HC Deb 17 April 1923 vol 162 cc1880-5

Mr. PETO: I beg to move That leave be given to bring in a Bill to promote the more general adoption of co-partnership between capital and labour by statutory and other companies. At first sight it may seem that such a Bill as this has only a very remote connection with the main Debate which will take place this afternoon, but, in his concluding remarks yesterday the Chancellor of the Exchequer said that industrial peace would do more for trade than the reduction of taxation, and I hold, therefore, that a Measure calculated to promote industrial peace is certainly not remotely connected with the financial position of this country and with its annual Budget. I have adopted the now somewhat disused practice of putting in a short Preamble to this Bill, and, as it consists of only a few words, I will ask the House to allow me to read it. It is as follows:

Whereas there is great loss to the industries of the country by the opposition of capital and labour, and whereas such opposition increases the cost of production and the prices of all commodities, and whereas it is desirable to restore to the wage-earning classes human interest in life and work and to place them in a position of economic equality with every other class,

I desire that this Bill be enacted. I avoid laying down any standard scheme. I avoid anything of the nature of compulsion. I proceed, in Clause 1, to set up a body of five persons who are to be called Industrial Co-partnership Commissioners, and the Clause further provides for the payment of salaries and expenses by fees approved of by the Chancellor of the Exchequer, so that, therefore, 110 burden is imposed on the national finances. I would call the attention of hon. Members to the method of nominating these Commissioners. One would be nominated by the Trade Union Council, one by the Federation of Employers in British Industries, one by the Labour Co-partnership Association, one by the President of the Board of Trade for the time being, and one, who would be Chairman, by the Chancellor of the Exchequer for the time being.

In Clause 2, I provide that the company or companies in. question may refer schemes for the division of profits between capital and labour to these Commissioners, and I would ask the permission of the House to read one or two of the provisions of that Clause. Subsecton (1) provides that such companies may make provision, by a scheme to be submitted to the Commissioners, for the division of profits between capital and labour employed by those companies, in such ratio, at such times, and in such manner in all respects as the Commissioners may approve. In Sub-section (2) it is laid down that every such scheme shall provide for payment to all employés of the company, in addition to any share in profits, of wages at rates not being less than the rates commonly paid in the district where the company carries on its business; for the fixing of a basic rate of interest on capital which shall bear relation to the risks involved in the business; for the investment of some part, being not less than one-half, of the employés bonus in the capital of the company; and that the employé's bonus, whether paid in cash or in stock or shares of the company, will not be liable to forfeiture for any legal act or omission of the employé. Sub-section (2) provides that. in deciding whether or not they will approve of such a scheme under this Clause, the Commissioners shall be entitled to take into consideration whether the employés who are to work under the scheme have been consulted with regard to it and have approved of it. The next Sub-section provides for the affixing of a certificate, much in the same manner as the Registrar of Friendly Societies certifies a friendly society. The only other Sub-section of this Clause to which I shall refer is one which states exactly to what sort of companies the Bill will apply. The Bill is to apply to companies engaged in production, and is not to apply to any banking, finance, insurance, or investment company, or to any other company which for the main purpose of its undertaking employs only clerical labour, or to any company engaged in wholesale or retail distribution.

I now come to Clause 3, which provides the inducement or the method by which I hope much greater advantage will be taken of the system of co-partnership. The Clause provides that a company which puts before these Commissioners a scheme which is approved and certified will be assessed to and charged with Income Tax at three-fourths of the ordinary rate, and that it will be charged for stamp duty on the issue of capital at one-half the ordinary rate of Stamp Duty.

Clause 4 provides what I think is a most important use of the power that the Government and local authorities have of promoting anything which they believe to be for the common good. It provides that, after the lapse of a year from the passing of the Measure, a preference shall be given, in the placing of Government contracts and the contracts of local authorities, to firms and companies who have adopted such a scheme. Clause 5 only provides for the machinery of the daily work of the Commission, and, further, that the Commission shall make an annual report, to be laid before Parliament, and that practically all that they do shall be subject to the approval of the Chancellor of the Exchequer.

It would be impossible now to place before the House any detailed argument in favour of co-partnership, but I should like to recall to the House that 10 years ago, on the 15th February, 1912 an Amendment to the King's Speech was I moved by the present Leader of the Opposition, and seconded by the right hon. Gentleman the Member for Platting (Mr. Clynes) in which they called attention to industrial unrest, and asked for the setting up of a minimum wage and the nationalisation of mines and railways. To that Amendment I moved an Amendment in very much the same sense as the provisions of this Bill, asking for the further adoption of the co-partnership principle and an equitable division of the profits of businesses between capital and labour, setting out in detail what were the advantages. May I now just put before the House, in a few words, what I am convinced are the main advantages of co-partnership? It lessens strife and cheapens the cost of production of all commodities. It does that by lessening the burden of supervision, lessening the waste of material, and bringing the united brain of management and labour to bear upon the problems of production, and so improving the processes and their application to production. I am convinced that it, would increase our power to sell in foreign markets, that it would thus increase employment and give to wage-earners a human interest in life and in their work, and would raise their status to an absolute equality in every respect with every other class in the country. From this, as I hold, it would follow that it must increase the profits of industries throughout the country when they are equitably divided between all who work in those industries, and that, therefore, the revenue derivable from direct taxation would be increased. If any hon. Members think the inducement I offer of a rebate of one-fourth of the current rate of Income Tax is too much, I would remind them that an increase in profits to the extent of only one-third would result in three-fourths of the present Income Tax equalling the total which is now collected, and, therefore, I would ask for sympathetic consideration of these proposals by Members in all parties in the House, on the ground that I am asking permission to introduce a Bill which is an honest effort to contribute to industrial peace and the prosperity and welfare of the country. I beg to move,


I rise to oppose the Bill. While doing full justice to the admirable motives of the Mover, and of those who support it, I should like, from painful experience, to point to one or two dangers which are bound to arise if a Bill of this sort become law. In the first instance, the advantages to the workers to be obtained by co-partnership have, I am afraid, been very much exaggerated. After all, it is not desirable that the weekly wage-earner should invest his small savings in the same business concern from which he draws his wages. I have come up against that problem myself already. If, through any mistake on my part, my business were to go down and become bankrupt, it is quite certain, if I had as co-partners those whom I employ for wages, they would not only lose their employment and weekly wages, but they would lose their savings as well. In fact, the danger has impressed me so much that I have come to the conclusion that the only proper way in which to invest such portions of their profits as they wish to invest yearly is to form some sort of investment trust, by which, owing to his greater knowledge of share markets and matters of that sort, the employer may be able to obtain for his employés a better return on their savings in safer investments than they can do for themselves.

This Bill puts forward a form of reform at the public expense, and it does not provide against one very great danger. It is perfectly easy for a producing or manufacturing company to sell the greater part of its output to an ad hoc selling company. Therefore, the advantage which would accrue from the reduced taxation owing to the co-partnership scheme would accrue really to the same individuals through the formation of a special selling company. It is a little complicated, because I do not know the exact wording of the Bill and what safeguards have been put in to prevent it. Under the working of the modern joint stock company system, it is possible to avoid making a large profit in a manufacturing company and to get a very large profit for the same individual by means of a selling company which takes over the output of that factory at low prices and retails it at high prices. Therefore, although, as I say, I recognise most fully the excellent motives behind this Bill, I hope that this House will not give it a Second Reading. It has not been thoroughly considered. It has evidently been drafted by people who have taken up with enthusiasm a new thing of which they had not had actual practical experience, and to my mind the dangers—and I hope the House will agree with me—are very much greater than the benefits which it can possibly give.

Question, "That leave be given to bring in a Bill to promote the more general adoption of co-partnership between capital and labour by statutory and other companies," put, and agreed to.

Bill ordered to be brought in by Mr. Peto, Colonel Sir Charles Burn, Sir John Butcher, Sir Evelyn Cecil, Mr. Flohler, Sir Herbert Nield, Sir Ernest Pollock, and Lieut.-Colonel Pownall.