HC Deb 19 March 1951 vol 485 cc2241-6

10.35 p.m.

Mr. Erroll (Altrincham and Sale)

I beg to move, That an humble Address be presented to His Majesty, praying that the Order, dated 16th February, 1951, entitled the Iron and Steel Prices Order, 1951 (S.I., 1951, No. 252), a copy of which was laid before this House on 20th February, be annulled. I hasten to reassure the House that this Prayer tonight is not an attack on the nationalisation of the iron and steel industry. We are concerned with the increase in prices which this Order seeks to ensure for a wide range of iron and steel products. As we all know steel enters into the manufacture of a large number of commodities, as the schedule to this Statutory Instrument shows. It covers stainless steel, sheet steel, tinplate and steel bars, rails, fishplates and soleplates, spring steel bars, tubes, pipes and fittings, wire and wire fittings, and railway fittings as well. There is no doubt that cheap steel is essential for the economic welfare of the country, and the British iron and steel industry has served the country well in this respect in the past.

Prices have been rising all around us in the last two years, yet steel prices have risen very much less. If I may give figures over a decade, taking 1938 as 100, in 1948 the general level of wholesale prices had risen to 217 and coal had gone up to 245, but steel prices had risen to only 170. That is an increase of only 70 per cent. compared with the very much greater increase in the other industries. Last summer rail freights were increased, and all the nationalised industries were quick to respond by increasing their prices, but the steel industry did not pass the increase on to the consumer.

However, it became plain that, as prices of so many materials going into the steel works continued to rise, the industry, whether privately owned or nationalised, could no longer absorb any further major price increase, so that when the price of coal was increased three months ago it was essential that the industry should request a price increase. It should be made plain that the British Iron and Steel Federation has never fixed its own prices since its formation. Before the war the prices of iron and steel products were fixed by reference to the I.D.A.C. During the war there was control by the Ministry of Supply, and latterly by the Iron and Steel Board; now price control has reverted to the Ministry of Supply, which is responsible for the increase authorised by the Order.

The price increases are maximum. They are not the increases which must necessarily follow, but it is more than likely that full advantage will be taken of the increases which have been permitted. There is no doubt that price increases in basic industries have a very deplorable effect on the national economy. During the nationalisation of many industries in the life of the last Parliament we were always being told that it was in the public interests that the basic industries should be nationalised so that prices might be kept down. Exactly the opposite has happened and the nationalised industries have been quicker to put up their prices than any other industries. Now we find, with the steel industry nationalised, that they will quickly follow suit by increasing their prices more than once in the future.

The evil effect of price increases in basic industries, especially in the steel industry, is that there will be a rippling out effect of those increases to so many other affected industries, in particular the other nationalised industries. Let me take just two examples from the Order. The Order increases the price of steel rails. This in turn would increase the cost of railway operations, and I ask, how long will it be before we are faced with a further increase in rail freight charges because the price of the steel which the railways consume has gone up?

In another part of the Schedule there is a reference to colliery arches and auxiliaries, pit props and the like. All those essential items for the nationalised coal industry are to go up in price. How long will it be before we are asked to agree to an increase in the price of coal because of the increased price of the steel products which the nationalised coal in- dustry must use? The matter was well put in a Question a few days ago by the hon. Member for Huntingdon (Mr. Renton), who asked the Chancellor of the Exchequer on Tuesday, 13th March: whether he is aware that each nationalised industry has, in the past 12 months, increased the charges for its services on the ground, among others, that the costs of services provided for it by other nationalised industries have increased; and what steps he is taking to counteract the effect of those increased charges upon the cost of living. Here is yet one more example of what is taking place. In his reply the Chancellor said: There has been a general rise in industrial costs both in private and nationalised industry in the past 12 months mainly because of higher prices for imports and to a smaller extent because of higher wages."—[OFFICIAL REPORT, 10th March, 1951; Vol. 485, c. 137.] No reference here to the greater cost of coal and the greater cost of rail freight which are not imported at all but are entirely indigenous to this country.

The Government are taking no steps at all to slow down this inflationary spiral movement. I suggest that the Government must stop the rot and succeed somewhere in limiting the price increases which are continually taking place, not only in other industries, but particularly in this basic industry whose well-being is so essential for our welfare.

10.43 p.m.

Mr. Hugh Fraser (Stafford and Stone)

I beg to second the Motion.

I am sure that we on this side of the House are gratified to see so many hon. Members opposite, not exactly as fellow worshippers in this Prayer but at least bowing the knee in the House, graced with such a distinguished Front Bench, amongst others. This Order to raise steel prices creates at this stage, just after the vesting date of the nationalisation of steel, a matter of considerable interest, if not alarm, to hon. Members opposite. It is time we had a full statement from the Government and from the Ministry of Supply on how this Order was arrived at.

I think the Parliamentary Secretary will agree that the problem of steel supply in this country is going to be extremely grave. Here we have an Order which lays down increased prices for various items in the steel budget of the nation. One of the things which we and the indus- trialists want to know is—how much steel will there be available? Sheet steel and plate steel are mentioned in the Schedule, but what the industrialists want to know is—where is the sheet steel and the plate steel? Where are those things which are essential to our industries?

It will be observed that this Order does two things. I see that a great many hon. Members opposite have equipped themselves with copies of the Order, but for the benefit of those who have not done so I propose to quote from it. The shortage of steel at the moment is chronic, and the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) knows that it is chronic. The Minister seems to be able to do two things, apart from the normal increase in prices. The Order says, for instance: Where the Minister of Supply is satisfied that for the purpose of securing a sufficiency of supplies essential to the wellbeing of the community it is desirable that. … he may authorise that producer to sell and that purchaser to buy from him any such material in such quantities and at such price in excess of that scheduled maximum price as he may, having regard to the public interest, deem reasonable. I see the Minister is now reading the Order, which I presume his Ministry have been through before.

This Order seems to permit the creation of an official grey market in steel. It means that if the Minister deems it in the public interest, consumer A can outbid consumer B by offering a higher price to the manufacturer, with the consent of the Minister. I am sure hon. Gentlemen opposite were of the opinion that the nationalisation of steel would do away with all this talk of big cigars and talks at Steel House and would introduce an era of justice and of plenty, yet by this Order the Minister may at his own discretion agree that certain people in the steel consuming industry should pay above the maximum price to purchase steel. [Laughter.] Hon Members opposite may find that amusing—that the Minister should be able to create an official grey market in steel, that it should be possible for certain people to obtain privileges by going to the Ministry and seeing the right person there.

That is the meaning of the Order as I interpret it. I hope that the Minister will interpret it in a clearer and, I trust, a more honest light than I have—[Laugh- ter.]—that the will be able to show that the Order has a more honest interpretation. Naturally, I interpret such an Order in the way in which the average industrialist would interpret it. When hon. Members opposite have read the Order they will find that it has the same interpretation. I hope that when the Minister replies he will be able to impress us with a greater honesty in the Order than is suggested by first reading.

I turn now to other parts of the Order, which are of great interest to manufacturers. I see that there is a copy of the document in nearly every hand opposite, and if hon. Members would turn to page 2, clause 4, they will see that it is headed: Exemption for material situate abroad, and for export. I hope that the Minister can offer some explanation here. If there are to be maximum prices in this country which can be exceeded for export, then if one has a ton of rolled or semi-rolled product one can sell in this country either at the maximum controlled price in the Schedule or, with the consent of the Minister—according to my honest interpretation—at a higher price, or to a specific and favoured customer at higher prices abroad. It seems to me to be a direct inducement to the Iron and Steel Board to sell steel abroad. We know that, taking one year with another, and one half-century with this or that half-century, the Steel Board has to make a profit, and that the steel stock interest has to be paid.

It seems, however, with the background to the steel industry today of shortage of steel supplies to every manufacturing and engineering firm, that the appearance of giving encouragement to the Board to sell abroad steel, and raw and semifinished steel, is fantastic. I hope that the Minister will give a more specific interpretation to this than that which naturally springs to mind on first reading, or studying for a few hours, this document. I trust that he will go into this matter of the supply of certain of these shortages, of which he is only too well aware—of flats, plates, angles and channels.

Only today I had down here, with friends from the Trent and the north of Staffordshire, a manufacturer who now is receiving only 32 per cent. of the iron and steel supplies which he received three or four months ago. There is no question that at this time, with the necessity for re-armament and for increased export, and with various other problems facing the nation, steel supplies are vital. I hope that the Minister will give the House a proper explanation of this dangerous Order.