secondly when the noble Earl made the same point he has now, that I did not believe in the mandate theory, but that, if anybody in the noble Lord's Party put forward the theory of mandate, then the mandate was the other way about, as more people had voted for Liberal and Conservative than for Labour.
§ THE EARL OF LONGFORD
My Lords, the noble Lord has now made that point a third time and it seems to me as weak as when he made it the first time. Veterans of past debates will recall that a great deal was made in the past by the Conservatives about the mandate. The question was, should the House of Lords have the right to interfere with something passed by the House of Commons; and it was argued that they had no right to do that if there was a mandate.
§ LORD BLYTON
My Lords, would my noble friend give way? Is it not a fact that the noble Lord, Lord Ogmore, voted for nationalisation when he was a Minister in the Labour Party, and is it not a fact that the argument applied to us today applied to the Tories equally when they denationalised the steel industry?
§ THE EARL OF LONGFORD
I am not going to investigate the past of any noble Lord. My own past would bear limited scrutiny, as I am sure is true of any other Member of the House. I am coming on to reply to another important point which 137 was raised by my noble friend, Lord Blyton.
I think it would be as well if I tried to deal with some of the particular points, before coming as quickly as I can to the general argument at the end. I will try not to repeat too much what has been said already. Anxieties were expressed, in a reasonable and temperate way, by two noble Lords who have every reason to talk about steel, the noble Lord, Lord Clydesmuir, and the noble Viscount, Lord Muishiel, as well as by other noble Lords who are equipped, by talent or experience, or both, to offer their views. I refer to the noble Lord, Lord Windlesharn, the noble Viscount, Lord Rochdale, and the noble Lord, Lord Auckland. They expressed anxieties on particular points and perhaps I could reply to them, as it were, en bloc. I would assure Lord Clydesmuir, and those who think like him, that we can go a long way towards accepting his two main points. We agree that the nationalisation of steel is an operation of great complexity. The Corporation will need to consist of men with the experience and judgment needed to manage a vast industrial enterprise. We accept that absolutely.
While I understand I must not claim too much, and must not argue that we are getting more than a certain amount of co-operation from the industry, I personally think the Government have every reason to be grateful at this stage to the industry for the degree of goodwill and co-operation which has been exhibited. May I say how lucky we are that the noble Lord, Lord Melchett, should be taking on this job? One noble Lord, I think it was Lord Rochdale, said he was "one of us". That was said in an amusing way, yet there is a certain amount of truth in the sense that we know where we are with him. We know him well, and that is the main point that was in the mind of the noble Lord. It was not the argument that only a noble Lord is entitled to preside over a nationalised industry; it is that we are extremely glad that the man who is taking this on is a man of whose personal capacities we can speak so highly.
May I say a word or two about points raised by several of the noble Lords I have mentioned, as regards the central authority? There is obviously some understandable anxiety that this central 138 authority might be top-heavy. We quite agree that that would be a great mistake, and of course the Corporation will be responsible to the Minister for the efficient conduct of the whole nationalised industry and for the finances of the industry. A number of key policy functions—investment, price policy, personnel policy, for example—willbe exercised centrally, but within this framework we intend that responsibility should be delegated to the groups into which the industry will be organised, and delegated to the maximum extent consistent with the Corporation's statutory responsibilities and with the efficient management of the industry. The noble Lord, Lord Shackleton, explained that in slightly more detail earlier on. So I hope that noble Lords will realise that we are determined to try to make sure that there is the kind of delegation which would satisfy them. They will realise that we treat this as a major point, and there is no natural disposition on the side of the Government towards undue centralisation.
The noble Viscount, Lord Muirshiel, was worried because I think he felt that the nationalised industry would not be sufficiently subject to market discipline. Of course, he is aware, as an old Minister of a nationalised industry, that there are other disciplines imposed on nationalised industries than the strict market discipline—the accountability to Parliament, and so on. But I should think that there would be considerable market discipline operating here.
The Corporation will, of course, have to make both ends meet. Its financial objectives will be agreed, and certainly it will set out to make a surplus and not just to cover its expenses. There will also be acute competition. There will be competition, to some extent, from the private sector and, of course, strenuous competition from abroad. So I hope the noble Viscount will feel that there will be quite a lot of market discipline imposed on those who are running the Corporation. But there, again, I should like him to recognise that we consider the point he has raised to be of great significance, and not at all one which we are taking lightly.
A number of my own political friends referred to the speech of Mr. Macdiarmid, and here I speak carefully, after proper consultations. He is, as we know, the 139 Chairman of Stewarts and Lloyds and Deputy Chairman of the Organising Committee. I think I should make clear the relationship of the Organising Committee to the Corporation. I am not quite sure whether this point was completely obvious to all the noble Lords who spoke on this matter. Incidentally, I should have mentioned earlier the noble Lord, Lord Wells-Pestell, as having made a most powerful speech. When it comes to this question, I will answer him and the noble Lord. Lord Blyton, and the noble Lord, Lord Taylor of Mansfield, and other noble Lords all together.
The Organising Committee was set up by my right honourable friend the Minister of Power to pave the way for nationalisation and to ensure a smooth transition from private to public ownership. The Organising Committee has no statutory authority and its members are comprised of person of different backgrounds and diverse views. We are talking now of the Organising Committee and not of the Corporation. There is no question of this gentleman occupying any position in the Corporation at the present time. We are simply talking of him as Deputy Chairman of the Organising Committee.
In an exchange of letters with my right honourable friend on his appointment to the Organising Committee, Mr. Macdiarmid made no secret of his views on nationalisation but added—and now I am quoting what he wrote at the time—I am willing to accept part-time appointment as Deputy Chairman of the Committee and to work wholeheartedly as a member of it".It was also made clear in the same exchange of letters—and this, I think, should be recognised by the public—that membership of the Organising Committee implied no commitment on either side to the Corporation. I am not sure that everyone was quite clear on that. The questions raised by Mr. Macdiarmid's speech last week to the annual general meeting of Stewarts and Lloyds are, however, essentially for my right honourable friend the Minister of Power. I most certainly will bring to his notice the very strong views that have been expressed in various quarters of this House to-day. I know—at least, I hope—that noble Lords will not expect me to go further; 140 but that is a carefully delivered statement.
I should say a few words, even at this time of night, about Europe. I do not think the noble Lord, Lord Windlesham, will question the passionate interest in Europe on the part of the noble Lord, Lord Shackleton, or on my part, and I doubt whether he would question now the desire of the Government to enter Europe on proper conditions; so there is no difference between pro-Europeans and anti-Europeans on this point. I should like to assure him that we are entirely satisfied, from all our contacts with our European friends—and I am speaking up to the minute, and after a great many very close contacts have occurred—that this Bill is compatible with the Treaty of Paris, which established the European Coal and Steel Community and which is specifically stated to be without prejudice to systems of ownership, a point made, incidentally, by the noble Lord himself. May I repeat that, after all these contacts in recent times, we are entirely satisfied that this Bill is compatible with the Treaty of Paris.
§ LORD WINDLESHAM
I am most grateful to the noble Earl for telling us that. I am wondering if he is proposing to develop it a little to-night, or if at the Committee stage we could reintroduce this subject, because this is, of course, very different from what the Minister of Power himself said in another place on his return from Luxembourg.
§ THE EARL OF LONGFORD
I should not be prepared to admit to an inconsistency until I had seen the statement made by the Minister of Power, but I can assure the noble Lord that this careful statement represents the view of the Government—including, of course, the Minister of Power—about the up-to-date position. And may I say (I hope that in doing so I am not committing an indiscretion) that, having had a good many discussions myself in recent times about our possible connection with Europe, I have never found this mentioned as a difficulty which was in any way likely to keep us out. I am bound to tell the noble Lord that; and if there were any serious difficulties I think it is inconceivable that I personally, meeting Ministers confidentially on many occasions, should not have come across them. So, if I may put 141 it bluntly, I have no anxiety about this point myself. But if the noble Lord wishes to pursue it, perhaps the Committee stage would be better than this evening.
§ LORD WINDLESHAM
The noble Earl is being extremely helpful. Perhaps I may make one brief point, and then we can leave it to another stage. He said he had not been aware of this point. In reading through the House of Commons Hansards, on the Iron and Steel Bill proceedings one could not fail to become aware of it, because it was a point raised by Mr. Barber and others from the Opposition Front Bench, and there were complete debates on it.
The only point I would draw to the noble Earl's attention—he will no doubt wish to look at it after this debate—is in column 696 of the January 19 debate, when the Minister said this:The suggestion that there is something indecent in our drawing up a Bill which will present difficulties for entry is an extraordinary constitutional argument".Then, later, in column 697 he said:I accept that the Bill also presents difficulties. In exactly the same way the National Coal Board presents difficulties".This is why there seems to have been a slight change of position.
§ THE EARL OF LONGFORD
I have no doubt the difficulties can be overcome, but I can assure the noble Lord that, in using the words I have used to-night, I am speaking with the full authority of my advisers and, I have no doubt, with the full authority of the Minister. I have not gone beyond that in anything I have said except where I have given my personal testimony to the fact that I myself have not encountered this as a difficulty in discussions with fellow Ministers. But I quite agree that perhaps it would be better to pursue it at a later stage.
The noble Viscount, Lord Rochdale, who spoke so well about many aspects of this subject, was, I thought, very unfair to the Government about compensation. If I heard him aright, he even used the word "immoral". I am bound to say I think that is a rather fantastic use of language. There are quite as many people in this country who think the proposed compensation much too generous. We have had that view expressed to-night. If one took any particular owner of steel shares, I should think one would find he 142 is probably surprised at the amount he is getting. But I agree it is difficult to know where is the just solution.
You might say that the market price over a period, or at a given point, is the right answer. Certainly it would be much more reasonable than the cost of the assets. When all is said and done, surely the value of a company is more closely related to the future earning capacity of those assets than to their cost. I cannot myself see how the cost of the assets could provide a sufficient or adequate guide. But if one is defending the generosity—and I feel that I need to against some of my own colleagues—I would only say that where you are purchasing anything compulsorily you might argue that you ought to give more to the owner than you would if it were a voluntary sale. Therefore let us agree that the terms should be on the generous side. I will not go further except to say that I am sorry that the noble Lord used the word "immoral". Really I think the owners of steel shares, as the market has clearly shown, are being offered much more than they probably expected.
The noble Lord, Lord Merrivale, speaking—or, rather, breaking into at moments—perfect French, dealt with the situation in France. If I may say so (again hoping that this does not round patronising), I thought he made the best speech he has yet delivered in this House. At any rate, it was one that I enjoyed. I make one point in comment on his remarks. The present scheme for rationalising the French steel industry has been the result of strong Government pressure. It has been implemented with the aid of massive injections of Government money. So it is not the industry, so to speak, stepping forward on its own, to put its own house in order. Pressure came from the Government, and so did a great deal of money. I can only say that if, during the many years of Conservative rule, they had produced a solution of that kind, it might or might not have worked. The years have been eaten by the locusts, and when we came into power it was natural that we should introduce our own alternative. There was a chance, but it was not taken, if the noble Lord would like to look at it that way.
§ LORD MERRIVALE
My Lords, the point I wanted to make was that, in effect, it was the equivalent of the British 143 Iron and Steel Federation who played a very important part in bringing together the industry and the Government. In fact the Government pressure was not so great, I assure the noble Earl, as he tried to make out.
§ THE EARL OF LONGFORD
My Lords, it seems that we must both go on record on that subject.
I must say one word—it is drawing close to 10 o'clock—on the Millom company which was referred to by a number of noble Lords. The noble Lord, Lord Erroll of Hale, referred to the fact that the Iron and Steel Board had failed to approve the project put forward by the Millom company and alleged that this decision was given after consultation with my right honourable friend the Minister of Power. I am authorised to state categorically that the Iron and Steel Board did not consult my right honourable friend before making their decision. I am sorry that the noble Lord should have indulged in an unsubstantiated suggestion of this sort. I hope he will take it from me that he was totally wrong. That grave bow from the noble Lord I take to represent a form of apology, and I accept it as such.
§ THE EARL OF LONGFORD
The noble Lord, Lord Royle, emphasised the importance of the Millom company to Cumberland and asked if anything could be done to assist them. We are all greatly concerned to ensure that spray steel-making, a British invention so full of promise, should be developed sufficiently to maintain the lead established by the work of the British Iron and Steel Research Association and the Millom company. My right honourable friend the Minister of Technology is considering, in consultation with the Minister of Power, the application for financial assistance for this project. I should like to emphasise that we are considering the whole question in very great detail. We are determined that all aspects of this should be taken into account, and certainly before a decision is made Ministers will consider all the points raised. I should like noble Lords to recognise that this is being taken very seriously indeed.
144 My Lords, I would only say one or two words—and they really will be one or two words—on the general issue. I will not follow in detail the example set by my old friend Lord Wolverton in quoting from a speech with which I wound up the first debate on nationalisation of steel that we ever had after the war, in June, 1946. But I will repeat in one or two sentences the points I made then. There was one proposition, I said, which cannot be questioned: the proposition that we need a single planning body to take major decisions. From that we pass on to the need for a single executive agency, and from that to the unification of the ownership of the industry. If there is to be a single owner of the industry, that single body must not be any section or group of citizens: it must be the people of our country as a whole. I said that over twenty years ago.
It was true then, and it is just as true to-day. Indeed it is truer, as has been brought out by various people, the noble Lord, Lord Mitchison and other noble Lords. The argument applies to-day with still stronger force because it was possible, after all, to say, twenty years ago, "Just give the industry a chance; the war is barely over; let them put their own house in order." Well, my Lords, they had all the years, all the years of Conservative rule—13 or 14 or 15 years—and they failed to reform themselves, as the noble Lord, Lord Blyton, and so many other noble Lords have said.
If they failed to reform themselves, I do not put it down to personal feelings. I expect that, as men and businessmen, they are as good as any in the country, and I have no reason to say they are not. I would say that it is inherent in the nature of the system, and our conclusion on this side of the House is not due to some desire to placate some hypothetical group of wild men; it is our own desire. Our conclusion, arrived at after sustained thought over many years, is that this industry will never be able to reorganise itself so long as it remains in private hands. We bring forward this Bill, not in a spirit of provocation but in a desire for reconciliation and a final settlement, a settlement which will let the steel industry know where it is, and give this industry—which, after all has many glorious achievements to its credit 145 —a chance to do still more noble service to the country. I hope that your Lordships will agree that this Bill should now be read a second time.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.
§ House adjourned at three minutes past ten o'clock.