§ Considered in Committee under Standing Order 71A.
§ [Mr. JAMES HOPE in the Chair.]
§
Motion made, and Question proposed,
That it is expedient—
§ The MINISTER OF LABOUR (Sir Montague Barlow)I will endeavour as shortly as I can to explain the position 412 with regard to this Resolution. The White Paper circulated this morning puts the situation clearly, and I do not propose to take up the time of the Committee except for a very few moments. The history of this matter I think is known to most of the Members of this House. Sir Bernard Oppenheimer and his partners, Lewis and Marks, during the War started this factory. They founded the factory for two purposes. First of all, that it might be of assistance to the disabled ex-service men of the country, and, secondly, that we might have established in this country a new and a useful industry. Buildings were constructed and are very elaborate. They are fitted with the most modern appliances for the purpose of carrying on this work of diamond cutting. Not only that, they have convenience and opportunities for dealing with the disabilities of ex-service men if they require treatment. The premises were erected at a cost of £300,000, and for the purpose of the present negotiations they have been valued at £70,000. The disabled men who passed into this factory were selected from various parts of the country. A large number of men were trained or passed through the preliminary training, some 1,200 in all, and eventually the factory was operating with some 200 to 250 men. There is room for a great many more, up to about a thousand.
The arrangement was that the men should be trained during a period of six to nine months, during which period the ordinary Government allowances and payments were made in respect of training. After that the trainee passed into the ordinary productive side of the factory, the conception being that the business should be conducted, from the first, on a productive basis and that the men should be paid by piece work, and as they became more expert, the amount of money they could make increased. Managers and instructors were obtained from Holland, and the idea was to establish in this country a permanent form of employment for these men. Unfortunately in the period of 1920–21–22 there was a very severe depression in the diamond industry, as there was in other industries, and the factory had to close down.
There is no doubt the men made good. This was proved by two facts. The diamonds they had cut were selling on a 413 basis of equality in London and New York with those cut in Amsterdam. Further, a number of the men trained at Brighton were able to secure work in Amsterdam.
§ Mr. A. HOPKINSONHow many?
§ Mr. F. ROSEEighteen.
§ Sir M. BARLOWIt is a question, fundamentally, of what should be done with those men who have been trained. You have some 250 ex-service men who have been trained in a lucrative employment and who are now thrown out of work. The matter was put before the Trade Facilities Committee, who were not unfavourably disposed, but the difficulty arose that what was desired, and what was necessary, in this case was something in the way of working capital. The Trade Facilities Act does not permit of money being used for working capital, and the Government decided, in the very special circumstances of this factory, not to make any advance by way of cash, but to give a guarantee. That was to be the subject of a proper arrangement and proper security.
The three main reasons which led the Government to this decision were (1) that if the factory were closed down the training of 250 men already trained would be lost; (2) the men would have to be trained for some other occupation, involving a cost of probably £40,000, and even when they were trained there would then be no certainty of employment; and (3) there was the object of security for the men by giving them employment, and at the same time establishing a new industry in this country.
What are the proposals? Messrs. Lewis and Marks are to provide the premises, plant, etc., free of all encumbrances, and a sum of £100,000—£50,000 in cash forthwith and £50,000 when called upon, and guaranteed meanwhile by a bank acceptable to the Treasury. The Government are to guarantee a sum of £150,000, which is to be a first charge upon the assets of the company, buildings, etc.
The directors are to consist of three persons of distinction, Earl Haig, Lord Chichester and Sir W. Gentle; two directors, who will be business men, are to be appointed by the Government and two directors are to be appointed by Messrs. Lewis and Marks.
414 What is the protection for this Government guarantee? First, as I have already intimated—[Interruption.] The matter may be humorous for some hon. Members, but it is not humorous for the ex-service men.
§ Mr. F. GRAYWho guarantees employment?
§ Sir M. BARLOWLet us take what are the securities for the Government guarantee. There is the first charge on the building. It is provided that the whole of the £100,000 is working capital and none of it is available for acquiring the premises of the new company. There is a special arrangement for a continuous audit which will secure control. Not more than 50 per cent. of the profit can be paid out as dividends, the other 50 per cent. going to the reserve fund, and if the liquid assets, as defined in the agreement, fall below £200,000, or a loss is shown in any one year of £50,000, the Government can then set the terms of the agreement in motion, in fact, foreclose and take the premises over.
What are the arguments against this proposal? It is said there is no necessity for this arrangement, that if the proposal is a good one on the business side the company can raise money in the City. [HON. MEMBERS: "Hear, hear!"] I see that that meets with a certain amount of support. The answer is that under the agreement as it stands we secure that none but ex-service men are employed. If the company goes into the City for money you have no such security.
§ Mr. PRINGLEThey are the only people who have been trained.
§ Sir M. BARLOWIt is, obviously, perfectly easy for the company, unless there is a guarantee of this kind, not to, as in times past, feel themselves bound to employ ex-service men. The obligation to employ them is in the forefront of the agreement, and it is in respect of that that the Government guarantee is proposed to be given. It is also said that this is assisting private enterprise. Of course it is. The whole of the trade facilities work is assisting private enterprise. That assistance was originally up to £25,000,000, and was then extended to a guarantee of £50,000,000.
The only two questions with regard to this agreement are: Has this business a fair chance of success; is it a reasonable 415 business proposition; and have the Government reasonable security with regard to the guarantee? Take only one evidence of that. There are two Dutchmen who have spent their lives in this industry and have for the last two years managed the factory. They have satisfied themselves that diamonds, as cut at Brighton, can compete with the diamonds of the world. They believe so firmly in this concern that they are willing to throw in their lot with its future. Not only that, but it has to be borne in mind that while there was, two or three years ago, a slump in diamonds, that is not the case to-day. The second question is whether the Government is to be secured. I have mentioned the various points. [HON. MEMBERS: "What is its value?"] It is a very simple calculation. It is not unfair to put the value of the £300,000 buildings at £70,000, and there is, in addition, the £100,000 in capital brought in, and the money raised under the guarantee which will amount to a quarter of a million pounds. That will be used in the form of diamonds for cutting.
§ Mr. LYLE-SAMUELDid I understand from the right hon. Gentleman that the two gentlemen were Messrs. Lewis and Marks?
§ Sir M. BARLOWOne word in conclusion. I have full authority for the statement I am going to make now. I mentioned that Sir R. Kindereley and Sir William Plender were good enough to give their advice during the negotiations, and I have their authority to state that they consider the agreement as embodied in the Schedule of the Bill provides reasonable security for loss from a business point of view. I only want to make one appeal. It is quite right, of course, that we should consider this matter from the business side, and I quite agree there is a certain amount of risk involved, but Members of the Committee must bear in mind that this is a very vital matter to the 200 or 250 ex-service men who have been trained and look to it as their means of livelihood, and we hope it will be the means of livelihood to a very much larger number.
§ Sir FRANK SANDERSONIs it not a fact that the company has lost money since its inception?
§ Sir M. BARLOWI have already explained to the Committee that when the slump came the company could not carry on.
§ Sir F. SANDERSONCannot the Rt. hon. Gentleman produce a balance sheet, or has he himself had an opportunity of perusing the balance sheets of the Company?
§ Sir M. BARLOWBalance sheets, I understand, were produced to the members of the Trade Facilities Committee, who throughout have given their expert skill and advice on the matter.
§ Mr. A. HOPKINSONI do hope the Committee will not be misled by the speech it has just heard. I am afraid the Minister of Labour was rather upset by a certain amount of hilarity. I should like to explain that we were not laughing at the wounds received by our comrades in France, but at the close of the negotiations which have come to a head here to-night. We are also inclined to laugh when we see the Minister of Labour fighting the same tactics in this Government as in the last, that is to say, introducing Measures for which he can only get loyal support from one side of the House, namely, the Labour party. Again and again, we saw that in the last Parliament. They brought in Measures which supporters of the Coalition thought to be unwise, and again and again they were obliged to whip the Labour party to get their Measures through. Everything in this case depends on one thing, whether this diamond trade is undergoing a temporary slump or whether the slump will continue, as it probably will, for generations. The slump is not as bad as it was in 1922, but is there any reason whatsoever to suppose that the present slightly better condition of the diamond trade is going to be anything better than ephemeral and likely to continue? As many hon. Members know most of the diamond mines were shut down at Kimberley and the former German South-West African mines. Surely, having regard to the present state of Europe and the world generally, it is perfectly futile to come to us and say that the diamond industry is going to improve so enormously that a firm, which from its inception has had very heavy losses indeed, is now going to become a paying concern. We have heard of the 417 wonderful profits which were going to be made in cellulose phosphate, beet sugar and other things, and in every case it was the taxpayer who had to suffer. Is there any reason to suppose that any profit of any sort will be made on the present transaction? Who are the gentlemen who are to have this large sum of money? We know Sir Bernard Oppenheimer was a gentleman of strong philanthropic energy, and he tried to make a success of it. It was very largely the failure of this great scheme of his that actually accelerated his death. But who are Messrs. Lewis and Marks? Is their record the same as that of Sir Bernard Oppenheimer? Have they shown throughout their lives the high degree of public spirit and desire to benefit their fellow men? I think these things might very well be inquired into and that opinion might be got, not only from the Trade Facilities Committee, but from the City and elsewhere. I hope the taxpayers' money will be protected from wild-cat schemes developed by semi-Socialistic Ministers in this House.
§ Mr. LYLE-SAMUELWhen a Minister appeals to the House on behalf of ex-service men, he finds a response from every quarter, but when the Minister of Labour proceeded to-night to make out his case he must have felt the sense of the Committee to be against him, in that he felt there was to be an expense to the taxpayer which was not commensurate with the benefits to be derived. The diamond industry in this country has not been one which ever was or can be on a profitable basis. One may as well face the facts. In other countries it is profitable to have certain industries, and this particular industry belongs to Amsterdam, for the simple reason that the skill and fine margin of cost which is necessary for the production of diamonds enables it to be produced nowhere else at a price to be sold successfully in the market. My hon. Friend the Member for Mossley (Mr. A. Hopkinson) said the real question was, whether the slump in the diamond market was temporary or likely to be permanent. I really do not think that is the question at all, because, if the diamond market should recover, it is still true that the records of the company owning the factory at Brighton show that Amsterdam will undersell and 418 undercut us every time. Two hundred men alone are involved and £150,000 of public money—not the whole of it, I agree, but there is a guarantee of £150,000—is being risked in regard to 200 men, which works out at £750 per head. At 5 per cent. there is a permanent endowment of £37 10s. for them, and a capital sum of £750 to leave to their dependants. If the Treasury wishes, for the sake of these 200 men, to give a capital sum of £750 each, they can do so and bring complete happiness into their lives by thus assuring them a certain sum every year and a comfortable sum to leave to their dependants. We would then have the Government free from this interference with trade, trade which is not on a commercial basis, trade which they have no Ministers or officials to conduct, trade which they can give us no evidence will be a success. This large sum of money is the last—perhaps it would be too optimistic to say the last—the latest instance of a contribution from our national resources to the many millions spent similarly, the record of which in our history is deplorable.
Of all the fantastic schemes produced from the Treasury Bench this is really the reductio ad absurdum of Governmental interference with business. This is the least businesslike and most foolish proposition we have heard. This £150,000 is the latest attack on our national resources. If this is a business proposition we are considering, why was the factory never a success when there was a boom in diamonds and when diamonds were 300 per cent., even 500 or 600 per cent. higher in price. The fact is that there was not even the capacity to take advantage of it. Now when the slump has come and Amsterdam is able to cut cheaper than ever and their prices are cheaper than ever, the British Government is willing to stand in and risk £150,000 of the taxpayers' money in an enterprise which failed from the beginning when directed by men on business principles. I hope the Committee will not consider this as a party matter or be swayed by sentiment as to what we would like to do for these 200 ex-service men. There is no one who would not like to follow the Minister of Labour in anything that is just to these men. We want to be more than just and a little wise. A scheme so fantastic has not been presented to us since the War. This is a scheme with 419 a bad past. It really has no hope for the future. My right hon. Friend never went so far as to state that when this money comes, it would be a paying business and he skated quickly over the thin ice as to why this money was not being found privately. It is said that £70,000 is the value of this factory when it has its doors shut. Would you get £7,000 for it, without any good will, with diamonds in Africa and Amsterdam which it does not pay to cut? Lewis and Marks are one of the leading firms in the world. Does anyone suggest that they are in such indigent circumstances, or so baffled and harassed by their bankers, that they could not raise any resources necessary for this purpose? If this were a business and a business proposition the proposal would have come from Messrs. Lewis and Marks on their own to purchase the factory and run a profitable business. They know it is not going to be a profitable business and the right hon. Member knows it. What is the good of the opinion of the two chartered accountants? Two very respectable gentlemen, and we are delighted to have their opinion, but—
§ Sir M. BARLOWSir Robert Kindersley is not a chartered accountant.
§ Mr. LYLE-SAMUELBut Sir William Plender is a very distinguished accountant. It would have been interesting if Sir Robert Kindersley had expressed his opinion as a business man on it as a business, but he has had too much experience, and all Sir William Plender said was that he thought there was some reasonable security—a non-committal statement which we appreciate, and appreciate at its true value. One great expert told the Government they could lend millions to a firm which is not worth thousands now. Such experts have been ennobled and enriched. One gentleman got a peerage for telling the Government that Germany could pay thousands of millions. I think the right hon. Gentleman feels that the House has supported him in the efforts he has made to improve the condition of ex-service men whenever he makes an appeal to the House for them and every section then gives him its sympathy and support, but we do not think he ought to have dragged up the spectre of 200 men already broken 420 in strength and disappointed at the collapse of this scheme and suggest that because of this spectre the Government ought to be committed to the folly of a guarantee of £150,000 on a business whose past and whose future on the known condition of trade gives us no reason to suppose it is a proper enterprise for either a Government or a private individual.
§ 2.0 A.M
§ Lieut.-Colonel NALLThe Debate has shown that this matter requires the fullest consideration. I am surprised that a question of this kind should be brought on at this time of the Session. As was said by the Minister, this would have to go through five stages in the House. I agree with the last speaker that this is a very considerable sum of money for the benefit of 200 men. It would, in fact, pay these men nearly £3 a week each for five years. I wonder if the Minister in charge suggests that this scheme would enable this factory to keep going for five years. Which is the more likely to succeed: To put these men on to some useful work at £3 a week for five years or to trust to this factory keeping them employed for five years? My right hon. Friend did not at all fully explain the scheme. I think the House ought really to be told before it passes a grant—may I call it a dole?—much more fully what really is intended. According to this memorandum a company is to be formed with 500,000 £1 shares. Messrs. Lewis and Marks are to take up 100,000 of these on which they are to pay ten shillings a share. What happens to the other 400,000 shares? Who gets these? Are they to be allotted to anybody? If they are not intended to be allotted, why are they in the scheme at all? What provision is made for the purchase price of the factory? Does it come out of the £200,000 raised by the loan plus the £50,000 or in some other way? Does the factory become the property of the new company, or does it become the property of Messrs. Lewis and Marks? All these things require the fullest explanation. I do not want to take up the time of the House by asking a long series of questions, but I do want to suggest that this is a matter that ought to be adjourned until the House has had a full opportunity of considering this memorandum and the points that arise on it.
421 I want to put forward one other point that ought to be considered. This trade, if carried on at all, is a luxury trade; it is not a necessity, and if there is any prospect for it at all in this country—if it really can, in fact, be successfully carried on—surely there are those in this country who will carry it on, provided they are protected from alien competition, and, instead of resorting to an extravagant-subsidy of this kind, this is one of the cases that can be assisted in this country without charging the taxpayer by imposing a suitable duty on the imported article.
§ Lieut.-Colonel NALLI do not want to pursue that.
§ Mr. PRINGLEOn a point of Order. Is the hon. and gallant Gentleman, in examining this Resolution, not entitled to refer to alternative forms of assistance whereby the object can be better secured?
§ Lieut.-Colonel NALLI do not want to pursue that; I merely mentioned it because I believe there are other means by which this industry could be supported. What I do want to do is to ask the Government in view of the issues involved to adjourn this discussion until a more suitable time.
§ Sir M. BARLOWI beg to move, "That the Chairman do report Progress, and ask leave to sit again."
It will be present to the minds of all what took place at Question Time to-day The Prime Minister, with regard to this 422 Bill, said that facilities would be given, but that it would be quite impossible to carry it unless it were substantially a noncontentious Bill. I think it is fairly clear from what has taken place that it can hardly be described as noncontentious. I would like to say that it is quite clear from the last speech made that, possibly because there has not been much time to consider the matter, the full effect of the agreement has not been appreciated. The questions asked by the last speaker show that there has not been time for Members to consider the matter. In view of the shortness of the time, and of the fact that the course of the Debate has shown that the matter is not entirely noncontentious, I think the proper course would be to accept the suggestion of the last hon. Member. I therefore beg to move to report Progress, and, if necessary, the matter can be reconsidered subsequently.
§ Committee report Progress; to sit again To-morrow.
§ The remaining Orders were read, and postponed.
§ It being after half-past Eleven of the Clock upon Tuesday evening, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.
§ Adjourned at Eight Minutes after Two o'clock a.m.