HC Deb 07 March 1934 vol 286 cc1929-55

9.44 p.m.


I beg to move, in page 2, line 17, after "produced," to insert: and the average price per ton of coal purchased in connection with such manufacture. The miners expect to get some advantage from this legislation, but that will be determined entirely by the price of the coal that is used in this process, together with the quantity. Behind this Amendment is a certain amount of suspicion. We in the mining industry are seeing many processes set up to use coal as a raw material, but we find very frequently that it is not to the advantage of the mining industry on the productive side. For some reason or another, though there is an increased demand for coal for the new processes, the price of the coal seems to suffer. We have suspected that the people interested financially in the production of the coal were also interested in its use as a raw material in the next process, and that they were deliberately keeping the price of the coal low in order to make profits on its use in the new processes. In fact we in Lancashire got so suspicious of a certain steel company, the directorate of which was very similar to the directorate of a big coal company, that we set an inquiry on foot to try to ascertain at what price the coal had been sold by the colliery company to themselves as directors of the steel company, and we have reason to believe that the transfer price was very unfair to the producers of the raw material. To our surprise that view was confirmed during the discussion of this Bill in Committee by the hon. Member for Stroud (Mr. Perkins), who said in the course of a speech: A board of directors can make their costs of production what they like. If I were in charge of a benzol plant in a gasworks and was told by my directors to give them the cost of production, the first thing I should do would be to ask them if they wanted to make it high or low, because I could make it whatever they liked. I should make it high by the simple device of putting on to the cost of the benzol the whole of the overhead charges—directors' fees, royalties and so on. If, on the other hand, I am instructed to make them low I can leave out all these overhead charges and put them on the other processes in the gasworks."—[OFFICIAL REPORT (Standing Committee C); 22nd February, 1934, cols. 55–6.] That is the very thing which we suspect is possible under this legislation, and we do not think this Amendment asks too much from the Secretary for Mines. He has made provision under Clause 2 for information to be furnished to the Board of Trade, and all we ask is that another piece of information to be supplied shall be the average price per ton of coal purchased in connection with such manufacture. We emphasise the word "purchased." We are told that we in the mining industry need not worry any more about the price of coal, because things are so arranged that minimum prices are fixed and we know the minimum price. It is not the minimum price of coal at the pit head for which we are asking. What we want to know is the purchase price paid by the manufacturer for every ton of coal on which fourpence or more is to be paid in connection with this process.

The Minister may tell us that the term "purchase price" may cover a lot of things, and that it will be difficult for him to get this information, but it is not difficult at all. He will know the amount of coal used in this process, and where it was used, and there will be no difficulty in ascertaining the facts. We do not want the information for public property, but we ask that he should know. His knowledge of the price will be ascertainable in this House, and he could at any time allay suspicion by saying that the average market price was the price charged to the manufacturing company. We hope the Minister will not create artificial difficulties. He rather resents the suggestion I have made occasionally that this Bill is the result of a pledge given outside the House and that on that account he cannot accept Amendments. Instead of resenting the suggestion the best thing he could do would be to prove me wrong by accepting this small Amendment. It will give satisfaction to the miners, who will know that they are getting a fair deal. Let hon. Members who want to help the miners remember this. It is the price paid for the coal used that will ultimately determine whether this legislation is to be of any advantage to the miners. If, though the demand for coal increases, the price goes down pro rata, then this legislation will be of no advantage to the miners. That has been our experience with these processes in the past. Since pre-War days there have been lots of processes attached to the mining industry without any financial advantage to any miner. I ask the Minister to allay the suspicion caused in the minds of the miners.

9.50 p.m.


It does not appear to be clear that this Amendment is really needed at all. Does not the Clause as drafted give power to the Board of Trade to obtain this information if they so desire? If the information is not available to the Board of Trade it is about the only information in connection with the process that is not furnished to them. I think the Minister will make it clear that the Amendment is not needed; but if it is needed I hope he will accept it.

9.51 p.m.


I have sometimes thought during the proceedings on this Bill that I might attach the letters "D.D." to the name of the hon. Member for Ince (Mr. G. Macdonald), because he is always so direct and disarming in his remarks to me, but however persuasive and disarming he may be he cannot persuade me that something which does not exist does exist. I have made the statement, and I make it once again, that all that has happened in this matter is that a statement was made in this House by the Prime Minister on behalf of the Government, and on that assurance—and this Bill ratifies the assurance—those concerned in the various processes agreed to go forward. He may have what suspicions he likes, but the fact is that if there had been any Amendment which seemed to me practical in the course of the Committee stage there would have been no difficulty whatever in my accepting it. But he knows quite well that I cannot accept this Amendment. I told the committee upstairs that in my judgment it is neither necessary nor practicable. He said that the miners are interested in the price of the coal. To listen to his speech one would think that the only point we were concerned with is the price of coal directly used for this particular purpose, but he understands that things are not quite so simple as that. What the Amendment asks is that I should obtain the average price of coal used in these processes. It is not a matter of asking one particular firm which is going to engage in the hydrogenation process.


You pay them all fourpences.


No, we do not pay them fourpences. There is a preference of 4d., which is a different thing; and it may not be 4d., it may be 8d. or 6d., it depends on the period and the rate. But I do not want to be side tracked. The issue is that this Amendment asks that I should obtain the average price of coal from every firm engaged, whether directly or indirectly, in the manufacture of motor spirit from coal, shale, peat or other indigenous products. What possible justification can there be for asking the Mines Department to ask every gas company in the land, every coke oven firm, or operators of shale oil, low temperature carbonisation, or any other kind of process to declare the average price of the coal they bought? What practical value would it be? In my judgment none. The average price of the coal would convey nothing to the House in terms of a particular operation. The hon. Member knows perfectly well that the average price of coal in one district may be "x," and be much higher 20 miles away from a particular point inside that area. If the hon. Member says that it is necessary that the miners should have this information, my reply is that the coal industry itself has the right under the Act of 1930, Part I, to—


The coalowners have.


And the coalowners are as much interested in the price of coal as the miners. They have the power, if they wish, to classify specially a particular type of coal for a particular purpose and fix their own minimum price. A miner has full protection under the present law, and therefore this Amendment is not merely not desirable, but it is not necessary, and though I regret to disappoint my hon. Friend after his disarming speech I must tell him that I cannot accept it.

9.55 p.m.


We do not deny that the coalowners have the power under Part I which the Minister says that they have, but they are not exercising it. It is still feasible for a colliery company to be interested in a process of this kind and to supply coal at less than the fixed minimum price which may obtain in the district. The statement that was made by my hon. Friend is true. Until a few years ago there were very many cases of the kind in many districts in this country, and when the quarterly ascertainments came to hand we were able to find out that the transfer prices from the colliery to the steelworks, for instance, were not comparable to the average market price. It is therefore essential that this Amendment should be accepted by the Government, if the miners are to have something like equity.

One can make a success of any process, substantially, if the raw material is delivered for practically nothing. We do not assume that the coal would be given away, but unless some report can be obtained by the Board of Trade in order to ascertain that the correct price—that is the average market price for a given district and for a given grade or class of coal—is charged to the firm interested in the process, it will be positively true that the process will exploit the productive side of the industry and that, in the ultimate, the miners will have to pay in lower wages. Miners' wages are determined by the price of coal, and, if the market price of coal is not charged, obviously the wages which are based upon that main factor will suffer. We cannot accept the explanation of the Minister and we beg for the support of hon. Members in showing that this Amendment could be accepted. It is a matter of equity for the miners in general.

9.58 p.m.


I have listened to the speeches in support of the Amendment, and particularly to the speech of the hon. Member for Ogmore (Mr. E. Williams). The only argument which I have been able to see in support of the Amendment is that possibly an unfair transfer price might be put forward. I suggest that there is already a safeguard against that. The accounts of every colliery company are audited by chartered accountants, not only on behalf of the coalowners but also on behalf of the Miners' Federation. We have every safeguard. If an unfair transfer price is put forward, it is immediately dealt with.


It is possible for a Scottish colliery company, for instance, to supply coal to a process company of this kind where a synthetic treatment of coal is taking place, and to send that coal to a factory in South Wales without violating Part I of the Act. It will be impossible for us to ascertain the correctness of the accounts, because they are outside the district.


I cannot agree with that point at all. The books of every colliery company, including the Scottish colliery companies—I speak from personal experience, having some knowledge of the matter—are audited by a firm of chartered accountants. The Miners' Federation have a first-class chartered accountant acting for them and going through the books of every colliery company in Scotland at the present time. If an unfair transfer price did appear in the books of any colliery company it would be open to those chartered accountants to take the matter up immediately and to make representations. The only argument in favour of this Amendment which has been advanced, absolutely falls to the ground, in view of the fact that there is adequate protection in the existing provision in regard to the auditing of the books of every colliery company.

10 p.m.


The Minister gave no substantial argument against this Amendment. He gave no reason why it should not be accepted, but he gave me

Division No. 148.] AYES. [10.5 p.m.
Attlee, Clement Richard Daggar, George Evans, R. T. (Carmarthen)
Banfield, John William Davies, David L. (Pontypridd) Graham, D. M. (Lanark, Hamilton)
Batey, Joseph Davies, Rhys John (Westhoughton) Greenwood, Rt. Hon. Arthur
Brown, C. W. E. (Notts., Mansfield) Debbie, William Grenfell, David Rees (Glamorgan)
Buchanan, George Edwards, Charles Griffiths, T. (Monmouth, Pontypool)

the impression that we have been a little too lenient with him. His argument amounted to this: "It would be impossible to ask everybody who is producing oil from coal to state the price per ton of the coal that they purchased." Under the Bill he is going to have to ask for far more difficult information than that. If he looks at the Bill he will see that he is to ask to be furnished with information with respect to the quantities of oil produced and as to the types and quantities of the material from which it is produced. If that means anything, he has to ask for the quantity and type of coal that they have purchased. It is easy to understand what "quantity of coal" means, but when you come to the word "type" it may mean different things. Does it mean that he has to ask them to supply information as to the amount of small coal which they purchased, the amount of large coal or the amount of coal which is something between small and large? I submit to the Minister that if he is asking for the type and quantity he could easily ask for the price per ton of those quantities.

This is a question in which we are very interested. We have always had a feeling that coal has been sold far too cheaply to undertakings such as railways, iron and steel works and gas and electricity undertakings. When coal is supplied too cheaply our people have suffered because wages depend upon price, and cheap coal means low wages for our men. We are not asking for the information; all that we are asking is that the Ministry of Mines should get the information when they ask for the other information about kinds and quantities. We are really helping the Minister to get more information in regard to the coal industry and to this new industry. I hope that when the Bill goes to another place he will reconsider the matter as to whether such an Amendment as this can be included.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 33; Noes, 165.

Groves, Thomas E. Lunn, William Tinker, John Joseph
Jenkins, Sir William McEntee, Valentine L. Williams, David (Swansea, East)
Jones, Morgan (Caerphilly) Mainwaring, William Henry Williams, Edward John (Ogmore)
Kirkwood, David Mander, Geoffrey le M. Williams, Dr. John H. (Llanelly)
Lawson, John James Parkinson, John Allen
Leonard, William Price, Gabriel TELLERS FOR THE AYES.—
Logan, David Gilbert Smith, Tom (Normanton) Mr. John and Mr. C. Macdonald.
Acland, Rt. Hon. Sir Francis Dyke Graham, Sir F. Fergus (C'mb'rl'd, N.) Peto, Geoffrey K. (W'verh'pt'n, Bliston)
Adams, Samuel Vyvyan T. (Leeds, W.) Grimston, R. V. Radford, E. A.
Albery, Irving James Gunston, Captain D. W. Ramsay, Capt. A. H. M. (Midlothian)
Applin, Lieut.-Col. Reginald V. K. Guy, J. C. Morrison Ramsay, T. B. W. (Western Isles)
Aske, Sir Robert William Hamilton, Sir R. W. (Orkney & Zetl'nd) Rea, Walter Russell
Baldwin, Rt. Hon. Stanley Hammersley, Samuel S. Reid, William Allan (Derby)
Balfour, Capt. Harold (I. of Thanet) Harbord, Arthur Robinson, John Roland
Balniel, Lord Haslam, Sir John (Bolton) Ross Taylor, Walter (Woodbridge)
Barclay-Harvey, C. M. Hills, Major Rt. Hon. John Waller Ruggles-Brise, Colonel E. A.
Barton, Capt. Basil Kelsey Hope, Capt. Hon. A. O. J. (Aston) Runge, Norah Cecil
Beauchamp, Sir Brograve Campbell Hope, Sydney (Chester, Stalybridge) Russell, R. J. (Eddisbury)
Blindell, James Hornby, Frank Rutherford, John (Edmonton)
Boyce, H. Leslie Horobin, Ian M. Rutherford, Sir John Hugo (Liverp'l)
Brocklebank, C. E. R. Horsbrugh, Florence Salmon, Sir Isidore
Brown, Ernest (Leith) Hudson, Capt. A. U. M. (Hackney, N.) Samuel, Samuel (W'dsworth, Putney)
Browne, Captain A. C. Hunter, Dr. Joseph (Dumfries) Sandeman, Sir A. N. Stewart
Burnett, John George Hunter-Weston, Lt.-Gen. Sir Aylmer Savery, Samuel Servington
Butler, Richard Austen Jackson, J. C. (Heywood & Radcliffe) Shakespeare, Geoffrey H.
Campbell, Sir Edward Taswell (Brmly) Jones, Lewis (Swansea, West) Shaw, Helen B. (Lanark, Bothwell)
Campbell, Vice-Admiral G. (Burnley) Kerr, Hamilton W. Shepperson, Sir Ernest W.
Caporn, Arthur Cecil Keyes, Admiral Sir Roger Simmonds, Oliver Edwin
Carver, Major William H. Latham, Sir Herbert Paul Skelton, Archibald Noel
Castlereagh, Viscount Law, Sir Alfred Smiles, Lieut.-Col. Sir Walter D.
Cautley, Sir Henry S. Law, Richard K. (Hull, S.W.) Smith, Louis W. (Sheffield, Hallam)
Chapman, Sir Samuel (Edinburgh, S.) Leckie, J. A. Smith, R. W. (Ab'rd'n & Kinc'dine, C.)
Christie, James Archibald Leech, Dr. J. W. Somervell, Sir Donald
Clayton, Sir Christopher Leighton, Major B. E. P. Somerville, D. G. (Willesden, East)
Conant, R. J. E. Levy, Thomas Sotheron-Estcourt, Captain T. E.
Cook, Thomas A. Liddall, Walter S. Spencer, Captain Richard A.
Cooke, Douglas Lockwood, John C. (Hackney, C.) Spens, William Patrick
Copeland, Ida Loftus, Pierce C. Stones, James
Crookshank, Col. C. de Windt (Bootle) Lovat-Fraser, James Alexander Storey, Samuel
Crookshank, Capt. H. C. (Gainsb'ro) Lumley, Captain Lawrence R. Stourton, Hon. John J.
Crossley, A. C. MacAndrew, Lt.-Col. C. G. (Partick) Strauss, Edward A.
Cruddas, Lieut.-Colonel Bernard MacAndrew, Capt. J. O. (Ayr) Strickland, Captain W. F.
Davies, Edward C. (Montgomery) McCorquodale, M. S. Summersby, Charles H.
Davies, Maj. Geo. F. (Sumerset, Yeovil) McEwen, Captain J. H. F. Sutcliffe, Harold
Denville, Alfred McLean, Major Sir Alan Tree, Ronald
Dickie, John P. Magnay, Thomas Tufneil, Lieut.-Commander R. L.
Doran, Edward Makins, Brigadier General Ernest Turton, Robert Hugh
Duckworth, George A. V. Manningham-Buller, Lt.-Col. Sir M. Ward, Irene Mary Bewick (Wallsend)
Duncan, James A. L. (Kensington, N.) Margesson, Capt. Rt. Hon. H. D. R. Wayland, Sir William A.
Dunglass, Lord Mayhew, Lieut.-Colonel John Wells, Sydney Richard
Edge, Sir William Mills, Sir Frederick (Leyton, E.) White, Henry Graham
Edmondson, Major A. J. Mills, Major J. D. (New Forest) Whyte, Jardine Bell
Essenhigh, Reginald Clare Mitchell, Harold P. (Br'tf'd & Chisw'k) Williams, Charles (Devon, Torquay)
Fleming, Edward Lascelies Muirhead, Lieut.-Colonel A. J. Wills, Wilfrid D.
Foot, Dingle (Dundee) Munro, Patrick Wilson, Lt.-Col. Sir Arnold (Hertf'd)
Ford, Sir Patrick J. Nall, Sir Joseph Wise, Alfred R.
Fremantle, Sir Francis Nation, Brigadier-General J. J. H. Womersley, Walter James
Fuller, Captain A. G. Normand, Rt. Hon. Wilfrid Wood, Rt. Hon. Sir H. Kingsley
Gledhill, Gilbert Nunn, William Worthington, Dr. John V.
Glossop, C. W. H. Palmer, Francis Noel Young, Rt. Hon. Sir Hilton (S'v'oaks)
Gluckstein, Louis Halle Patrick, Colin M.
Goff, Sir Park Pearson, William G. TELLERS FOR THE NOES.—
Goodman, Colonel Albert W. Petherick, M. Captain Sir George Bowyer and
Commander Southby.

Motion made, and Question proposed, "That the Bill be now read the Third time."

10.12 p.m.


On the Third Reading we wish, without undue delay or any desire to prevent the passage of the Bill in its final form, to point out some objections which we have to the Measure. In order to do that effectively and with the necessary brevity, I will summarise the provisions of the Bill itself. It provides for a preference on home-manufactured hydrocarbon oils, the preference to be a standard figure of not less than 4d. per gallon for a period of nine years. That is the main provision of Clause 1, and a definition of the term "preference" is given in Sub-section (2). In Clause 2, the Minister arms himself with power to obtain information regarding the new industry which is to be carried on within the scope of the preference, and the Clause lays down the kind of information which he is to require. Clause 3 deals with the position which may arise in the event of the preference at any time being fixed at a higher point than the 4d. per gallon mentioned in Clause 1, and here we come across the famous formula which the Minister presented to the House in his speech on the Second Reading, and with regard to which the House, I am sure, would, if there had been time, welcome further instruction and entertainment.

The conditions are simple. The Bill is plain in its statement and effects, but there are certain very grave defects that we find in it, and I desire to refer very briefly to the principal ones. We moved an Amendment in Committee the object of which was that the preference should only be allowed to operate so long as Parliament so determines. Our first objection to the Bill is that it fixes this preference for a minimum period of nine years at 4d. per gallon. We were unwilling, and we are still unwilling, that this House should pledge future Parliaments to the continuance of a preference of this kind. We say that no Parliament should pledge its successors to a duty or preference without permitting its successors to express their own views on the preference that has been established.

We have heard that this is a departure and a dangerous precedent in legislation of this kind. The Minister has always contended that it is not so, but we have very grave apprehensions as to the possibility of a Government which happens to be strong enough to over-rule the Opposition and may try to impose upon that and successive Parliaments fiscal limitations which might be a very serious embarrassment indeed to the Government which succeeded the one that made the imposition. We still contend that it is a very dangerous thing in advance, without sufficient information as to how this preference is to operate, and as to the results of the operation of the preference, to commit Parliament to a continuation for a term as long as nine years.

We passed from that and we came to the second Clause, and we urged there that the Minister should obtain very much more information than he seeks to obtain, and we urged that the infor- mation should be obtained and made available not only in the interest of the coal miners but in the interest of the Minister himself, of the country, and of all those who may be directly or indirectly interested in the new works to be set up under the Bill. The Minister may not desire to-night to give a description of the prospects of this industry, but certain Members are still under the impression that it may develop into a very large industry indeed and may require the conversion of a very considerable tonnage of coal into oil year by year. No limit has been fixed in the Bill and, if the process of hydrogenation or low temperature carbonisation for any other process yet to be discovered is successful, there might be a very considerable quantity of oil derived from manufacture on these lines. The Minister does not know the limits of his commitments. He does not know how many hundreds of thousands or millions of pounds a year he may be called upon to forfeit in the form of taxation in order that this preference may be maintained. He said on the last Amendment that the Government paid nothing towards this process. That is true, but at present there is an actual preference of 8d. per gallon.

The Chancellor of the Exchequer has sought, for various reasons, to derive a revenue from imported hydrocarbon oils. The Customs duty stands at 8d. per gallon. So long as there is no Excise duty and the Customs duty remains at its present level, our effective preference will be 8d. If, in the event of a reduction of the Customs duty, the effective preference is reduced, the period under Clause 3, under the formula, is reduced correspondingly. There is no limit to the aggregate amount that may be found under the Clause and if, as some optimists imagine, the quantity of coal to be converted runs into 5,000,000, 10,000,000 or 15,000,000 tons of coal per annum, that would yield a considerable volume of oil and the loss of revenue of the imported oil now substituted by the oil produced at home would represent a considerable loss indeed to the Exchequer year by year. We think the Secretary for Mines, responsible as he is for collating all the information bearing upon the industry, ought to arm himself with very much more information than he seeks to obtain under Clause 2. We ask that not only should that information be collated by him, but that there should be a statement made to Parliament once a year. One of the reasons which have prompted us to insist upon this is the need for Government protection of investors, and the people who may be shareholders in these new ventures which may come into existence in very large numbers indeed. The more successful these processes may be, the larger will be the call for new capital to be invested, and the wider will be the invitation to the investing public to take part in these new enterprises.

One hon. Member said, in regard to the Bill which we are discussing to-night, that it might be the beginning of a great ramp, and there is the possibility of a very considerable investment of new capital in the processes of hydrogenation and the comparable processes which are now found to be practicable. Information should be made available in order that the investing public may be safeguarded. The Secretary for Mines should be called upon to state in Parliament from time to time the cost of the material utilised in the industry, the cost of production, and the price of the oil obtainable, and what, in a general way, are the profits. If the public are not protected by a declaration of that kind, it will be open to spurious companies to issue prospectuses conveying false information. The more alluring the prospectuses, the more successful the company promotion may be. This scheme, which holds out very great promise indeed to the mining industry, may be thoroughly discredited in the first two or three years of the experimental period because of a ramp or orgy of speculation which may exist because of the absence of authentic knowledge of the results of the industry.


Is not the hon. Gentleman aware that there is a very strict law dealing with false statements in prospectuses.


It has not prevented a very large investment in these processes. I remember attending a meeting at which the prospects of hydrogenation of oil were explained by a person who was called an expert. I do not pretend to be an expert in these things, but I know that the person explaining the new industry knew neither the rudiments nor the beginning of the thing. He looked very respectable and talked very learnedly, rand a very large sum of money was invested in the company which this gentleman represented. He was a gentleman outside this House, I am glad to say. The hon. Gentleman opposite represents a Government who are going to guarantee a preference of 4d. a gallon for nine years, or, if the preference remains at the present standard, of 8d. a gallon for 4½ years. This House is responsible in guaranteeing that preference not only to the taxpayers of this country whose resources will be called upon to supplement the loss in the revenue from imported oil, but in a much more direct sense responsible to the investing public, who are very often said to be the poor widow and other poor people. Certain hon. Members say when it suits their purpose that the poor widow and the poor man is exploited, and I now desire protection for them by asking that the Secretary for Mines shall present reliable information.

We have warned the Secretary for Mines and we warn the Government not to take the risk of bringing this scheme to ruination. They must not shipwreck it for lack of pilotage, lack of lighthouses, lack of warning beacons or whatever may be required to see that the scheme is not unduly exploited. It is a matter of very great moment to the mining industry if we are to turn from coal production to the production of a large part of the liquid fuel that is required in the country. The internal combustion engine is part of modern civilisation and liquid fuel will play an increasingly important part, and it can be produced from the coal which we possess in abundance.

Let us see to it that we embark upon this scheme with every precaution against abuse, exploitation and unfair discrimination in favour of one company as against another. Let everybody who wants to embark upon this process of hydrogenation have a fair field and no favour. Let the public be duly warned that all the information will be given, and let future development be done in the light of the knowledge that all the necessary information will be available. Then we shall feel sure about the scheme. We do not like the idea of subsidies or preferences, but we wish the scheme well if it is run not in the interests of individual firms but in the interests of the coal industry and the men employed in that industry.

10.27 p.m.


Before this Bill passes from the House I feel it incumbent upon someone to recapitulate a few of the more general reasons against it, particularly because no serious attempt has ever been made by the Secretary for Mines to answer them. He is, as we all know, a very devoted and active Secretary for Mines, but he seems to think it is unnecessary to answer the objections to his policy. If I may say so, he sometimes seems to attach a little too much importance to bring Ernest. There seem to be adequate reasons against the Bill for every single school of thought in the House. I cannot conceive how a Labour man can vote for it. The only attempt to justify it that may conceivably appeal to them is the ground that it may produce employment. If the Government have now, after two years successfully pursuing exactly the contrary policy, altered their mind upon that subject—I hope and trust that that is not the case—it would seem to me that a Measure of this sort would be in itself a condemnation of the policy which the Government have pursued, and it would be quite inconsistent with the continuance in office of the President of the Board of Trade and the Chancellor of the Exchequer, whose whole doctrine to the country, in season and out of season, has been exactly to the contrary. They have over and over again prided themselves upon avoiding attempting to produce employment at the cost, direct or indirect, of the taxpayer. This case is particularly flagrant for, on the showing of the figures presented by the Government, this is a suggestion that now, after two years, they support this Bill because it will give employment to 1,000 miners. I suggest that if it be defended upon that kind of ground, that it produces employment, a Bill which after two years produces employment for 1,000 miners is little else than a jest out of place.

Then I turn to the Liberals. I say that I turn to them, but I am not sure where to turn. There is usually a family band on the bench in front of me, and there is an ancient fish- like Liberal smell below me. There is also some of the species over there, one or two on the bench opposite. Why should any Liberal vote for the Bill? To begin with, it sets up an industry under the cover of a tariff which is guaranteed not to fall below 100 per cent., and which at the present moment is 200 per cent. I can understand hon. Members who may lean to the Free Trade side of this issue being prepared to vote in favour of reasonable tariffs and supporting the Government in an effort to bring down excessive tariffs, but if a tariff of 200 per cent. is not to be considered excessive, I cannot think what the hon. and gallant Member for Bournemouth (Sir H. Croft) has to complain of, for 200 per cent. ought to satisfy anybody. Moreover, I understood that the Liberal section of the Government were supposed to have as one of their interests a reversal of the unhappy progress towards economic nationalism, of helping the awkward position of raw materials producing countries.

What is the situation in regard to this proposal? We are here putting hindrances in the way of a raw material which is brought to this country almost entirely in British ships, largely from of wells in British ownership, some of them actually with a shareholding by the British Government, and it is extremely difficult for any Liberal Member of the Government to have much conviction in, or get much support for, the view that they are endeavouring to reverse a tendency to economic nationalism if they are going to support a Bill of such flagrant economic nationalism as this. I have an extraordinary bad memory, but I believe the Secretary for Mines was once a Liberal, and this argument may possibly, I will not say appeal to him, but may cause twinges in his—[An HON. MEMBER: "Conscience!"]—I was not going to say conscience, because that perhaps would be out of place. The position with regard to the money involved is that every ton of coal which is used in this process will attract an indirect sum from the taxpayer of about £3. We will not argue as to whether the word "subsidy" is a valid word or not, but I think it is a little difficult for Members of this Government, or emissaries of the Government, to get much attention paid to their requests to foreign Powers not to give artificial and unfair support to competing industries if we are prepared to give as heavy a support as that to an artificially introduced industry of our own.

I turn to the Conservative Members, and after all there are some Conservative Members in the House; they are not all parlour Socialists in disguise or in office. I wonder whether hon. Members do appreciate the effect of this Measure upon the Budget. There are some people like the whole army of imaginative financiers who are always coming down to the investor or the House of Commons and trying to persuade the people that they have found some extraordinarily ingenious way of getting money from nowhere, and as far as I can see the House and the investor believes them. They usually go on to blame the wicked bankers for getting them into trouble. The position I submit is extremely simple. We have here a revenue duty bringing in a very considerable sum of money. Given a state of trade and given a price of petrol, the amount of oil which will be bought is fixed. Therefore, every time anyone buys a ton of oil made by this process it will mean that there is imported one ton less of oil that pays the present heavy revenue duty. That being so, the figures are simply obtained from the statement made by the Prime Minister some time ago. About £1,000,000 of revenue duty will be lost if this scheme is the success which was held out to the House by the Prime Minister.

The dilemma is perfectly clear. Either the Chancellor of the Exchequer wants that money or he does not. If he needs that money, and if we lose £1,000,000 by not importing oil which would pay that duty, he must put on new taxation to make good the loss. If on the other hand he would have had a surplus of £1,000,000, a reduction of taxation which would have been possible will no longer be possible. [AN HON. MEMBER: "What constituency do you represent?"] I am amazed at the degradation of Parliamentary discussion which we have heard earlier this afternoon, and in the interjection of an hon. Friend who says, "What sort of constituency do I represent?" That is positively an immoral interruption. What we are here to do is to weigh arguments, not to see whether we can bully one another or blackmail one another by saying, "Vote for me next time, because I pointed out that you have a good slipway, and you will get the new Cunarder," or, "Vote for me, for you have now an oil-from-coal installation." I hope my hon. Friend regrets his interruption.

I submit to the House that the Minister is for a period of at least four years causing a loss to the revenue which we can ill afford, a loss of revenue which the House should not consider to be a subject of jest, a loss of revenue which will only mean that either a reduction of taxation which would have been possible will become impossible, or that new taxation will have to be imposed to take its place. For all these reasons, I submit that this is not a Measure which the House should approve, and particularly for the last reason, that it is a continuous and gross waste of public money. During the early part of the afternoon we managed to get rid of a good deal, and it is a pity that we have to finish off the evening by getting rid of £4,000,000 more.

10.39 p.m.


I had the privilege of addressing the House on this subject in July. I do not propose to reiterate anything I said then. Therefore my remarks will of necessity be short. The hon. Member for Central Southwark (Mr. Horobin) has had a very pleasant 10 or 15 minutes enjoying himself with destructive criticism. I feel certain that when he visits his electors he will be able to face every one of them and say, "I said in the House that all the other fellows were wrong." That will be the only satisfaction that he can get. I do not propose to follow him with destructive criticism. It is generally agreed that it is vital for the well-being of this country that something should be done to put new life into the coal mining industry. It is further agreed by everyone who is really interested in the cause of coal that these proposals are going to help the coal industry to some extent. It is generally recognised, that in view of declining markets, we must find some new use for coal. Here it is. Dispute seems only to have arisen as to the method by which this industry is to be worked. The Opposition say, "Nationalise it." We have insisted that private enterprise is the best way of doing it. If it succeeds, so much the better. If it fails, there is no loss to the taxpayer. Indeed, if it succeeds the Government have the advan- tage of sharing in the profits of the industry through the normal channel of taxation.

We are not giving a subsidy. I do not believe that hon. Members of the Opposition understand the difference between a preference and a subsidy, but the people in the country do understand it. If we give a preference to a home-produced article, it is only the logical conclusion of the whole policy of the Government. The Government say, "We will not interfere with this industry, but we will see that as far as possible, it begins under conditions which are as near to the ideal as they can be." What are ideal conditions for an industry? In my opinion the essential thing in a home industry is that it should bear the lowest possible burden of taxation. Here we are helping an industry by making the burden of taxation on the new product as low as we can. That seems the sensible thing to do. There is a second way in which we can try to ensure ideal conditions, that is to see that the conditions which we create in the beginning have as far as possible the virtue of continuity. Some years ago the late Lord Melchett said you could never carry on an industry under uncertainty. If this proposal had to come before the House year after year as has been suggested for reconsideration and approval we would not find the capital in this country willing to invest. Capital is not willing to invest tremendous sums of money in a new enterprise unless they are certain that the conditions under which the enterprise is going to be carried on have some degree of continuity. For that reason I particularly wish to say how much I approve of the principle of securing the continuity of good conditions in the industry.

Certainty and security will go a long way towards making things right. It is because we have certainty and continuity that we see these big plants coming into operation. We see the new plant going up at Billingham. We find the Low Temperature Carbonisation Company promising to commence two new plants as soon as possible. There will be continued expansion of the industry so long as the Government proposals are carried into effect. The fuel which is produced is satisfactory and I am sure that Members of the House were delighted when the Under-Secretary of State for Air told us that the Air Force were going to take seven times as much fuel produced from coal this year as they took last year. Some of us have wondered with regard to the Navy, because their contracts have not seemed to be so good, but it appears that on the fuel produced from coal which is taken by the Navy there is no preference under this Measure or any other Measure. I hope the Secretary for Mines will keep in consideration that the logical conclusion of his policy would be to extend it so as to cover all the oil produced from coal in England. I feel that we on this side must be very glad indeed that the Government have been able to assist in laying the foundation-stone of what we believe will be a growing and important industry in this country.

10.45 p.m.


Unfortunately, although since July last this matter has been fully discussed, we are really no further advanced now than when the matter was first raised. The matters which were in doubt then are still in doubt, the criticisms which were made then are still unanswered, and for that reason my right hon. and hon. Friends are unable to support the Bill at this stage. In particular, no attempt has been made to meet the criticisms which were raised by my hon. Friend the Member for Gower (Mr. D. Grenfell), with regard to the indeterminate nature of this subsidy, and the point which was also raised by the hon. Member for Central Southwark (Mr. Horobin). If this experiment is successful, which in itself is a matter for speculation, this subsidy may rise to £35,000,000 a year. This country may turn its mind in due course to the definite planning of its national resources, having regard to the whole national economy, and the sooner it does so the better. When that day comes, I fear that, with the haphazard way in which we are proceeding now, the difficulty of the planners may be to get rid of most of the planning which we have already set on foot.

If we had a call from Mr. Wells' visitor from Mars, he would, if he gave his mind to this aspect of our affairs, say, "What an extraordinary race. They are prepared to put the whole resources of the taxpayer behind the further development of any- thing which is already being produced in superabundance by Nature and which is causing an embarrassment." And that is in fact what we have done and what apparently we are prepared to do. If there is anything which is produced in such an abundance that it is an embarrassment to those concerned in its production, we organise the national resources to produce still more of it. We assist the production of wheat, sugar, and so on, but when it comes to things in which Nature is more niggardly, such as water, it is another matter. We are prepared to give £1,000,000 per annum for the production of surplus petroleum, but for the production of water, which is badly needed throughout the whole country, the organisation of these supplies is limited to a capital contribution of £1,000,000. We are prepared to give a swingeing bounty to sugar amounting to £40,000,000, but when it comes to the provision of houses, which are badly needed by the people, we at once begin to count the cost. As it is, these things are done in a haphazard way. They are the pet schemes of the Departments, brought down to the House, not looking at the whole planning of the national economy, and as a result we get no proper balance sheet of these transactions. They are presented to us from the departmental point of view and from that point of view only.

The hon. Member for Central Southwark referred to the cost of the employment which can be provided by means of this scheme. I think the figures were somewhat larger than those which he quoted, but say some 1,200 miners may he employed on the one plan at Billingham, and some 2,500 men in all. On the basis of the cost of £1,000,000, that would mean an annual charge to the taxpayer of £363 or thereabouts for every man employed, and by a simple process of arithmetic one arrives at the fact that if one devoted the whole of the sum available for the service of the National Debt in the same way, one would have employed half the unemployed people in the country at the present time. The question is whether the House thinks that that is a reasonable proposition which ought to be undertaken.

The mind of this nation has only recently begun to turn towards the subject of national planning, and we are as yet not very well accustomed to the idea. Our technique of government in dealing with this matter is wholly deficient. Proposals of this kind ought not to be brought forward, as they are, without due consideration; that is to say, without any accurate balance-sheet. We have been told about the employment in the mining industry. We have not, on the other side of the ledger, heard the amount of unemployment which will be caused in the shipping industry or in the shipbuilding industry. Even at this moment, I believe, there are some eight or 10 tankers being built in this country for the purpose of carrying oil, a very useful contribution to the hard-hit shipyards at the present time. Nor, indeed, have we heard from the Minister of Mines the capital loss which will be inflicted on the enormous English oil-producing industry, and even the Government's interest in the Anglo-Persian Oil Company appears to have been overlooked.

We hope that, when this country gives its mind to the development of national planning, there will not be these haphazard movements, but carefully thought-out and co-ordinated schemes having regard to the national policy as a whole. When the Economic Advisory Committee was appointed, some of us thought that the step was one of considerable importance. "Here," we thought, "is a body which will see that these proposals are not brought forward as they have been in the past, but that they will be related together; and that Government Departments will not take decisions separaely and independently of one another, but that there will be some connection between Government Departments and between Members of the Cabinet, who, as we know, are at the present time far too occupied to take a broader view of the whole matter." Schemes which may look perfectly well when considered in vacuo in relation to one particular industry may be quite wrong when they are considered in relation to the national economy as a whole. I therefore sincerely hope that as we proceed with these matters we shall learn wisdom and, instead of coming, as we do, with these haphazard schemes involving in the aggregate enormous sums of the taxpayers' money, sums to which there is no limit and the benefit of which remains in doubt, we shall direct the minds of the Government and of the whole nation towards a more orderly pro- cedure than we have followed in connection with this scheme and with a very large number of other schemes which have been brought before us during the last few years.

10.53 p.m.


I should not have intervened in this Debate if it had not been for the very theoretical speeches delivered by the hon. Member for Central Southwark (Mr. Horobin) and the hon. Member who has just sat down. I should just like, in a very few minutes, to try to put a small amount of fact up against that theory. Several years ago I had the opportunity of seeing this Bergius process of hydrogenation at the Government experimental centre at Greenwich. At that time I was told, and I fully realised, that the process was a chemical miracle, but that it was not a matter of commercial possibility. The cost of production of hydrogen was then so great that it was impossible to produce this oil at a reasonable price. Dr. Bergius' process, as far as this country is concerned, has been bought by the Imperial Chemical Industries, and through many years' work of research that concern has brought the process to the state in which, with the 8d. tax imposed, they can carry on. They will, however, have to spend £2,000,000 of money. Could they go to their shareholders and say, "We are spending £2,000,000 of your money, and we simply rely on the fact that there is an 8d. tax on oil at the moment"? They would not be trustees of their shareholders' money if they did that.

This process is a good process; they know it. They have proved to the Government that it is a good process. What they ask the Government is this: "Will you undertake that you will not reduce your duty by more than 50 per cent. over nine years? If you will promise us not to make the reduction on the present duty for that period, then we are prepared to spend our money and prove this process on a large scale." If it is proved that there is something mechanically wrong with it, Imperial Chemical Industries will lose their £2,000,000 and the Government will not lose any revenue. The gamble is for the company to prove it successful. If the company prove it successful, the invention will be to the great advantage of this country and the coal industry, the coalowners and the coal miners. There will be a huge field in which we can produce oil in this country. At the present time we have to import, and, although we get a revenue on the imports, it is far better to keep employment in this country than receive a revenue and give employment elsewhere.

I cannot follow the hon. Member for Central Southwark in his theories. I know nothing about the policy of other parties, but the Conservative policy is to make as much work in this country for our own people as we can. If this scheme is a success it will produce work. The hon. Member seemed to have forgotten that a large quantity of oil is made in this country to-day from coal. There is the high temperature carbonisation and low temperature carbonisation, and they are really dependent for their existence on the 8d. tax. It would not pay them if the tax came down to 4d. These developments are not in competition. The Bergius process does not compete with the other two. Each of these processes produces another commodity, coke or coalite, but the Bergius process does not produce a residue, but only oil. Therefore they are not in competition with one another, and all three can grow together and prosper without hurting each other. These are a few practical things which make this experiment very desirable. If it succeeds, it will bring great benefit to the country. If it fails, it will be the loss of the shareholders of Imperial Chemical Industries.

10.57 p.m.


The summary of the Bill given by the hon. Member for Gower (Mr. D. Grenfell) has relieved me of the obligation of going over the Clauses, but I should like to reply to some of the things he said. He stated that one of his main objections to the Bill is that it does not give the Mines Department power to get enough information. I can assure the House that Clause 2 gives the Department power to get all the information we think necessary and desirable in order to follow these processes through, to ascertain the results, and to get such information for the Treasury as is necessary. With regard to the point that he desires the experiment to be done under national ownership and con- trol, we have already debated that question. I cannot hope to satisfy the hon. Member for Central Southwark (Mr. Horobin). It would take me an hour to do it, and this is not the time. He enters upon a whole series of theoretical disquisitions and stands on his Olympian heights distributing his criticisms and his praises and his disparagements equally to Socialists and Liberals of all kinds and Conservatives. I looked him up in Dod's Parliamentary Companion, and I see that he is described as "N." That, judging from the series of speeches I have heard him make, may mean either "National" or "nothing."

Whenever the Government tries to do anything active and productive he distributes his warnings Cassandra-like, ad libitum, to all concerned. The Minister of Agriculture, I understand, has fallen under his displeasure. I have, too, but we must bear it as best we may. I have noticed that if there is one person on this globe whom he and his fellow planner, the hon. Member for Stockton-on-Tees (Mr. Macmillan), who sits side by side with him so happily from day to day, hates more than anybody, it is Mr. Roosevelt. I commend to his consideration this simple fact—or assumption if he likes—that President Roosevelt is able to do this extraordinary planning in America probably because, in Mr. Hoover's day, there were too many Horobins who wanted to do nothing. That, I think, is a sufficient answer at this time of night to the hon. Member's theoretical disquisition. The Government have not approached this problem in that temper at all. When he argues about preference, it is very interesting to notice that he is the only hon. Member in the whole of these discussions who has raised that point. Not even my hon. Friend the Member for East Birkenhead (Mr. White), with the other Opposition Liberals, who take Free Trade so seriously, have ever raised that point. He is the only hon. Member who has ever done so; and I do not wonder at it, because I know those other hon. Members feel they would be on very uncertain ground.

We are not for the first time giving a preference to oil from coal. We have been giving a preference to oil from coal from the first day the duty was put on oil. At the moment 40,000,000 gallons of light oils a year are produced in this country by one process or another, and every gallon of that gets the advantage of the full 8d. preference, and in the whole series of discussions on the oil duty no voice from any quarter has been raised against that action. All we are doing now is to assist people who desire to carry one experiment further, under one particular process, the process of hydrogenation. I am rather surprised at what the hon. Member for East Birkenhead said on that point. If he will take the trouble to turn up the report of the Royal Commission which sat under his leader, he will find very great hopes held out to the mining industry about this very process. I agree that in that passage in the Royal Commission's report there is no reference to any particular plan for putting it into operation. But that is the trouble with all theoretical planning. The hon. Member talks about a plan. What good is a plan unless it has a relation to reality. I can plan as many new worlds as I like by a speech, or an article in a daily newspaper, or in the "Liberal Magazine" or in any other magazine, but my plans would have no validity unless they were translated into action and applied to facts, and before hon. Members come down here to patronise every other Member who is trying to do a practical piece of work they should produce some plans of their own worked out in detail and applied to the facts.

The same observation applies to my hon. Friend the Member for Gower and his friends in reference to their theoretical plans for nationalisation. We claim no such theoretical basis for this Bill. This Bill is the result of a long series of experiments and research work, some of which has been done and subsidised by the State. We have done a great deal of research work, and the State puts aside some £85,000 a year for fuel research work, but this Government is the first Government after a long series of discussions, to bring this great experiment to the realm of possibility.

The only issue on which it remains for me to say a word is this. Is the arrangement in the Bill likely to be too costly for the value of the experiment? Hon. Members who are suspicious, who are doubtful, will say "Yes." We differ. We think the arrangement is a moderate arrangement, a practical arrangement, an arrangement which commends itself to those who will, as the hon. Member for Ecclesall (Sir S. Roberts) has rightly said, take all risk; and when the hon. Members for East Birkenhead and Central Southwark draw up their balance-sheets in ordinary business I hope they will not draw them up on the principles upon which their speeches were founded to-night, which is to try to put everything they can on the debit side and to find nothing on the credit side. When they say there has been no answer to the financial point, I will prove my statement by repeating the answer, given on behalf of the Government, in regard to this balance sheet on 8th February: It is not possible to make a reliable estimate of any loss of revenue under the proposed guarantee, as this will depend on a number of uncertain factors, including the extent to which home-produced motor spirit displaces imported spirit, the quantity of spirit produced, the amount of preference and the length of the period over which the guarantee extends. As regards the cost to the Exchequer, further considerations, such as the relief of the burden of unemployment, have to be taken into account."—[OFFICIAL REPORT, 8th February, 1934; col. 1385, Vol. 285.] As a matter of fact the hon. Member for East Birkenhead did a very simple trick. He got the figure £363 into his mind and then he said, "That is going to be the cost." He made an assumption, but he did not realise that he made an assumption. It is only when the balance-sheet can be worked out in practice that anybody is entitled to say what the cost will be. The hon. Member's assumption is that every ton of oil produced from Billingham will replace a ton of oil from abroad. May I point out to the hon. Member for East Birkenhead that last year there was an increase in the importation of motor spirit three times greater than the total estimated production from Birmingham in a full year. The argument in my judgment therefore falls to the ground. I ask hon. Members to believe that the hon. Member for Gower is right, and that this is a Bill which gives great promise to the mining industry. I will leave it there, in the confidence that the House will give the Bill a Third Reading.

Question put, and agreed to.

Bill read the Third time, and passed.