§ 3.39 p.m.
§ The Minister of Supply (Mr. John Wilmot)
I beg to move,
"That this House approves the decision of His Majesty's Government to bring forward proposals for transferring to the ownership of the nation appropriate sections of the iron and steel industry with a view to its efficient organisation in the public interest."
I am glad to have this opportunity of laying before the House the reasons for the Government's decision on this matter and details of the proposals. When I was privileged to make, on behalf of the Government, an announcement about this matter on 17th April, I felt that it would not be altogether popular with some hon. Members opposite. As events have turned out, some of the reactions were quite shrill. But as will have been noticed, there has followed upon that announcement a most interesting public discussion, from which, I think it may be said, there emerges a general consensus of opinion on certain points. These points are that the industry cannot be left to itself, that it cannot be regarded as a private, competitive industry, and that the Government must not only continue to control it, but must take a closer and more direct interest in it than they did before the war. On those points, there seems to be a wide measure of agreement.
This decision which the Government have taken has not, I can assure the House, been taken lightly. We realise as deeply as anybody the wrong that would be done and the grievous harm that would result if a mistake were made in a matter so vital to the future economic life of our country. That is why it is my purpose and, indeed; my duty to show to the House today that this decision is fully justified by the facts. The decision has been come to after very close and earnest study, and the Government, are convinced that the decision is a right one in the best interests of the industry and of the public. Having come to that decision—and not to have come to it now would certainly have been wrong— it was clearly the duty of the Government immediately to inform Parliament. Let me say quite definitely that if this Motion is approved by the House today, the Government will proceed to prepare and introduce legislation to enable important sections of the iron and steel 839 industry to be brought under public ownership during the lifetime of this Parliament.
I have said that the decision is a grave one. The Government are aware of the arguments against it. Those arguments have, rightly, received the most earnest consideration, but we have no doubt at all that the overwhelming balance of advantage lies this way. I hope that I shall be able to approach this matter in no partisan spirit, and that I shall be able to show that this decision is being taken with the sole object of determining how best this industry can be conducted in the public interest. It is completely false to suggest, as has been done in some quarters, that this decision has been sprung upon the country, or upon the House, or upon the industry. This decision was, it is true, taken upon the facts of the industry, in the circumstances as they are now, and in the light of the experience of the past but there can be no question at all as to the Government's mandate as we shall see. This question was put squarely before the electors at the General Election. It was debated during the course of the Election. Hon. Members will recall that the Labour Party put before the country an industrial programme in the most definite shape which is most appropriately titled, in view of today's events, " Let Us Face the Future."This question of mandate is important. It goes to the very root of our democratic system, and I should like to say a few words about it and to give a few lines that were included in that programme. They are important. Here they are:The Labour Party is a Socialist party. Its ultimate purpose at home is the establishment of the Socialist commonwealth. But Socialism cannot come overnight, as the product of a week-end revolution. There are basic industries ripe and over-ripe for public ownership …. There are many smaller businesses rendering good service which can be left to go on with their useful work. There are big industries not yet ripe for public ownership, which must revertheless, be required by constructive supervision to further the nation's needs and not to prejudice national interests by restrictive anti-social monopoly or cartel agreements.…. In the light of these considerations "—and this is the most definite of all statements—The Labour Party submits to the nation the following industrial programme: —(1) Public ownership of the fuel and power industries. (2) Public ownership of inland transport. (3) Public ownership of iron and steel.840 This programme, so definitely stated, was quoted by numbers of Labour candidates all over the country. It was set forth as a programme of work which the Labour Party would carry out, in the lifetime of one Parliament should the electors return a Labour majority. It is the programme which, before the Election, had been subject to much public debate and comment, because it was brought before the Labour Party conference at Blackpool, which coincided with the dissolution of the Coalition Government. Naturally, the Press gave it the widest possible publicity, but, further, lest there should still remain one single elector in any constituency who was not aware of the implications, right hon. Gentlemen on both sides of the House referred to it in their election broadcasts. That is the fact. But—and I say this with the greatest emphasis—it is no part of my argument today to maintain that the Government are justified in this decision solely on account of the fact that it is clearly within their mandate. We must establish a right decision upon the closest examination of the facts, in the public interest, and this attitude was most clearly put by my right hon. Friend the Lord President of the Council in a speech to a Canadian audience which has, rightly, attracted great attention. [An HON. MEMBER: " Was it correctly reported? "] I will correctly report it now. He said:It is the public interest that counts and the real field for argument is how best can the industry be organised or managed with a view to achieving economic public advantage. It is up to the nationalisers to prove their case. It is no less up to the anti-nationalisers to prove their case. Let the argument be directed to the merits, and let the test be the public interest.I shall presently seek to show that this industry has, in fact, passed beyond the stage of free competitive enterprise and has become in the nature of a monopoly or cartel. Now there is wide, perhaps somewhat surprisingly wide, support for this declared policy of bringing under public control primary industries which are the basis of our economic life and which have become monopolies. If there were any doubt about this it is evidenced by the fact that the Leader of the Opposition himself has agreed. The right hon. Gentleman the Member for Woodford (Mr. Churchill) gave his very welcome adherence to this course in times and circumstances very like those with which this Government are now confronted. I 841 quote a short passage from the issue of the " Manchester Guardian " of 25th July, 1919, where he is reported as saying:Everybody agrees that there must he some services organised nationally and that others should be left to private enterprise and ownership. It is impossible to make a cleavage of principle on a point like that. If you ask me my own view I consider monopolies are a proper subject for national control provided that a good case is shown in regard to methods and merits in each case.I absolutely accept that " provided that a good case is shown," and I shall now seek to do so.
Let us look at the nature of this industry. The iron and steel industry lies at the base of the whole of our industrial life. Its workers, over 300,000 strong, supply the raw material for. by far the greater part of our magnificent engineering and shipbuilding industries. Its production is one of the keystones of our military defence, and the basis of our main export trades. The livelihood of millions of workers depends on the provision of iron and steel of the right qualities in the right quantities, and at the right prices. In fact, it is scarcely possible to think of any human activity which does not depend, either directly or indirectly, on iron and steel. Farmers could not feed us without the ploughs and the tractors and the complicated agricultural implements which have now become the tools of their trade. Travel depends even more on the product of this great industry, from which it draws the raw material for its great ships and locomotives. Cotton spindles, printing machines, motor cars, and an ever increasing variety of household goods, all spring from iron and steel. New uses are constantly being found for the products of this industry. We now make, not only baths and sinks from steel, but are even planning to make complete houses from it. Iron and steel is as much the lifeblood of the nation as is coal and His Majesty's Government consider that they would be failing in their duty if they did not entrust the fortunes of this basic British industry to full national control.
The steel industry has a magnificent war record and the highest praise is due to workers and managers alike for their achievements; without them the war could never have been won. Before making any criticism of the organisation of the industry, I wish to take this opportunity 842 of acknowledging the debt which the nation owes to them for their work in the war. I hope the House will not think it irrelevant, however, if I point out that it was precisely during this period that the industry has been under the closest and most detailed Government control. But let us look at things as they were before the war, and in the period between the wars. Immediately after the last war there was a wild boom, in the best style of private enterprise, followed by a long and terrible depression, unhappily also the other inescapable result of private enterprise. For nearly 15 years there was great unemployment in the industry. Queues of workless men were a dread and familiar sight in the steel towns. Efficiency declined, and modernisation was postponed; the drift was down and down, and the companies got into great difficulties.
In 1932 the Conservative Government of that time began to take an interest in the industry. They started off by imposing a high tariff against foreign imports, and went on to encourage the industry to form itself into a private monopoly, rigidly controlled at the centre through the Iron and Steel Federation, with all the apparatus of restrictive monopoly, standard prices, loyalty rebates and cartel arrangements with its counterparts abroad. In fact, with the setting up of this Federation in 1934, competition and free enterprise virtually disappeared from the industry, and in its place there arose a private monopoly. But despite the prophetic words of the Leader of the Opposition, to which I have already referred, no national control was established adequate to prevent a steep and steady rise, not only in prices, but in profits. If, under a monopoly, prices and profits rise simultaneously, it is clear that the public is not getting a square deal. This is what happened in the British iron and steel industry in the years between 1934 and 1938.
The figures are extremely illuminating. According to the Board of Trade figures, taking the 1930 price as the basis, at 100, there was a general rise in steel prices from 98.7 in 1934, to 139.1 in 1938. What is more startling are some of the prices which go to make up the index figure. Pig iron rose from £3.2s. 6d, per ton in January, 1934, to £5.9s. od. in 1938, ship plates from £8 16s. 3d. to £11 8s. od., and soft basic billets from £5 12s. 6d. to £7 17s. 6d. Thus there was a 30 to 40 per 843 cent. rise in British steel prices after the formation of the Federation. If it be contended that these rises can be accounted for by a rise in costs, I invite hon. Members to look at the rise in profits over the same period. The actual rate of profit of 43 leading companies in the industry rose over the period by 76 per cent.—[HON. MEMBERS: " On what? "]—I am quoting the percentage rise. I have not got the detailed figures. [Laughter.] Hon. Members opposite are laughing a little too soon. If it is contended that I have not taken into account increases in capital, then I say that the rate of profit on capital rose by 40 per cent. [HON. MEMBERS: " On what? "] I have not an aggregate figure for the whole industry. I have given the percentage rise, which is a sufficient index.
Here are the figures of the main companies. These, surely, are definite enough, and I take them from the Exchange Telegraph Company's records. Stewart and Lloyds, gross profit in 1934, £1,089,000, and in 1938, £2,650,000; Dorman Long, £483,000 in 1934, and £1,498,000 in 1938; Guest, Keen & Nettlefold's, £428,000 in 1934, and £1,327,000 in 1938. No wonder the vital industries, the consumers and customers of iron and steel, such as the manufacturers of motor cars and engineering products generally, all greatly interested because they depended so greatly on iron and steel, protested against these increases. One of the largest motor car manufacturers, Lord Nuffield, is quoted in "The Times" of 21st August, 1937, as using words which will have a familiar ring. He said:It was a perfect ramp, an absolute ramp,and he went on:big cigars and nothing to do.I am not sure what he meant by that. He went on to say—I am quoting from the same issue of "The Times"—It is asked why we cannot produce a cheaper motor car. The steel manufacturers in this country are doing their best to get all they can from the present position. They are overcharging us. Since they had the duty their price has gone up by 25 per cent.He was not alone in these views. There was a rather candid member of the industry itself, a member of the great Chamberlain family of Birmingham, the chairman of a very important company, 844 Tube Investments, who, speaking at the last annual meeting of the company held before the war, had something to say about the capital aspects of this monopoly. I quote from the "Economist" of 10th December, 1938 three days after the meeting:There have been ghastly miscalculations and lack of long vision in connection with steel capital expenditure. Now that protection forces us to buy our steel at home, the steel people can and apparently do foist the cost of their follies on to the rest of the country.That was said by Mr. Arthur Chamberlain. It would certainly seem that the "Economist" was speaking for the consumers and for the public when it said on 22nd October, 1938:The steel industry enjoys a monopoly position, it is making considerable, if not excessive, profits. Its prices have risen more than those charged by other British industries or by foreign steel industries. Its prices are among the highest in the world.We shall do well to appreciate that these criticisms are levelled not at the managers, technicians and workers in the iron and steel firms, great and small, who kept the industry going in those difficult times and through most trying years. They were not the people who were criticised and attacked. It is this system of private monopoly which is condemned, and it is this system which the Government are determined to change.
So much for the past. Before the war, since the war and during the war there has been much anxious consideration of the problems of this industry. Hon. Members will have read in the White Paper the reports of the Iron and Steel Federation and of the Joint Iron Council. These reports, in the period which elapsed between their presentation to the Government and the announcement which I made just before Easter, have been submitted to most careful consideration and examination. Surely, the time has now come for decision and action. We do not need further inquiries. What is needed now is rapid progress with the urgent schemes of capital development which was not possible until these reports had been considered and the Government's decision had been announced. I come-to the reports themselves. I say at once that the Government accept much in these reports as a sound basis for industrial reconstruction. Of course, we cannot be bound by every detail, but we particularly welcome the important proposals for 845 new projects in the development areas, which will greatly enhance the efficiency and improve the balance of the whole of our national economic life. The reports agree that supervision and control are necessary. This view was stated again by the Federation's president last week, when he said that the Federation were not opposed to public supervision, but that, on the contrary, the industry had willingly operated under Government supervision.
§ Sir Waldron Smithers (Orpington)
Was the word " control " used?
§ Mr. Wilmot
I said " supervision."The hon. Gentleman will be able to distinguish the fine meaning of these things. Let us be quite serious about this very important matter. The difference between us is that the Federation consider that public supervision could be successfully combined with the present private ownership of the industry and the continuation of the monopoly arrangements. After the most careful consideration the Government consider that, faced with the necessity of carrying out vast schemes of national planning in the industry, such a divorce of ownership from control just would not work.
I am sure the House would wish me to give the reasons why the Government have come to that conclusion. The plan involves expenditure over the next 7½years of no less than £168 million. The report is cautious in estimating that the industry could find even half this total. However true that may be it is also true that the necessary facilities and priorities for raising the second £80 million, if not the first, would have to be provided by the Government. Priorities and facilities would have to be given for the necessary labour and materials in advance of other schemes and other claimants. I am sure no one will doubt that the raising of this money, and the timing of it, could be better arranged if the industry were under unified public ownership. [HON. MEMBERS: " Why? "] I shall seek to show why, presently.
In addition, the Federation's plan presupposes throughout that there is a central authority with effective powers to carry this great plan through. Now this is most important; it supposes and presupposes that there is some authority at the centre powerful enough to carry this 846 great programme through over the next—it may be—10 to 15 years. By the industry's own admission, and in the nature of things, such a vast plan of reorganisation could not be carried out by competitive private industry. By the industry's own admission, by the Federation's own admission—[Interruption]. Well, let us see. The plan involves not only the erection of new plants but the scrapping of old plants, and that not on a small scale. Perhaps hon. Members will think about this aspect of the plan; it involves the scrapping of 30 per cent. of our existing steel capacity and means doing away with 40 per cent. of our blast furnace capacity in this country, and this is only the first stage, with second and further stages to follow. What do these changes mean? What does this scrapping of plant mean in practice? It means great and drastic changes in the livelihood and the social life of whole areas of our country. The Government remember the tragedy of Jarrow, and they feel most strongly that this power should not be left in the hands of a private trade association, but can only be exercised by some public authority responsible to this House.
The Federation plan demands a very high degree of cooperation and, in many cases, of self-sacrifice from the companies which compose its membership. If the plan is carried out, the desires and interests of individual companies will have to be resisted and overridden. Some companies will certainly suffer injury to their interests under this plan; some may have to go out of business altogether. Is it possible that the Government can feel satisfied that this central trade association is capable of securing unified control over this diverse industry to that great extent? I submit that this is an absolutely vital consideration.
It has already been announced by important companies such as the South Durham Steel and Iron Company, the Cargo Fleet Iron Company and the Skin-ningrove Iron Company that they cannot accept this plan. The chairman of the South Durham Steel Company, as reported, in the " Financial Times " of 24th May, said at his annual meeting:We have continuously opposed the Federation's proposals as affecting our works which were entirely contrary to the scheme of reconstruction previously submitted to the Federation, but which did not meet with the847approval of the Federation's advisers, although we take the view that we ourselves know best the particular necessities of our own plant.
§ Mr. Oliver Lyttelton (Aldershot)
Did not the chairman also express himself as entirely opposed to nationalisation? I think it would be fair if the right hon. Gentleman also mentioned that.
§ Mr. Wilmot
It certainly would be fair, and if the right hon. Gentleman had been not so quick on the rise, I was about to say so because the point I am making is not whether or not the South Durham Company are in favour of nationalization but whether or not the Federation can enforce its will on the iron and steel industry. I say it cannot. It has no power to enforce its will; its writ does not run against the shareholders. I think that is that. I also have a letter from the secretary on behalf of the Skinningrove Iron Company to exactly the same effect. Is it not clear that if a trade association—
§ Sir Andrew Duncan (City of London)
What is the effect of the letter from the secretary of the Skinningrove Iron Company?
§ Mr. Wilmot
It is not usual to read private letters, but if the right hon. Gentleman wants it read, I am willing to do so. I hope, however, that he will not afterwards complain that I did read it. The letter is addressed to myself as Minister of Supply. It reads as follows:In the recent White Paper on the Iron and Steel Industry reference is made, under the heading of modernisation and development proposals for the North-East Coast,' to the Skinningrove Iron Company, Ltd. In this connection we wish to draw your attention to the implications in the report as to the future of these works. We have to state that we entirely disagree with the implications and the Chairman of this Company, Mr. R. Mather, has already written to the British Iron and Steel Federation under date 3rd April, 1946, to this effect.
§ Sir A. Duncan
§ Mr. Wilmot
The right hon. Gentleman asks, " So what? "I will say that this Federation does not speak for the whole of this industry, and the Government cannot be satisfied that it has the power to override individual companies which oppose it.
There is in this Report a further and equally important suggestion which the 848 House must take very seriously. The Federation plans imply a continuation of tariff protection and of central, price-fixing powers. The Federation further assumes that it itself shall exercise these powers, under some form of Government supervision. This, surely, is monopoly with a vengeance, and I suggest that neither the Government nor this House is likely to approve it. For these reasons the Government have decided that there must be public ownership over certain large sections of the industry, which I intend to define before I sit down. It will be some time before legislation can be introduced. I do not think it would be wise to dogmatise—
§ Mr. Lyttelton
§ Mr. Wilmot
—the right hon. Gentleman had better wait for the end of the sentence—as to the precise form of the permanent instrument best fitted to own and manage these undertakings. Let us not be too rigid or doctrinaire in the forms that nationalisation must take. I do not think it would be wise to have any common or unified pattern. We have to find the method best suited to the particular circumstances of each industry, or group of industries, brought under public ownership. Through the years, while this practice of public ownership has been steadily growing and widening, under Governments of every political colour—
§ Mr. Lyttelton
§ Mr. Wilmot
No, and succeeding—the forms have been evolving. The earliest, I suppose, was the departmental or Post Office model. There have been many variations since. The Central Electricity Board, the London Passenger Transport Board and the British Broadcasting Corporation are other examples. In the Dominions there are further variations. It is very interesting to observe that, in that great Dominion, the Union of South Africa, by far the largest part of the iron and steel industry is publicly owned. There, the form is a company, the South African Iron and Steel Corporation, in which the Government own 90 per cent. of the capital. In current times, we have the example of coal, where the assets to be taken over have been specified, and a further field is created in which Government acquisition is optional. In civil aviation, the three corporations will have the power to acquire control of other 849 undertakings. In telecommunications, the proposal is to acquire the shares of Cable and Wireless, Ltd., as has been done in the case of the Bank of England. Those are all interesting and valuable precedents. We must adopt that which is most suitable, when the time comes for the iron and steel industry. It is surely obvious that there must be discussion and negotiation. Is it not true that, in the field of man's industrial as well as his political organisation, there is, as in Nature herself, a compelling and inescapable rule of life, " adapt or perish."
Before I come to the details of what the Government propose, will the House allow me, for the sake of clarity, briefly to explain the broad divisions of the industry? There are five. The first is the mining and the quarrying of ore. Second is the production of pig iron by smelting the ore in blast furnaces. Third is the production, from pig iron and from scrap, of steel ingots which, in the next and fourth stage are manipulated into various shapes, such as plates, sheets, strip, rods, tubes, and a thousand others. Fifth is the production of iron castings from pig iron or scrap and the production and the manipulation of wrought iron. That is the main set-up.
Now, I propose to tell the House which sections it is proposed should be brought into public ownership, subject, of course, to the possibility of excluding some special individual plants where conditions are exceptional. We think it right to start with the iron ore, and with those coke ovens which were omitted from the coal scheme as being associated with steel works. We should also take over the manufacture of pig iron, and the manufacture of steel ingots from pig iron or scrap. We must include the primary or heavy rolling sections of the industry, since steel smelting and primary rolling are essentially one industry, operating a continuous process. Beyond this, there are various other finishing operations, some of which are so closely integrated with the actual iron and steel-making as to be virtually one process. We intend in such cases to include the whole plant. In others cases, the finishing processes are more easily separated, and are often carried on in separate or independent works. There, we intend to review the field, section by section and firm by firm, in consultation with the industry, before 850 deciding on the exact boundary in each particular case.
Surely the House and the industry will agree that this is the only fair and sensible course. Is it really suggested that the Government should make up their minds on these intricate details of particular plants, without consulting the people whose livelihood or property is concerned, and who have intimate knowledge of the particular problems in each case? I have it in mind to consult, on these purely technical aspects, not only managements but workers and their unions as well. I want to ensure that, after the whole job has been done, both public and private sectors shall be efficient and successful. We shall seek the opinions of the men on the job, both managers and workers.
§ Mr. Mort (Swansea, East)
Would the Minister say whether he made particular reference to the tinplate industry?
§ Mr. Wilmot
Yes, I think I did so. Where there are completely integrated rolling processes they will be taken in, but where the rolling processes are separate, they will have to be considered firm by firm.
§ Mr. Mitchison (Kettering)
Does that go for tubes?
§ Mr. Wilmot
That goes for tubes, too.
I now turn to the iron foundries manufacturing iron castings. A large part of this industry is closely associated with engineering, and should be left in private ownership, as also should be many small jobbing foundries with mainly local connections., On the other hand, spun pipe foundries are invariably in association with blast furnaces, and would therefore come with them under public ownership.
I come to the period which must elapse between this Debate and the enactment of the necessary legislation. During this period, in order to see that the industry is carried on, that it secures, despite the current shortage, the necessary supplies of materials required both from home and abroad, and that the modernisation schemes proceed smoothly and rapidly, we intend, as I have already said, to set up a Control Board. This Board will take over those functions, together with responsibility for the regulation of production and distribution, and for advice on prices—functions so far performed by the Iron and Steel Control. Does the 851 Opposition — does anybody — really imagine that the Government could have acted otherwise? The industry must be carried on. There must be Government help and, it is admitted, Government control, and we must have an instrument through which that control is operated.
It is completely false to suggest, as has been done in some quarters, that this Control Board, upon which I shall invite to serve representatives both of managements and workers in the industry, will be asked to design the pattern of nationalisation. Nothing of the kind. That the Government have already determined. But in seeking technical guidance upon difficult practical problems of severance in particular cases, the Government will certainly avail themselves of the best technical advice to be found, including the advice of the industrial members of the Board in their individual capacity. The functions of the Board are quite definite, and for a limited period. We are confident that the industry, realising that the Government, after the fullest inquiry, have come to these definite decisions, for which they have a clear mandate from the electors, will not be so foolish or so unpatriotic as to refuse their advice on technical points. Nor do we believe that under the fair guarantees, to which I shall come in a moment, and of which the Chancellor of the Exchequer will speak more fully tomorrow, they will do other than continue to run their machine at full speed. The right hon. Gentleman the Leader of the Opposition —and we are all very sorry I am sure not to see him in his place today—has expressed some definite fears that the industry was running down. The right hon. Gentleman said that production in the iron and steel industry, in view of the Government's attitude was—how did he put it—in a "purgatory of suspense." He described the industry, in his characteristic way, as:bent and burred by the violent impingements of a Utopian Socialist scheme.He went on to say that it was:on the road, and a direct and short road, to financial bankruptcy and economic collapse.I am sure the House will be glad and relieved to know that the hard fact is that production in the steel industry at this moment—despite, or even because of, the closest detailed Government con- 852 trol—is running at an all-time record high level. Exports are booming. Steel production is now running at the rate of 13,250,000 ingot tons a year, against 12,750,000 ingot tons last year, and 10,500,000 tons for the whole of 1938. Exports in March of this year were worth £6½ millions as compared with £6 million in February, and a monthly average of little more than half in 1938. Does this show a "purgatory of suspense"? The President of the Federation, I am glad to say, has announced publicly that:The industry will endeavour to maintain and, if possible, to improve on recent high levels of production and to continue the substantial contribution that it has been making to the export trade.Does that show a "purgatory of suspense?"If hon. Members care to compare the Stock Exchange market quotations in the main iron and steel shares before my announcement of 17th April, with the prices today, they will find they have kept very steady. Some in fact have gone up. Does that show a purgatory of suspense? Rather I think it shows the investing public's sane and thoroughly justifiable confidence in the intentions and fair dealing of this administration. Not merely is production at a record level but a considerable number of development schemes are already licensed and are proceeding. Work is going on. As I said in answer to an hon. Member opposite a day or two ago—
§ Mr. Maclay (Montrose Burghs)
How many are proceeding?
§ Mr. Wilmot
I will tell the hon. Member. A list of those schemes upon which work has been started during the last six months will be found in the OFFICIAL REPORT of last Monday. I have no doubt the hon. Member has looked at it before he asked the question. I will not, therefore, take up the time of the House by going through this long list.
§ Sir A. Duncan
§ Mr. Wilmot
Just a moment. The total value is some £8½ million. In addition, work is proceeding on other schemes of almost the same value started earlier.
§ Sir A. Duncan
May I ask whether it is the case that the bulk of the sanctions for these schemes had gone through the Building Executive, before the General Election?
§ Mr. Wilmot
About half the schemes were sanctioned before, as the right hon. Gentleman said. The other half have started since. [Interruption.] No, I am quite clear about this. The right hon. Gentleman will find in the issue of HANSARD to which I have referred, a list of schemes started during these last six months. Very well. During these last six months this Government have been in office. In addition, work is proceeding upon a number of other schemes which were started earlier, but, while awaiting the Federation's report, for obvious reasons, I was forced to hold up the approval of schemes which were coming in separately from various companies. What is the use of asking for a plan of national development, and then letting things develop all over the place, without any coordination? We wished to make sure, once these reports were on the way and we were considering them, that the various enormous plans of capital development which were being proposed were in the picture, and were part of the national planning which the Federation and the Government wished to see carried out. Now that this examination has been completed, we have gone toward with the approving of all the major schemes which are ready to start, and we are only awaiting details from the companies in order that the licences may, forthwith, be issued
On this question of capital development, the most important aspect of the whole matter, I would like to give the industry an assurance about the future— about future expenditure on approved development schemes—pending the putting into effect of the Government's proposals. We are must anxious that the industry shall proceed energetically, and I feel sure that they will, with those urgent measures which are so necessary for the country's recovery. Many of the firms have already started, and others are ready to start. Up to the present all the schemes carried out are either from the firms' own resources, or out of moneys raised by borrowing, and in some cases by new issues of capital There must be no slackening of effort, and the Chancellor of the Exchequer, who as I have said, will be speaking tomorrow, has authorised me to assure the industry that whatever the final method and basis adopted, proper allowance will be made in assessing compensation for the results of any expenditure incurred from now onward, on ap- 854 proved schemes of development or rehabilitation. This assurance will, I feel sure, enable the individual firms to proceed without any modification of their plans for financing and executing their schemes either from their own resources or by borrowing. I stand ready to discuss all these questions with the industry. No political capital can be made on the score of suspense. The big companies in industry are playing the game, as we knew they would.
I ask the House to approve the Motion which is before it. We seek a stable economy and a high level of employment. To achieve those ends, we have successively examined the basic services and industries and, where the facts and the merits of the argument enforced the conclusion, we have adopted public control and ownership. To coal we now propose to add iron and steel. The issue is not between competitive private enterprise and public enterprise. The steel industry abandoned the methods of competition 12 years ago. It exhibits neither the characteristic virtues, nor the defects of competitive enterprise. The industry has progressively enlarged the influence and the power of the central organisation, its trade association. The steel industry is nearer to monopoly than it is to competitive enterprise. In all this there can be no controversy. It is implicit in the last statement of the Council of the Iron and Steel Federation published in "The Times "on 23rd May. It is the ground and explanation of the Federation's willingness to accept public supervision and public control. This divorce of control from ownership will not work and it must stop. These divided loyalties between the Federation and company shareholders, to whom their directors stand in a position of trust, will not work and will not do. We do not propose public ownership because we like the sound of the words. Today His Majesty's Government make these proposals for the reorganisation of this great industry, vital to Britain solely because it believes sincerely that they will bring greater freedom, greater happiness and greater prosperity to British men and women.
§ 4.44 p.m.
§ Mrs. Leah Manning (Epping)
Since the right hon. Gentleman the Leader of the Opposition some few weeks ago detained this House for a considerable time demanding this Debate, may we ask 855 that he be sent for now before the Debate continues? With great respect, Mr. Speaker, if it is not a point of Order, is it not a point of courtesy that the right hon. Gentleman should be here?
§ Mr. Speaker
This has nothing to do with me.
§ 4.45 p.m.
§ Mr. Oliver Lyttelton (Aldershot)
I think it would be only good manners if I began by congratulating the right hon. Gentleman the Minister of Supply on the very agreeable, though somewhat protracted, way in which he has performed his melancholy task—
§ The Lord President of the Council (Mr. Herbert Morrison)
Perhaps it was less than the Leader of the Opposition took when he asked for the Debate.
§ Mr. Lyttelton
The right hon. Gentleman can hardly tell a compliment from an insult, I was going on to say that I complimented the Minister on the very considerable Parliamentary talents which he has exhibited whilst, at the same time, expressing the hope that on a future occasion they may be lavished on subject matter more worthy of them. I confess that I awaited the speech of the Minister of Supply today with very great apprehension, first because it concerns a vital national matter and, as I think and as I shall show, will damage a vital national interest; and also because nobody, I suppose, addresses this House without apprehension, about proposals of which he does not know the nature. Fortunately for me and unfortunately for the public interest I found the Minister in exactly the same position. He has no knowledge really of what are the proposals. He goes on saying, " Do not let us dogmatise about the way these things come about. That would be very precipitate. Surely I must be allowed to take advice." He spent half of his speech complaining that here was a rigid monopoly under which nobody could work, and the other half of his speech saying it was not rigid enough. He had an eloquent passage on the virility, the higher production, and the export of this industry but this industry is now privately owned and his argument, rather like a boomerang, comes back on him. If these things are true, why not leave it alone? But of course we are told 856 every day that " Labour gets things done."
§ Mr. Walker (Rossendale)
So we do.
§ Mr. Lyttelton
May I, with respect, suggest that it is also rather important to inquire whether Labour gets the right things done? On the subject before the House today we learn that the Labour Government propose to do something to somebody, somehow, sometime, but they will not say until later what it is proposed to do, with what and to whom. They certainly have not told us where they will begin, or where they will end. I draw the attention of the House to one matter of detail. The Motion before the House does not ask the House to approve proposals, because there are none; it asks the House to approve the decision to bring forward proposals. And why is this curious circumlocution used? The reason is that the Government are quite unready, and everything that the right hon. Gentleman has said has proved it. An immense series of quotations, sometimes from highly important people and at other times from highly unimportant, fills in the time and attempts to conceal the fact that the Government do not know what they are doing.
§ Mr. Alfred Edwards (Middlesbrough, East)
May I ask if this reply to my right hon. Friend's speech was written out beforehand?
§ Mr. Lyttelton
The hon. Gentleman is failing in his usual courtesy. Everybody in the House knows that I have not read a word. I am quite entitled to have my notes, just as much as the right hon. Gentleman was entitled to have the massive ones which he read. The hon. Member for East Middlesbrough (Mr. Edwards) knows perfectly well that I have not read a word, but if he thinks it courteous to interrupt, because I have the White Paper and some notes in front of me, then I can only say we are getting to a sorry pass. The truth of the matter is that in the trial of the State versus the iron and steel industry, the judge has walked into court and said, " Gentlemen of the jury, I pronounce the prisoner guilty, and in the course of the trial, which will last for several months, I must ask you to find reasons which will justify the decision I have just announced."That is what he said. Then some learned 857 counsel asks, "To whom does the sentence apply? " " Well," he says, "That is a technical matter upon which I must ask the cooperation of the prisoner."There are some of us who think that that is neither justice, nor sense. If the House wants any proof of the truth of this parable, I think that it is common knowledge—I may be wrong, but I think it is common knowledge— that the Government attempted to add to the White Paper an explanation of what they were about to apply nationalisation to, " an appropriate section of the industry "—blessed words. I say it is common knowledge, but I will, of course, give the right hon. Gentleman an opportunity now of denying it if the report was incorrect. No answer; then why is there no explanation?
§ Mr. Wilmot
If the right hon. Gentleman wants me to answer, I can tell him quite definitely that the Government never had any such intention.
§ Mr. Lyttelton
The Government never had any explanation they could give.
§ Mr. Wilmot
I have given it.
§ Mr. Lyttelton
I think we shall get to that a little later. The truth is that the right hon. Gentleman is the Bo-Peep of the Government. He has lost his policy and does not know where to find it. I would like to ask the Government whether a committee was formed to report to them on the plans put forward by the industry itself. I think that is common knowledge, and I could make a fairly accurate guess as to the members of the committee.
§ Mr. H. Morrison
§ Mr. Lyttelton
It is not possible to stop these things getting out. It did not come from the steel industry, or the Civil Service, but from another source. Is it true that this committee reported that the plan put forward by the industry was complete and adequate for the purposes we all have in mind? If that is a fact, would it not be a good plan for the Government to publish this report? I ask them to do so, because it is a material document enabling hon. Members in all parts of the House to judge why the recommendations of an expert committee have been set aside.
858 I do not consider that it is any part of my role this afternoon to defend the steel industry. For one thing, I have never been engaged in the production of steel or held any shares in steel companies, un like the hon. Member for East Middles brough who interrupted a few minutes ago. On the other hand, I have been connected with firms which are rather large users of steel, and who have very little complaint of the way in which they have been treated. I want to put certain facts in as objective a way as I can. It is not in dispute that the fortunes of the steel industry had sunk very low indeed during the period of great depression from 1929–1932. The production of steel, as many hon. Members know, had actually sunk to 3,600,000 tons a year, compared with the output today of over 13,000,000 tons. This is a point—if I may have the attention of the right hon. Gentleman—
§ Mr. Wilmot
I am listening.
§ Mr. Lyttelton
The gross return on the capital invested in the industry, that is the return before making allowance for depreciation or renewal of obsolete plant, was no more than 2 per cent. during the period 1927–1933. When the right hon. Gentleman engaged in a bit of shadow-boxing, he reminded me of the old stories of anti-aircraft guns, the production of which had trebled because three were produced one month, as against one in the former month. All the figures he gave ignored the fact that the return in that period was extremely slight.
§ Mr. Scollan (Renfrew, Western)
Can the right hon Gentleman tell us how much of that capital was actually watered?
§ Mr. Lyttelton
That is a question which the hon. Member for Western Renfrew (Mr. Scollan) must refer to the Institute of Chartered Accountants. In other Government statements the capital has been put very much lower, comparing it with the present proposals, than any such study would show. Everything has been squeezed out. The right answer to the hon. Member is "To what market prices did this nominal capital sink? "The point I am on is that the return on invested capital is no more than 2 per cent. No industry can keep itself in a state of efficiency, or renev its plant, if its earnings are as low as that. This figure is before allowing for depreciation or renewal. The reasons for their" misfortunes can 859 hardly be laid at their own door. The steel industry was greatly over-extended during the 1914–18 war in the national interest, and very largely with its own money. Of course, after the war, the world was struck by the great depression. Again, the world depression can hardly be laid at the door of the steel industry, or said to be of its making. Perhaps the main cause was that the United States found it impossible to act the role of a creditor nation.
I do not say that in any carping spirit, but just to touch on some of these main causes. For reasons largely out of our control in this country, and certainly outside the control of the industry, the flow of international trade became frozen. Moreover, the whole capital of the German steel-making industry was written off. The book value of all its debts and share capital was reduced to a few gold pounds as a result of inflation. Thus the steel industry in Great Britain had to face a competition of an entirely extraordinary nature, and that, at a time when, owing to the depression, the world demand had sunk to the lowest ebb ever reached in the history of the industry in relation to its capacity. The effect of inflation in Germany was not only felt on the book value of the plants, but also on the wages paid to the workers in Germany. If my memory serves me, in the copper smelting industry there was a time when the Germans were paying for skilled labour considerably less per day than the United States were paying to their unskilled workers per hour. I mention the point to show the abnormally difficult time.
It was after these catastrophes that the Government of the day decided that a duty must be imposed on foreign steel, and the industry must organise itself as a national industry so that it could speak with one voice when dealing with foreign steel makers, and that such discipline should be voluntarily imposed amongst the steel makers so as to avoid cut-throat price reductions at the bottom of the economic cycle, and over-sharp price increases when demand overtook supply. Accordingly, the British Iron and Steel Federation was re-formed in 1934. The first task was to reorganise the industry on the lines I have mentioned; the second was to see that the national interest was promoted, and not damaged, by any measures which the steel industry took 860 either then or in the future. At that time, and ever since, the prices charged by the iron and steel industry to its customers have been under Government control. I must say that the difference between this kind of structure and that of public ownership appears to be very " blurred," or " burred "—I am not sure which is the right word in the right hon. Gentleman's mind.
In the early days the body which controlled the prices was the Import Duties Advisory Committee. They were charged with the task of promoting a healthy industry engaged in exports to foreign makers from which combines and cartels on the Continent had largely excluded them and from which they were excluded by the abnormally low prices and the decline in real wages which had taken place on the Continent. Later, these functions were assumed directly by the Ministry of Supply. Before I go any further, I should like to draw the attention of the House to an important fact, which is that steel prices in this country, up to the time when our rearmament began, and for some time after, were, on the average, 10s. a ton below the comparable American prices. The right hon. Gentleman indulged in a few agreeable evolutions to show that prices had gone up. Of course they had, because the reason why the steel industry was at a low ebb was because the prices were below cost, so it is absolutely no use reading these things out, and imagining that any argument is supported by the fact that prices had risen from a point where they would bankrupt the industry, to a point where there was reasonable prosperity.
I have here a table which shows the comparative prices, and by and large— there are individual items which would not support this—the prices charged by the iron and steel industry in this country to consumers in this period were 10s. a ton below the American prices. So a charge of inefficiency or of exploitation of the consumer at that time can, I suggest, hardly be sustained. If the right hon. Gentleman is uncertain about these figures, I will supply him with the necessary data. Exports of steel also rose quickly to about one-fifth of the total production of the industry, which compares with about one-twentieth of their much larger capacity which was exported by the United States. 861 I must hark back a little at this point, to remind the House that between 1935 and 1939—
§ Mr. Scollan
Before the right hon. Gentleman leaves the other point, I would like to ask if the international cartel of steel producers arranged the new prices. We are told that there was an increase in prices from the point at which they were 10s. below those of America.
§ Mr. Lyttelton
These prices do not compare with those of Continental cartels but with those of America. These price differentials in our favour—domestic prices— apply over a long period.
§ Mr. Clement Davies (Montgomery)
I would like to know the years to which the right hon. Gentleman is referring, because my figures are rather different from his.
§ Mr. Lyttelton
I said that the period which I was speaking of was 1933–39.I took 1933 as the point of departure because it was at, that moment that the duties were imposed. There is nothing tricky about this argument; I can assure the hon. and learned Member. [Interruption.] Hon Members opposite appear to think I am leading them up the garden path. I was about to remind the House, when the hon. Member for West Renfrew (Mr. Scollan) intervened, that between 1935 and 1939, the industry, after having been given some security from foreign competitions, spent no less than £50 million on modernisation of its plants. At today's prices, this figure of £50 million is equivalent to over £100 million. That calculation is based on the cost of the capital installation required to produce one ton of steel billets. In 1935, the figure was about £8 12s. per ton of capacity. This has now risen to about £23 10s. per ton. At that time the industry had wide and comprehensive schemes to complete this process of modernisation. From my own personal experience in the Government, I know, like the right hon. Gentleman, that all these schemes of modernisation had to be put on the shelf during the war in the interests of immediate and vital war production. The only exception to that rule was that we had to expand far above any domestic requirements the production of alloys and special steel. I need advance no apologies for that. It was, of course, part of a piece of international planning. On the other hand, the United States, with a 862 much more plentiful labour supply, far greater natural resources, in iron ore, for example, and a long way from the incidence of enemy attack, actually expanded their production from about 75 million tons a year to the astronomical figure of 90 million tons, not only by the modernisation of their existing plants, but also by building new plant, to supply the abnormal war demands of themselves and their Allies.
Immediately after the end of the war, the steel industry of this country had six years of arrears to overtake, arrears due to nothing but the war, and it is completely fallacious to imagine that because the steel industry's plans now involve an expenditure of £168 million over six to eight years they represent a kind of deathbed repentance. Nothing of the kind. This large sum is due to the fact that the industry's own plans have been suspended, and because prices have risen so steeply since before the war. The process of the modernisation of an industry never comes to the end. It is exactly like the people who clean the windows of the Houses of Parliament, who, as soon as they have finished the last window, begin again on the first. That is what must be done in an industry. It is wrong to think that modernisation can be cut off as a chunk and that the process then finishes. It has to go on all the time. In view of the position I occupied in the war, I must also say that without this £50 million expenditure, our ability to wage war would have been incalculably damaged. The contribution of the iron and steel industry to victory, as the right hon. Gentleman was among the first to acknowledge, was immense. That being so, it would be most unseemly not to acknowledge that this production could not have been attained without the dogged persistence and courage which the workers in this industry displayed in the most difficult conditions, and under continued air attack.
I sum up the historical part of my remarks by saying that the very low levels to which steel production had sunk in the great depression were due to world causes, among which not the least were the inflation in Germany, and the high tariff policy and absence of foreign lending by the United States. Secondly, when the duties were imposed, the industry recovered very quickly from the trough into which it had sunk. It had already spent, 863 on a farsighted policy of modernisation between 1935 and 1939, £50 million, equivalent to over £100 million at today's prices. Thirdly, the prices they charged to consumers were, by and large, 10s. a ton under the American prices, and were subject to the approval of the Import Duties Advisory Committee, a Governmental body, up to the time when the Ministry over, which the right hon. Gentleman presides, took over the functions itself. Fourthly, the programme of £168 million is a continuation of that on which £50 million was spent before the war, and the size of the sum is due to development having been arrested and to prices having risen. Lastly—this, I think, is giving the right hon. Gentleman a point —there is no justification, and he has not sought one for supposing that the industry would not submit with readiness to such an amount of Government control as is applied now Such control is absolutely different from a policy of nationalisation, which involves the Government in the responsibility of operating and carrying on these plants from day to day, and finding the engineers, the technique and the staff to do so.
No case whatever has been made to justify ownership by the State. Most perfunctory arguments without any substance have been given us on that point. I do not want to keep the House but I would like to make one slight discursion. If hon. Members opposite would look at the shareholders of six big steel companies they would find about half the capital is in fact owned by people with less than 1,000 shares, and a third of the capital by people with less than 500 shares; so I think it is no exaggeration to say that the workers have invested a large proportion of their savings not only directly, but by institutions as well, in this great industry. I wish they owned more of it. These are very striking figures. When the Government say they are going to move into the public ownership of an industry like this, all they are doing is to take the industry away from the public and transfer it to the bureaucracy. [An HON. MEMBER: "It will be owned by the public."] No; it is being taken away from the public and put under bureaucracy.
I now come to the last main subject which I feel able to touch upon within the patience of the House. It is as to what is meant by the nationalisation of 864 appropriate sections of the industry, which the right hon. Gentleman has entirely failed to define. Of course, we all know that blessed word "appropriate". All questions are burked by the word "appropriate"—"at the appropriate time," "The appropriate product," "in an appropriate manner." His Majesty's civil servants are almost as fond of the word "appropriate" as they are of the words "it may well be".
§ Mr. W. J. Brown (Rugby)
They are never treated appropriately.
§ Mr. Lyttelton
I agree with the hon. Gentleman. Under words of this sort tidal influences which affect people's lives are often described. "If the supply of food,"They say, "is not appropriately raised it may well be that some further measures of restriction may have to be applied over our rations at the appropriate time," and so forth. I think the right hon. Gentleman has shown quite clearly that the Government do not know what the appropriate sections of the industry are. At this point I must say that of all the astonishing statements made by the Minister of Supply at the time of his original declaration in April, it was when he was asked by the hon. Member for Sunderland (Mr. Ewart), I think, whether iron ore was to be included in the scheme and he answered:It is not possible to go into details of delimitation at this stage."—[OFFICIAL REPORT, 17th April, 1946; Vol. 421, c. 2713.]
§ Mr. Wilmot
The right hon. Gentleman I am sure, with his Parliamentary experience, will appreciate that it would be neither fair nor proper to the industry to have tried to define such a complicated matter and have it dragged out by a series of questions. We waited until the Debate which was the proper time.
§ Mr. Lyttelton
If the right hon. Gentleman had allowed me to go on he would have seen I was going to mention the very point he is trying to make. I should have thought one thing was certain, and that is that no scheme of public ownership whatever could be applied unless it began at the iron ore end of the business, at the indigenous raw material. Everybody knows that. The fact remains that a decision was made to do this, for other reasons into which I need not enter, and industrial reasons are being sought to justify it. The reasons are not 865 there. I suspect the Cabinet at one time toyed with the idea of nationalising the industry as far as the ingot. I think now, from the rather obscure statements of the right hon. Gentleman, that they intend to go on as far as the billet and no further. I suspect they did not know until someone told them that ingots were rolled in rolling mills belonging to the same people. Perhaps they thought the right hon. Gentleman the Member for Aldershot might point this out, so it would not be a good plan. Perhaps they also thought it was difficult to nationalise something at 900 degrees centigrade—rather too hot for the right hon. Gentleman. He has dropped it in the appropriate manner.
I do not want to repeat anything the right hon. Gentleman has said, but we must look at the nature of an integrated plan. I will not run over the whole thing—the quarrying of the iron ore, the rail transport of the iron ore, the blast furnaces, the use of rich gases from the blast furnaces in the rest of the process, and sometimes the sales of gas to outside undertakings, the manufacture of steel and the use of the waste heat. I meant to begin with the rich gases from the coke ovens, subsequently from the blast furnaces, and to come to the point that a single management is necessary, a single flow is necessary if we are to have the maximum efficiency. It is necessary to retain the heat in the steel throughout the process as far as possible in order to conserve fuel and reduce reheating.
I could not understand, from the rather jumbled statement which the right hon. Gentleman made, as to whether there are going to be some integrated plants which will be owned partially by the Government and partially by the public, or whether the right hon. Gentleman is going to do one thing in one case and is just in a position of not wishing to dogmatise. The truth of it is that it is quite incomprehensible what he is to do, and he does not know himself. Any demarcation that is applied in an integrated plant would simply lead to a disruption to the industrial process. Efficiency depends upon having a single management and preventing a difference of interests between the various processes and the various jobs which go to make up the finished product, Everybody who has managed or worked in a large industrial plant knows the difficulties of keeping all the departments in step. Of course, when something goes 866 wrong it is only human nature for the blast furnace manager to say, "The iron ore supplied by the mining department is causing too inert a slag."The steel maker says, "The pig iron is too high in phosphorus," and the rolling mill manager also complains of defects in the ingot. What will happen in the integrated plant if there are two owners and not one and where, instead of trying to adjust something inside the family, it is necessary to try and adjust it between two different interests and two different owners? I hope hon. Ladies will forgive me mentioning this. The Chinese have a hieroglyphic which means peace and which represents a house with a man in it and one woman. The same hieroglyphic with a man in the house and two women represents war. This is exactly what will happen in a semi-nationalised industry. There cannot be two masters and two interests to serve within a plant. I will not touch upon the difficulties of allocation, salaries, and all the rest of it. I wish to be as short as possible. Unfortunately, that is only the simplest part of the problem.
There are further difficulties when we get to the re-rolling industry which means 300 or 400 firms compared with something under 30 which would apply to the integrated plant. As far as I could understand the right hon. Gentleman, the re-roller will be put into the position of buying the steel billet from Government plants. They are thinking how far they will go after the steel billet, but, of course, it would be most inappropriate at this moment to be more precise. I agree. This is where the difficulties begin. When the re-roller has to find his steel billet from a Government owned plant he is at a hopeless disadvantage. As I understand the right hon. Gentleman, the re-roller will produce finished products which in every part of the steel industry will be in competition with the Government product. The re-roller will depend for his steel billet upon the Government. It is perfectly certain that a cause of injustice and friction is going to be created and that it is impossible to ask any Government, or anybody, to allocate steel to their competitors on a fair basis when they enjoy a complete monopoly.
That is a point which has come up in the Coal Bill and other directions and on which we have received no satisfaction from the Government. They have openly 867 admitted that it is their policy to discriminate between one customer and another. That is what they are going to do here. It is possible that, as time goes on, and the maturity of the right hon. Gentleman's knowledge ripens, he will find that the complexities of this " cut off " are so great that he will probably want to nationalise the whole iron and steel industry—the whole 400 or 500 plants—as well. I see that an hon. Gentleman is nodding his head; he is probably, hoping that this will happen tomorrow. Once he does that, he will find himself deep in the engineering industry, having to build bridges like Dorman Long and Company, and in the shipbuilding industry, which the Government have undertaken not to take part in, and in competition with the National Coal Board.
We have no news yet of how the Government intend to handle the problem, which is entirely of their own creation. The right hon. Gentleman has delivered a most eloquent encomium about how the steel industry is going now. But it is at present privately owned and privately managed. I repeat, why does he not leave it alone? The Prime Minister and other Ministers addressed exhortations in most moving terms to industry about cooperating in the drive for production which were sympathetically received. After all, this cooperation involves two people—it involves the Government as well as industry. Having asked for the " Dunkirk spirit,"The spirit of self-sacrifice, on everybody's part, the Government proceed to foster and promote it by expropriating the industry which they asked to help by driving into it and cutting at the very roots of its organisation. My belief is that everyone who is engaged in the steel industry should certainly push on with the present plans to the fullest extent they can, but, of course, those plans cannot be pushed on either as quickly or as far as is desirable when the industry does not know who is going to own what. Nobody can design an efficient plant unless he knows who is going to own which section of what inside that plant when it is built. We still do not know. The whole idea of integration will receive a blow and a great deal of delay will occur at best. At the same time, I warn the House that all the leaders of substance in this industry are con- 868 vinced that public ownership is against the national interest and that the Government have no right to try and mobilise their sentiments as citizens and patriots to do something which they are convinced —and they are entitled to their opinion which is a skilled one—will damage their country and their industry. Let us make that quite clear.
I have confined myself, so far, largely to trying to expose the various defects of the present ideas and to criticise the attitude of the Government. I would like to end on a more constructive note. Our ideas on this side of the House are that a great basic industry like iron and steel should be organised as a national industry. It should be able to speak with one voice to foreign producers of steel and should aim at preventing runaway prices in times of boom and slashed prices in times of slump. If the industry is so organised—it is a basic industry I am talking of now—its prices, the nature and extent of any arrangement into which it may enter with foreign Governments or producers and, in general terms, the location of new plants must be the subject of discussion and approval by the Government or under Government control. This differs entirely and absolutely in principle from the idea of the Government assuming direct responsibility for the running of industrial plants and making themselves responsible for day to day operation.
If that is not quite clear, there is a ready made example—the right hon. Gentleman is shaking his head—in front of the House today. The system which I am advocating now for iron and steel has been applied by agreement of all parties to the agricultural industry. There is nothing new about this, I do not think anyone would deny that our problem today is how to work in the management of the State, which is necessary in modern times, with the free play of private initiative, private resources and private liberty—it it is not impolite to mention the last of these three in these times. Our belief is that the Government should, first of all, be the arbitrator with the task of balancing the interests of various sections of the people and should govern accordingly. No one will deny that there is a great difference in interest between the agricultural community, the country men, and the industrial workers, the townspeople. That is in the nature of things. 869 We believe that the Government must maintain, in the national interest, a just balance between these interests which are, by their very nature, conflicting. But it appears to us to strike at the very root of good government if the Government themselves become the proprietors of a great interest in industry, such as the iron and steel industry. When they do that, they cease to be impartial and all powerful governors and become both judge and advocate, and no fair balance can be maintained when the Government are the bosses of an industrial concern on this scale.
All these ideas have gone by the board. It is in this respect that the nationalisation of a competitive industry like the iron and steel industry differs in nature from the nationalisation of a common service which has other defects, but which is not subject to this particular objection We would not like to see any 19th century or Manchester School solution of this problem. We believe that the industry should be left to manage its own business. We do not believe that it should be allowed to charge what prices it likes at any time, but that the people concerned should be allowed to spend their own money, run their own business, employ their own skill —than which there is no greater in steel making—and run their own risks and that they should be subject to such amount of Government supervision and agreement which will secure that the national interest and that of the steel interest march together in harmony.
§ 5.29 p.m.
§ Earl Winterton (Horsham)
May I call your attention, Mr. Deputy-Speaker, to, and ask you to convey to Mr. Speaker, the great inconvenience caused on this side of the House by the sun blazing through the window on several occasions in view of the fact that it has been held more than once by medical opinion that sitting in the glare of the sun is harmful? Cannot something be done about it?
§ Mr. Deputy-Speaker (Major Milner)
The Chair is, of course, in the hands of the House in a matter of that sort. Hon. Members have only to make their wishes known and I am sure Mr. Speaker will give any necessary instructions.
§ Earl Winterton
The hilarity which I noticed on the benches opposite seems to show that it is not yet the policy of this 870 Socialist Government to carry their reforms to a physical point. I should have thought they would have shown more sympathy for people's eyes.
§ Mrs. Jean Mann (Coatbridge)
On a point of Order, Mr. Deputy-Speaker. Could you arrange for the sun to shine on this side of the House?
§ Mr. Deputy-Speaker
I thought that the sun was always shining on the hon. Lady's side.
§ Earl Winterton
I take note of the derision with which hon. Members opposite treat this matter—it is typical of them— but I am sure that you, Mr. Deputy-Speaker, will be sympathetic if hon. Members are placed in some physical pain or disadvantage, and that you will convey the matter to Mr. Speaker.
§ Mr. Deputy-Speaker
I am sure that Mr. Speaker will willingly meet the wishes of hon. Members if they convey their wishes to him.
§ 5.32 p.m.
§ Mr. S. N. Evans (Wednesbury)
In accordance with what I understand is the custom of the House I desire to make known my special interest in the subject under discussion. As a supplier of that highly technical product, foundry moulding sand, I have had access to a wide section of the iron and steel industry, both at the managerial and technical levels, for nearly a quarter of a century. As the proposals now envisaged may affect the organisation owned and controlled by myself, it is right that I should disclose the fact. Nevertheless, I hope to make a contribution to this Debate completely unrelated to the past, present or future appearance of my bank pass book.
The problems which attend the nationalisation of coal, transport and utilities are infinitesimal compared with the difficulties which surround the socialisation of the steel industry. Here is an industry both volatile and complex. The finished product of one section is the raw material of another. It is certain that the boundary between steel and engineering will not be easy to define, and neither will that tidy, streamlined solution so beloved by our Front Bench be easy to arrive at. Nevertheless, on political and economic grounds the case for the socialisation of the steel industry cannot be gainsaid. Steel and insurance are the remaining citadels of 20th century privilege, 871 and no society moving towards a Socialist economy can afford a menace within its midst such as the Iron and Steel Federation. The anachronism of a few self-appointed men responsible to no one but the financial interests they represent, meeting in secret and arriving at decisions affecting profoundly the life of the nation, is a negation of democracy and constitutes what has been accurately described as one of the greatest sources of private political power in modern society. Further, the spectacle of " steel barons " peddling their armaments around the world is an affront to the Christian conscience and can no longer be tolerated.
On the economic plane, the record shows that the industry has been " Maginot minded " for 30 years, and to talk of free enterprise in connection with steel is an abuse of the English language. It has been neither free nor enterprising for many years. The mechanism of the market, the survival of the fittest—the test of efficiency in a capitalist society—has long since been discarded, and the consequence has been a consistent failure to make available to British fabricators steel at world competitive prices. The right hon. Gentleman the Member for Alder-shot (Mr. Lyttelton) made reference to British and American prices, but did not quote any. It may be that he was in a hurry to get through his speech. I shall be generous and quote a few for him.
In January, 1939, whereas our American competitors were able to buy cold rolled steel sheets for motor car bodies at £14 a ton, Austin, Morris and the others were having to pay £21 5s. American cold drawn one per cent. nickel bars could be bought at £21 5s. after being brought across the Atlantic, carriage, insurance and freight paid at Tilbury, whereas British manufacturers wanted £33 11s. United States cold drawn five per cent. case-hardened nickel bars were £28 8s. a ton at Tilbury, whereas the British manufacturers wanted £45 6s. More recently, in November, 1945, Stewarts & Lloyds prices for oil field equipment for Trinidad, was from 29 per cent. to 47 per cent. higher, free on board, than those of their Pittsburg counterparts. In the matter of barrel tanks, Oklahoma prices showed an advantage to the same buyers, the Trinidad Petroleum Development Co., of from 91 per cent. to 135 per cent. A 872 large London industrial concern of my acquaintance has recently had a tentative inquiry for £1,250,000 worth of capital equipment for Russia. In the building up of this capital equipment they required steel castings. They went to Scotland for a price and were quoted £148 a ton. They thought this was rather more than a joke, and got in touch with American firms. I have here a cablegram received today, and the American price free on board is £62 a ton. It is the same specification and the same metal. As the Minister of Supply rightly said, the case for transferring to the ownership of the nation appropriate sections of the iron and steel industry is unanswerable, and was, indeed, accepted by the populace in July. That being so, the role of back benchers in this Debate, as I see it, is two-fold— first to examine the White Paper proposals—
§ Mr. R. S. Hudson (Southport)
May I interrupt? I am sure the House is interested in the figures which the hon. Gentleman has quoted, but were the examples he gave leading up to the conclusion that if the industry had been nationalised, we should have offered castings at £62 a ton?
§ Mr. Evans
The argument which I was advancing, and intend to pursue, was that in its present cartelised state, this industry is not capable of providing British industry with its essential raw material steel at world competitive prices.
§ Mr. Hudson
Presumably the argument is, therefore, that when it is nationalised it will be?
§ Mr. Hudson
Perhaps the hon. Member would tell us how it will happen?
§ Mr. Evans
I was in the course of saying that the role of back benchers in this Debate is to examine the White Paper proposals and the credentials of those sponsoring them—which is a rather important matter—and to express a view about what constitutes the appropriate sections. That is what I shall try to do. The right hon. Gentleman the Member for Woodford (Mr. Churchill) on one occasion said that the use of recrimination about the past was to avoid the need for recriminations in the future. Coming from 873 such a source I must accept that, and have full regard to it in the development of my argument. The backwardness of the steel industry is well exemplified by the fact that it is now proposed to spend, in seven years, more than twice as much as was spent in the previous 30 years. In an age of development the only new development in this industry has been the Corby plant of Stewarts and Lloyds. Instead of energy and initiative we have had restrictions and cartels. The restrictionist practices of the Iron and Steel Federation have bolstered inefficiency and stifled enterprise. In this connection I think I might as well say it is well known that when the right hon. Gentleman the Member for the City of London (Sir A. Duncan) sneezes the industry catches cold.
Let us see what happens on the constructional side of the industry headed by Dorman Long. There are various associations within the steelwork constructional ring, but they are all tied up as a whole, and all centre on Steel House. There is a Midland section and a Scottish section. So far as the Midland section is concerned, the secretaries are that eminent firm of accountants, Messrs. Peat Marwick and Mitchell. What happens in the Midlands? A constructional firm receives an inquiry; they immediately report it, giving full particulars, to Peat Marwick and Mitchell. A few days later a list of the firms who have been invited to tender is circulated. In some cases a firm will state that they want the job and in others that they do not. When they advance a claim they give reasons; sometimes that they have worked for the firm before or, in the case of the Government or municipal contracts, they consider it is their turn.
In the case of a dispute about who is to have this order, what is done by these apostles of free enterprise, these champions of competition, the lifeblood of industry? They converge on Bennetts Hill, Birmingham, and there they get down to it. An argument develops, and out of the argument it is eventually decided that somebody is to have the order. When it has been decided who is to have the order—and it is quite a business, at times, to decide—that firm proceeds to supply losing tenders to the others who received the inquiry, who then proceed to post them to the victims. On occasions the firm which is to get the order also 874 provides blueprints. It makes the business a bit more regimental, a little less phoney. It is not unknown for an exasperated railway company—exasperated because they know precisely what has happened—to place the order with the steel firm farthest away from where they want the work done. They do that to get a bit back on the rail freights for the long haul—[Laughter]. I do not wonder that hon. Members laugh. It would be comical if it were not for the fact that when we come to exports it is tragic in the extreme. I would ask the Minister—he has gone out, but his very able Parliamentary Secretary is here—if he can tell the House before the Debate finishes tomorrow night what tenders have been received for the new Brabazon aircraft erection building at Bristol, and what variations in price there are, if any? If we could be told that, I am sure the House would be grateful.
I now turn to the recommendations of these industrial adventurers, these twentieth century Drakes, Hawkins and Raleighs, and to examining their proposals in the White Paper. The first thing that strikes one is the complete absence of the evidence upon which the plan is based. Unlike the Reid Report on coal, the Iron and Steel Federation's motto seems to be, "Treat 'em rough and tell 'em nothing." But the House wants to know.—we must know. When we have spent our £168 million, we do not want a steel industry abreast of the latest Continental and American technique; we Want it a generation ahead, and we must be certain that we are going to get an industry which is a generation ahead. In the matter of competitive force, it must be the most formidable instrument of its kind in the world. That is the least we can expect for our £ 168 million. Is that what the Iron and Steel Federation envisages? I do not think so, because it seems to me that they would be much more optimistic in the matter of exports if they did.
In the course of his Budget speech the Chancellor dwelt at some length on the £750 million import-export gap. He said —indeed it is common knowledge—that we shall have to increase our exports by 75 per cent. if we are to bridge that gap. Here is a chance. At home a steel industry, modernised and mechanised, at a cost of £168 million. Abroad a wrecked German steel industry which is not going 875 to be allowed to be restored to its previous productive capacity, as we understand it. What a marvellous opportunity for British steel. But what are we promised? Before the war direct exports of steel from this country totalled 2½ million tons per annum. What are we going to get? After spending all this capital, £168 million, we are to get 3,000,000 tons a year, an increase of 500,000 tons—a paltry 20 per cent. If this industry, mechanised and modernised at a cost of £168 million, can only expand its exports by 20 per cent., how are we to bridge the £750 million import-export gap? That is what I want to know.
§ Mr. Lyttelton
I am sure the hon. Member would not wish to mislead the House, but he is no doubt aware that primary steel production in other countries has greatly increased since 1939. The answer to the question he has just been putting is that we expect to do it by manufactured goods in which steel plays a part. So far he has only talked about primary steel exports, a very unfair type of argument.
§ Mr. Evans
The right hon. Gentleman would complain bitterly if I compared what, for want of a better word, I would call basic steel with manufactured goods in which steel is embodied. I could reinforce my argument very greatly if I did that. I am dealing with direct exports of steel, and not of products in which steel is contained such as machine tools or motor cars. I think the House understands me; I hope so. I repeat the question—if that is the best a basic industry can do in the matter of exports after these huge sums of money have been spent on it, how are we to bridge that import-export gap? An increase of 75 per cent., said the Chancellor; twenty per cent. says the Iron and Steel Federation. The House would do well to think that over. What sort of savings are we to effect when we have spent all this money? In the matter of steel plates, they are to be reduced from £16 11s. 6d. a ton to £16 7s. 6d. a ton —4s. a ton, the price of a round of drinks. You cannot change the Maginot mind, these people are defeatist. Their plan reeks of continued restrictions and cartels, and in my contention will not provide the foundation upon which the edifice of British industrial renaissance can be built.
876 A word about the line of demarcation and the future structure of the industry. Broadly, I feel that the frontier between steel and engineering should be the rolled product stage. There will be instances where the frontier has to be carried forward to embrace further operations, piercing and drawing tubes, Stewarts and Lloyds, for instance, but broadly speaking, and for the time being, it is my view that where fabrication starts, nationalisation should end. If I might illustrate for the benefit of hon. Members who may be a little more ignorant than myself, if that is possible, let us take bridges. The State-owned Dorman-Long plant will melt the ore, make the steel and roll out the joists and sections. The privately owned Dorman Longs will build the bridges. The State-owned Richard-Thomas plant will melt the ore, make the steel and roll the sheets, Fisher and Ludlow, Pressed Steel, and such concerns will fabricate the motor car bodies. That would be the line that I would establish as the demarcation between steel and engineering—the rolled product. The future structure of the industry under State ownership is of paramount importance, and for myself, I should require much more information than is available at the moment before arriving at definite conclusions.
§ Mr. Lyttelton
§ Mr. Evans
Thank you. I am not very enamoured of the National Board, especially if it is to be staffed from Steel House. That I should regard as disastrous. I feel that consideration, should be given to the grouping of the industry not on a geographical, but on a functional basis, and I venture to set out the industry in a manner which I think would merit consideration. I would divide it as follows: first, pig iron; second, construction joists, sections and rails— that is, girders, stanchions and railway lines; third, rolled mild steel and wire— forgings and the wire out of which they make nuts and bolts; fourth, sheet and strips for motor car bodies and chassis and automobile fittings; fifth, tubes— pipelines, water and steam fittings, oil-well casings and the like; sixth, alloy steel and armaments, cutting tools, valves, wearing parts for aircraft and automobiles, and lastly, ship and armour plates. Those are the seven groups.
§ Sir Patrick Hannon (Birmingham Moseley)
Are we to understand from this interesting statement that each branch of the enterprise mentioned by the hon. Member should be nationalised separately?
§ Mr. Evans
Oh no, the industry will be nationalised, and after it is nationalised we have then to decide in what form we can best operate the industry in the interests of the community.
§ Mr. R. S. Hudson
Buying a pig in a poke.
§ Mr. Evans
Perhaps hon. Members opposite do not know the industry. I have to say, despite what has been said this afternoon, that I can have no confidence in proposals emanating from the Iron and Steel Federation. It could be, of course, that the steel barons see their own prosperity as being synonymous with the well-being of the nation. Of course, it is not. The whole history of the between-war period proves that. Despite what has been said here by the Minister, I would urge the Government to make haste slowly in this matter. Here we are spending a huge sum of money, and setting the pattern of a most important industry for a generation, and I would say, " Let us make haste slowly."I suggest the setting up of an advisory council drawn from the managers and technicians in the industry, and I would take them out of privately-owned industry altogether. I would not have them seconded from units within the industry, looking back to those units for their future employment, I would take them right out and assure them of long term employment within the framework of the State machinery to operate the industry. I regard that as important for obvious reasons. I would reinforce the brains and ability that these men bring to bear with the best American and Continental advice that I could get. I would send for those men and I would get them to work to examine this industry from top to bottom. I would then send them to the Continent and to America to examine the latest American and Continental technique and equipment. When they came back I should feel that they would be in a position to present a report in which this House and the nation could have confidence, because it would be a report completely free from the influence of the barbed entanglements of financial fron- 878 tiers and vested interests which, unquestionably and inevitably, colour the iron and steel industry's report. If we did that I feel certain that we should get a steel industry worthy of a very great people marching towards a still greater future.
§ 6.2 p.m.
§ Major Peter Roberts (Sheffield, Ecclesall)
I wish to intervene in this Debate in order to discuss two considerations. The first is a general one, and the second is put forward from the point of view of the Sheffield constituency which I have the honour to represent. First let me get down to detail and take the five stages of production which the Minister mentioned this afternoon. I do not propose to, discuss the mining of ore, or the making of pig iron; but I do propose to deal with the basic making of steel. There is a very great distinction in the making of that steel, of which 90 per cent. is made by Siemens open hearth basic method, the produce of which is something about £12 to £20 a ton, and the special alloy steel made by crucible and other furnaces, the produce of which is worth something like £500 a ton, made up of different alloys by the technical skill of the individual man. Sheffield has an industry that has built up its reputation with high grade steel made by the technical development and the skill of the individual.
In order to appreciate this problem I think it is necessary to look much more to the future than the Minister did because it is a problem of the future and not a problem of the past with which we have to deal. As far as I can see, in the past our great industrial strength in iron and steel was in the expansion of the basic Siemen and Bessemer open hearth methods. The more fundamental method is becoming more easily operated where the bulk ores and the bulk coal lie, in India, China, South Africa, Belgium and Holland. There, great steel works are going up, where they are going to make that type of steel which, in the past, was the basis of some of our exports. I am convinced that the future of the industry in this country will be in the specialised alloy high-speed steel, and also in the great turning, re-rolling heavy engineering industry of this country.
With that preliminary, I should like to examine what arguments the Minister put 879 forward with regard to nationalisation as it affects the future. The point about the suggested inefficiency of the industry between the wars, was most ably dealt with by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton), and I do not propose at this stage to go into that in any great detail. I would turn to the question of State ownership for its own sake, and I want to deal at once with the allegation that there is no competition in the industry as it now stands, especially the allegation by the hon. Member for Wednesbury (Mr. S. N. Evans). I take up that challenge. I know well that there is competition in quality, there is competition in technique, and there is competition in production. In Sheffield we have firms who get orders because people know they can get from those firms the type and quality of steel they want. If the whole thing is to be bulked into the "British Mark 5," all the great experience built up by the years of hard work, by workpeople and managements alike, the great names of Sheffield, known all over the world, will be lost. I suggest that if we do have State monopoly, that form of competition, that most vital form of competition, will go.
Secondly, the Minister did not in his argument take us all the way on this vital matter—that if the State controls the industry, we shall get into State trading in iron and steel throughout the world. We have seen examples of State trading. Russia is doing it. We had the classic example of Germany before the war in the Balkans. We have seen one State trading against another State. I warn hon. Members on both sides of the House that if we embark, without any proper international control, on State trade that is one of the easiest ways to get ourselves into another war. As to the question of change of ownership, the fundamental problem is one of production and technique. I am informed, and I believe it to be true, that nearly 98 per cent. of the managements in this industry are men who have come from the shops—shop stewards, shop managers, and managing directors. These men will not change, when the ownership of the shares changes. To change the ownership of the shares is only scratching at the problem.
If I may submit a solution—for I think it is necessary for us to be constructive— I believe it is the job of the Government to concentrate on the basic structure, of 880 the prices and wages of the industry. I said so at the General Election and have said so all through. But it is the job of the industry to get on with running its own business by the spur of the drive which the shareholders, at general meetings, exercise on the managements. In that way we get the best out of the industry. If the State is to help in this way, that is to say through the controlling of prices, and, in the determination of the locality of the industry, then, I think, there must be some sort of Government central control. I suggest that something in the nature of a joint steel council should be formed by the Government and the industry, management and labour. The council should advise the Minister, who, through this House, can bring such pressure as is necessary to bear on the industry in the national interest. That is as far as State control should go, in policy direction. The running of the industry, the placing of orders, the dealing in export should be left to the people who know how to do it.
If the Minister fails to accept that advice then I want to state the position of Sheffield under nationalisation, because it principally makes these high speed alloy steels of which I have been speaking. To bulk those into the scheme, merely because they are a form of steel, with such production as Dorman Long's will be a very great mistake indeed. These alloys are made up of 14 or 15 different kinds of metal, in quantities ranging from 40 per cent. to.002 per cent. The men at the furnaces with the actual technique are real masters of their trade and their skill is very important to us.
I believe that if nationalisation takes place the individuality of Sheffield, as such, will be gone in about 10 years. Sheffield comprises a collection of steel makers, not based on any orefields, but on experience and technique, and I am frightened that if it is " steam rollered "In this way, its individuality will go.
It has been asked where the Government are going to stop, and what is to be the division of ownership. In a place like Sheffield, there are big firms with both the Siemen open hearth, and the acid and electrical furnaces in operation. I ask the Minister whether this division is practical. As has been said some of these big firms have furnaces and rolling plant which are geographically separate, but 881 others have their plant all intermixed. This matter is not so elementary as has been suggested. There are some experts in the industry who think that there is a possibility of differentiation either at the basic open hearth process or at some stage of the billeting or rolling process. My view is that it will not be practicable to stop before almost reaching the heavy engineering industries. The Government, with the best intentions in the world, will be so caught up that they will be forced to go too far before the danger is apparent to them. Therefore, I maintain that the great danger as far as Sheffield is concerned is that if too much is taken, too much will be lost.
I wish to end on this note. I have gone into the streets in Sheffield to obtain the views on this matter of the ordinary man in the street. I have spoken to housewives, a bricklayer, a chimney sweep, as well as to many others. I admit that one man said, "I would nationalise everything," but another said, "I do not like the Government. I do not think they are doing very well." But the average person did not know the difference between the open hearth furnace and an electric furnace. All they asked was " What is it going to cost?" One man who owned a bicycle shop knew there were about 28 lbs. of steel in a bicycle. He said, "If the price of steel goes up, it will have to be passed on to the consumer."There was no question of a mandate, but I found only practical common sense. This is not a question of theory; it is the question of the proof of the pudding. The speech of the Minister has done nothing whatever to give us technical evidence that what he is doing will have any beneficial effect on production of steel or its price. As the Lord President said, the proof is on the nationaliser. Therefore, until we get some better arguments than those which have been put forward today, I suggest there is no basis for the present action of the Government.
§ 6.14 p.m.
§ Mr. Mitchison (Kettering)
There has been presented to the Government a technical report from the iron and steel trades recommending the expenditure of £168 million to modernise and develop that industry. As the Minister has already pointed out, it is perfectly clear from that report that the industry itself is unable 882 to find at the moment more than half of that large sum. The suggestion in the report is that the money should be raised from the public, and, as I understand it, that the Government should give priority in the raising of capital, and to this extent assume responsibility for it. There is nothing beyond that. There is no suggestion of any form of central control, and the report is completely silent as to how the various changes which are recommended can be brought about, and how, where those changes happen to conflict with the interests of any particular company, or raise conflict between one section of the industry and another, those conflicts are to be reconciled. Having regard to the history of the industry, I can only conclude that the report represents one further step in the complete domination of the industry by the Federation itself. I am not surprised that in those circumstances there should be protests, and if the scheme had been proceeded with in the form recommended in the White Paper, the number of those protests and the number of conflicts would have been bound to increase. I see no particular reason why this or any other Government should assume responsibility such as is suggested in the report, while they take no measure of control but leave it in the hands of the Federation. That in itself would be a good reason for the transfer to public ownership of the major part of the industry.
There are other reasons, which are bound up with the industry, and which have been so bound up with the industry in the past, for saying that no Government ought to allow increased control to the industry itself I should not regard the industry in its present state so much as one monopoly as a group of section monopolies in various degrees, tending always towards a more complete monopoly. One of those sections happens to be very largely localised in the Division I represent, which includes Corby, where Stewart and Lloyds have one of the largest tube mills in the country. That company deals with the product from mining the iron and steel ore to the production of the tube itself. That section is almost a monopoly, and Stewart and Lloyds, in association with Tube Investments, control at least four-fifths of the total production. In this case control rests with one particular company, but in the industry as a whole it is tending 883 to rest more and more with the Federation. It is not true that in the past its commercial dealings have been guided by questions of national policy. There is no doubt that scrap was sent from this country to Japan at a time when Japan was already attacking China, and at a time when that scrap was to be used for building up the war potential of a country which in the last war became one of our enemies.
I do not expect those whose business it is to make and sell iron and steel, or the Federation, to be other than patriotic; but, on the other hand, I do not expect them to have an enlightened view of what the national interest may be. It is not their duty to direct national activity, but their own activities are of such international importance that they need the control of an elected Government. That case seems to me, both in principle, and, so far as we can see it, in practice, to be completely unanswerable.
In other respects their international relations have been, shall we say, somewhat suspicious. It is true that this country, for some time, at any rate, has not entered into the international steel cartel as a whole. But there must have been a remarkably close collaboration; for, in the depressed period of 1932 and thereabouts, prices were fixed for the most important steel products in this country. Those prices were based on, and identical with, in the majority of cases and in the most important ones, the prices fixed by the international cartel.
The section of the industry with which I am specially concerned—the tube section—happens to be one which has been entirely controlled by an international cartel in which this country played a part. That, and the railway sections, are, I believe, the only two in that position. I am bound to admit, as most hon. Members in this House have to admit, that our information as to the iron and steel industry, and the workings of its chiefs, is far from complete. From time to time, something comes out into the open; from time to time this, that, or the other international agreement emerges from behind the veil It seems to me that it is the duty of the Government to know, and their duty to the public to be responsible for, arrangements of that character, 884 which have the highest international importance. They ought to be publicised and considered by persons responsible to the people as a whole.
In this Report, we find proposals for abolishing this and that piece of plant, and reducing whole sections of the industry, not immediately in all cases, but as part of a programme calculated to last from five to 7½ years reducing local areas from their present comparative obsolescence into complete desuetude. This is an industry in which employment has suffered more than the usual ups and downs. I am not going to trouble the House with detailed figures, particularly since percentages seem always to produce an irritating effect on right hon. Gentlemen and hon. Gentlemen opposite, even whey they do come out of a Government Blue Book. Let them look for themselves at the unemployment figures, and compare the general figures with the terrific ups and downs suffered in this industry. These men felt the slump as badly, if not worse, than in any other industry. They felt it not only in this industry, but in the industries which derive from it. If any hon. Member had been up, as I went up once, on a winter night, to Jarrow, and had spoken there, and found the whole town out of work, anxious only to know whether, under the new re-arrangement, they would get more or less out of the new Regulations—if they had seen that spectacle of human misery, they could not regard this industry, and what derives from it, as one which should be left, in any form, to the private individual. They would consider it, most particularly, as something so essential to the life of the country, that, in a democratic community, nothing but a democratic Government, answerable to this House, should properly take charge of it.
It is not merely employment in general. It is, of course, the shifting of industry from one place to another that is implied in this, or any, plan of reorganisation of industry. In all conscience, there has been trouble enough already in the move which has taken place from parts of South Wales to a newer—shall I call it a newer system of production, founded on iron ore, rather than on coal, which has led to large-scale transfers from other parts of the country to the Midlands, where the iron ore lies. That is a difficult matter. I speak for men who have come from Scotland, bringing their language and 885 their ways with them, who have been through the slump and got it burned into their souls; and these men are anxious that the Government, and no one else, should take the responsibility for that. They have their reasons. There they are now, producing these tubes, carrying on one particular branch of the industry. The hon. and gallant Member for Eccles-all (Major Roberts) may perhaps be right. The future may, for all we know, lie elsewhere. There may be great prosperity waiting for Sheffield, and disaster waiting for Corby. If that is so, I hesitate to believe that we would not rather be saved from that by those who are responsible to us, than by those who are only concerned with so organising the industry that the most profitable parts of it continue, and the least profitable cease.
§ Major Roberts
May I point out that my argument was directed merely to saying that so far as Sheffield is concerned, if nationalisation came along it might very easily become destitute?
§ Mr. Mitchison
I am quite aware of what the hon. and gallant Gentleman said. He will remember saying that he thought that the future of the industry lay with the specialised steel produced in Sheffield, rather than with other parts of the industry. It was to that remark that I was directing my observations. I do not know what they think in Sheffield, but I know what they think in the part of the world for which I am speaking
I come to another point. Take a colliery town which will become the principal business of the Government under the Coal Bill. Here, too, in Corby, we have a community, in the middle of the English countryside, in what used to be a small country village; and lock, stock and barrel, that place belongs to a limited company. The houses belong to them; the services belong to them; it lies with them whether some other company is allowed to come there or not; it lies with them whether the men and women, at present solely dependent upon them, and upon their success for employment, shall have some alternative way of living, if they do not happen to go on in continued prosperity. That is all wrong. It is wrong in theory, and it is wrong in practice. It is just these places, dependent solely on a single industry, that feel the worst of the slump, and unless we can 886 be positively certain of continued full employment, we have no right to let any place and the men and women in it run that sort of risk again. So far as the present system of dealing with the iron and steel trade is concerned, and so far as this present White Paper containing the report of the Federation goes, there is nothing whatever to give to an industry of that character the security and the chances of development which it might have under Government responsibility for the whole community.
That goes, too, for other things. I hope that the Minister, when he takes over this industry, will not try to hand over too much to the technical men in it. The control and development of a community like that should be left to the people in it under representative local government. Moreover, the industry, however great its private or national importance, should have regard to other considerations, too. When the Minister visits Northamptonshire I hope he will notice that under private enterprise considerable damage has been done to the countryside and to agriculture. Iron ore has been torn out and the debris left lying by wasted land, with compensation offered upon such terms that it suited no particular person to have that debris replaced. Now that we are proposing to take public responsibility for this industry, I hope we will take it as a public responsibility with due regard to such considerations as that.
§ 6.33 p.m.
§ Sir Patrick Hannon (Birmingham, Moseley)
I think I should begin by telling the House that I am interested in the steel industry. I associate myself at once with the very practical speech of my hon. and gallant Friend the Member for Ecclesall (Major Roberts). High speed and low speed steels in Sheffield will suffer greatly if they come under the comprehensive plan which was submitted to the House this afternoon. If I might say so, the Minister made an admirable speech. I have listened to a great many speeches in this House. Some had substance in them, some were constructive in purpose, and some outlined a definite policy. But the right hon. Gentleman this afternoon did not define a policy which could commend itself to the House in these difficult days. The objection which I have to the Government scheme is that it is thrust upon the country at a moment when all our energies should be concentrated upon 887 the production and expansion of our export trade. I had the privilege the other day of going to a central building here in London, where five Ministers of the Crown, including the Prime Minister, made an emphatic and urgent appeal to all employers for more production. The previous day they had made a similar appeal to trades union representatives. Notwithstanding the appeal, and the fact that it is the desire of everyone in this country to increase production and our export trade, the Government now propose introducing, in this ill-prepared way, a Measure which will frustrate substantially the productive output of the country.
I happen to be president of a large manufacturing organisation. The right hon. Gentleman who introduced this Motion referred, again and again, to trade organisations. The trade organisations of this country fulfil a sound economic purpose not only for the trades concerned but for the economic life of the country. The trade organisation of which I am president: represents nearly 4,000 of the smaller manufacturers of this country, and for a considerable time past, since the indication of the Government's intention to nationalise the iron and steel industry, we have pursued an inquiry into this proposal. The result has been, taking it by and large, that most of the small manufacturers are alarmed at the suggestion that they are to come under control of the State in relation to their supplies of iron and steel. The steel industry in this country is not a single industry. It is a series of industries, spread over every corner of the country, and if once it is touched, then the Government are bound to interfere with a whole range of industries which depend upon steel.
The right hon. Gentleman referred to the price of steel in 1931–32, which was a very critical time in our industrial history. He referred to a statement made by a certain prominent member of the motor trade with regard to difficulties which arose then between the steel manufacturers and the motor industry. It is a curious reflection upon the situation then obtaining that that particular manufacturer, while complaining of the price of steel, was making £10 a car profit out of the industry in which he himself was engaged. I think that we should exercise a good deal of caution when statements of that kind are made in 888 this House. The hon. and learned Member for Kettering (Mr. Mitchison) deprecated—perhaps from the aesthetic point of view—the ravages wrought on the Northamptonshire countryside. Had private enterprise not entered upon that land for ore, and had it not been available for steel production, where would we have been in the war? He must examine it in that light.
§ Mr. Mitchison
I am sorry to interrupt the hon. Gentleman, but my suggestion was—and I am sorry I did not make it clear—that the land ought to be restored to its original agricultural use. It is a point on which I imagine he and all other hon. Members opposite would hardly differ with me.
§ Sir P. Hannon
I agree at once that the restoration of the countryside should have been undertaken.
§ Mr. Jack Jones (Bolton)
I think the hon. and learned Gentleman was trying to make the point that had the ravages been repaired in the early stages of the war the land, from which the ore was taken, could in later years have been producing potatoes and other foodstuffs.
§ Mr. R. S. Hudson
It could not be done.
§ Sir P. Hannon
If that attitude on the part of hon. Gentlemen opposite had been maintained up to the end of the war, things might be very different this afternoon. The least said on that point in this House, the better for hon. Gentlemen opposite. The question of efficiency has frequently been introduced in this Debate. I think that the best argument in favour of the efficiency of the industry was produced by the right hon. Gentleman himself. He paid a high tribute to the contribution which this industry made during the war. If the iron and steel industry was so inefficient at the outbreak of the war as has been suggested, how did it contribute so well to the war organisation and to every aspect of national defence, on every front? I happen to have had a great deal to do with organisations in war production in our munition factories and certainly the supply of steel in all its phases was raised to the highest possible level of efficiency, a level which could not have been reached and maintained had it not been for the character and quality of the industry and of those responsible for its direction.
889 His Majesty's Government seem to be more and more in a hurry from day to day to do things to which they have given very little thought and about which they know very little from a practical point of view. May I in a very modest and moderate way suggest to the Parliamentary Secretary—as he comes from Scotland where so much reason makes itself manifest from time to time—that to put a brake on this kind of legislation for industry, would be a great help at the present time? Members on the other side have indicated that those responsible for iron and steel production should become civil servants. That idea would be repugnant to many people who have been successful in the iron and steel industry. This industry, widespread as it is, touches upon the industrial life of the country at many points. It is responsible for the basic structure of our national productive effort, and ought not to be interfered with unless, after great thought and consideration by the Government. It is a case of " more haste, less speed."In this case, where the plan has not yet been revealed, there should be a more cautious and a more thoughtful examination of the consequences of legislative proposals, before they are submitted to the House. I hope wisdom will come to the Government, and that, in time, as they gain wisdom, and as those who support them realise what serious legislation really means to the economic life of the country, they will move more slowly until, finally, they are replaced by an Administration which will govern the affairs of the country in a more competent fashion.
§ 6.41 p.m.
§ Mr. Mort (Swansea, East)
It is one of the many virtues of this House that in Debates such as this there are so many Members who can make a contribution as a result of their personal experience. Indeed, that often happens no matter what subject is brought before us for consideration and discussion. Members have declared their interest today. 1, too, have an interest to declare. I have spent 30 years, the best part of my life, in the steel trade, and I have visited, as a trade union official and a member of the Select Committee on National Expenditure, during the war, most of the steel plants in this country. I want my contribution to this Debate to be the voice of the workshop.
890 The horn and gallant Member for Ecclesall (Major Roberts) said that he had been canvassing certain people who did not know the difference between basic steel and other steel. That is natural. With the technical side of the steel industry the members of the general public are not very well acquainted. The reason may be that we in the steel trade are not so loquacious as those in other trades —indeed, it is over a year since I troubled the House with a speech. For other trades, there has been considerable propaganda. A Member once told me that when a substitute was found for coal 75 per cent. of the time of the House would be unoccupied. But although there has not been that extensive propaganda in connection with the iron and steel trade, the House knows that, in 1932, the trade union to which I have the honour to belong started a national campaign on behalf of the public ownership of the industry. I do not wish to base my case today on the voraciousness or oppressiveness of employers in the industry. I want to give them all the credit to which they are entitled, and they are entitled to a good measure.
It is very strange that we did not have much talk in this House about the steel trade during the war. That is because the goods were delivered. For that, all credit must be given to the men concerned. The reason for that was this: There exists in the steel trade today a system of negotiation which is unequalled in any other industry in the country, and for that I have great pleasure in paying public tribute now to two great men, one a former honoured and respected Member of this House for many years, the Rt. Hon. John Hodge, and the other, Sir Arthur Pugh. They laid the foundations of the conditions which were accepted by the employers, which were the basis of peace in the industry and, to a great extent, of its good conditions. I do not want to say that they were ideal, but they went a long way towards narrowing the breach. The breach had been very wide. My hon. Friend the Member for Bolton (Mr. J. Jones) is an aristocrat of the steel trade. I was of the lower orders. He was a first-hand smelter; I was a crane driver. We published our scheme. We did not have a great deal of support in the country, but one significant thing happened. The Governor of the Bank of England sent for our 891 general secretary, and told him that he did not like it. I would like Members to keep that in mind, because I shall refer to it later in dealing with what I call the financial stranglehold on the steel trade. As I say, we propagated the idea of national ownership of the steel trade and the Governor of the Bank of England sent for our general secretary and told him, " We do not like it."
I do not want to go over the history of that old business, because it has been repeated by many Members, but the House must remember that this country was the pioneer in the industry. Every great idea in steel and iron was born and developed here. We held the major position; we were the leading steel producing country in the world, but we receded from that. Why? My opinion, and the opinion of men in the workshops, is that the steel trade, in its early days, was a money making machine. That is all it was for. There was no ploughing back of profits into the industry. I have known firms in South Wales which repaid their capital in a few years, and which went on paying enormous dividends. But they never got down to the great question of reorganisation. They changed from being money making machines to machines that were owned by financial interests. That is the situation we have to face. What guarantee is there that if the Federation's Report is accepted those financial interests—the " financial octopus," as I prefer to call it—will not come around again?
The steel experts and technicians were doing their job during the interwar years, but who was running the trade, who decided policy? The Bank of England. I have known a pioneer of a great industry in Scotland move out of his chair and a nominee of the Bank of England, who had once been a miner, move in. He was there as a bailiff, and his job was to get as much money as he could out of the industry. Shall we ever forget the Ebbw Vale episode? It is a disgrace that a man of the ability, foresight and vision of Sir William Firth should be idle, if he is idle—I have not seen that he is connected with anything very important. Why was he given his ticket of leave? Because he offended the powers that be. He was a pioneer. Who stepped in? The Bank of England. Who decided the policy? The financial interests. That sort of thing has 892 happened too often. What guarantee is there that it would not happen again if the Federation's Report were accepted? I know, of course, that the position has changed fundamentally as a result of the nationalisation of the Bank of England, but the contrary policy to the Government's proposal is one that cannot be tolerated.
I am prepared to give the steelmakers credit for what they have done, but they have come rather too late. There is no doubt that in some respects they have done remarkable things. After the tariff was imposed, they were called upon to put their house in order and some remarkable things were done. I have seen the plant that was referred to by my hon. and learned Friend the Member for Kettering (Mr. Mitchison). It is one of the most up-to-date in the world. But what is the position with which we are faced in South Wales—to deal with a part of the country that I know best? We are faced with a revolution in the manufacture of tinplates, a revolution that ought to have come 20 years ago. Before the last war, America had 29 strip mills, and there was not a mill in America that was operated on old-fashioned lines. That was known by the manufacturers in South Wales, but they had the desire to maintain the old. Is it information to hon. Members that there are two tinplate milk in this country still run by a water wheel? They are museum pieces.
The position has now reached a point of crisis, and something has got to be done. One of the strongest arguments for nationalisation is that the implications of reorganisation necessary in the industry, if we are to get back to our former position in world trade, are such that it cannot be undertaken by anybody except the State. When a strip mill is erected in South Wales, whole areas which are now dependent upon the operation of hand mills will become derelict. Is it just that the workers should shoulder this responsibility, which is not theirs, and which they would have to shoulder if this process went forward without nationalisation? To give another illustration, it was decided to erect a strip mill at a place which would have involved leaving Ebbw Vale derelict. What happened? There was great agitation, as a result of which the Richard Thomas company decided to put the strip mill in Ebbw Vale. Why should there have to be that sort of agitation? Such 893 a matter is part of the question which ought to be decided by the Government. I appeal to the Minister to pay special attention to some of the terrible effects that must follow if there is integrated planning, which we must have. We have the right to ask the Government in implementing this policy, to be cognisant of these problems.
There is one last word I want to say to the employers. They were given a tariff, and they were told to put their house in order. They have done so, almost too efficiently, and on the wrong lines. They have built up an organisation, and anybody who reads the constitution of the Iron and Steel Federation must admit that it is a marvellous document and a marvellous organisation, so marvellous that it even sends a shiver down my spine. A friend of mine who once sat on a Cooperative committee told me that they sacked a man who was delivering bread because he was too efficient. He never had a mistake in his money. When they sacked him they found out why. People can become too efficient, and when they do so they are a danger to the State. The decision we have to take is not simply that of nationalising a privately-owned industry. The industry is not privately owned. There are individuals who put money into it, but the men who decide the policy are the people who rule over all. There is one other feature that must be borne in mind. We must not have what has happened in South Wales for many years, that is to say, placing a premium on inefficiency. There are tin-plate works in South Wales which have not turned a wheel for years, but the shareholders have drawn their dividends, although the workers have drawn no wages. It has just been a question of organising the market and the production. There is a saying in South Wales, "If you have any money, buy a redundant tin works, and live on it for the rest of your life."That is all wrong.
Finally, I want to say a word on behalf of the men who have toiled in this great industry. The people of London experienced terrible bombing, but I want hon. Members to imagine the kind of men who worked in the steelworks while the bombs were dropping. Let hon. Members imagine half a dozen men round a 60 ton ladle of molten metal while the bombs were falling. They are great men true 894 sons of Vulcan, and they deserve the best. They are anxious to have the Government's policy implemented. We have not heard the details, which we would like to have. [Interruption.] We have had a preliminary announcement; the concert is coming. On behalf of the men in the iron and steel trade, I say, " God speed to the Government; get on with this policy quickly, so that the people working in this trade can put their ability and skill not to the private profit of individuals, but to the general good of the State."
§ 6.58 p.m.
§ Colonel Lancaster (Fylde)
The House has just had the advantage of listening to the first speech this afternoon by somebody who has practical knowledge of the industry. Although I cannot commit myself to being completely in agreement with all the conclusions of the hon. Member for East Swansea (Mr. Mort), I would like to congratulate him on a very lucid speech. He put his finger on one point which seemed to me to be a rather significant omission from the Minister's speech when he referred to the excellent labour relations which have continued in this industry for so many years. Before coming to the main part of my speech, I would like to say a word or two about the speech of the hon. and learned Member for Kettering (Mr. Mitchison), who has the advantage not only of representing a constituency in which there is a great steelworks, but of being my Member of Parliament.
While I think few hon. Members would quarrel with the point he made that matters affecting international arrangements should be under national control or, indeed, with the other point he made concerning the question of full employment, I think it was unfortunate that he made no mention of the fact that the steel works which he represents is an example of what I suspect to be the highest form of vertical management in the steel industry in this country. It seemed to me that he made no effort to suggest to the House how, by virtue of changing one form of monopoly for another, that particular type of management was going to be improved upon.
I should like for a moment to say a word about this afternoon's discussion, particularly in relation to that which we 895 had last week. Within a matter of one week we have had the very responsible task of considering the advisability or otherwise of nationalising the means of production and processing of our two main mineral deposits. We decided last week in regard to coal; this afternoon we are at the inception of our consideration of the question of iron and steel. I have been wondering if there were any lessons we could have learned from our deliberations during the last four or five months in the matter of the nationalisation of coal as applied to this industry. But whereas coal is in great part an extractive industry, which, however variegated, is substantially confined to that major problem of the extraction of a raw material, the iron and steel industry is really concerned most particularly with the matter of processing. No one has advanced the view this afternoon that there was anything particularly wrong or uneconomic in our methods of extracting the iron ore mineral deposit. Like other hon. Members I should like to tell the House that I have been connected with that side of the industry for many years, and whereas the extraction of coal brought with it the very real social problem of the vast numbers of men connected with that industry, nothing of a similar nature arises on this occasion.
There is no great problem in regard to the conditions of labour or of labour relations. As the weeks went past and those of us, with some experience of the administration of the coal industry, tried to discover from the Minister of Fuel and Power what were the underlying reasons for bringing the industry under Government control, we were forced to the conclusion that the decision had not been primarily an economic one. It was one brought about by the social considerations—the very real social considerations —which overlay the problem. No such factors seem to me to have operated, on this occasion. What has concerned the Minister has been to attempt to show to the House that because reorganisation was necessary—and no doubt it is necessary —as a report similar to the Reid Report has now been laid before Parliament, it was therefore desirable that the Government should assume its ownership. That seems to me to show some confusion of thinking between the actual matter of reorganisation and the subsequent manage- 896 ment and administration of the reorganised industry.
I think a great many of us recognise that the problems which are inseparable from reorganisation on a national scale, the problems of a social nature, the positioning of works, the financial aspect, the priorities, and the hundred and one factors which are involved at this stage, make some considerable form of Government control desirable. As I see it, however, no attempt has been made this afternoon by any spokesman—particularly the Minister—to prove to the House or to show in any way how, once that reorganisation had either been decided or got under way—in part at least, because it will never be absolutely complete—Government ownership of the industry was going to bring about any advantage to the nation.
I reject the question of finance; it is a very small thing, this matter of £22 million a year involved. But having conceded to the Minister the point that there is considerable advantage in the Government at this stage assuming a degree of control, I maintain that it is not necessary to take over the ownership of the industry to assume that control. Just as I have always contended that the Government could have implemented the Reid recommendations through the instrument of the Coal Commission, I feel that some similar organisation could have been the overriding authority to enable integration and reorganisation to be carried out within the steel and iron industry. Having conceded that I cannot for the life of me see how any advantage accrues to the nation from then onwards if the management and administration of this industry should be in Government hands. In fact, of course, the industry will be operated by means of a Steel Board through the medium of the managements which at present operate the industry.
§ Mr. Wilmot
That is right.
§ Colonel Lancaster
We must not fall into the error of thinking that Governments or boards on a national level or, indeed, technicians, are necessarily people of vast initiative. I think it is fair to say that the average technician is, on the whole, apt to be cautious and conservative—conservative from a practical point of view, not in a political 897 sense. If we are to maintain initiative in this industry and produce the types of foundry iron and steel in the quality and form they are required for the purposes of the finished article, I believe that in the long run we will get better results by leaving it to the emulation of private enterprise. What we have to decide as time goes on is how these two agencies can best play their part. I believe it would be the gravest mistake if, at the commencement of our consideration of this vexed question—and the matter will be under review for the next year or two —we deluded ourselves that we have in any way solved the problem. I am afraid that towards the end of his speech the Minister, thumping the despatch box, did try to suggest to the House that this could be done quite simply. The speech of ray right hon. Friend the Member for Aldershot (Mr. Lyttelton) showed clearly that, in this matter of management and administration, the Minister had made no attempt to explain how he would tackle that problem. Before the Government go much further I hope that they will think again and attempt to define the part which Government and private enterprise can play in the conduct of this industry.
I would finally say a word on the subject of monopoly. When a monopoly is set up, there are, of course, disadvantages attached to it, but I wonder whether they are greater than those which are laid to the door of unrestricted private enterprise. I wonder whether the disadvantages of any form of monopoly cannot be effectively controlled. The obvious disadvantage of a monopoly is that it can fix prices against the consumer. That matter can be dealt with by the Government without embarking upon a scheme such as the Minister has outlined. I am afraid that we have got into the habit of thinking that everything is necessarily wrong with a monopoly. I do not take that view at all. Monopolies can be controlled in the public interest. But control of a monopoly in industry is a very different matter from the Government becoming concerned with the day-to-day administration and the running of that industry. On that ground I make my appeal to the Government, that, at this early stage in our consideration of this problem, they should think again before embarking upon the second of these great changes in the basic industries of this country.
§ 7.13 p.m.
§ Mr. Alex. Anderson (Motherwell)
Today's Debate is of vital importance to my constituency. " Motherwell, Scotland," stands for steel. It is a name known in the four quarters of the land. The life of that community depends upon the development of the steel trade. We have behind us a long and intimate knowledge of that trade, and we know, from bitter experience, what uncontrolled management of the steel industry in the hands of private enterprise can mean. I can cast by mind back over 25 years. I can think of the last war, when we had private enterprise in steel, when there was little competition, and when people expected a reasonable term of work. I can think of the long and bitter years between the wars, when there were unemployment, want and destitution in my constituency. The cold chimneys of Motherwell cast a stark shadow over the homes of the people, whose morale was deteriorating and whose resources were being used up, and who, in spite of the reorganisation which took place in 1933, could get no employment in their own trade. The profits of the investor in that industry nevertheless, began to increase steadily.
We are vitally interested in the reorganisation of the steel trade. It is the considered opinion of the Scottish steel makers that there is no solution to the problem of steel in Scotland except straightforward and out with control by the State. We complain that our steel industry is not efficient. Every steel worker can tell of planned inefficiency, of steel works where there are no rolling mills and heating capacity for smelting, and of places with smelting capacity without attendant rolling capacity. There is no attempt at integration or at building up a balanced steel industry. There is only a carrying out to the full of a policy of restricted output, increasing prices and cartelisation. We feel that that position is not suitable for modern civilisation and that it does not fit into the modern development of our community.
A good deal has been said about the work of the steel industry during the war.. I challenge anybody to deny that the steel industry pulled its full weight during the war; but it would be equally foolish to say that the steel industry could not have pulled an infinitely fuller weight if it had been organised on a national basis in 1939. 899 If we compare the progress made by the steel industry during the first world war with the progress it made during the second, we obtain some interesting figures. In 1933, British steel production was 7.6 million tons. In 1917 it was 9.7 million tons. Under the private competitive system, during the war the British steel production increased by 25 per cent. When we compare this figure with the figure during the last war and with the figures of other steel producing countries, we find what this country lost in steel work potential because of the policy and the organisation of our steel masters. In 1937, the peak year, steel production was 12.98 million tons. During 1943, the peak war year, production was 13.43 million tons.
§ Mr. Lyttelton
I am sure that the hon. Gentleman does not wish to be unfair. I would point out that the level of steel production, as I had some reason to know because I was concerned in it, was controlled by the Government. A peak was put upon the amount of steel that we should make and the supplement that we should receive from America, as part of the national plan.
§ Mr. Anderson
I was coming to that point. We did not see the increase in production during the war which we might reasonably have expected. We had to suffer.
§ Mr. Lyttelton
It was prevented by the Government.
§ Mr. Anderson
The figures for home delivery of steel in 1937 amounted to 11.5 million tons. In 1946 that figure has not yet been attained. In other words, the British steel industry today cannot produce enough steel to meet the home demand in a world at peace or enough steel to satisfy the export demand. The result is that we are faced, at the end of the war, with a position in which our industry cannot supply the world demand. The position has become critical for the steelmasters. Over them hangs the threat of nationalisation.
§ Major Roberts
Surely, one of the difficulties at the moment is the shortage of labour. The steel capacity is there.
§ Mr. Anderson
I must disagree. The steel capacity is not there. I come from 900 a steel district, and I am certain that the steel capacity is not there. But I do believe that with proper organisation the capacity would be there. The White Paper is supposed to be a method of solving the problem. I find these very definite deficiencies. First and foremost, it has been drawn up by the same people who did not organise the steel trade on a proper basis when they had the opportunity. I say quite frankly in this House, that we in the Scottish steel industry have absolutely no confidence in it. We have confidence in our technicians, managers and workmen, but we have no confidence in the organisation of the steel trade. We believe, too, that in this White Paper the expansion of the steel trade is not sufficient. For example, it provides for a steel output in 10 years' time of 13,000,000 tons for home consumption and 3,000,0000 for export. We believe that those figures do not make sufficient provision for an expanding steel demand throughout the whole world. We also believe that unless provision is made for an expansion with modernisation and integration, we shall be faced with a colossal problem of unemployment. We believe also that the capital cannot be obtained. The White Paper presupposes the expenditure in Scotland of £29 million on the reorganisation of the steel industry. That is as much as, if not more than, the total capital of the steel industry in Scotland today, and we believe that if there is to be a State contribution to the building up of a steel industry, there should also be State control. That seems to be a logical assumption.
I would like to make a reference to my own area and to put a few points. I have been told by my people to press upon the Minister and the Government to go ahead with parts of this scheme. We do not want to wait for a long period of reorganisation, and I am happy to see that a start is being made. We believe that the reorganisation of the industry should go ahead irrespective of any negotiations that may be entered into. We believe that we are going to be faced ultimately with an integrated steel plan somewhere in Scotland. We believe it may be, naturally enough, upon tidal waters, but we urge on the Government— this is a social Government—that there are more than economic values to be considered; there are human values. There has been built up in Lanarkshire a great social capital and a wealth of industrial 901 experience, and we believe that, with reorganisation and integration, Lanarkshire can attain, in the production of Scottish steel, the valuable place it had in the past. We ask that when this transfer comes, it should be done slowly and humanely, and that in Scotland we shall not have a parallel to Europe in the number of " displaced persons." We ask that there shall be security for those who work in the steel industry. There are many industrial casualties in my area in the heavy steel industry and we ask that that position shall be removed. I believe that, given goodwill and Government direction and control, our steel industry will make real progress.
§ 7.25 p.m.
§ Sir Arnold Gridley (Stockport)
I would like first to congratulate the Minister who was, today, faced with the greatest Parliamentary task so far entrusted to him I do not think he had a very good case to present, but he certainly made the best of the material at his disposal. I was glad when he paid a tribute to the way in which the iron and steel industry discharged its responsibilities during the war, and I would remind him and the House— although he will need no reminding—that but for the fact that the industry was able to spend £50 million on modernisation of plant between 1931 and 1939, it would never have been in a position, when war broke out, to render to the nation the service that it did render.
There is one fault I find with the case which the Minister presented: He gave us a good many figures showing greatly increased profits earned between one date and another. If one merely looked at those comparisons, without considering on what circumstances they were based, one would be entirely misled. I am sure the Minister would not desire to mislead the House. He referred in one case to a comparison of profits made by Stewarts and Lloyds, Limited. I slipped out to the Library to see what distribution had been made to the shareholders of Stewarts and Lloyds, Limited, during the 11 years from 1929 to 1939. It may interest the House to know that the average paid to the ordinary shareholders during those 11 years worked out at just a little over 6 per cent. —6¼ per cent.—which is not a very extravagant return to shareholders on their risks when the industry was going through those most difficult stages. In 1930 the 902 figure was 3¾ per cent.; in 1931 and 1932, nothing; in 1933, when things began to get a little better under Protection, 2½ per cent.; and then the figures gradually rose. That is not an extravagant return on capital to shareholders, and I make bold to say that if I went on making comparisons with other firms, the results would work out pretty much the same. Before he came into this House, the Minister used to look after the interests of shareholders, and I have no doubt that he could quote a good many figures from the past, and tell us how little, over a period of years, shareholders received on an average.
I wonder who advised the Minister on the sub-division that he gave us today— which sections of this great industry are to be nationalised, and which are to be left to private enterprise. As I understand it, the ironstone mines and ore beds are to be taken over, the blast furnaces that produce the pig iron are to come under national ownership, and the steel ingot production is also to be brought under national ownership and control. From then on, with certain exceptions—I do not know what they are going to be—the processes are to be left to private enterprise. I tell the Minister here and now, that if that is the plan, be will soon find it utterly unworkable. It is completely impracticable.
Part of my excuse for speaking today is that a few years ago, I lived and worked in one of our great iron and steel centres—Middlesbrough and Tees-side. When I went into that district I knew very little more about the industry than a great many Members of this House do today, but I had to learn it and see how electric power could be brought to the assistance of that great industry and modernise its methods. One thing we did which was greatly in the national interest was to harness to the production of electric power what until then had been wasted, and therewith to provide something like seven generating stations in that one area alone, giving probably the cheapest power in the country. The first electrically driven reversing rolling mill was put down by Dorman Longs at that time. That industry was not backward, it was enterprising, and always has been, as has been shown today by previous speakers.
We cannot remind ourselves too often of the tremendous importance to all 903 classes in this country of doubling our export trade. Of our exports, by far the biggest items are electrical plant, machinery and machine tools. Those of us who produce these types of plant and are very anxious about getting back into the export market are very much disturbed at what will happen to the iron and steel industry when it is nationalised, the industry which is producing—for our engineering industries—its finished products which are our raw material. Therefore the cost of the finished products of iron and steel is of the most vital consequence to us. I can only say, speaking for some thousands of manufacturing firms, that the anxiety felt today is really grave, whatever the Minister may think about the way in which the country approves these schemes one after another. He claims that his proposals will not retard the expansion and development and modernisation of this industry. I only wish I could think he was right. If he knew, as I do, what the feeling is, I am sure he would not be quite so confident.
When the Government produce these products—rails, by the thousands of tons, heavy bridging material and so on, how will they sell them? I cannot picture any Government Department tendering for a bridge like the Sydney Bridge that was put down in New South Wales by, I think, Dorman Long. There, the successful contractor, when he had finished the bridge, found he had in the end lost hundreds of thousands of pounds. No Government Department is likely to be successful in carrying on negotiations with other Governments overseas for important contracts for bridges. [An HON. MEMBER: " Why not? "] Because very often con tracts are won or lost by the man on the spot being in a position to give an instant decision, which may result in his winning or losing the contract. I well remember a few years ago being faced with exactly that position in New Zealand—
§ Mr. Wilmot
The hon. Gentleman's speech is so interesting, and so serious a contribution to this Debate, that perhaps he would wish me to say—what I thought I had said in my speech—that there is no intention of running these plants by a Government Department. In South Africa, where the Government own 90 per cent. of the capital in the great steel industry—
§ Mr. Lyttelton
One hundred per cent. duty.
§ Mr. Wilmot
—the business is run by business and technical experts, who carry on their commercial relations in the ordinary way.
§ Sir A. Gridley
That only shows how little the Minister was able to explain to us today, the details of his plan.
§ Mr. Wilmot
It is in my speech.
§ Sir A, Gridley
We do not know, and we can only assume that just as the Coal Board is to enter into contracts with large coal consumers, and so on, whoever controls this industry in the future will be in a very similar position. If that be so, then I can see international complications arising before very long because we shall be in competition sooner or later for great overseas contracts with a strong iron and steel industry working under private enterprise in America, and probably later on, when the German industries are resuscitated, we shall be in competition with Germany as well. We have to face these serious risks. They are not to be lightly set on one side.
Is the nationalisation of this industry really necessary in order that the Government should achieve what they want? I do not believe it for a moment. I know nothing about the inside of the industry; a lot of talks may have been going on, and whether every steel firm is agreed or not on this report, I do not know. But we have been told that those who are in charge of the Federation are prepared to sit down with the Government, and discuss what type of control the Government really want and, as far as possible, they are prepared to cooperate. In those circumstances, is it wise for the Government to go on with these nationalisation proposals? I should have thought that they would realise that it is really embarking upon very great risks, and that it would be wiser to prove to the country, by carrying through the complete nationalisation of one or two industries first, that they know how to do these jobs. Then, with the country behind them, they could go forward with the rest of the plans. But with so many tremendous world problems yet to be solved, I should have thought that the Government would have been wise to concentrate much more upon the solution of those 905 world problems which affect not only us but other countries, instead of throwing the spanner of nationalisation into the wheels of industry at a time when the wheels of industry ought to be revolving faster than ever.
§ 7.37 p.m.
§ Mr. Percy Morris (Swansea, West)
I have long held the view that if we only wait long enough, there is such a thing as rough sense of justice in life. That is why I welcome the Government's Motion of approval for the taking over of appropriate sections of the iron and steel industry, in the interests of the country. Just before the war, as a member of a deputation appointed by the Swansea county borough council, I waited upon Sir William Firth, then chairman of the Richard Thomas combine in the tinplate industry. We were very worried about the rising tide of unemployment. We were conscious of the fact that the tin-plate industry needed modernising, and we approved of the steps that were being taken in respect of the stripmill works at Ebbw Vale. So, in preparing our brief before meeting the chairman, we resolved that, in no circumstances, should we engage in sentiment, and that we would make it abundantly clear that all we desired was that in the modernising of the tinplate industry those in authority would have some regard for the areas that were being left derelict. In fact in the area which I have the honour to represent, one tinplate works after another was being closed down and men who had spent a lifetime in the industry were being thrown upon the industrial scrap heap. We resolved that we would ask the chairman if, in some large-scale reorganisation, something could not be done to take the place of these obsolescent works.
We stated our case dispassionately, quietly and, I hope, fairly, and were given a courteous hearing. But, to my dismay, immediately we had finished, Sir William Firth said, " Gentlemen, there is no sentiment in business."I left that room feeling that nothing could be done in the interests of the tinplate works of Swansea and district, whilst those people were in control. Hon. Members can imagine my surprise when a little later I read in the newspapers that the chairman had been deposed and that he was very conscious of the grave injustice that was being done to him, on grounds of policy. In fact, meetings were held and correspondence 906 passed on the subject. Lady Firth wrote inviting the public to express their sense of resentment that the chairman of this industry had been dealt with so unfairly. But the reply of the chairman to us had been, "There is no sentiment in business." Now the wheel has taken a further turn. I little thought in that year before the war that in 1946 I would have an opportunity, speaking from the back benches of the House of Commons in support of the Government's proposals, of saying to hon. Members opposite who are holding up their hands aghast: "There is no sentiment in business."
Hon. Members opposite ought not to be surprised at our attitude to the proprietors and managers of this industry. I have taken some brief notes of the history of the iron and steel industry, and I find that in 1913, we exported twice the tonnage that we imported. In 1931, we imported one million tons of steel more than we were exporting. In 1932 tariffs were imposed for reorganisation purposes. In 1933, no less than 45 out of every 100 tinplate workers were idle and in 1934, two years after the imposition of tariffs, we find that hon. Members opposite and those who support them, in papers like the " Economist," were the most bitter critics of the iron and steel industry. In fact, in "The Times " we read that if they failed to take reorganisation seriously, they could hardly expect the public, or the Government, to view their inactivity with indifference, and that is just what had happened. They were not short of information on the matter.
There were five authoritative reports making suggestions on how this great industry could be reorganised, and placed on a sound and proper basis. But for the fact that new works were established at Ebbw Vale and Corby, nothing had been done to expand the productivity of the industry, and, as a result, men were idle for three, five and seven years As has been said, if the industry had been properly organised in 1933 and 1935, it might have made an even greater contribution during the war. We welcome the Government's suggestions and ask that they shall expedite matters, so that these proposals can be brought before the House as quickly as possible, and the confidence of these men restored.
Hon. Members will not be surprised that when we returned from the depu- 907 tation to which I have referred, tinplate workers asked, " What is the prospect? " We could only say, "There is no sentiment in business." When they heard of the deposition of the chairman and other incidents in the columns of the local newspaper, they smiled cynically, and reflected that:' The mills of God grind slowly, but they grind exceeding small.Now these men feel a new hope has arisen, and a new opportunity has come to them. They are putting the whole of their trust in the Labour Government. The electors of South Wales have trusted governments from time to time. They trusted the Liberals; they have never been very much tempted to trust a Tory Government, but they did much to bring this Government into power, and are hoping that the Government's proposals will be implemented, and that quickly. I observe that three Members of His Majesty's Government are to take part in this discussion. I hope that does not mean that there is going to be divided responsibility.
§ Mr. Wilmot indicated assent.
§ Mr. Morris
I hope I am right in assuming that the Minister of Supply will be solely responsible.
§ Mr. Wilmotindicated assent.
§ Mr. Morris
Perhaps I may be presumptuous enough to mention this matter to the Minister. During the last couple of months, since this subject has been a subject of keen controversy, representatives of the iron and steel industry in South Wales have been telling the public, " We are ready. You can have a strip mill at Port Talbot, and we propose in fact, subject to the necessary Government authority, to have not only a strip mill at Port Talbot, but cold reduction plants at Llanelly and Swansea. In fact there is an approximate expenditure in view of no less than £41 million, and we are being obstructed as it were, because the Government will not make up their mind."Tinplate workers and others are being led to believe that if it were not for the policy of His Majesty's Government, this new move, this extension of the tin-plate industry, would have begun in South Wales. I beg of the Minister, when replying, to make it abundantly clear that His Majesty's Government are not going to delay in this matter and that these pro- 908 posals, after they have been approved by the Government, will be implemented in order that work may be given to these people who are waiting to work. If there is a strip mill at Port Talbot and cold reduction plants at Llanelly and Swansea, it will do much to provide work for the idle dockers, who made a magnificent contribution to the war effort.
I cannot feel any pity in my heart when I hear hon. Members opposite pleading that this business should" be left alone. Its history demands that it should be given attention. If we judge it by its efforts, we must condemn its past practices altogether. I have no misgiving in my mind about technical managers, and managerial staff. I am confident that they will be willing to render as great a service to this nationalised industry as to the industry under private control. In fact, they will have a better opportunity. Their terms of reference will be very much improved and they will feel they are making a contribution for the national, yea, and international, benefit, rather than trying to ensure profits for the people who have invested their money in it. We in South Wales ask that this industry shall be revived and quickened. If the Government are taking it over, as we hope they will, we ask that they will implement their plans without delay and not allow the tin-plate workers to be led to believe that, but for discussion in the House, work on the new plant would now be proceeding. I do not believe that for a moment, but we shall have to answer these people when opportunity arises. I have a splendid reply to make in respect of the coal industry, a good reply in respect of the banks, and I hope to have a good reply in respect of transport. If I can have a good reply from the Minister of Supply as to the tinplate industry, we shall feel that the confidence of the tinplate workers has been more than justified. I ask the Minister to have regard to the remarks I have made, and to promise to work quickly. If he will do that, we shall all be extremely grateful.
§ 7.50 p.m.
§ Mr. Clement Davies (Montgomery)
We have had to deal with so many important matters during the last few months that it has become almost a cliché. and certainly a platitude, to say that this Debate concerns one of the matters most vital to the interests of this country. 909 Steel is so important that unless we can produce steel of the proper quality in the proper quantity and at a price which will enable our manufacturers to meet world competition with their products, we are sunk. That, in my view, is the position of steel. May I also add my congratulations to those which have been given to the right hon. Gentleman the Minister of Supply? He had a very difficult subject with which to deal. I hope he will forgive me if I venture to criticise to the extent of saying that I wish he had been more analytical than he was in the course of his speech. I agree that he made up in emphasis what he lacked in analysis.
The problem that is confronting us is: How can we now, in this period, when there is a tremendous demand for steel, ensure in the future, and as a long-term policy, that steel of the proper quality, in the proper quantity and at the proper price is produced? That is the position to which we have to face up. On both sides of the House many compliments have been paid to the steel industry. When one looks into its history, I am not at all convinced as to whether those compliments are deserved. If one begins with a review of the natural advantages we had in this country, one wonders why this Debate should ever have been taking place. We began with the advantage of having the iron ore, of having the proper coking coal; we began with the advantage, which still exists, that we have not to transport either coal or raw materials or the finished article for long distances. We also had the tremendous advantage that practically every important discovery in steel was made by people of this country. But we had the disadvantage that the industrialists in charge of that steel failed to take advantage of one of the most important discoveries that was made. It was made by my fellow countryman, Sidney Gilchrist Thomas. Not until it had been developed on the Continent and in America did they wake up to the advantages of it.
In 1870 we were not only the chief producer, but we were producing more-than the rest of the world of wrought iron, pig iron and steel. We maintained our premier position down to the '90's and in some cases down to 1900. From that time onwards the story is one of a comparative falling off in relation to the Continent or to America. As we are to hear so much more of the story of iron and steel, I 910 would commend to Members of this House a book written, not by a politician or even by an economist, but by two scientists and engineers, Mr. Burnham and Mr. Hoskins, and containing a survey of our iron and steel between 1870 and 1930. It is rather interesting, when one is considering what or who is responsible for our present position, to note that they have analysed the position carefully. This is their conclusion, which it is well worth our bearing in mind:The factors in production are: raw materials, labour, capital and 'entrepreneur-ship.' We have noted that there was no scarcity in raw materials, though they might have been more, efficiently utilised, no proved restraint on wage rates by labour apart from a rigidity imposed by the depression of the twenties, and no marked scarcity of capital except in the last decade of the period, when the industry was generally incapable of making a profitThe remaining factor is ' entrepreneurship,' and our study has led us to suggest a weakness in this direction. If a business deteriorates it is of no use blaming anyone except those at the top, and if an industry declines relatively faster than unfavourable external and uncontrollable factors lead one to expect, the weakness can only be attributable to those who are in control of its activities. There is, in fact, good evidence to believe that the British iron and steel industry would not have declined relatively so fast or so far during the period reviewed "—that is, from 1870 to 1930—had the men at the head possessed greater vision and a bolder and more energetic capacity for organisation, direction and administration.That is a pretty sweeping statement, but as one reads the analysis preceding it, one feels that it was justified.
I agree that during the period 1914–18, the industry was undoubtedly called upon to make great sacrifices. It extended plant, either utilising its reserves or getting the money at a very high rate of interest in the form of high interest preference shares or high interest debentures. Then came the slump of 1921 and 1922, etc. Undoubtedly, when that came the industry was vastly overcapitalised. No wonder there had to be, amongst the stronger, better and bolder undertakings, a writing down in order to try and put themselves on a fair basis. Moreover, they suffered from the action that was taken by the right hon. Gentleman the Member for Woodford (Mr. Churchill) in 1925, in restoring the gold standard.
Then, after 1931, came their plea for a tariff, and in 1933 that tariff was imposed, 911 temporarily, in return for a promise that they would set up a reorganisation group. That is what led to the formation of the Iron and Steel Federation. Undoubtedly, there was then a reorganisation within the industry, but in the main that reorganisation was purely administrative. It was, as the " Economist " said, on 28th February, 1942, in an article, which again I commend to all hon. Members, reorganisation, so to speak, on paper. The extension of a tariff was used to induce the industry to make its trade association stronger and more comprehensive. What did it mean? It meant that by controlling prices, qualities, quantities, sites, and by controlling who should come into the Federation, and the terms upon which they might come in, they then established a sort of monopoly.
It has been said that the Minister at one moment said it was a monopoly and at another moment that it was not capable of exercising the power of a monopoly. It is not a monopoly in the ordinary sense, because there is no control in the Iron and Steel Federation with regard to organisation. They cannot turn to a concern and say, " You are inefficient and you must close down."They cannot turn to another and say, "Instead of extending here, build over there," but they can, and they do, settle what the prices are, they settle the quantities and do the negotiating. They have all the faults of monopoly as far as I can see, but not the usual benefits of monopoly. What was then the position? If one wants to see what happened it will be found in the report of the Import Duties Advisory Committee, reporting in 1937. What did they say? They said undoubtedly it had had a beneficial effect upon the industry, that there had been more control, and they suggested that there should be further control in the interests of the industry. Every now and then there is a sort of passing reference to the public interest and the need for setting up some kind of control over the industry which would safeguard the public. We have waited up to now for that safeguard for the public interest. I exclude the war period, to which different considerations apply. We waited up to 1939.
In 1935 the Iron and Steel Federation reiterated that they had no intention whatever to raise prices. They categoric- 912 ally renewed their assurance that it was not their intention to raise prices as a result of increased production, but the Board of Trade index of iron and steel prices showed that they had increased by over 38 per cent. in three years. The steel cartel prior to the war was offering its steel at prices higher than Belgian steel and at far higher than the price level—
§ Mr. Lyttelton
Did that apply to Unilever as well?
§ Mr. Davies
I have yet to learn that Unilever turn out steel. They use it in large quantities. If the right hon. Gentleman wishes to divert the whole Debate on to something else, I am ready. The question I wish to ask is: Where is the protection for the public in cases of that kind? For everyone who is engaged in the steel industry—the right hon. Gentleman says that today they amount to 300,000—at least ten other workers are employed in converting that steel into something else. These prices have been raised without any public control of any description. What is the position? We now come to the report issued by the Iron and Steel Federation. It is in the main purely physical. It is technical and it deals with the large number of plants which ought to be scrapped, the number of new ones that ought to be created, and the cost. It does not deal with organisation, price management, tariffs, cartels, or with the relationship of the industry to the Government, still less with the relationship of the industry to the public. One has heard that another report, an earlier one dealing with these matters, was submitted to the Government. If that is so, I hope the Government will produce it because it is in the interest of all to know what are the facts in this case.
The very fact that the industry itself estimates that £168 million are required in order to put if in a proper position is evidence of the seriousness of the state into which the industry had fallen prior to the war. The first question, therefore, which one has to ask is: Do the proposals go far enough? Will the proposed changes secure what is necessary for the welfare of the whole country? Unfortunately, so far as I can see— reading that report and nothing else—the Federation's report does not afford much assistance in answering the question. I 913 will not go into more detailed matters, such as the extent of this five year plan for a short term policy, its influence upon the situation, or the points which have been raised by the hon. Member for East Swansea (Mr. Mort) and the hon. Gentleman the Member for West Swansea (Mr. Percy Morris) as to what effect there will be upon the people now engaged in the industry who may find that factories are closed down and new ones opened up. It is obvious that that report, as far as it goes, is nothing but a compromise, and is merely patchy. There is one more serious matter which I wish to raise before I leave this report. It was raised by the " Manchester Guardian "In a leading article on 8th May last. The question was asked as to what is to be the position of the very great political power that has been exercised in the past, and will be exercised in the future, by the iron and steel producers, unless there is control. There has been a concentration of economic power in their hands which is dangerous and undemocratic. In the days gone by one can only guess at the power they wielded in political matters in their production and control of armaments for this and other countries.
Those are the problems which face us. It is obvious that the position today is that there is a sort of monopoly vested in the Iron and Steel Federation. There is practically no public control whatever. It is a monopoly exercised for the purpose of the few who are running that industry and not for the protection of all, such as is necessary. They apparently are willing that there should be some supervision. On the other hand, the Government say there is only one remedy, and that is, that the State should take over the ownership. In that way the public will be protected. I have no doubt about that. The question we have to put to ourselves is: Will steel, when the industry is taken over by the State, be produced of the quality, quantity and at the price that will enable our manufacturers to compete for both the home and export markets? We want more information upon that point.
This is a very different question from the case of coal. Coal is not only the raw material but the finished article. In steel there are any number of ramifications. There are about five processes before one begins to utilise the steel for machinery or for whatever it may be 914 needed. In addition, there have been many inquiries with regard to coal and two Royal Commissions inquired into that matter—the Sankey Commission and the Samuel Commission—and everyone knew what the position was. With regard to coal, the Government are entitled to say, " We had a mandate," but I wish that the right hon. Gentleman would not use the word " mandate" with regard to particular items. The Minister said today that there was a " mandate "To nationalise the steel industry. How many of those who use the word realise what it means? They would be on much safer ground if they said, "The country gave us a majority because they preferred our method for dealing with the economic problems to that of the Conservatives."
§ Mr. Alfred Edwards
It was in the programme.
§ Mr. Davies
I daresay it was in the programme, but how many people are there, who really understand the ramifications of the programme? Therefore, the question we have to put is, Can the Government give a satisfactory assurance that they will be able to deal.with this problem? May I refer the House to the words of the Lord President on 6th December last? The Minister of Supply today referred to a speech made by the Lord President in Canada. He need not have gone to Canada; the right hon. Gentleman made his position perfectly clear on 6th December last, and it is right that I should refer to what he said. On that day the Lord President dropped what I might call " doctrinaire Socialism " and faced up to what should be done in the public interest, which is the proper way. He said:But we are going to nationalise certain industries, and if we take the series of industries with which this Government are dealing, either the case must be proved for them, or the case must be proved against them. I agree that, in the argument about nationalisation, there is the onus upon the party that is proceeding to nationalise, to prove that the nationalisation is in the public interest. I agree that the party in power proposing these things ought not to do it for political or doctrinaire considerations. But I equally say that the Opposition has no right to oppose these things on the ground that they are dogma or doctrinaire considerations."—[OFFICIAL REPORT, 6th December, 1945; Vol. 416, c. 2637.]I accept that and adopt it myself. It is the sound and right way of looking at the matter. 915 Therefore, I end, as I began, by saying that before we touch the problem, we must be satisfied that we are doing it both for the short term and long term policy. It is not a question of doctrine or dogma; it is a question of the way of solving the problem, of protecting the public interest and of producing steel of the quality in the quantity and at the price which will enable this old country to produce all that it requires, both for itself and for export, so that it may compete with anyone in the world.
§ 8.15 p.m.
§ Mr. Frederick Lee (Manchester, Hulme)
I would ask the House to turn its attention for a few minutes to that section of the Report, on page 54, which deals with the position of manpower in iron foundries. I believe that I will take the House with me when I say that, despite any reorganisation of plant, machinery, or anything of that kind, unless we can solve this great problem of how to get a sufficiency of manpower, our investigations will result in a stalemate. It is true to say that for a considerable time there has been a drift away from the foundries. Those of us who have been engaged in engineering know that on many occasions vast sections of the engineering industry have been held up because of the lack of ability to produce castings at the required time. For many years now, the foundry has been the Cinderella of the iron and steel trade. I know that one cannot make a palace out of a foundry, but I believe that the time has arrived when, either under nationalisation or private enterprise, much more attention must be given to wages, conditions and amenities for the foundry workers. The foundries complain bitterly that they are always the last to receive consideration.
I can remember when it was my job to go through foundries. During the morning, one was literally frozen to death by the cold, desolate atmosphere caused by the men working in wet sand, and in the afternoon one was either gassed by fumes or almost roasted to death by the molten metal being poured. I feel that, unless we can ensure to the industry an adequate flow of apprentices, the Government will fail in their task of trying to rejuvenate either the engineering industry as such 916 or that section of it which depends on foundry work.
On many occasions, when discussing this topic with parents, I have tried to show that there is, in fact, a future in foundry work. But how can one expect parents to put their boys into an industry which for so long has been completely unable to give them either a decent standard of education—and of life itself —or to provide them with decent facilities while they are at work? I am very pleased that in this section of the Report much of the point I am now making is accepted. I consider the Report quite objective, although I do not agree with the contention that increased wages and better facilities and amenities would not have a very big effect upon the attitude of parents and boys of school-leaving age in turning their attention to foundry work.
I have said that the drift away from the foundries started before the war. The ridiculous manner in which much of the best skill and craft which the industry produced was wasted during the slump years of the early 'thirties is, of course, now history. But it would not be true to say that the present position is due merely to the slump. We know that during that period literally thousands of people who would have liked to get away from the industry were compelled to stay because there was no alternative. Unemployment was then rife, but, now, when there is not the same fear of unemployment, we have reached the position where, in spite of the fact that an Essential Work Order has been raised in every other phase of engineering, we are compelled, in order to keep men at the industry, to retain the Essential Work Order for iron foundries. I feel that that is an acceptance of the fact that we have not given sufficient attention to the position in which the foundries have been placed.
During the war the incidence of engineering production swung in favour of light engineering, such as aircraft manufacture and so on, and many foundry men found better types of work in light engineering. Essential Work Order or no, those men will never go back to the foundry trade unless we assure them that there will be a better future for them in that trade than ever there was in the past. I appreciate that foundry work does not lend itself 917 in the same: way as machine work to mechanisation as we know it today. It is heavy manual work requiring a great deal of skill. Because of the heavy nature of the work, the wastage of labour is greater than in most phases of engineering, and that is an additional danger for, as we see in the Report, the supply of fresh blood to the industry has practically dried up.
I would ask the Minister to consider most seriously the manpower position in the foundries. The wage rates at the moment are quite ridiculous. I am not referring only to the standard of payment. We find that what little mechanisation can be done has resulted in a class of moulder —a machine moulder—who is now graded as a semi-skilled man. With the transfer of the work of the loose pattern moulder to the machine moulder, a suspicion is bred in the mind of the skilled moulder because his job is being done by a person who is receiving less wages than he is, and the machine moulder also suffers from a sense of injustice, which I think is quite justifiable, in that he is now being asked to perform tasks which were previously considered to be skilled at a rate of pay far less than was received by the man who originally did that job. If we are to have an inquiry into the ramifications of the industry, one of the chief points which must be considered is this question of standardisation of the status, and consequently of the wages paid to the people who are working in the foundry industry. A completely new wage scale should be set up, based not on antiquated ideas of skill and a little less skill, but rather on the productivity of the whole class of moulders. Only by that method can we give any incentive to the people who are working in the foundries.
On the question of obtaining an adequate supply of labour, if the war has taught us nothing else, it has taught us that previous ideas of grades of labour, skill and so on, have never been given their correct perspective. I remember that in many grades of engineering, skilled men working in large boring mills and so on had to have the piece work rates doubled for the work they were doing, because there were no labourers available. When we remember that in years gone by the foundry labourer has been regarded as somebody worth only about 38s. a week, and not considered to be in any way important, whereas now the cost of castings has increased tremendously be- 918 cause we cannot obtain foundry labourers, we must surely realise that so far as future wage scales are concerned the labourer must be taken very much into consideration. A scheme must be evolved whereby the earnings of the skilled men, which depend on their productivity, must also take into consideration the position of the labourer. If we could give an incentive to the labourer by showing him that increased productivity by the skilled man would result in an increase in wages to himself, I know sufficient of our foundry work to realise that he would be a far more capable assistant to the skilled man that he has been before. In considering foundry conditions the board which makes the investigation should bear in mind that such is the nature of the work—heavy manual work—that if any section of industry, including the mines, is worthy of a 40-hour week, the foundry-trades are certainly worthy of it.
A further cause of the drift away from the foundries has been the embarrassment to the moulder caused by the growth of fabrication. One can go round the large foundries of the country now and see that many of the big heavy jobs which were previously performed in the foundries no longer exist. Prefabrication has taken them into the welding shops and out of the. foundries. I ask the Minister to give us some form of manpower survey, and tell us whether or not he believes that the time has arrived when the people in the welding shops who are now doing the job which the moulders previously performed, should be classified in the same way as moulders were—as highly skilled tradesmen performing a job, in which we could get people to put their children. There is a future for fabrication. We know it has gone a long way already, and I am certain it will go much further, but I think the Government should show to the foundry workers that in spite of the fact that fabrication on a bigger and ever growing scale will become the order of the day, it will not necessarily mean that foundry work will become redundant, and that the people whom we want to go into this trade will go into " blind alley " occupations. I would like to know the Minister's idea on that point, because I believe that much will depend upon it if we are to get more men into the foundries. We can also do a big job of work in getting manpower into the foundries by trying to instil into them the old pride which the moulder always took 919 in his job. I remember that during the war, in an attempt to get people interested in that job, we experimented by taking them to the actual point at which their particular component had been assembled and at which they could see it in action, and we found by that method that we could invigorate them and give them a new understanding of the importance of their job.
Much is made in the Report of the fact that in foundry work there is a shortage of maintenance engineers. Yet there are many thousands of trainees who, during the war, did a very good job of work but who are now leaving the industry, and no real effort is being made to retain their services in some category in the engineering industry. I suggest that an appeal should be made to men of this type to turn their attention to maintenance work in the foundries, because unless we can get an adequate supply of maintenance men the work of the men on the floor of the shops must undoubtedly fall short of our desires. Now that we are embarking on a great programme of nationalisation, the men in the' foundry trades will feel that there is a greater future for them than they could have conceived in the past. It will be necessary for the Government not. only to issue other White Papers, or give us their intentions in regard to nationalisation. The people in the foundries should be shown that, the industry having been nationalised, it will "be used in the interests of the people who "work in it; that from now on they can expect a really sound, solid future; that they will not be faced with the issues with which they were faced in the 1930's, of a few weeks' employment and then two or three months on the dole. They should be shown that they can expect from this Government a basis in industry which will guarantee them decency in their occupation, recognition of their fundamental nature in the productive jobs; and an understanding that when this industry is placed in a better position than it is today, their own resources, their wages and their standards of life will benefit as a result of Government control.
§ 8.31 p.m.
§ Mr. Martin Lindsay (Solihull)
In examining this problem, I have tried to consider it entirely from the national aspect. I hope I have no prejudice against nationalisation. So far as the 920 coal industry is concerned, I agree with right hon. and hon. Gentlemen opposite, that in the present circumstances the right thing to do is to nationalise the coal industry, chiefly because of the extremely bad relationship between employers and employed. That, of course, does not apply to the iron and steel industry, where there has been no major strike for something like 40 years. I have also come to the conclusion that very few people can be trusted to do their job without some supervision, without someone over them. I am certain it is a good thing that I, and possibly other hon. Members, are answerable to constituents; and I am certain it is a good thing that every Minister is personally responsible to the Prime Minister. Frankly, I would not entrust big industrialists, any more than other groups of persons, to do their job so well, if they were not answerable to anybody. It is the case that the steel industry has been answerable to the nation, under the supervision of the Import Duties Advisory Committee for 14 years, and the question of control of the industry does not raise any problem at the present time.
It was with that background to this particular question in view that I came down this afternoon to listen with great attention to the Minister, expecting that he would be able to make out a reasoned case to fortify the decision which the Government have taken. I am bound to say I do not think he has made out any such case. The first reason he gave for the Government's decision was that at the present moment the industry is a big monopoly. Surely the greatest of all monopolies is the Government itself. After that statement, the right hon. Gentleman leant across the Table, jutted his chin out, looked very forcefully at those of us who sat on these benches and accurately described the very sad story of unemployment in this industry in the inter-war years. I was rather surprised that he made no attempt to identify the great distress that was caused with my Party. But for years hon. Members have sought to identify the very sad story of unemployment with the capitalist system and the profit motive. Once this transfer has taken place, if there is big unemployment in the industry it will no longer be possible to blame it on to something else. The only people who will be responsible will be the Government and the right 921 hon. Gentleman himself. Not only will the right hon. Gentleman have the responsibility of the employment of men in the industry, but he will also have responsibility for the enormous sums of money which people, many of them quite small men, have invested in industry. That is an awful responsibility for any one man, however able he may be and however well advised he may be by a conscientious board.
The greatest advantage of private enterprise is the diffusion of responsibility, that of a large number of different firms compared with one large Government monopoly. There is a diffusion of responsibility and so a diffusion of the effects of error, if errors be made. The Minister will have a very terrible responsibility in the proper conduct of this great industry. I remember the steel industry in the year 1929. I am thinking of that big iron and steel town of Scunthorpe in North Lincolnshire, when it was visited by the President of the Board of Trade during the period of the 1929–31 Government of the party opposite. Mr. William Graham went to Scunthorpe and addressed the iron and steel people, saying: "You are asking for a tariff and I am going to advise the Government that you should not get it."That was an error of judgment made by one man. Possibly, if he had formed a different opinion and given different advice to the Government, the tariff might have come two years earlier and we might not have had all that terrible story of unemployment in the iron and steel industry. [Interruption.] It is quite true. I am not censoring Mr. William Graham. I am merely stating that it is a matter of history, and using it as an example of what may happen when one man makes a mistake when he is responsible for an enormous structure like this great industry, as the right hon. Gentleman will be if the Government proposals take effect.
Another reason the right hon. Gentleman gave was the profits which the industry made. I have never had any shares in the iron and steel industry, so once more I look at this from an entirely disinterested point of view. Over a long period the industry has not passed on any exaggerated profits to its shareholders. I remember a time when the 24s. shares of the United Steel Company stood at 4s. 6d.; that was about 20 years ago. That is what hard-headed businessmen 922 thought about the prospects of getting big dividends out of the iron and steel industry. Much of the profits they made they very properly put back into the industry, and it is because of those profits that those big developments, such as Richard Thomas in Ebbw Vale, Stewarts and Lloyds in Corby and the Appleby-Frodingham—who spent £4 million in Scunthorpe just before the war—have been possible. And so the industry has been able to find half the capital for the £160 million proposals of the Iron and Steel Federation plan. I was not able to follow the right hon. Gentleman when he said that the Government would have to find the other half of this money, namely, the odd £80 million. Perhaps I heard him wrongly. I hope I did, because we all know the enormous sums of money which this Government finds it necessary to provide for so many very desirable purposes. I hope that it does not mean that another £80 million must be found by the taxpayer when the Federation's proposal was to raise it in the ordinary way through the City.
Then the Minister spoke about prices, and mentioned the motor industry as; evidence that prices of steel were too high. This hardly rings true to me. I remember that before the war the price of steel, after it had been pressed into the shape of a motor body, was something like £30 a ton. How much does a motor car weigh? Not anything like a ton. The cost of the steel is something like £20, in a car for which the manufacturer is asking £400 or £500. It is ludicrous to my mind to suggest that the price of steel plays a predominant part in the price of the finished motor car. When prominent industrialists criticise one another they hardly help the national efforts to increase export trade throughout the world.
The Minister referred to those firms in the Federation which were not prepared to come into the Federation's plan. The right hon. Gentleman's argument was that the Federation has no power over those firms which want to contract out. It is not a good argument, because those firms can do nothing without the Government while there are controls. They cannot make any development, they cannot get permits for labour, materials or anything else, and by those means the Government have power to make any dissident firm come into the scheme.
923 I do not believe that the Minister has made out a case for the steps he proposes to take. If the Federation's plan, which was produced at the request of the Government, had been a bad one, if the industry was inefficient, or not capable of producing a satisfactory plan, then I would have been the first person to say that there was a case for taking over the industry. Surely, however, if the industry has made a plan which is satisfactory to the Government, the people who have made it are the best to carry it out. I cannot believe that the management of the steel industry as advised by the Board, will have the resilience which the industry had in building itself up. Nor can I believe that the Minister, bearing in mind the huge sums of money which have been invested in his care, will be prepared to take the risks that were taken in the building up and management of this industry. It is for that reason that I believe this experiment will fail, and cause great misery to the people employed in it.
§ 8.44 p.m.
§ Mr. McAllister (Rutherglen)
In all these Debates on nationalisation it is very interesting to notice the contrast of mood between hon. Members opposite and hon. Members on this side. Hon. Members opposite are concerned about prices and about profits, they say that the issue is whether we can produce enough steel of the right quality, in the right quantity and at the right price, while we on these benches approach the matter from a rather different point of view. I intend to speak for only a few minutes, but in that time I want to give the House some slight idea of my own personal experience in the iron and steel industry. I was born in the iron and steel town of Wishaw, and I represent the constituency of Rutherglen, which has the largest steel plant in Scotland. One steel works alone in that constituency produces one-tenth of the total Scottish output of steel as envisaged in the reorganisation plan. Looking at it from the personal point of view, the iron and steel industry in Scotland has a very dismal record indeed. I remember, as a schoolboy, going to the Glasgow Iron and Steel Company's works at Wishaw to meet an elder brother. I went to the steelworks gate, but I did not meet my elder brother, because that 924 morning he had been burnt to death in the Glasgow iron and steel works.
We have heard a lot today, and we shall no doubt hear a lot again, about the contribution of the iron and steel industry to the war effort. We heard a great deal about that at the end of the last war, but in 1920 the Glasgow Iron and Steel Company closed down their works at Wishaw, thousands of people became unemployed, and the great steel works became derelict. The people remained unemployed for 20 years, and during the 20 years between the wars there never was one moment of time when there were less than 4,000 men idle, who might have been employed in the steel works, in that little town. Now we come to the end of another great war, and hon. Members opposite pride themselves on the fact that the iron and steel industry has made a great contribution to the war effort. No one would deny that the iron and steel industry played its part in the war effort, but are we- to consider that the iron and steel industry is merely the directors of Colvilles and the Steel Company of Scotland, or is it also the people employed in the industry? If so, have hon. and right hon. Gentlemen opposite, and the directors of the British Iron and Steel Federation learned their lesson? I say they have not.
In my constituency of Rutherglen there is a works, Hallside works, which is very famous in the industry, because it was there that Sir Williams Siemens, who designed the plant, made the first commercial use of the open hearth furnace. In this report of the British Iron and Steel Federation we learn in a casual sentence that Hallside and Blochairn will be scrapped—just like that—and the men employed there are apparently to be scrapped too. There was a typical revival of an old Scottish steelmaster's practice just before Christmas, when 400 of my constituents employed at Hallside, received notice that they were dismissed. Since then 400 or 500 others have also received notice. I approached my right hon. Friend at that time, I approached the industry, and I said to them, " You are preparing a great report on the future of your industry; can you not wait until that report is published and the decision has been taken before you decide to sack these men and destroy your organisation? " But no, they could not wait, and the men and their families spent a very 925 happy Christmas unemployed, thanks to the great Christian spirit, the great foresight, and the industrial organising capacity of right hon. Gentlemen opposite and their colleagues in these firms.
I was very glad to hear the right hon. Gentleman the Minister say that in this great reorganisation of the industry we shall approach it from the point of view of human needs and human values. I would like to assure him, and I think I can speak on behalf of my steelworker constituents, that we shall not object to the reorganisation of the industry even if it does mean dislocation in a particular area, but we shall complain, and complain rightly, if that transformation does not take place with the minimum of human dislocation, the minimum of unemployment, and the maximum development of the amenities which ought to be associated with the industry when it is transferred elsewhere.
§ 8.50 p.m.
§ Mr. Erroll (Altrincham and Sale)
I hope the House will forgive me if I do not follow the hon. Gentleman the Member for Rutherglen (Mr. McAllister), but time is short. I hope I shall be forgiven, too, should I unconsciously repeat anything which has been said earlier today. I have just this moment arrived from visiting two steel works in South Wales and I was unable to attend the earlier part of the Debate. I want to deal with the question of price stability. I am sure this matter will be raised again during the Debate, if not today then to morrow—namely, the question of uniformity of prices charged by the whole steel industry. I ask hon. Members opposite not to raise the question again when they come to nationalise the electricity supply industry, or to complain about the diversity of prices in that industry. They cannot have it both ways. They want private enterprise to be always in the wrong. It is wrong if it agrees to a price structure within itself, and it is wrong if it has diversified prices. Either a unified price structure is a good thing or a bad thing. I want to proceed straightaway to a more technical question. I am sure the Minister in his delightful, benevolent, but very woolly way, is sure that we must go ahead with some half baked nationalisation scheme—
§ Mr. Wilmot
I wonder of the hon. Gentleman will permit me, in my woolly 926 way, to point out that the electricity undertakings have a statutory monopoly. Steel companies, as such, have not.
§ Mr. Erroll
That is perfectly true, but their prices were subject to a considerable measure of supervision before the war, by means of the Import Duties Advisory Committee which exercised, if not statutory control, a very real control, even in the razor blade industry. But more of that anon.
§ Mr. Wilmot
§ Mr. Erroll
I want now to continue with my theme of partial nationalisation in this industry and to go into the question of where the Minister can hope to draw the line. I do not look into the past, as hon. Members opposite do when they complain about the mistakes of the past. Of course mistakes were made in the past, but what we on this side of the House are out to do, is to see that mistakes are not made in the future.
§ Mr. Erroll
Yes, let us face the future. I only wish hon. Members opposite would. I have been trying to consider how the dividing line can best be drawn between the nationalisation portion of the industry and that portion which is left to free enterprise. If it is to be done by firms, I think we shall be up against a real problem, because we have some firms as completely integrated steel undertakings, and others which only undertake a particular stage, such as blast furnaces, or re-rollers or finishers or processors. In addition in cases of such integrated nationalised works one would find them in direct competition with free enterprise works and that would not be permissible because the free enterprise works would always win in the competition.
There is another much more serious problem if we nationalise firms and that is that these firms might have associated companies overseas, and we would have to consider whether it would be practicable for the British Government to have a State owned steel works, for example, in Australia or in a South American country or in any other country. That is a complication to which I hope hon. Members opposite will give consideration. A process of partial nationalisation is also going to frighten away the Americans. We 927 have heard a good deal about American efficiency in the steel industry and I know there are already several American steel companies who have been deterred from coming into this country, bringing with them their modern, up to date processes, because of the threat of nationalisation. It is vitally important if the Government intend to proceed with a policy of partial nationalisation, as I suppose they will, that they should fix the limit without delay, so that at least we shall not discourage our American friends from coming here and bringing work and prosperity to this country.
Another method of nationalisation might be to draw the line by processes, but I am sure no one who goes into a steel works could fail to realise how the various processes are interlocked. If one were to take over blast furnaces but not rolling mills, for example, one would get the complication of gases from the blast furnaces being used to provide the heat required for soaking pits and for the steel melting shops. It is extremely difficult to draw the line in individual works and I hope the Government in its worst flights of folly will not attempt such a piece of mis-engineering. I am glad to see the Minister nodding his head in agreement. Another possibility is the nationalisation of individual works. If one is to do that, and that might possibly be practicable on technical grounds—I think it might— it must be individual works but not works belonging to a company or group. For that would kill not only the works that were nationalised, but would also kill the remains of the private group of companies, because they form an integrated whole, and are carefully planned and coordinated as such. One is going to be up against the problem which arises whenever a new process is introduced. A good example is the manufacture of lead alloy steel. There was a great deal of resistance at the time the proposal was put forward to the Iron and Steel Controller of the day. It was some time in 1940. The Government Department concerned did not want to see the steel industry disturbed from its smooth course by an awkward additional process, and there was a considerable measure of resistance at this proposal, which was to interject small quantities of lead at the teeming stage of manufacture. This process was ultimately, introduced because it was put 928 forward by a member of an integrated group of companies, and so the whole process could be kept within one melting shop, belonging to the integrated group who undertook the work.
If melting shops are to be nationalised, we are going to have the same or greater resistance to new ideas in such processes which have been of marked assistance. It will become even infinitely more difficult to introduce them in a State-owned group of steel works, than it was in private enterprise, by private individuals, under the Controller, because we must recognise that running through all the Government proposals is the great question of stability. The Government want to make life safe for steel-makers, men and managers. It is obvious that the product of the majority of steel-makers is improved, as the result of pressure by the consumers. The consumer constantly wants a better product, and the steel makers give it to them because the consumers see they get it. If they are protected by means of State monopoly there is not going to be the same urge and incentive to improve their work. I do not want to bring in the Post Office analogy once again, but it is obvious that in any State-controlled organisation such incentive is lost. Take the right hon. Gentleman's own Ministry, the Ministry of Supply. How difficult it was to get improvements carried cut in the administrative branches of the Ministry during the war—
§ Mr. Wilmot
If the hon. Gentleman prefers periodic starvation of thousands of people in the alternation of boom and slump, I do not.
§ Mr. Erroll
No. Of course the right hon. Gentleman knows me well enough to know that I do not prefer anything quite so Russian as that. I am surprised at the Minister being so puerile as to suggest it. I was certainly not suggesting any alternating periods of booms and slumps. What I do suggest is that we shall have nothing but slumps if we are going to be sluggardly in our methods. We have to be progressive. While we want the stability which the Socialists suggest, we shall only get real stability by technical progress, and without technical progress we shall not have exports, and in consequence we shall have a lower standard of life. I do not suppose the Minister wants to see that.
§ Mr. Wilmot
Certainly not, but if the hon. Member surveys the whole field, he will find that the most consistent technical progress is made in those industries where there is the least disturbance in the livelihood of the people engaged.
§ Mr. Erroll
I am sure that that is correct, and I think that the Minister will be glad that I am agreeing with him for once.
Finally, I want to deal with the position of the technicians in the industry. I am not concerned with the owner, or even the so-called guinea-pig directors, who are few in numbers. From the technician's point of view, it is not a very important issue whether the shares are owned by the Government, or by a lot of people they have never met. What the technician fears—and several of them told me this only today in South Wales—is that the good man will not get a high reward while the industry is made safe for the mediocre. That is one of the most important points in the whole question. If the Government in their scheme can really make opportunities for the best technicians and will put out the bad ones, they will be part-way to converting me to the merits of their proposal, but I do not think they have a hope.
§ Mr. Wilmot
I will do my best.
§ Mr. Erroll
I am glad that the Minister has said that he will do his best for the industry, because we too want to do our best for one of the most important of Britain's industries.
§ 9.2 p.m.
§ Mr. Jack Jones (Bolton)
I feel it a privilege to be the last speaker on the Government side today. Because a little background might be helpful to hon. Members opposite, I would point out that I happen to be the only Member who the day before he came to this House was making steel. I am proud of my trade, as was my father before me. Among the few things he left me, was his trade union badge dated 1886, which I proudly wear. Comparatively speaking I am still a young man, but I have had 33 years' membership of this great industry. Hon. Members opposite have not kicked any-think like as hard as I had expected. Having regard to what they are likely to lose, I am surprised that they have not kicked a good deal harder. I am proud 930 of the tribute which has been paid to our grand men who have served this country so well. There is no finer body of trade unionists in the world. I come from a factory which worked 21 consecutive Christmases, and 20 consecutive August Bank Holidays, but after all that loyalty and all that was done to encourage that firm by the men, it was not until just before I came to this House that we were able to get something done in regard to some miserable wash basins, canteen facilities and such things.
I could talk for a week about some of the things that have happened inside the industry. I have heard a lot about the men themselves not complaining. That may have been construed as a sign of weakness. But it was not so. I have heard it said that the " axle that squeaks the loudest gets the most grease."That may be true, but our men are not the men who squeak. They do the things demanded of them; serve the State and make the steel—and not only for war purposes. We wish to God that we had never been called upon to manufacture one shell, but it did not happen that way. I am proud to be a member of a community who, out of a sense of loyalty, have given so much and demanded so little in return. The day has arrived when we intend to improve conditions, but we do not want to do so by other than constitutional means on the Floor of this House.
The men of my union have a splendid war record. Ours was the only union which at the commencement of the war said, " No exploitation of the public purse." We froze our wages and they still remain frozen. We could have demanded 103 per cent. on base but we kept it at 67½ per cent. I cite these facts to show that this band of men have been more than loyal, but I am beginning to wonder whether an effort has not been made to exploit that loyalty. The hon. and gallant Member for Ecclesall (Major Roberts) said he had recently met certain men around Sheffield, and asked them certain questions about the nationalisation of steel. It is a good thing to find that hon. Members opposite are now ascertaining the opinion of our men. They might have looked round and ascertained that opinion many years ago. When we were facing the future in 1932, a full and complete précis was presented to the 931 nation of why we thought the iron and steel industry should be put under national control. We talked about this in 1932 because of our bitter experience after the 1914–18 war.
I claim—and I do not want any credit for it—to be an expert steel maker. My colleague, the hon. Member for East Swansea (Mr. Mort), referred to me as one of the aristocrats. That may be true. I was one of the highest paid men in the industry, but I earned every penny I got in front of a steel furnace. The steel produced was worth £30 a ton, my colleagues and I received 4d. a ton, or less. Despite that, we got good wages. But I want to see better results from steel making. Education for the children and a higher standard of life, so that everyone can enjoy the benefits of the steel we make. Hon. Members have made much play today about bridges. I could say quite a lot about the Bayley bridge that helped to win the War. When the bombs were dropping the Germans thought from the flare in the sky that the steel works were burning. It was not the works that were burning; the flare which they saw was from the steel which was being made inside the works. We ask no credit for that, but we ask that what we suffered between the wars shall never be repeated.
I shall never forget that when I was getting married, I bought an engagement ring with my war gratuity. That ring had eventually to be pawned to feed the children. Was that because of the Labour Party, or Socialism, or the lack of desire on the part of men to work? No. It was because of the lack of planning on the part of the people in control, and for no other reason. Two million men were begging their bread and walking the streets. That was at a time when we wanted new roads, houses, and electrification of railways, and all the other multifarious things that could not be provided in those dark days Some of us have not forgotten them, but we carry no venom in our souls. All we ask is that this House shall make very certain the things to which I have referred shall not happen again. Our attitude has been face the facts.
I hold up another pamphlet, that of the Iron and Steel Trades Confederation, which was issued on behalf of our candi- 932 dates in the recent General Election. Here is something of what it said:You will help to decide by your votes the future of this country and the future of the industry upon which you depend for your livelihood; every worker in the iron and steel trade is vitally concerned in the outcome of the election.I could read a lot more, but I conclude by quoting the final part of the pamphlet:If the industry's development is left to private enterprise we are threatened with a repetition of our experiences in the years between 1919 and 1929, when industry was rationalised without thought or concern for the interests of the workpeople engaged in same, or the social implications of such rationalisation.This is a very important sentence:We have no hesitation, therefore, in appealing to the iron and steel workers to vote for Labour in this Election and return a Labour Government invested with power to secure an orderly planned expansion of the British iron and steel industry.That is signed by the President and members of the Executive Council of the British Iron and Steel Trades Confederation. I regret that it is not always those people who shout the loudest who have the best case. We have made out a case because we have proved without a shadow of doubt that we deserve nothing but the best. That is what this House has to face, what this country has to face and what the iron and steel industry has to face.
I had the proud privilege of being one of the four humble workmen selected during the war to go to that great country across the Atlantic and represent the industry. I did my best in America to put our country on the map. The "Daily Express " was satisfied with it any way. We saw in America plants integrated to a point far beyond anything in this country. Man for man, we can knock spots off the Americans as far as steel production is concerned, provided we are given the same opportunity and the same technical apparatus, because we are still the finest steel makers in the world. The right hon. Gentleman on the Opposition Front Bench in particular knows that statement to be perfectly true. The hon. Member for Altrincham and Sale (Mr. Erroll) has made some statements about the question of initiative. I could go into a plant this very minute and join the nightshift, and, given the raw materials and the specification, without supervision of any type, make any specification of steel known to science. I am prepared to do it when it. 933 is State owned over and above what we were permitted to do for some vested interest, and that goes too for the rest of the men in the industry.
§ Mr. Erroll
I am sure the hon. Member would not withhold that skill from the nation, because the steel mills happen to be owned by private enterprise.
§ Mr. Jones
Of course, I would not, but there are suggestions that other people will withhold their skill if the industry is nationalised. That is the point. I say those at the top of the trade can withdraw their knowledge and services from the nation as far as we are concerned and they can get out, because there are plenty of young, efficient technicians prepared to take their place and work on behalf of " John Bull Limited "Instead of for " Profit and Greed, Unlimited."
§ Mr. Erroll
In the past in Government arsenals, bright young men could not get on in those State owned institutions. We do not want that to happen again.
§ Mr. Jones
That is all right, but if the hon. Gentleman would like some instances I can give him facts and figures. I can take him into factories not far from his own constituency, and show him individuals who have been introduced within the last fortnight. They are men who never saw a steel ingot in their lives, but in six months' time they will be giving instructions to men who have served the industry all their lives. I also have facts, figures, and names in regard to men who sheltered behind that industry during the last six years, and after the war ended, they were given some of the best jobs in the Control Commission in Germany.
§ Mr. Erroll
If I may interrupt the hon. Member for the third time, I shall be very glad to receive their names, because I can assure him and the House that I hold no brief for, or give no support to, people of that sort.
§ Mr. Jones
I am glad that the hon. Member says that. The fact is that there has been privilege so far as the executive positions at the top are concerned, and the hon. Gentleman opposite knows that that is perfectly true. We have something to face—America, for instance, with her 100 million tons of steel output per annum, with all the geological advantages she possesses, as well as natural gases, integrated plant, and 934 finishing mills which have to be seen to be believed. There are men working there in decent surroundings, and in decent conditions producing steel at a lower price than that at which we can produce it, while they are enjoying a higher wage and a higher standard of life because of mechanisation and capacity of production.
Take Russia. A lot has been said about the inefficiency of the Russians, but friends of mine who have recently returned from that country—not ambassadors or big fellows—talk of one basic open hearth furnace producing 4,000 tons of high quality steel per week. The geological wealth of Russia is unbounded. We must face up to that. Take India, where white men were getting £35 a week in the industry while the average wage paid to the Hindu is 7s. 6d. a week. That is exploitation of the highest order. Take the position in Turkey. I had the privilege of competing against the world for the plant manager-ship of a new works in Turkey, and securing that appointment, despite the fact that I did not come from a university. I did so because I had sound practical knowledge, and an ability to control men and apply common sense.
I say in all seriousness to the Minister that there is not a moment to waste. What was the position in the inter-war years? Because of cartels, combines, shares, bonus shares, high tariffs and the effect of derating, we had, in the steel industry, the highest incidence of unemployment in the country, with the exception of one other industry. We had 41 per cent. unemployed. The management of our industry can be improved. There are some good men at present in control. I have met them. It is the big fellows who design policy that we want to get after. I spent yesterday in the steelworks ascertaining the opinion, not of the men— whose opinions I know—but of the management, and I want to tell the Minister and the House that there are many who are waiting for the word, " Go,"To put the industry on its feet. It is not true that all men at the top of the tree, and in high technical positions, are not prepared to work for the Government.
See what the Americans have done in the matter of research in steel, as compared with what we have done. We have done something, but we have not done 935 enough. I am not saying that all our plant is. prehistoric, because I should be foolish to say so. I once worked on a 100 ton furnace of the latest design. Take the Scottish position. The men who built Noah's Ark built the furnaces in that country, and the right hon. Gentleman the Member for the City of London (Sir A. Duncan) knows something about that. They are prehistoric, absolutely out-dated.
§ Sir William Darling (Edinburgh, South)
It is still the best steel in the world.
§ Mr. Jones
Yes, because of the skill of the men who operate the plant. The hon. Member, by his interjection, is proving the skill of men who can, so to speak, make a silk purse out of a sow's ear in the sense of producing the best steel with a prehistoric furnace.
§ Sir W. Darling
Will the hon. Member—
§ Mr. Jones
No, time is short, and I have already given way three times. The Federation are asking the Government and the country to provide some £22 million a year for the next six or seven years to supply the technical needs. Where would the money be spent? That is the problem. They would spend it to benefit themselves, and not the public, in getting the things which they need to re-equip the industry. The statement presented by the Federation is based entirely on the location of profit-making plant. What about redundant persons, what about the interests of the community? What of the men who, after having spent the whole of their lives in the industry in a certain area, are suddenly thrown out of work, and receive no compensation? In the Federation's plan not a word is said about what should be done with persons who are displaced. It is a plan of greed and avarice, and not a plan of need and service.
I have mentioned the present plants. Some of them are good—I was privileged to work in one—but some of the plants, although they are good technically, could be improved a tremendous amount from the point of view of welfare. I defy any hon. Member opposite to take me into a steel plant in this country where atmospheric conditions could not be tremendously improved. The blackouts installed 936 during the war have not been removed to the extent they should have been. Welfare in the heavy steel industry is at a premium. There is no such thing as personnel management to any degree, and I think hon. Members opposite will agree that there is a great field of opportunity in that respect. The men have not kicked hard enough; they have put up with conditions. With regard to present demands, in recent conversations which my trade union had with the owners and controllers, we were sympathetic to the idea of working the present £420 million worth of plant on a seven-day week, subject to certain conditions; we were sympathetic because we believed that, with the present plant, if it were worked continuously, we could produce something like one million tons per year to put the country on its feet. What did we find? Out of 39 plants operating in the country, only 10 were in a fit condition to operate that extended working week. That is the sort of thing we are asked by hon. Members opposite to continue.
I think that sufficient reason has been given for the Government's policy. I am reminded of a Scots story of a young man who took his intended wife for a walk. They walked for four hours, and neither of them said a word. At last, the girl said, " Will you marry me? "The young man replied, " Yes."They walked for another four hours, and neither of them said anything; they had tea, and not a word was said. In the end, the girl plucked up courage, and said, " Will you never speak to me again? "The young man said, " Haven't I said enough? "I think the Minister said enough to prove our case. The question of the use of oil fuel, the question of oil fuel and mixtures of coke oven gas, and so on—all these things could be looked into. I had the privilege of working on a Radex brick furnace, which has a life of something like 50 weeks as against a life of 29 or 30 weeks of the British product. What has happened with regard to that kind of mechanisation and improvement? We want to know, and we are entitled to know. I say that the Government have done the right and proper thing. I congratulate the Minister on the speech that he made.
The right hon. Gentleman who spoke for the Opposition started by telling us that he knew nothing about industry, and went on to prove it for the next three 937 quarters of an hour. I do not wish to detain the House unduly. To sum up, this is not a question of private enterprise versus capitalism, or of venomous political spleen being put into operation. This is entirely a question of whether the present owners and controllers, whether capitalism, can be trusted to carry on this great industry. The answer is " No." We pledge ourselves in this House, and I pledge on behalf of my trade union, our men, and our management, 100 per cent. behind this scheme. There may be odd individuals who can be nobbled in various ways. [Interruption.] I know something about that. Except for the fact that I was a highly skilled steel worker and local leader in my own shop of a trade union, some effect might have been given to suggestions that it might be convenient to remove men like me.
This task needs speed and resolution, and it needs able planning. We on these benches, whatever may be said from the benches opposite, urge upon the Minister that the Board which is set up to control this industry shall be comprised of practical people, not prehistoric Tory bankers. We demand that, and we have no hesitation in making the demand. It is a fair demand because if we pledge ourselves to give 100 per cent. support it is not too much to ask that we should be given the: opportunity of framing the control within which that support can be put into operation. We ask for full consultation with our men's representative.
I believe that we on this side of the House have every right, judged by every possible standard of equity, to call upon this Government to proceed at once with the plan to nationalise this great basic industry. We believe that the geological wealth given to this country and to the world by a beneficent Almighty should be used not for the benefit, as in the past, of a few, but for the benefit of mankind as a whole and so give that condition of life which will enable all men to work and live as Almighty God intended men should work and live.
§ 9.26 p.m.
§ Lieut.-Commander Gurney Braithwaite (Holderness)
It falls to my lot to make the final contribution from these benches at the end of this first day of a Debate which has been marked so far by what I think hon. Members will agree has been a series of particularly well informed 938 speeches. To my mind none has been more enjoyable than the remarks of the hon. Gentleman the Senior Member for Bolton (Mr. J. Jones) who has just resumed his seat. All of us enjoy hard hitting; none of us really likes mealy mouthed speeches, and I am sure the hon. Gentleman will not complain if I, in my turn, am rather forthright in the remarks I am about to make.
It may well be asked why one who has no practical connection with the industry under discussion, and who represents Holderness, a Division in which no such activities take place, should be intervening at all. But it so happens, as the Minister will, I think, recall, that in what I may describe as a former Parliamentary incarnation I had the honour of representing the Hillsborough Division of Sheffield from 1931–1935 when that seat was vacated temporarily by the right hon. Gentleman the First Lord of the Admiralty. It was during that time that I had the honour to be the secretary of the group of Members who interested themselves in the steel industry at that time. May I say at once how heartily I endorse everything the Minister said in opening this Debate about the terrible depression which hung over the country then? I shall never forget the sight of Sheffield with 60,000 unemployed at that election, 17,000 of them in my own constituency. I have always felt that it was entirely to that situation and the dis-gruntlement with the right hon. Gentlemen who sat opposite at that time, that I owed my first and rather brief excursion into political life, and I endorse everything the Minister said on the subject.
The Chancellor of the Exchequer, speaking in this House last week when moving the Second Reading of the Bill dealing with telecommunications, began with one of those phrases of a graphic nature which so endear him to us all, " Yesterday, coal; today, cables." He might well have added, "Tomorrow, iron and steel "—or perhaps he should not have. "Tomorrow, iron and steel "—the Socialist advance continues. Of course, the Socialists have behind them the necessary massed battalions to enable them to continue this process, which may last a considerable time. That is a matter of arithmetic. I would observe that the further the Socialist offensive progresses the greater will be the breach made in 939 national unity. It is all very well for the Prime Minister to declaim about the spirit of Dunkirk, but the fact is that a majority of votes cast at the General Election was against this policy of nationalisation. Although the Government have the big battalions they might do well to pause and to reflect upon that fact.
Now perhaps I might briefly refer to some of the speeches which have been made. I will begin with that made by the Minister of Supply. I could refer to him as "an opponent of many years' standing." He is certainly a Parliamentary colleague of many years' standing. He is also a colleague in another sphere, to which it will be necessary for me to refer before I conclude. I was a little sorry to see this young Minister stand at that Box this afternoon—after all, he has done a good deal to lower the average age of the Cabinet, which was approximately that which would qualify for the old age pension—and trot out the rather moth-eaten excuse about a mandate. He aroused in me a certain nostalgia. I confess that, on Wednesday and Thursday of this week, I would much rather not be here, because for the first time since 1939 there is to be a race meeting in Beverley in my constituency. I would rather be there. I am certain that there will be returned to his former pitch at that race meeting a gentleman who used to be a great feature of it before the war. He wore a jockey cap and he used to sell tips to those who were wise or unwise enough to buy them from him. His phrase was not "I've got a mandate," but "I've got an ' orse."There is one noticeable difference between my friend in the jockey cap and His Majesty's Government, because the tipster occasionally gave a winner.
It is not surprising that the right hon. Gentleman commended his proposal to us this afternoon on two counts. The first was that the Iron and Steel Federation was a rigid monopoly. The second was that it lacked the advantages of centralisation which would have enabled it to impose its will on its members. The Minister quoted to us from correspondence which had reached him on the subject. When the Minister was making those statements he had the good fortune not to be able to see the expressions on the faces of those who sat behind him. The most impressive speech on Government policy 940 was made by the hon. Member for Wednesbury (Mr. S. N. Evans), who spoke after the Minister. Here was something of substance into which hon. Members could get their teeth. The hon. Member had certain objections to the existing state of affairs. He said that men were meeting in secret. Is that to be stopped under nationalisation? Are the National Coal Board meetings all to be held in public? Are its deliberations to be disclosed to us? Is the Iron and Steel Advisory Council to disclose to the public everything it does? I doubt it very much. I should have thought the hon. Member could not make much headway along those lines.
He complained that armaments were being peddled under private enterprise. Are they not to be made under nationalisation? If the manufacture Of armaments becomes a State affair I see trouble arising for any Government which cuts down its armaments programme. I can see hon. Members in whose constituencies these factories are situated bringing the greatest possible pressure to bear. But I make this prediction—if armaments are manufactured by the State, more and better armaments will be manufactured than if left to private enterprise.
§ The Chancellor of the Exchequer (Mr. Dalton)
Do you object to that?
§ Lieut.-Commander Braithwaite
No one is going to suffer more than the right hon. Gentleman the Chancellor of the Exchequer. The more State factories, the more trouble for him if employment in those factories goes down.
§ Mr. S. N. Evans
The new national board or whatever body is set up to operate the industry will be responsible to Parliament, whereas the Iron and Steel Federation is responsible to no one bar the units comprising it. That is the first thing. The second thing is that we shall not go peddling armaments round the world as is being done at the present time.
§ Lieut.-Commander Braithwaite
There is really no time to deal with all this. Armaments were never peddled round the world except under export licence. I hope the hon. Gentleman is going to be fair. We have divided the time and I have not interrupted previous speakers. It is just as well to take something as well as give something. If armaments are going to be 941 subject to constant Parliamentary Debate, that strengthens my case. Extreme pressure will be brought on the Government if there is any easing up in the programme. The hon Gentleman made a comparison between British and American prices to the detriment of this country. I do not see that he was improving the case of hon. Members opposite by his eloquent tribute to the high speed capitalists, this vast American steel industry, organised under private enterprise, with all the advantages enumerated by the hon. Member. Vast differences, it is true. The hon. Member quoted them and gave figures. Are those gaps going to be closed by nationalisation?
§ Mr. S. N. Evans
§ Lieut.-Commander Braithwaite
The hon. Member is more confident than some of the occupants of the Front Benches because no such claim was made by the Minister and I should be very surprised if the Minister would make it now. But the hon. Member for Wednesbury went further. He faced the future in a big way—no five year programme for him. He said we are going to be a generation ahead of America under this nationalisation programme and under this State control. Is our revered venerable Post Office a generation ahead of America? Can it really be said that the telephone system of this country is a generation ahead of America? I am bound to say that, much as I admire the hon. Member for Wednesbury, I cannot think that His Majesty's Government were advantaged by the intervention he made this afternoon.
Then there is a Socialist split in Swansea. We had speeches this afternoon from the hon Member for East Swansea (Mr. Mort) and the hon. Member for West Swansea (Mr. P. Morris)— made, I believe, in the absence of each other. I have been sitting here all day and I took down what they said. The hon. Member for West Swansea paid tribute to the industry and the steel manufacturers. He said they had put their house in order as they said they would do when the tariff was imposed. He thought they had, in fact, put it in order too much and that certain disadvantages were accruing to the public in consequence. Not so the hon. Member for East Swansea, who complained that no reorganisation had taken place.
§ Mr. Mort
I did not hear the speech of the hon. Member for West Swansea (Mr. P. Morris), but with regard to my own speech, I said that I had visited some very up to date plants in the country.
§ Lieut.-Commander Braithwaite
I think I have transposed West and East
§ Mr. P. Morris
May.I make a similar defence? The hon. Member for East Swansea (Mr. Mort) has confirmed what I said, so we must be right
§ Mr. J. Jones
May I remind the hon. and gallant Gentleman thatEast is East, and West is West, and never the twain shall meet"?
§ Lieut.-Commander Braithwaite
The hon. Gentleman has spoiled the very thing that I was going to say. As I was about to observe, " East is East and West is West " and how delighted I am that the two of them have at last met. At any rate, much hard thought must go to the condition of South Wales, where I understand there are some 70,000 unemployed at this moment of full employment and very grave responsibility rests upon His Majesty's Government in this matter.
No Debate is complete without a contribution from the hon. and learned Gentleman the Member for Montgomery (Mr. C. Davies), the leader and sole representative of Liberalism who complains, not for the first time, that many of the evils which we have been debating today rest upon the broad shoulders of the right hon. Member for Woodford (Mr. Churchill). Had it not been for what happened in 1929, subsequent events would not have taken place, he said. I think the time has come to say that the right hon. Member for Woodford was not alone in that opinion in 1929. The late Lord Snowden was the next Chancellor of the Exchequer and he adhered so firmly to the gold standard that a catastrophe took place in 1931. I do not remember much complaint from the Liberal Party of that day. I was not in the House but, if I am correct, the late and much revered Josiah Wedgwood and the hon. Member for East Aberdeen (Mr. Boothby) were the only two hon. Members who raised their voices with any vehemence on that subject. So I think the gold standard is as irrelevant to this discussion as the existence of the Liberal Party is to current affairs.
943 We all greatly enjoyed the contribution of the Senior Member for Bolton and, as time is speeding on, I would make only one comment upon what he said. His speech was so well informed that it is almost sacrilegious to criticise it, but he stepped out of his knowledge of the steel industry into a sphere in which he is not so well versed when he referred to the exploitation of Indian labour in the Tata works which are under Indian control. I think the hon. Member made that observation at a rather unfortunate moment, when three Cabinet Ministers are in India seeing how best they can hand over the whole of the Indian people to such exploitation.
§ Mr. J. Jones rose—
§ Lieut.-Commander Braithwaite
I am sorry, I cannot give way.
§ Lieut.-Commander Braithwaite
I thought the hon. Member for Rutherglen (MR. McAllister) put his finger on the real issue of this Debate when he said that what we ought to be discussing is not so much profits, cartels, or the gold standard, but human needs and values which were the crux of this matter. I wholeheartedly endorse that view, but to what extent are human needs and values being advantaged by the Government's proposals? Surely human needs and values, not only of the workers of this great industry but of all our people, at the moment are focused on one thing— it has been said often enough by the Chancellor of the Exchequer—increased exports, a tremendous production drive. How do the Government's proposals stand up to that? I suggest that they do not.
The right hon. Gentleman at the beginning of the Debate focussed his remarks quite properly on the subject of the capital required for reorganisation. And there was this tremendous figure of £168 million. He said that this cannot be raised by normal efforts and the Government would have to step in, and if the Government are going to step in with vast sums of the taxpayers' money, obviously the Government must have some say in the control of the industry. May I deal with that point of view? First I want to suggest that it is not true that these sums cannot be raised by normal methods and 944 ordinary capital issues even under the disadvantages under which we labour by the Chancellor's Bill relating to borrowing. In the analogous tool trade issues have been subscribed eight or ten times over by the public. Surely, over the period of issue necessary, these flotations could be made and, if not, what becomes of the Industrial Finance Corporation set up for just this purpose of financing industry? What about the Agricultural Mortgage Corporation? We live in days of cheap money, we are told. Is it really true that there could be no Government loan of public money with proper interest and sinking fund arrangements without the Government having to take control? I wonder if the Chancellor, when he winds up tomorrow, can tell us if there was an expert committee which advised the Government on this matter of financing the industry to the extent of £168,000,000? Did that expert committee report that it could be done through the channels I have indicated? Perhaps he will be good enough to deal with that.
I come to the question of reorganisation. I expected to hear far more from the benches opposite charging the industry with a breach of faith on reorganisation, and that when the tariff was imposed in 1932, the industry did not reorganise. May I give a very rapid chronological record? The years 1919 to 1921 were analogous to those through which we are passing. There was the switch over from war to peace production, accompanied by a catastrophic fall in stock prices, and many firms were ruined by the fall in the stocks they held. From 1930 to 1932 there was the long and catastrophic slump, and in 1932 the tariff was imposed. It was what I should describe as a moderate tariff— 33⅓ per cent.—enabling the industry to compete with foreign competition, but it took two years for the forestalling to be worked off as there was heavy dumping of steel prior to 1932. It was only in 1934 that the industry began to feel the beneficial effect of those import duties. The House will also recollect that in 1936 we stepped once more into an armament programme, rising sharply in its demand. The Government of the day said to the steel industry: " Do not waste time, produce, produce. Time is short, we require armaments, and we require them quickly." Really, between the two wars long as the period was, there was no real 945 opportunity for reorganisation, until 1932, and it was interrupted again in 1936. But, during the five years the sum of £50 million, as was mentioned by my right hon. Friend the Member for Aldershot (Mr. Lyttelton) was laid out on reorganisation.
May I come to some more general objections to this proposal? Excessive standardisation of the steel industry will damage our export trade such as nothing else will. Its effects will be felt, particularly in Sheffield. At least during these long 12 years, under conditions Utopian to hon. Members opposite, not a single dividend was paid in the city of Sheffield. There was the abolition of the profit motive with 60,000 unemployed to appreciate its effects. Nothing can damage exports more than excessive standardisation.
Shall we obtain orders abroad if our representatives are to be civil servants, with their 23s. 6d. a day expenses allowance, compared with go-getting American representatives of private enterprise? As an instance of that, I would say that already the threat of nationalisation of British industry is damaging our good will in these export markets. Nationalisation, as we all know, means delay, delay and again delay. How is the Order Paper filled up day by day? By hon. Members in all parts of the House putting down Questions dealing with delay by this Department and by that Department. It is a fearful thing for an industry so dependent upon export markets to be subjected to this deadly, blighting mildew of delay.
My hon. and gallant Friend the Member for Ecclesall (Major.Roberts), who made such an able contribution this afternoon, told us that Sheffield was different from any other part of the country. That is true not only of Sheffield. So often a single firm is not a steelmaker pure and simple. Inside the same factory one finds steelmaking carried on side by side with the making of files, drills, saws, cutters and hosts of other tools. If, in such cases, it is proposed to nationalise a whole factory, does this not entail bringing into the scheme firms which are purely tool-makers? Then there is the psychological aspect of the matter. If the industry is nationalised, where will business builders in the future be found? The steel trade is not like coal or the railways, in which huge capital outlay was necessary to place 946 them on their feet at the start. In nearly every case steel firms started in a small way, by an enterprising man, often in a spirit of adventure, being prepared to face losses and never to surrender. My hon. Friend the Member for Stockport (Sir A. Gridley) instanced the Sydney Bridge and gave an example of what might have happened to it had nationalisation occurred. In this connection the study of the origin of our largest and most successful firms would repay the study of the right hon. Gentleman. Many of our most important steel concerns started as one man businesses. These names are household words—Vickers, Cammell, Osborne, Jessop, Fox and Hadfield, all men who started on their own.
The greatest harm is being done to the industry by the present uncertainty, Which of us, working under notice to quit, can give of his best? Exports of iron and steel during April amounted to 207,741 tons, with a value of £6,970,000. Over the first four months of 1946 exports were running at an annual rate of 2,350,700 tons and a value of £75,724,000, representing an increase on 1938 of 20 per cent. in tonnage and 77 per cent. in value. Steel is being produced. The industry is getting into its stride, despite an increase in the price of coal of well over 100 per cent. and in wages of about 60 per cent. I ask the right hon. Gentleman what good purpose is served by the disturbance which nationalisation will create. At such a moment the industry should be allowed to proceed with its natural plan of development, which is very different from nationalisation.
In conclusion, I would like to make a personal appeal, not so much to the Minister of Supply, who is a very important personage, but to the man I once knew years ago. Our lives, in matters political, have been on somewhat parallel lines. I will explain the discrepancy in a moment. We entered this House within 18 months of one another. We were defeated in the Election of 1935. We found our way back by by-elections within one month of one another. I have given up hope of competition now. No Member of the Government is more courteous or efficient than the right hon. Gentleman. I have to deal with him and I hope he will allow me to say that. I remember the right hon. Gentleman in a different capacity. When we were both scratching 947 and scraping for a living in the City of London, a long time ago, he rendered inestimable services to the cause of capitalism as secretary of the Shareholders' Protection Association. No more efficient appointment could have been made.
§ Mr. Dalton
Protecting them against ramps.
§ Lieut.-Commander Braithwaite
I will explain how. The speeches which the right hon. Gentleman made in those days, which I always listened to with admiration and in fact adapted for my own use when he was not present, differed greatly from the speech we heard this afternoon. In those days did the right hon. Gentle man give tongue at company meetings— on the ground that profits were too high? Oh, no—on the ground that profits were not high enough—
§ Mr. Wilmot
The wrong people got them.
§ Lieut.-Commander Braithwaite
—or indeed on the ground that there were no profits at all. So eloquent was the right hon. Gentleman on more than one occasion that at set of sun when day was done he himself was put on the board of the company. I appeal to the Minister's former self.. He must know from his knowledge of all these matters that this plan makes nonsense. I do not want to see him go the way of some others. May I say in all sincerity, as one whose first Parliamentary Election was fought against one whom I suppose I must now describe as the right hon. Member for Rotherhithe (Sir B. Smith), the late Minister of Food, for whom I have a very high regard, that I deplore his resignation? From the moment he was given the post of Minister of Food without Cabinet rank his task was quite hopeless. I am perfectly sincere when I say how very much I regret his resignation. I hope the right hon. Gentleman will not tread that path. I hope also he will not tread the path of the Minister of Fuel and Power who, whether judged by his actions or his lucubrations, has certainly earned for himself the title of " Shivering Shinwell." How lamentable it would be if my old friend, if I may call him so, were to go down to posterity under the sobriquet of " "Wavering Wilmot."
§ Debate adjourned [Mr. Simmons.]
§ Debate to be resumed Tomorrow.