HC Deb 11 July 1946 vol 425 cc715-29

As amended (in the Select Committee and on recommittal), considered.

10.7 p.m.

The Financial Secretary to the Treasury (Mr. Glenvil Hall)

I beg to move, "That the Bill be now read the Third time."

Quite briefly, as I think the House knows, the purpose of this Measure is a simple one. It is to transfer to the Treasury the balance of the Cable and Wireless operating company shares, and compensation is to be paid to the companies who now hold the shares by the issue of Government stock. Broadly, the Bill does nothing more than acquire the shares. It makes no attempt to lay down the method which shall be adopted in the future for running this Company and the overseas telecommunications services. That is now under consideration by the Government and, in due time, an announcement will be made. The Government will, however, take into full consideration the expressions of opinion that have been made during the passage of this Bill through its various stages when they come to make up their mind.

The reason why this Measure is necessary now is, first, that it is essential as part of the process of this country's implementation of the recommendations of the Commonwealth Telecommunications Conference which was held in London in 1945, and which was accepted by the whole of the Dominions members of the Commonwealth. Secondly, it is essential now, in order to implement and to give effect to the agreement reached at Bermuda, to which this country was a party. The operating company refused to implement the rate reductions which were agreed at that Conference unless the Government indemnified it against any possible loss, and under Clause 5 of the Bill the Government have undertaken to indemnify it against any possible loss up to the appointed day. However, as a permanent arrangement it was felt that such a guarantee to a privately owned company would have been intolerable, and for that reason—as well, of course, for others—it was decided to take over the shares now.

In passing, I would like to say that the Government do not for one moment accept the figures given by the Company as its estimate of the loss which it will sustain as a result of the alterations in the rates agreed to at Bermuda. The Company in estimating the loss that will flow from the change in those rates, apparently makes no allowance for the fact that in itself a reduced rate is likely to draw increased traffic, and it also forgets, in the view of the Government, the long-term benefits which should accrue to the limitations which that agreement lays down of the use of the direct wireless circuit.

Mr. Oliver Lyttelton (Aldershot)

Might I ask the Financial Secretary what is the Government estimate of the loss involved?

Mr. Glenvil Hall

Of course it is impossible to say what the loss will he. What we have to remember is that the revenue accruing during the war must obviously have been something more than the likely revenue that will accrue in the early postwar years. I do not want to labour this, because I do not desire to speak too long in moving the Third Reading, but, whilst we are willing to guarantee the loss up to the appointed day, it is our view that the loss the company now estimates will accrue will he nothing like the figure of £2,500,000. I say no more about that, but leave the matter there——

Mr. Manningham-Buller (Daventry)

If the Financial Secretary expresses the view that the company's estimate of the prospective loss is wrong, it means that he must have formed a view of what the loss will be. Will he tell the House the view of the Government?

Mr. Glenvil Hall

As I said earlier, it is impossible to say what it will be. But, if the hon. and learned Member wants my guess, I think it will be less than half the figure the company estimates.

Such criticisms as have been levelled against the Bill during its Committee stage, have been concentrated almost entirely in two directions. One is the position of the staff when the Bill becomes law, and the other is the attitude of the Dominions. The Chancellor of the Exchequer has dealt very fully on more than one occasion with the position of the staff. I think the House will agree that he has given the fullest guarantees.

All I need do at this stage is to indicate to the House the latest position in regard to the Dominions. One of the main criticisms from the other side of the House was that the shares should not be acquired finally until the Dominions, who are a party with ourselves to the 1945 Agreement, have initiated legislation, or at least taken some steps towards implementing their side of the undertaking. We took the view in discussions during the Committee stage that this country should take the lead in this matter, and should not wait for the Dominions. We also indicated that we had every reason to believe that the Dominions would honour their signature, and that any other view was a gross reflection on the integrity of our sister countries in the Commonwealth. I can now let the House know the situation. Since this Bill passed through Committee, the Australian Government have introduced legislation in the Commonwealth House of Representatives and I hope that in due course that legislation will reach the Statute Book. We understand that New Zealand is in process of preparing legislation for introduction into its Assembly. As I said on the Committee stage, no legislation is required in India, but the Indian Government have given the company notice of their intention to exercise their option to purchase the company's undertaking, and the purchase will go through in due course.

I am sure hon. and right hon. Members opposite will be very interested to hear the situation in South Africa. We are informed—and we have up-to-date information—that it is intended to bring the South African organisation under public ownership. The form has not yet been decided, any more than it has been decided here, but such legislation as may be necessary will be introduced next Session.

In Canada, the acting Prime Minister stated recently in the House of Commons that the Canadian Government had indicated their willingness to nationalise their external telecommunication services. I can now add, from messages which we have quite recently received, that legislation in Canada is contemplated after the negotiations, which are now going on between the United Kingdom Government and Cable and Wireless, have been completed.

I have not the slightest doubt that this information will allay the fears and anxieties of hon. and right hon. Gentlemen opposite, who probably quite sincerely thought that this change had been forced by this country, or by this country in association with Australia, on our sister Dominions. I think that the facts as I have given them will dispose of that view. I hope, therefore, that now that it is certain that all the Dominions within the Commonwealth march with the Mother County in this matter, we shall he allowed to have the Third Reading of this Bill.

10.17 p.m.

Mr. Oliver Lyttelton (Aldershot)

I do not propose to ask my hon. Friends on this side to divide against this Bill. I want to make it perfectly clear that we are taking this action in the interests of Imperial unity in the matter of Imperial communications.—[Laughter.] I do not see that it is very funny. I have no doubt that I shall be able to make some jokes later, but this is not one. The Financial Secretary to the Treasury, with the extraordinary skill which he always displays, stated the Opposition case, of course, as it was not—an old dodge—and then proceeded to knock it down. Our position is perfectly clear. We are not dividing against this Bill, which we think is a had Bill, and is very distasteful to us, and we are taking that course in the interests of Imperial unity.—[Laughter.] Again the Chancellor seems to be much amused. He will not be so much amused when he finds that the whole scheme on which this Bill has been framed proves to be unworkable, as it undoubtedly will. I make a prophecy—I do not make many—that we shall see more legislation in this matter, when the present scheme is found to be entirely unworkable.

We on this side of the House very much deprecate legislation which aims first at purchasing shares, and considering afterwards what is to be done with the business, when the Government have got it. We hope that in this case, once the shares have been acquired, and the Dominions have taken the necessary action, some workable arrangement will be evolved. We do not consider however that the House has been fairly treated in having presented to it a Bill which acquires the shares, but leaves completely in the dark, how the business, when acquired, is to be managed. We do not consider that Clause 4 of the present Bill goes nearly far enough. It still leaves much too much for negotiation between the Treasury and the company on staff pensions and other matters concerning a large section of the cable company. I say that we do not think it goes far enough, because our experience is that the Government are extremely bad employers. I think my views upon this matter were shared by the Select Committee. The Chancellor of the Exchequer has given assurances that salaries, wages and conditions of employment will be protected. That is not in the Bill and therefore 1 cannot dilate upon the subject. I confine myself to the remark that Clause 4 is inadequate to deal with the problems which will arise over the employment of the staff.

I repeat that we think the Bill is a very bad one. We do not divide against it because it is our belief that, whatever modifications may be required subsequently, at this moment Imperial unity in the matter of cable and wireless communications can best be served by not emphasising the manifold defects in the Bill. I conclude by expressing the hope that some wise administrative measure"; may be taken which will mitigate the effects of a piece of hastily improvised and ill-thought-out legislation.

10.21 p.m.

Mr. Maclay (Montrose Burghs)

As an earnest and humble student of the legislative processes of this House, I must confess that the progress of this Bill has been extraordinarily interesting. The Second Reading Debate, which I studied very carefully in HANSARD, really discloses very few arguments for the nationalisation of this company. There were many remarks which were far from fair to the management of the company. What is really interesting is that being a hybrid Bill we have available the special Report of the Select Committee on the Cable and Wireless Bill. I hope hon. Members will examine that document. I recommend it particularly to those who like a thriller. It is a most astonishing document and I think one must congratulate the Members of this House who formed part of that Committee, and particularly the Chairman, for doing an exceedingly able job.

I do not think that the things which the Committee disclosed were those which came out on the Second Reading. I must say to those who like thrillers that if they go through this document carefully they will find confusion, mystery, search for obscure motives, veiled hints about diplomacy and strategy, and even an innocent country cousin turning up, I am afraid in the guise of the Financial Secretary to the Treasury. Hon. Members who go through the document will also find there is a feeling of intrigue——

Mr. Donovan (Leicester, East)

Would the hon. Member make it clear that he is referring not to the Report of the Select Committee but to the evidence which was given before it?

Mr. Maclay

Certainly, but the Report includes the record of the evidence. It is a verbatim report similar to HANSARD, Hon. Members can get the document from the Vote Office and see for themselves. A most extraordinary thing about this inquiry is that feeling throughout that there is a mystery man lurking somewhere in the background, and in the last few pages there is an extremely good climax, but I must not detract from the credit of the authors by giving it away_ Hon. Members ought to read it for themselves. Many things emerge from the Report, the most important being that there has been something seriously wrong for a good many years in the relationship between Cable and Wireless and the Dominions. It becomes increasingly clear as one studies the Report that the breach of relations between Cable and Wireless and the Dominion Governments is by no means the fault of the company.

If I might remind hon. Members of the structure of this company, it has, since 1928, partaken of the nature of a public utility company of some kind. In addition to the Board, which has two Government approved directors, there is a committee called the Imperial Communications Advisory Committee, consisting of representatives of each Dominion Government, plus one representative from the Colonies and one from the United Kingdom. The purpose of that Committee is to watch the interests of the Dominion Governments in everything to do with cables and wireless. Theoretically, the whole scheme seems exceedingly good and might well work. I just want to touch on one main point which will make it clear that, in fact, latterly it did not function well, not because of its own nature, but because of other things involved. First, there was the quite remarkable position assumed by the chairman, not of Cable and Wireless Ltd., but of the Imperial Communications Advisory Committee. The chairman of this Advisory Committee was also the representative on that Committee of the Government of the United Kingdom. At one time or another, he also represented Canada and Australia, and, what is more, he was for a considerable period receiving a payment of £1,500 a year from Cable and Wireless, Ltd., with the full knowledge of the Treasury, to act as liaison officer between Cable and Wireless, Ltd., and the Treasury.

Mr. Speaker

The composition of the Committee is quite outside the Third Reading of this Bill.

Mr. Maclay

I am trying to build up a case in defence of the company on the charges made against it on Second Reading.

Mr. Speaker

If charges were made against it on Second Reading, we have nothing to do with them on Third Reading. We are dealing with what is in the Bill, and not with what may have been said on Second Reading, in Committee or on the Report stage.

Mr. Maclay

I apologise, Mr. Speaker. I am not quite certain if I may now go on, because I was trying to argue whether the Third Reading of the Bill was justified, because of extra evidence received since the Second Reading. I hope I am in Order in touching very briefly on other points brought forward as an excuse for going through with this Bill, and they certainly arise out of the Bill itself. It is necessary to see what is happening. It has been argued that, apart from the question of Dominion relationships, there are strategic considerations, but we must remember that, if there are strategic considerations for nationalising Cable and Wireless, Ltd., during the whole of the war it was found possible to have Cable and Wireless, Ltd., carrying on this vital work without being taken over by the Government, and it is impossible to find out what new considerations have arisen to change all that.

Then, there is a lot of talk about diplomatic considerations, but we must not forget that there are grave diplomatic dangers for a Government in taking over a cable and wireless organisation which has to pass through foreign countries. It is surely very difficult for a Government to take over a private company with foreign establishments; it must be much easier for a private company to operate its business with those establishments in foreign countries. Hon. Members opposite will find this difficulty with every one of the State ownership enterprises which touches foreign trading.

Then as regards the implementation of the Bermuda Agreement, I think the Chancellor indicated, and I think it has been suggested this evening, that Cable and Wireless, Ltd., showed resistance to the reduction of rates. That is true, so far as the Bermuda Agreement is concerned. I think that the Chancellor will agree that the past history of Cable and Wireless, Ltd., has shown a steady, progressive attitude towards reduction of rates, and that, had they been left to themselves, that reduction would have gone on. Resistance to the Bermuda Agreement was because they had not been fully consulted, and they did not believe that the rate reductions proposed would leave a working profit with which to carry on.

That brings me to my final point that one of the main arguments for this Bill is that one cannot pay money from the Government to make up the loss of a private company. I am prepared to be accused of being reactionary, when I say that that is a fantastic point of view. In point of fact I am quite convinced that I am 25 years ahead of the right hon. Gentleman and hon. Gentlemen opposite and that in due course hon. Members on the Government benches will find that State ownership is the last possible thing that will improve any industry. If that industry reaches the stage of monopoly that makes it necessary for some sort of control to be imposed—and I quite agree that Cable and Wireless had reached that stage—then there are other means of exercising that supervision far short of taking over financial control. I have had the privilege of working for five years as a temporary civil servant. I have the highest possible regard for civil servants. I also have the highest regard for the system. If, however, there is one thing that one learns when one is working as a civil servant it is that that system can never be made suitable for running any enterprise which has to provide a service to the public, which requires initiative, which requires enterprise. Hon. Members opposite have often said with regard to this argument, "Oh well, we will change the system." I can only wish that some of them would work as temporary civil servants for a time; they also would come to have the highest regard for the service, but they would also learn its limitations. It is useless to argue, as was done earlier this evening, that the operating boards will be free of bureaucratic interference; in every case the overriding consideration is that it is this House of Commons that is responsible for the financial control of such public utilty companies. The Minister must answer questions in this House. From this inevitably spring the evils and inefficiencies of bureaucracy. I hope, Mr. Speaker, I am not transgressing too far with regard to this Third Reading Debate, and I will not develop that argument further.

May I in conclusion return to the question of the Dominions, and to the point I made earlier? I do not think that anything on this earth could in existing conditions have made the relations between Cable and Wireless and the Dominions really satisfactory. The working of the Advisory Committee had for whatever reasons got into a very curious condition, but if the company had been in direct contact with the Dominion Governments there is good reason to believe that these difficulties would never have arisen. One must, however, accept the situation which exists. The Dominions are and have for some years been disturbed at what has been happening. The question is what should have been done. What I submit is that it would have been perfectly possible for the Government of this country and each of the Dominion Governments to have achieved some other means of control of what was, obviously, a virtual monopoly of vital interest to the whole Commonwealth. It need not have been necessary to nationalise it all. If the Dominions felt so strongly about it they could have nationalised their own ends of it, and such a system would have worked. I do not think any Member of this House would deny that. There was really no need to nationalise it in this country. Today's position, however, is one that has to be accepted, and it is with exceeding reluctance that one realises that there can be no point in voting against this Bill although it is one which one thoroughly dislikes.

10.35 p.m.

Mr. Blackburn (Birmingham, King's Norton)

I wish to record my astonishment at the statement made by the right hon. Member for Aldershot (Mr. Lyttelton) to the effect that the party opposite was concerned in this matter, about Imperial unity, because when this subject was last debated, right hon. Gentlemen on the Front Bench opposite made the suggestion to the Dominions and the Empire that they should back out of this agreement. The right hon. Member for Bournemouth (Mr. Bracken) said: One wonders, being hard-headed people, whether they will adept schemes modelled on this foolish Bill.''—[OFFICIAL REPORT, 2nd July, 1946: Vol. 424, C. 2059.] The right hon. Member for Aldershot and the hon. and learned Member for Daventry (Mr. Manningham-Buller) made speeches which were tantamount to an invitation to the Dominions to back out. What could he more disruptive to Empire unity? Yet today they stand before this House and say that in the interests of Empire unity they are not dividing against the Third Reading, though previously they divided the House on a new Clause on this matter. I conclude by say-that we have heard the reaction of the Dominions to this interesting suggestion from the right hon. Member for Aldershot and others. We have heard that several Dominions are introducing legislation to implement the agreement, and I can only add that if the Opposition is going to be ineffective in its attempts to assault the Government or disrupt Empire unity as it has been on this occasion, if it is going to show such utter fatuousness. I say "Long may it gleam upon our forward path."

10.36 p.m.

Sir Waldron Smithers (Orpington)

I cannot allow this Third Reading of this Bill to go through without making a protest. I have been told that if I vote against this Bill I shall be voting against Empire unity. I do not agree. This Bill presumes to give to the Empire and Commonwealth a cable and wireless service. If the Empire wants an efficient cable and wireless service, the present company, which has never been accused of inefficiency, ought to be left to carry on because it will provide a better cable and wireless service for the Empire than can be provided under the dead hand of State control. I cannot understand how it is that the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), who speaks for the party on this side of the House, while he describes the Bill as unworkable and distasteful and applies to it several other adjectives which I had not time to put down on paper, yet does not propose to divide the House against it. This Bill, by taking over the shares of the company and gaining control of it, really means that taking wealth is part of the policy of the Government. I am glad that the Chancellor of the Exchequer seems to agree with me because I want to ask him this question. What is to stop the Government, when they have got all the real wealth of the country, giving in exchange for it pieces of paper—thus following the example of Germany after the last war—then wiping out the paper? I do not believe that that can be stopped, and I believe that is the intention of the Government. That is why I am opposed to the Bill.

10.38 p.m.

Mr. Robens (Wansbeck)

The Bill makes provision for the present holders of the office of director to vacate their offices on the appointed day, and I rather think that the Chancellor at one time said he thought some members of the present directorate might be persuaded, or invited to go on rendering service under the new authority. I hope that he will look at that point again and examine the position of the present directors. I hope he will not be too ready to accept any of the present directorate as directors under the new State set-up. The general management of this organisation has been extremely critical of the Government and has tried to sabotage this Bill. Its attitude has been to utilise its economic power over the employees of the company in an endeavour to panic them against this Bill. At the same time, in its own dealings with the staff association, it has deliberately left over a good deal of work which it ought to have done, and left staff problems—and our friends on the Front Opposition Bench appear to be very considerate about staff proplems and employees—to present snags and difficulties to the new administration. There are such matters as that of the temporary and unestablished staff, raised last January. The company promised to deal with that by 1st April. It has done nothing about the matter. It would be very interesting if whoever is to reply will indicate whether the company was precluded, by obligations to the Treasury, from making a settlement with the trade unions concerned on a number of issues.

Mr. Deputy-Speaker (Major Milner)

The point which the hon. Member is raising does not appear to have any relation to the Third Reading of the Bill.

Mr. Robens

I am sorry if I have overstepped the mark. But we are dealing with the position of directors who are there to administer the company. I thought that I might have an opportunity of saying something about the directors and what they have to do. However, I shall not develop that point further. But there is undoubtedly among the employees of the Cable and Wireless Company a great interest in this matter. When I was in Bermuda I was surprised to receive a telephone message from the Cable and Wireless office. It was because of the fact that they had read the HANSARD reports, and were interested in meeting someone who had taken part in the previous Debate, and they wanted to know a good deal more about it. They were perfectly satisfied about the assurance given in relation to their staff position by the Minister in a Labour Government, and I hope the Chancellor will shortly present to us the additional legislation required, and will look carefully into some of the points I have raised.

10.43 p.m.

Mr. Ernest Davies (Enfield)

The hon. member for Orpington (Sir W. Smithers) seemed rather fearful about the fact that this Bill provided for the acquiring of some of the real wealth of this country in the form of Cable and Wireless. What we are concerned about is the price we are going to pay, and, if the House will bear with me for a brief time, I want to deal with the Clause in the Bill which covers the question of compensation. I want to be assured by the Chancellor, that Clause 2 will be fully implemented, and that all the relevant factors concerned with the assessing of compensation will be taken into account. By that I mean those factors which came out before the Select Committee, and which showed that the future revenue of Cable and Wireless was likely to decline substantially, as was admitted by the Financial Secretary to the Treasury. Those factors should be taker: into account when the tribunal assesses the compensation to be given to the existing shareholders in the form of Government stock. They should include the fact that there was an understanding between the Government on the one hand and the United States on the other, and the Dominions, that the direct circuits for communications which had been established between the U.S.A. and the Empire and Dominion countries during the war were to end after six months. But it came out in the evidence before the Select Committee that it was unlikely that, in any circumstances, these direct circuits would be terminated, and, of course, in actual fact it has turned out to be so.

In the evidence before the Select Committee, one of the managing directors, when asked about the direct circuits, stated that Australia adhered to her decision to have the Australian-U.S.A. circuit continue; New Zealand knew that her circuit would have to be maintained after the war South Africa had not then opened a circuit with the United States, but said it might be necessary to maintain it after the war. The Dominions obtained benefits from the two circuits which eliminated London. They wished them to continue in use after the war. There would have been some agreement as to their continuance whether the Bermuda agreement had been entered into or not I suggest further that the prospective Income of Cable and Wireless would have shown a considerable decline in any case, had the circuits been eliminated as was originally agreed or not. If the direct circuits continued in operation, the rates would have had to be reduced and the total revenue would have declined. Whether there had been a rate war or not, the revenue would have declined. My contention is that the interpretation of Clause 2 must take into account the fact that the revenue of Cable and Wireless was bound to decline, whether the Bermuda agreement had come into being or not. Another factor which should be taken into account is the political aspect. That is to say——

Mr. Manningham-Buller

Is it in Order to suggest what factors a tribunal appointed under the provisions of this Bill should take or should not take into account, when they are not referred to in the Bill? Surely the hon. Member is entitled to refer only to what is in the Bill.

Mr. Deputy-Speaker

I cannot stop the hon. Member on the Third Reading from discussing the operation of the Bill.

Mr. Manningham-Buller

May I remind you, Mr. Deputy-Speaker, that the hon. Member for Montrose (Mr. Maclay) was stopped by Mr. Speaker from referring to the evidence which had been given before the Select Committee?

Mr. Deputy-Speaker

That does not affect what is before the House at the moment.

Mr. Ernest Davies

Surely it is in Order to discuss how the tribunal set up by the Bill is going to work. I ask the Chancellor to tell us how far the tribunal will take into consideration the return on his investment which the willing buyer would expect, rather than assessing the maintainable revenue. What I wish to point out is that under Clause 2, the compensation shall be assessed on the price which a willing buyer will pay any willing seller on the basis of net maintainable purchase. I contend that in view of the position of Cable and Wireless at the end of the war, as it came out before the Select Committee, any willing buyer of Cable and Wireless today would expect a very high return on his investment, and if he was expecting a high return on his investment, therefore, the number of years' purchase of the expectable revenue would result in a comparatively low global sum. Obviously the higher rate of interest you expect on the capital the less the global sum resulting will be that results from its capitalisation. That should apply in this case. I urge on the Chancellor that when he comes to hand over to the tribunal the assessment of the compensation which has to be given to the shareholders of this company, he should then draw their attention to the relevant factors that should be taken into account. In my view, if they do take all these factors into account, the result will be that the Government of this country will have made a very satisfactory investment.

Mr. Lyttelton

May I ask the hon. Member whether his point is that the net maintainable revenue is the revenue which is maintainable? If so, I am in agreement with him.

Mr. Davies

No. The net maintainable revenue 'is revenue which it is to be expected that the company will earn in the future. In the past, net maintainable revenue has been wrongly interpreted, in my view, as in the case of London Transport. In conclusion I would say that if these relevant factors are taken into account the purchase of Cable and Wireless by the State should result in payment of compensation of a global sum which will place a far less total interest charge on the company than it would have to pay if it had continued on the present basis.

Bill accordingly read the Third time, and passed.