IRON AND STEEL (DISTRIBUTION SCHEME)

HC Deb 04 March 1952 vol 497 cc339-84

10.11 p.m.

Mr. Frederick Mulley (Sheffield, Park)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Iron and Steel Distribution Order, 1951 (S.I. 1951, No. 2006), dated 20th November, 1951, a copy of which was laid before this House on 21st November, be annulled. This Order was made on 28th November and came into effect on 4th February. The purpose of the Order is to ration the supplies of iron and steel except for the small quantities which are listed in the Third Schedule. It is a new Order in the sense that except for sheet and tinplate there was no statutory control of iron and steel before 4th February. The previous scheme ended in May, 1950.

I should like to make it clear at the outset to the House and the Minister that, in moving this Motion, I do not wish to oppose the principles of a distribution scheme at this time In fact, the scheme was inherited by the present Administration when they took office, and I think it will be agreed on both sides of the House that control of iron and steel at this time is absolutely necessary if we are to pursue the export, and defence programmes to which we are committed.

The question I want to raise tonight is whether this type of allocation is the best way of directing the use of iron and steel in the national interests, and whether its administration, which comes entirely within the discretion of the Minister and is not laid down in the Order, serves that purpose.

Before addressing myself to these points, I should like to ask one or two questions to enable the Minister to make clear the need for allocations at this time and the size of the problem. A number of estimates have appeared in the Press as to the difference between the overall supply and the overall demand. The short-fall has been estimated at as little as 7 per cent. Can the Minister give us an estimate for this period, February and March, and also for the next quarter and perhaps also the figures for the main types of steel listed in the First Schedule to the Order?

Secondly, can he tell us the percentage of total supplies that have actually been allocated for this purpose. In other words, is there anything in reserve? Could he possibly give us a rough idea of how the allocations are divided between defence, export and home civilian consumption? Thirdly, could he tell us what is the basis of the allocation? Is it 1949–50 when the previous scheme was in operation, or 1950–51, or current consumption or current requirements?

I am informed, in fact, that there is some discrepancy between the basis of allocation and between the different forms of industry, and there is no question but that the allocation of 1949–50 or even 1950–51 penalises firms which have increased capacity, and particularly creates difficulties for those with large and expanding export orders. Conversely, it gives an unreasonably high allocation to those whose businesses have declined.

If current consumption, or consumption in the immediate period before the Order took effect, is the basis, this penalises firms who have been working under capacity for the last 12 months because of their difficulty in getting supplies. Consequently, the scheme would perpetuate the mal-distribution of steel supplies which it is designed to rectify. If cuts of x-per cent. were applied to these cases, it would not be sound policy. The only proper basis is the requirements of a firm or industry. If there is shortage of steel, this can then be reduced by an allocation on a percentage calculated on the priority of the end-goods concerned.

I appreciate that it is unwise to make public the exact allocation made to in dividual firms and industries because it inevitably leads to rivalry, jealousy and so on, but I ask the Minister to ensure that all are treated on the same basis.

It is obvious that any scheme will produce complaints. It is also obvious that the production of steel to increase exports and defence will mean a reduction of steel for home civilian use. In fact, it would seem that in the first period there was a complete freezing of supplies, or a niggardly release, which is tantamount to the same thing. This would appear premature, since re-armament is not able to consume all the diverted steel and widespread dislocation, considerable under-employment, and redundancy in certain areas, have been caused.

We have been told that the anticipated volume of defence orders was not reached in the last year. Can the Minister tell us why existing production has not been allowed to dwindle in step with the decrease in re-armament? Why has it been necessary to chop off certain civilian supplies, with widespread dislocation?

I can illustrate this point with two examples in my own constituency in Sheffield. One is of a firm making civilian products, admittedly not of very high priority, although including export orders. It has a large defence sub-contract to begin in June. It cannot begin its defence work until then because, of the necessary re-tooling, not only in its own work but in the work of the main contractor. On account of the drastic reduction in steel supplies for its existing product, the firm will be unable to retain skilled workers so as to be ready to begin its defence orders in June. This decision will retard and not help the re-armament programme.

The second case concerns a steel-mill, producing hack-saw steel. I understand that redundancy is threatened in one department because, although there is no shortage of billets, the firms' customers have been unable to obtain the necessary authority to acquire the steel which the firm can produce. I am informed that at the moment they are producing for stock. Yet, during the war, when we were on a 100 per cent. war economy, this firm were in full production, producing the same types of steel.

Consequently, we get the absurd situation that there are firms on one side of the street threatened with redundancy because they cannot acquire tool steel, and on the other side of the street a firm threatened with redundancy because it cannot sell the steel that it is able to make. Both these cases, assuming that they will be adjusted in due course when full output is required, will not be able to expand their production because they will have lost some key workers. That is not a problem that can be resolved by juggling with numbers of men.

The high production which the country needs can only be achieved by keeping together teams of men who, over the years, have developed an understanding between themselves and an understanding between worker and management. We cannot halve the labour force one week and in six months, even if we can get the number of men made up, expect to start production at the level where it was chopped off. I suggest to the Minister that this is an urgent problem and that this human aspect of production should be considered, as well as the bare statistics.

Apart from the question of what happens to the workers who are redundant, and the human problem they represent which needs also to be considered, this policy will retard and not increase production in the fields in which expansion is necessary. I wonder whether the officials of the Ministry ask themselves or ask the firm concerned what are the consequences of this allocation to the firm and its workers for the future.

It is for this reason that the prospect of increased allocations in the future is not particularly helpful, since the gap may involve the complete disorganisation of the complex working of the factories. Will the Minister assure us that there is no reserve of steel being built up, because the belief that this is the case exasperates men and management alike, and the evidence would appear to indicate that there is such a reserve since several industries have received increased allocations after sending deputations to see the Minister—to mention examples from Sheffield, the hand tool and light spring manufacturers.

Again, the second allocation in many cases is larger proportionately than the first. It is, of course, for three months instead of two months as was the first, but it is not smaller as one would assume it would be if the defence programme is building up. For the second quarter one would have thought it would have been smaller than the first, but instead of that for many firms it is larger. I believe that at this time to build up such a reserve by reducing steel exports would be criminal folly and certainly would make nonsense of all the appeals of the Chancellor of the Exchequer to increase exports to meet our balance of payments difficulties. I hope, therefore, that the Minister will give us a clear answer to this point tonight.

Before turning to one or two examples of bad allocations in the light of national needs, I want briefly to ventilate another point of criticism which has caused great inconvenience to a number of Sheffield firms. That is the date on which the allocation for the current February to March period was notified to the firms concerned. In fairness to the Minister, I must say that they concern cases where other Ministries were acting as agents for the Ministry of Supply in this matter, but in many cases they did not receive their allocation until very near 4th February and in some cases actually after that date when the scheme began. This naturally caused great anxiety to the firms concerned.

Also, on account of the low stocks which are prevalent and because it takes about two months from the placing of an order before delivery of the special steel required can be expected, it led in many cases to a slowing up of production, short-time working and under-employment. Even before 4th February, of course, in practice an allocation scheme was in operation since the steel mills would not accept orders unless accompanied by the appropriate authorisation. This particularly penalised small firms.

Another difficulty facing small firms now under the allocation scheme is that they cannot get various types of light steel and are having to use heavier steel than that which they need, to the detriment of the steel position generally. It amounts to a misuse of resources. The reason would appear to be that the mills have practically stopped rolling various types of light steel—for example, "T" bars—and there are some small firms who are unable to take up their allocations.

I want to give one or two examples of what appear to me to be bad allocations in the light of our need of more exports. First, a firm manufacturing gramophone needles, which has expanded its exports, in the face of Japanese and German competition, so that in the last year it exported 60 per cent. of its production, has been allocated only 64 per cent. of its requirements, I am told, for the first two periods—and this despite the fine conversion value of those exports.

In another case, of textile machine accessories, I am told that the firm is getting only 51 per cent. of the steel required to work at full capacity—again, despite its bulk of export orders. My third example concerns the hand tool trade, which is generally admitted to have been very badly hit. I have already mentioned some of the repercussions. Some steel mills are reducing output of these special steels because manufacturers cannot take up their production.

I have seen the figures relating to a firm which, because of recent expansion by installing new machinery, is getting only 26 per cent. of its current potential consumption, or 13 per cent. of what it requires to work at full capacity. This firm recently installed an injection moulding machine, using American powder, which it was allowed to import on the understanding that 90 per cent. of its output would be exported; and although it has a stock of this American powder, paid for in dollars, it has no steel allocation whatever to make the blades that it produces. This is particularly discouraging to firms who have shown great initiative in responding to the call for more exports.

That firm more than doubled its exports between September, 1950, and December, 1951. I am told that, in fact, it raised the export proportion of its production in that period from one-half to two-thirds. It would appear that firms who, in the national interests, have tried hardest to expand production and to expand exports, have been the hardest hit.

The Minister will agree that it is difficult to answer a correspondent who writes that: Unless we get a considerable increase, we shall ultimately have to lay off a large number of our workers. Furthermore, we have no stocks on which we can depend during the next few months. We are willing for you or any Member of the Government Departments to come down here and check over our stocks and it will he realised that we are running on almost a day-to-day basis. We are at a loss to understand why our allocations have been so severely cut in view of our high conversion factor and our increased export trade which we understand is so essential to the country's economy. I hope that the Minister will be able to give an answer tonight and to assure us that the detailed working of the scheme has his close attention.

The working of the Order is of the utmost importance to our economy, to the maintenance of full employment, and to meeting our balance of payments difficulties, as well as our defence requirements. I hope that the Minister will not neglect it because of his pre-occupation with the de-nationalisation of the steel industry, which, I believe, can only aggravate an already serious position.

10.29 p.m.

Mr. Maurice Edelman (Coventry, North)

I beg to second the Motion.

My hon. Friend the Member for Sheffield, Park (Mr. Mulley) has already made it clear that we on this side of the House have nothing against the principle behind the Order. Indeed, we welcome the belated conversion of right hon. and hon. Members opposite to the principles of control, priorities and fair shares, although they are somewhat late in accepting them. For our own part, had we been in power, we undoubtedly would have used an instrument of this kind for the three-fold purpose of maintaining full employment, of maintaining our export trade and of carrying out our defence programme.

But in some obscure way, in the manner with which we are now familiar on the part of hon. Gentlemen opposite, we find that instead of full employment being maintained we have unemployment and under-employment. Instead of the export programme being maintained, we see a decline in the programme. Worst of all, in view of the protestations of the Government and the Minister of Supply, we now find that the defence programme is not being carried out to schedule; and owing to the working and present operation of this Order there are serious difficulties in our factories.

All over the country, whether it be in Scotland, where the ship-building is getting only 70 per cent. of its requirements, or whether it be in the Midlands, where the motorcar industry and the vehicle and associated engineering industries are getting on an average only 80 per cent. of their requirements, there are complaints of the working of this Order and the activities of the Government. There are complaints, not only by workers, who are fairly vocal in their complaints that they are not being allowed to carry out the full measure of production as they would like to, but also by managements, and all those who feel and recognise that unless we maintain our export programme and use all the labour and skill available the country will be in very serious difficulties.

Only the other day I was shocked to find, as I am sure the House will be shocked to learn, that in many factories up and down the country workers and managements are getting together, not in order to see with what little labour a job can be done but, on the contrary, to see how much labour can be put into a particular job in order to keep men in employment. That is very common, and I wish to give the right hon. Gentleman some examples of cases with which I am familiar in my own constituency.

I will not refer to those who have given me the information, but I am prepared to take full responsibility for the information I am about to supply. I was told by a trade unionist only the other day that at his factory a 35-hour week was being worked, the workers preferring short-time to redundancy. Despite that fact, and this occurred in the case of a motor firm, 298 workers had been dismissed.

I have another case where another trade unionist told me that in his factory, an important factory concerned with the vital motor industry, vital to our export trade, 430 men had been dismissed as redundant—about 10 per cent. of the labour force of the factory.

Mr. Speaker

Is the hon. Member arguing that these dismissals took place as a result of the operation of this Order?

Mr. Edelman

That is precisely my argument; that owing to the ineptness and fumbling of the right hon. Gentleman and those associated with him, we are now in the position that we have serious unemployment and under-employment in industries vital to both our export and armament programmes.

I will give one illustration arising directly out of the operation of this Order by the Government. It relates to a factory concerned as much with armament work as with the export programme. A worker informed me that the cut in the allocation of steel had resulted in the reduction of 300 units per week. This could have meant shutting out 350, but by negotiation, sectional work, short-time, etc., it had been brought down to a redundancy of 10 per cent. This firm was on armament work, and the worker could not understand why that labour had been declared redundant. I do not want to multiply examples, although I could do so, but I gave them to illustrate how the inept working of this Order has resulted in the difficulties which I have described.

I cannot forbear from giving one other example, which is not concerned with sheet steel as were the other examples. A Coventry trade unionist tells me that the foundry in which he is employed, and which is considered to be a barometer for the engineering industry, had to declare during the week before last no fewer than 84 men as redundant while short time is being worked from now on. I have given these examples as a general illustration of how the steel shortage—or alleged shortage, because I hope to prove that the position is not as the Minister says because, far from there being a shortage, there is an adequacy—is really affecting industry.

Here I have an example of how, in those factories where sheet steel allocations have been cut down, armaments workers have been made redundant and are unable to find suitable work to absorb their skill. A shop steward in the Vehicle Builders' Union has told me that two hundred vehicle builders are out of work in Coventry and finding it extremely difficult to obtain alternative suitable employment. Other jobs, such as bakers' roundsmen, have been offered, but that, honourable job though it is, is unsuitable. Other men have been offered posts as cloakroom attendants.

My informant formed the opinion that the Government intended to shut out 40,000 workers from the motor industry, and I would ask the Minister a direct question on that. Will the Minister say if it is the intention of the Government to contract the motor industry, and is it his intention, by means of this Order which regulates the allocations which the Government can make to that industry, to shrink it and thus make large numbers of workers redundant? I hope for an answer because, if that is so, as it would appear, then the Minister is deliberately reducing the size; and not only will men be made redundant, but quite clearly it is going to mean that our leading export trade is going to be shrivelled up. That is what will happen with, apparently, the obscure idea that the skill and resources of that industry will be taken up by the armaments industry.

If that be the intention, it is all the more tragic, because it means that we shall not be able to balance our trade since we shall not have the means of sending out the cars and other vehicles which have played so extremely important a part in our export markets in the past. I have said that it is possible that the Government have the idea that men made redundant will be "taken up" in the arms industry. If that is so, one would have thought that the Minister would have made such arrangements that any armaments works engaged on vital defence contracts would have had the materials necessary to absorb the men who become redundant.

Colonel Cyril Banks (Pudsey)

The hon. Member must realise that his right hon. Friend the former Minister of Supply at the time of the nationalisation of iron and steel made the statement in this House that in the future there would be less steel available due to the fact that it was not possible to get the imports which we required. That, in effect, was his right hon. Friend's prophecy.

Mr. Edelman

Before answering that point, I would mention an incident, which I have already told to the Parliamentary Secretary, of where a Midlands arms factory, engaged on most critical defence contracts, so far from being in full production, has recently made 15 per cent. of its labour force redundant. The trade unionist who communicated with me said that his factory had been working on rearmament—I will not describe the parti cular type because I think it would be inappropriate—and that recently they had had redundancy which amounted to a 15 per cent. cut in labour and that they were to work three and a half to four days from now on. He added: "How is it that we who are on re-armament are on short time and have had redundancy?" That is a question which I wish to put to the Minister. How is it that arms works concerned with vital re-armament have not the essential needs to carry on with their essential job?

Last year there was some decline in the overall total of steel. For the most part in the instances I have quoted, and in the motor industry to which I have paid special attention, the preoccupation is primarily with sheet steel. If that is the case, how is it that whereas in 1950 when we had full employment only 1,611,228 tons of steel or sheet steel were produced—that is alloy, non-alloy, uncoated, etc.—in 1951, the year of production which has direct relevance to the current production, the total of sheet steel produced had risen to 1,753,464 tons? That was irrespective of imports.

It does suggest that, in view of the fact that the physical quantity of sheet steel available has risen, something has happened. Perhaps the right hon. Gentleman can tell us. It is his responsibility. Where is that sheet steel? What is he going to do, by means of this Order, to make sure that that steel goes to the right people in the right quantities? It must have gone somewhere. Has it gone to the black market, or to the grey market? Is it being held in private hoards? Are there stocks, other than Government stocks, taken up by sheet steel? These are urgent questions I put to the Minister; I hope he will give the answer tonight.

Recently the Parliamentary Secretary to the Ministry of Supply, who approaches the question with an optimism I find admirable and a buoyancy I fully approve, was in the Midlands and was able to give some promises and make certain forecasts, which I hope with all my heart will be fully justified. I sincerely hope that he will be able to get more steel which he will be able to allocate to all those industries in the Midlands and throughout the country which today are gravely disturbed about maintaining their production because of the lack of materials. But I suspect that his optimism was based on the anticipation that we would be receiving large quantities of steel from America.

We know that one million tons of steel has been brought from America, together with a substantial amount of ore, but the right hon. Gentleman the Prime Minister seems to have bought a pig in a poke. No one knows what the steel is, or what its specification may be. Why should the hon. Gentleman, with the approval no doubt of his right hon. Friend, make such optimistic forecasts when he does not know the specifications of the steel we are going to get? Does he mean that the American motor industry is going to cut down the allocation of steel to its own manufacturers? Are they going to deny these cars for their home market so that we shall have steel for our export market? I doubt that very much.

I believe that in the hands of the Minister of Supply and those associated with him the instrument which is before us is a sharp and a dangerous instrument; it should not be in his hands. It is an instrument which he may and, indeed has, used to the detriment of the industry as a whole. I hope, therefore, that unless he can give some answers which will at least give us more information than we have at the moment, my hon. Friends will decide to oppose the Order because of the way in which the right hon. Gentleman has bungled the question of the allocation of steel, right from the start.

10.46 p.m.

Mr. R. Jennings (Sheffield, Hallam)

I admire the way this Motion has been moved. I thought that the mover put the case, from the Sheffield point of view, very fairly and very properly. I feel sure that he did not exaggerate his point, as the seconder seemed to do. [HON. MEMBERS: "It is the truth."] Nevertheless, he tried to convey to the House that the Minister was responsible for a good deal of bungling. [HON. MEMBERS: "Hear, hear."] Be that as it may, any bungling in that direction is nothing to the bungling of the last six years.

I feel that this Order places upon the Minister a very grave responsibility. If we look at the First Schedule—at the multiplicity of materials to be controlled, acquired and disposed of by the Minister—we appreciate the great variety of industries which will be affected by what ever action is taken. In the Second Schedule we have a list of the various Departments that are to authorise the allocation of these materials. I feel it is right and proper for me to raise my voice and tell the Minister that in the City of Sheffield we have a multiplicity of industries. [An HON. MEMBER: "And Birmingham."] This Order will be looked upon by the people running those industries with a feeling that it must be used in the proper way. Allocations must be given with wisdom; with foresight and with courage. There are bound to be complaints in various parts of industry because they are not getting, perhaps, the whole allocation to which they think they are entitled.

I do feel that some of the illustrations given by the hon. Member for Sheffield, Park (Mr. Mulley) show that there are cases where the Minister must look very carefully into all these points of complaint to see that the administration of the last Government is not followed and that bottlenecks, dislocation and under-employment are not allowed to exist. The grave difficulty that I see is that we must have instilled into the Departments a feeling of urgency and the realisation that what takes place in the Departments will directly affect the employment of the people out in industry. We must have the closest co-operation between one Department and another, and forthright decisions must be made. When complaints are made they must be sympathetically looked into, to see that the Order is being operated in the most expeditious way. I am certain that the Minister appreciates his responsibility, and that those in the Departments are not anxious to create under-employment or unemployment.

I am one of those people who believe that no one but a fool wants to see unemployment. I have said so from that side of the House on many occasions. It is a false charge to suggest that anyone on this side wants to create any bottleneck of unemployment. [Interruption.] I know that it is difficult for hon. Members opposite to have to listen to some of these truths.

I plead with the Minister to use his great judgment and wisdom and to see that in every possible way all decisions are equitable and that every allocation gets its right amount of priority. If he does this, I am sure that the Order will work efficiently and effectively.

10.53 p.m.

Mr. Frederick Peart (Workington)

The hon. Member for Hallam (Mr. Jennings) revealed an uneasy mind when he referred to bungling. However, we do support his attempt to prod the Minister into conceding that there is a need for urgency. I do not think the hon. Member for Coventry, North (Mr. Edelman) exaggerated. In his constituency there is, because of the deliberate starving of the motor industry of steel, a measure of unemployment.

It is all very well for the hon. Member to say that no one but a fool believes in a measure of unemployment, but the simple fact is that in the past we have known economic policies which have created the position which is now being created in Coventry and in other parts of the country. The argument of my hon. Friend that there is a danger of a measure of unemployment and under-employment being created is one we must look at.

Mr. Jennings

I was answering the suggestion of the hon. Member, who was putting that forward in substance.

Mr. Peart

The hon. Member said he was exaggerating, but I do not think that he was exaggerating the position in Coventry. He tried to demonstrate to the House that because of the policy on allocations a measure of unemployment has been created in the motor industry. I want to deal quickly with two other aspects which have not been mentioned. I refer first to the agricultural industry. I should like to know how this Order will apply to the industry. One section of a speech by the Chancellor of the Exchequer on 29th January has been quoted before. He said, I turn now to plant, machinery, and vehicles for civil use. Our objective is to reduce total home deliveries of plant, machinery and vehicles for civil use by £150 million to £200 million at current market prices below the level attained in 1950. The House should know that this severe and unwelcome step means on the average a cut of no less than one-sixth of actual supplies in 1950, and even in that year the supplies which industry and agriculture got fell short of what they would have liked to buy and what is really needed in the long-term interests of our economic progress."—[OFFICIAL REPORT, 29th January, 1952; Vol. 495, c. 57.] The Chancellor of the Exchequer, who is the man behind this Order, went on to say that he would like to appeal to industry and agriculture in general to postpone their demands on the engineering industry.

I want to know if it is the deliberate policy of the Government, through this Order, to starve the industry which is concerned with the production of agricultural machinery and implements of supplies of steel for the coming year? If it is, I believe that policy to be stupid and foolish, because if we are to challenge our economic difficulties we must have increased agricultural production. Hon. Members on all sides have accepted that. If we are to have increased agricultural production and even a target, which all parties have agreed to, representing a 50 per cent. increase above the production we had in the 1930's, then agriculture must have the tools to do the job.

If it is the deliberate policy of the Ministry of Supply, for certain reasons which they may argue, to starve the agricultural industry of that supply of steel, then the machine side of the industry will be affected, and that in the end will affect the total figure of agricultural production. I see some hon. Members opposite nodding their heads in agreement. I hope that those who accept that view will get up and say that this industry must not be severely attacked by the present policy of the Ministry of Supply or the Chancellor of the Exchequer.

Colonel Banks

Does the hon. Gentleman realise that last year in the motor industry alone the number of motorcars in this country under a Socialist Government was down by 35,000 cars? Surely this started long before this present Government came into office? Why blame this Government?

Mr. Peart

I am not going to accept the hon. and gallant Gentleman's argument in relation to agriculture, because since 1945 it has been the deliberate policy of the Labour Government, and particularly the Ministry of Agriculture, to see that we should allocate a proportion of our steel supplies to the agricultural industry not only for the home but for the export markets. I do not think his figures actually apply to tractors and combine harvesters.

Colonel Banks

These firms make both agricultural vehicles and motorcars.

Mr. Peart

The hon. and gallant Gentleman quoted figures for motorcars. I do not accept his view. It does not apply to agricultural machinery.

Finally, I want to deal with another Department which is affected by this Order and which is covered by the Second Schedule. I refer again to the speech made by the Chancellor of the Exchequer. I refer to the position of steel for education. The Chancellor said: In order to meet difficulties in school building, particularly the shortage of steel, which is affecting the building programme like everything else, the Minister of Education proposes to ask authorities to make more economical use of school premises and to have more flexible arrangements in the age of transfer to secondary schools."—[OFFICIAL REPORT, 29th January, 1952; Vol. 495, c. 54.] Since then, Circular No. 245 dated 4th February, has been issued by the Minister of Education, and it reflects the deliberate policy of the Government to starve school building of steel. I want the Minister to tell me if the Order will continue the policy which was foreshadowed by the Chancellor and has since been confirmed by the Minister in her Circular. The Circular states: The need for financial economy, the shortage of steel and the temporary overloading of the building industry necessitate a revision of the educational building programme for 1952. It goes on to say: The rate of starting new work will depend largely on the speed with which projects under construction are completed and on the outstanding requirements of those projects for steel. I could quote other parts of the Circular and speeches which have been made recently. I believe that it is accepted by every hon. Member that the Circular reflects—for whatever reasons it can be argued—the deliberate policy of the Government now to reverse the steel allocation policy for school building which was laid down by a Labour Ministry.

Mr. Charles Ian Orr-Ewing (Hendon, North)

Surely there cannot be a very great starvation of the educational programme if we are proceeding to construct places for 400,000 extra children within the present programme?

Mr. Peart

The hon. Member should know that there is what is called "a bulge in the school population," and the economy measures foreshadowed in the Circular will force local authorities 18 months or two years from now to acquiesce in what I consider to be a major cut in the school year.

The Government have reversed the policy which was laid down by the previous Government. It has been reported publicly that my right hon. Friend the Member for Farnworth (Mr. G. Tomlinson), the former Minister of Education, guaranteed 40,000 tons of steel for school building. I do not know whether that was adequate at the time, but this Government are even cutting down that amount, and this will have very disastrous effects on the educational service.

Mr. Spencer Summers (Aylesbury)

In pleading for more steel for education and farm equipment, the hon. Member is making it more difficult to meet the claims which his hon. Friends have already made in the debate.

Mr. Peart

All I am asking is that the Government, which has now committed itself to a policy of rationing and fair distribution, should see that each service gets its fair share. I ask that education should have some steel. Education will not now get any steel for the next few weeks. I merely ask that the Minister of Supply should see that education, which is a vital social service and performs an important service in relation to production, as we were told in the debate on manpower, should get its share of steel in relation to production—the supply of technicians and so on—if we are going to win the wider, long-term battle. In present circumstances it is foolish to cut down so drastically on the supply of steel for school building. After all, the amount is small compared with the global quantity of steel used by other industries, and it is negligible when we think of the demands for re-armament.

Therefore, I ask the right hon. Gentleman to impress on the Chancellor of the Exchequer and his Cabinet colleagues that the present allocation will seriously affect agricultural production and will endanger very much the main fabric of our educational system. I hope my hon. Friends will protest strongly against the Order and register their opposition.

11.05 p.m.

Mr. W. F. Deedes (Ashford)

To hear one or two Opposition speeches one would suppose this Order was being used the victimize certain industries. In fact, this is a serious business for all industries which use steel. There is no user of steel who is not now threatened with a scarcity. Tonight we are really using the language of priorities. Until we know what the Minister's commitments are and what supplies he has to meet them, it is hopeless to tell him what the priorities shall be.

I intervene to submit that none of the priorities mentioned by hon. Gentlemen opposite tonight will in fact be supplied unless one other priority is supplied—our transport system. I refer particularly to our railways. The railways are facing a situation at least as serious as any put forward from the other side. They have cut their locomotive building programme by one half, their wagon building by one third, and have eliminated the building of carriages, which are essential in the priority system of transport.

The wagon situation is by far the most serious. We have 150,000 wagons on the railways today more than 40 years old, a high proportion of which have been breaking down during the last two or three years. Last year—hon. Gentlemen opposite will not confuse this with any responsibility of the present Minister—90,000 hot boxes were experienced by the railways. [Interruption.] I am not going to be led astray. The cost of putting that trouble right runs into a considerable sum. I have some sympathy with the railways in this matter and want, in one respect, to put in a good word for the work that is being done by the Railway Executive under nationalisation. Progress has been made towards a certain amount of standardisation of the rolling stock on our railways. That progress is now made more difficult by the steel situation which today confronts the railways.

Mr. A. C. Manuel (Central Ayrshire)

The hon. Member mentioned the figure of 90,000 hot boxes. Is he aware that the large proportion of these were on wagons—

Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew)

I do not think we can pursue that. This all happened before the Order came into force.

Mr. Manuel

On a point of order. The Order is related to the allocation of steel to various industries. Steel wagons are not being produced in the numbers that would be produced but for the Order. I respectfully submit that the point raised by the hon. Member, and to which I was referring, is within the scope of the debate.

Mr. Deputy-Speaker

I think not, because the hot boxes referred to happened before the Order came into force. There is nothing about them in the Order.

Mr. Deedes

I am sorry, Mr. Deputy-Speaker, that I ventured too wide in referring to hot boxes.

Mr. Manuel

Do I take it, Mr. Deputy-Speaker, that you rule out my interjection while allowing the point to be made by the hon. Member for Ashford (Mr. Deedes)?

Mr. Deputy-Speaker

I did not stop the hon. Member making the point, but it is not to be pursued because it does not arise.

Mr. Deedes

One of my objects in raising this problem of the railways is to try to induce hon. Members opposite, contrary to some of the speeches they have made, to understand that there is no particular victimisation of any one industry under this or any other Order. All industries are equally in difficulty.

Mr. Mulley rose—

Mr. Deedes

I am sorry—I have given way once.

I want to say a word, still on the subject of railways, about the employment side of the question. There are 80,000 men involved in the construction of railway equipment who are affected by the necessary supplies of steel. Of those, I think, 3,000 alone may be cut down in respect of the carriages which the railways can no longer make. That is a quite serious matter, because once they have left the industry they will find alternative employment, but the railways may not be able to ensure their return to the industry.

There are districts in which men who leave railway works can find alternative employment in the re-armament or other industries—

Mr. Deputy-Speaker

We are not discussing employment on the Order.

Mr. Deedes

I bow to your Ruling, Mr. Deputy-Speaker, and say this final word. In respect of the railways, the need for steel, and the effect upon both construction and unemployment, is undeniably as strong as in any of the industries which have been mentioned tonight. I want, however, to follow something that was said by, I think, the hon. Member for Sheffield, Park (Mr. Mulley) when he mentioned the question of exports and the effect upon the exports of certain industries consequent upon the shortage of steel.

There is one industry—the bicycle industry—which in the last year undoubtedly has made very considerable advances towards lifting the export figures, as exhorted to do by the late Government and by the present Government, and they in particular are feeling a little aggrieved at what may be, and, I think, is, a perfectly fair allocation but is none the less an allocation which makes their achievements in the past 12 months appear rather hollow.

The problem is that those who have stepped up their exports during the past year, in which steel has been free, beyond a point which their allocations 12 months ago made appear to be possible, now find that the steel which is allocated to them not only eliminates home sales—which, I think, we are all agreed may be necessary, and that is accepted—and not only eliminates some exports—that is regretted, but it may be inevitable—but may even cut into our dollar exports. That is a much more serious proposition.

I ask the right hon. Gentleman to look very carefully at the claims of any firm whose advances in the export trade during the last 12 months, particularly in the dollar market, are such that the terms of the Order, while they may apply quite fairly to all the industries concerned, none the less react unfairly in these very exceptional cases. If that is done, and the case for these industries which have made considerable efforts to push up their exports is fairly reviewed, we shall eliminate one of the main sources of grievance under this Order.

11.16 p.m.

Mr. John Edwards (Brighouse and Spenborough)

I will not detain the House for long, but I should like to ask the right hon. Gentleman a few questions on one particular aspect of this matter. My hon. Friends and indeed hon. Gentlemen opposite, have already given so much information about the troubles of this scheme that there can be no doubt that there is something wrong with the way in which it is operating at the present time. Therefore, I think it is pertinent to ask the right hon. Gentleman some questions about the way in which the allocation has been made. Is it working well? What is it that is not working well?

I am sure we can be all agreed that what we want more than anything else is that the distribution scheme should be fair. We cannot have any allocation scheme without tears. The mere fact of allocation means there is not enough material to go round. But if we are to ration we must be certain that the claims of the different parties are properly considered, the claims weighed properly, and the allocations then made so that hon. Gentleman and the public generally are sure they are fair.

In the last Government the allocation arrangements were perfectly well known. It was known that there was a Materials Allocation Committee consisting of representatives of all the various Government Departments. It was known that that the Committee had a Ministerial chairman, and it was common knowledge that I was the chairman—at any rate in the last 12 months of the last Government. People wrote to me about the allocations. I can recollect an occasion when an hon. Gentleman, now a member of the present Government, actually brought a delegation from the agricultural machinery makers to see me. That Committee had the job of deciding between the various Departmental claims. If agreement could not be reached, then the Ministers got together and, if finally a settlement could not be made, it had to go to the Cabinet or a Cabinet committee.

To what extent has that machinery been altered? Does the Materials Allocation Committee still exist? Has it got a Ministerial chairman? Is the right hon. Gentleman Ministerial chairman for the steel allocation? I see the right hon. Gentleman shakes his head. I am glad because I would regard it as a bad thing if he was. Perhaps we could be told who is the chairman. I have heard—not on any real authority—that the Chancellor of the Duchy of Lancaster is chairman. Does he settle Departmental allocations? Has he the last word? Does he settle any part of the allocations for Departments? For example, in the right hon. Gentleman's case his Department will have the biggest allocation by far. Have the various industries been given an allocation by the Committee, or the Chancellor of the Duchy, or is it wholly a matter for the right hon. Gentleman to split up this vast global allocation which may have been given to him?

These are questions to which we are entitled to have an answer. If we cannot be told how the allocations are made, there would be no harm to the public interest if we could be told the amount of Departmental allocations.

What I am sure we all want to do is to find a way of allocating a material which is short, and we should be more confident that there was a fair way if the right hon. Gentleman would draw this veil of secrecy which so far has been hiding the actual administrative arrangements and let us know how the thing actually works or, in this case, does not work.

I could myself add to the evidence given by my hon. Friends. What worries me from the evidence I have seen is that there does not seem to be sufficient appreciation of the priority which ought to be granted to exports. We need not argue about the fact that the export drive is pre-eminent in our present circumstances. It seems to me, from such allocations as I have known to individual firms, as it there were an attitude which amounts almost to indifference on the part of the right hon. Gentleman and his colleagues. This really will not do. Unless exports can he given the right priority, unless right throughout the Department there is a recognition that a good exporter is to be encouraged, we shall not overcome our current economic difficulties. I shall be obliged to the right hon. Gentleman if he will answer the specific questions I have put to him and give us an assurance that he is fully seized of the need for priority for the good exporter.

11.23 p.m.

Mr. Peter Roberts (Sheffield, Heeley)

I would not have intervened in this debate but for the lack of perspective in the speeches made by hon. Members opposite. I do not include the speech of the hon. Member for Brighouse and Spenborough (Mr. J. Edwards), because that was directed very much to the point. But I would point out to the House that we are discussing, or have been discussing, the question of the shortage of steel; and the problem underlying their apparent attack on my right hon. Friend is really the problem of the production of steel.

I shall not put myself out of order by saying that the real problem is the question of the nationalisation of steel, but some of the remarks made tonight by hon. Members opposite will come in useful to hon. Members on this side of the House when we come to the steel debates later on.

Mr. Mulley

Does not the hon. Gentleman think that the time of his right hon. Friend would be better spent in seeing that this Order worked than in preparing schemes for the de-nationalisation of the steel industry?

Mr. Roberts

I am referring to the arguments from hon. Members on the other side of the House, and I am trying to point out that the arguments, as I have listened to them, have tried to make out that this question of hardship is a result of what my right hon. Friend has done under this Order. Shortages are no new thing. The right hon. Member for Vauxhall (Mr. G. R. Strauss) knows perfectly well that I was pressing him over a year ago to introduce an Order of this kind, and I am on record to that effect. He also knows that the question of shortages was brought to his attention.

The hon. Member for Workington (Mr. Peart) mentioned agriculture. I can assure him that in Sheffield we have been worried about the question of steel for agriculture for a very long time. It is no new thing, and I want to bring the House back to this question of perspective. If hon. Gentlemen opposite try to make party politics out of this it will react upon them as a very unfavourable boomerang.

We are questioning now the allocation of what steel supplies there are. I am not going out of order by putting the responsibility for the shortage of steel where it should be. I want, however, to remind hon. Members opposite—

Mr. Edelman

Is it not the case that, despite the shortages under a Labour Government, full production and employment was maintained, whereas under the present administration there has been unemployment and under-employment and productivity has fallen?

Mr. Roberts

I think that the hon. Gentleman is usually fair, but in this case he is not. Under the previous Administration we had four large shops in Sheffield closed in the autumn of last year, and there was this question of under-employment going on in Sheffield for quite a while—and in Rotherham, too—and we on this side of the House did not make party political capital out of it. It is not true to say that we tried to do that at the expense of the unfortunate position in which many of our fellow workers found themselves, and I point out to hon. Members opposite that if they try their game it will not pay them in the long run.

The hon. Member for Sheffield, Park (Mr. Mulley) asked questions about the figures for the first quarter's allocation for this year and also mentioned the second quarter. I hope that the Minister will give the full picture, because if he is going to answer the hon. Member and give these figures, then he will also be able to give estimates for the third quarter. I understand that the steel position was very difficult at the beginning of the year—almost chaotic; again a legacy from the previous Administration—but I hope that by the third quarter, and certainly the fourth, this allocation question will be very much fairer and the industries needing the steel most will get it.

Mr. James McInnes (Glasgow, Central)

To which industries is the hon. Member referring.

Mr. Roberts

I propose putting my faith in the Minister in order to see that the proper allocations are made, and I hope he will be able to assure us—as, indeed, I am sure all hon. Members hope—that allocations will be on a satisfactory basis by the end of this year.

I come now to a point raised by the hon. Member for Coventry, North (Mr. Edelman) about American steel. The hon. Gentleman has spoken previous in this House on that subject, and it is really a misconception to claim that, where people create, as they do in this country, a vast variety of steel, we shall not be able to fit into our steel production certain allocations of whatever types of steel we receive from the United States. Personally, I do not think he need be worried about the question of the kinds of steel likely to be imported from the United States, because almost every kind can be used in our steel economy.

There is this last point, raised by several hon. Members, about redundancy and about steel allocations causing unemployment. I would put to the Minister for his consideration that, rather than using allocations to transfer work from one factory to another and necessitating, therefore, possible movement of labour with all the consequent difficulties over housing and other problems, he should use existing works to augment the armaments factories in their present conditions.

That would mean, as during the war, going to various firms at present making things not so useful or so important for the armaments drive and saying, "Here is a list of products required in the national interest; how much can you make?" I suggest that if he does the ingenuity of a great number of those gentlemen is such that they will be able to look through the list and find out what they think they can convert to, and in that way the works will be kept going, the labour will be kept in the works and the allocation of steel will not have to be switched.

It is extraordinary how in innumerable small firms employing 20, 30 or 40 men of great skill they can turn their hands to new ideas. I have noticed that in the past Ministers have tended to use the big bludgeon of allocation to get the production they required for re-armament rather than to use the ingenuity of skilled workers of Sheffield and elsewhere. I suggest to him as a question of policy that he should adopt that method rather than try to change the allocation of steel from one works to another.

Tonight we see the Opposition apparently praying, or so they say, against an Order which they themselves have been supporting in principle for a number of years. It is extraordinary. If they do accept the advice of at least three of their Members and go into the Division Lobby, it will set a precedent of insincerity and inconsistency which it will be hard to beat.

Mr. Mulley

Does the hon. Member not realise that under the procedure of the House one has to put down a Prayer to raise the matter?

Mr. Roberts

It can be raised in other ways if the hon. Gentleman wishes to do it.

11.33 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

I intervene in this debate because I feel that when the noble Lord, my predecessor, reads this debate and of the claims for the motor industry, agriculture and the railways, he will severely castigate me if I do not put in a claim for the shipbuilding industry.

The hon. Member for Ashford (Mr. Deedes) mentioned priorities in the allocation of steel, and it is with these that I am concerned, because I noticed, on reading the Votes on Account, that the strategic reserves in this country are to be severely run down to the tune of about £100 million. I feel that shipbuilding should have first priority in the coming year, because in that industry we are faced with difficult circumstances due not only to an inadequate allocation of steel but also to the fact that the allocation we are receiving is coming spasmodically. Costs in shipbuilding are being increased because men are severely under-employed.

Sir Murray Stephens, Chairman of Alexander Stephen and Sons, recently said: We do not know what steel deliveries may be like in two years' time. All that we do know is that deliveries have fallen very far short of the industry's programme—in fact a figure has been mentioned of a shortage of 33 per cent. during recent months.

Mr. Arthur Colegate (Burton)

Can the hon. Gentleman give the date of that speech? To what period does "recent months" refer?

Mr. Bence

January, 1952—so "previous months" must be November and December. Sir Murray Stephens continues: If this were to go on, the position would be very serious indeed. It would mean two ships in place of three each year, and the cost would obviously go up also. It is to be hoped that the strong reasons for giving shipbuilding its full due allocation of steel to meet the needs of its output will prevail and that this vital industry will not be slowed down…A long-term continuance of the present deliveries would be disastrous. Why deliveries are so had just now it is difficult to see, and what one would like to know is where all the steel is going. They are the words of the Chairman of Alexander Stephen and Sons—one of the biggest shipbuilders on the Clyde.

The cost of shipbuilding is being driven up at a tremendous pace because of the inadequacy of the steel allocation, and this will make it very difficult where firms have to take on long-term ship construction at fixed prices. We are afraid that the delay in delivery and the increasing costs of production due to under-employment of men in the shipping industry may have serious repercussions in a few years' time.

This allocation of steel throughout the country not only means under-employment in the shipping industry but in the engineering industry. The result has been demonstrated by a fall in production of most engineering plants throughout the country in the last few months, and we have the position of rising costs with under-employment of manpower in most engineering industries, the effect of which must be a slowing down of every programme in every field of our economy in respect of the engineering trades.

We are trying to do an awful lot of things, and we shall fall down on every one of them through the faulty allocation of steel. The Government are trying to do too much with too little in too short a time, and I suggest that the Minister should get down to tackling the problem of the allocation of steel to the shipbuilding industry because, with the running down of our resources, as I have mentioned before, it cannot be long before shipping will be our first line of defence. Surely everyone will agree that British-built ships, and Clyde-built ships in particular, would be far more useful in an emergency, with our stocks run down, than some of the prefabricated ships, the experiences of which in heavy storms we have learned of in the last few months.

I appeal to the Minister to take the advice of an hon. Member opposite and appreciate, when considering priorities, that under present circumstances shipbuilding is a first priority.

11.38 p.m.

Mr. G. R. Strauss (Lambeth, Vauxhall)

I think it would be generally agreed in all parts of the House that my hon. Friends, in raising the matter of this Order for allocating steel, have rendered the House and the country some service, because they have expressed the very deep grievances and the very real concern felt by many people throughout the country about their employment and about the prospects of their works being able to continue and flourish. Nothing could be more important than the ventilation in this House of matters of such great importance, affecting the lives and the livelihood of perhaps tens or hundreds of thousands of people.

It is clear from what my hon. Friends have said that they are exceedingly critical of the application of the allocation scheme against which they have put down a Prayer and against which I and my right hon. Friends are also praying this evening. In their speeches they have made it clear—and I make it clear again—that we do not oppose the principle of an allocation scheme or, indeed, this allocation scheme. What we are concerned about is that this scheme should be properly administered. Where mistakes have been found to exist they should be examined and remedied as quickly as possible.

One cannot help making the comment—before asking the question which I have in mind—that this Government, when in Opposition, criticised every form of control over industry and made a great deal of propaganda about the way in which our controls were fettering and hampering the ingenuity and the inventiveness of our people; but the first thing they do when they come in is to adopt a most important and all-embracing control scheme affecting all the basic industries of this country. We are used to their going back on their pre-election programme and policy, and we are almost getting tired of pointing out the many occasions on which they have had to eat their words.

I would like to ask the Minister of Supply a number of questions about this allocation scheme, which arises, as has been said, from the shortage of steel and iron which we hope will be temporary. The basic cause of this shortage was the drying up of the large quantities of scrap which we were getting from Germany. This amounted to about 2 million tons for many years. It suddenly came to an end last year, and it has not yet been replaced in sufficient quantity by any other material.

I would like to ask the Minister whether the allocation scheme we are now discussing is identical with the allocation scheme which was in force up to May, 1950. In the introductory document issued to consumers, it is stated that it is basically the same. Does that mean that it is identical, or does it mean that it has been altered in some particulars? If the latter is the case, we would like to know where alteration has taken place. Or is it the same scheme, with only the amounts of metal allocated to the various consumers changed?

I will preface my next question with the remark that in the opinion of my right hon. Friends who were engaged in the administration of the previous allocation scheme, and in my experience, no allocation scheme, particularly one as big as this one, is perfect. There are bound to be evasions. There is bound to be, in the early stages, a certain amount of unfairness. It is difficult to be sure that everyone is being treated fairly, and that every steel consumer is acting fairly in respect of the amount of steel he is receiving.

It was our experience that many big industrialists under the former scheme were getting more steel than they were entitled to and that they were evading the scheme in spite of every step we took to see that they did not do so. Whole groups of industrial consumers—and I will say openly that the motor industry was one of the worst offenders—were in one way or another getting steel beyond the amount to which they were entitled. They were putting it to good use, it is true, in exporting it; but they were using steel above that allocated to them, with the result that many other important consumers, such as the railways, and perhaps shipbuilding yards, and others who were entitled to certain quantities to keep their industries going were not getting those quantities. That evasion was unfortunate. We took steps, I think successfully towards the end, to ensure that further evasion did not take place.

I would ask the Minister whether he is satisfied that the scheme as now drawn up, and the arrangements which he has with industry, will ensure that no one will get any significant quantity of steel above that to which he is entitled. If one person gets more than he ought to, then someone else goes short. That is contrary to the national interest.

It is inevitable that in the early stages of a scheme of this sort things will go wrong. One does not know what stocks people have, how much some people's production has increased since the basic period. There are bound to be anomalies and difficulties. What we are concerned to ensure is that prompt and effective steps will be taken to rectify mistakes quickly. These cases which my hon. Friends have mentioned appear on the surface to have been grave mistakes made in the early days. They may have been inevitable. I want to know whether they have been remedied or looked into and will be put right without any delay.

I would give a warning to some of my hon. Friends, speaking from some experience. Very often someone comes along—an industrialist—and makes a case from which it would appear that he has been unfairly treated, but on closer examination one finds that he does not make his case. It appears he is not getting anything like the amount of steel he was using the year previously, but although he was getting a proper allocation that year one finds he was using more steel than he was entitled to.

It is necessary to examine carefully cases of unfairness when they are put forward, because it may be that sometimes the industrialist is trying to get more steel than he is entitled to. All cases must be examined carefully whether the people are getting the right amount of steel or not, because on that depends the employment of skilled people who have been years in a particular firm. Every effort must be made to see that they do not suffer from maladministration of Government Departments.

Next I would ask the question: is the machinery such that quick adjustment can be made where it appears that somebody has not been receiving the steel he should have received? Can quick adjustment be made through the regional controller so that the matter does not have to go to headquarters for consideration? It is desirable that as far as possible, although it is not always possible, adjustment should be made locally by the regional controller or the Ministry of Supply who know the local circumstances and requirements of each firm.

I am not sure whether the Minister will want to answer the next question. When he made the allocation to start with, did he keep back a useful amount in reserve to put right any serious cases of under-allocation that might arise? He should have done so, and if he can give us any information I will be grateful.

My next question is whether he can tell us, when he is making his allocations to engineering firms, what are the relative priorities for defence orders and export orders. Sometimes they conflict. Sometimes one cannot give all one wants to firms on defence work or semi-defence work. The same applies to firms employed on export orders, even to dollar markets. Is there any priority system for one or the other? If so, we should know. Or is it the case that defence and export orders to dollar markets get equal priority and neither gives way to the other?

Another point which was touched on by some of my hon. Friends is with regard to the steel allocation for school building and the extent to which an inadequate amount of steel is likely to retard the school programme. At Question Time today a Question was asked about the adequacy of steel for building up blitzed cities. What I am worried about is that the shortage of steel may be used by hon. Members opposite as an excuse for cutting down social services, whereas really a cut may be made for quite different reasons—for economic or Budget reasons, or whatever they may be.

I am fearful that when the cuts take place we shall be told, "We cannot help the cuts because the steel shortage is such that the steel is not available," when the real reason is very much different. I hope it will not happen. There is no reason why it should happen. It is for the Government to divide up the steel as they think fit between the social services and the many requirements of the railways, shipbuilding and all the other things which have been mentioned.

I now come to my final question. It is important that the House and the country should know what the prospects are for allocating steel under this Order during the second, third and fourth quarters of the year. What is the steel position? Are allocations to be raised substantially during the second, third and fourth quarters, particularly in the last two quarters, as a result of the agreement with the United States? Industry ought to know that.

Are we sure that we shall get the steel which we were told we should get under the agreement with the United States? It has happened in the past that we have made arrangements with the United States Government and, through no fault of the United States Administration, we have not got what we expected to get. I have no reason to believe that that will happen on this occasion, but it will be some assurance to us and to the engineering industry if the right hon. Gentleman can tell us that he is certain that he will get the substantial quantities of steel to which we are entitled under the agreement, and if he does get them, whether he will be able to increase allocations significantly during the latter part of the year and remove some of the grave difficulties about which my hon. Friends have been speaking.

If he can say a further word about the types of steel that we shall get, that will also be of great interest. He has told us in answer to a Question that among the types of steel that we are to get are various categories. Do we yet know what they are? Have we made any agreements or contracts? Are we likely to find that we are getting large quantities of steel which we do not want much or which are exceedingly inconvenient and awkward to feed into our steel industry? Shall we get the surplus that the Americans do not want? Shall we have any say at all in the type of steel that we shall get?

All this is exceedingly important. It is not only the welfare of the engineering industry, the building industry, the rail ways and the shipbuilding industry and a lot of other industries which depends on the amount of steel which will be available during the coming year, as well as on the fairness with which that steel is allocated. The livelihood of tens of thousands of workers in industry, the welfare of thousands of children who may or may not get schools, and the prosperity of the whole country depend on the quantity of steel that we are likely to get during the course of the year and the fairness with which it is divided among the applicants for it.

If the right hon. Gentleman can satisfy those points, he will have done a considerable service not only to us but to all those interests in the country who are so anxious to know today what their prospects are for steel during the rest of the year.

Mr. Speaker

I ought to point out that it appears to me that the Order is concerned not with the supply of steel or the production of steel, either from our own resources or from abroad, but with its distribution.

Mr. Strauss

I fully accept what you say, Mr. Speaker, but the distribution of steel under the Order will depend in turn on the amount of steel which is available Therefore, I think we are entitled to know, when we are considering what effect the Order will have on industry, how much steel there is likely to be to distribute. Otherwise it would be very difficult to come to a decision as to whether the Order is justified or not and whether we need an Order or could carry on without one.

Mr. Speaker

It may be referred to, but I would point out that, no matter what the supply of steel is, the Order would operate unamended.

11.55 p.m.

Mr. Jack Jones (Rotherham)

I did not intend to intervene, but I realise that this has become a question of priorities. We are asking the Minister of Supply to do the impossible—to give to every industry, every constituency, and the various Members of the constituencies all that they desire to have. There is only a limited amount of steel in the country and the question that gravely concerns us on this side is that it shall be allo cated fairly and in the best interests of the national economy.

The hon. Member for Heeley (Mr. P. Roberts) quite unfairly, and out of order, suggested it was because of nationalisation. Let me tell him that if he would go to his constituency and tell steel workers that, he would get a rude answer.

Mr. P. Roberts

Oh, no! Do not believe it.

Mr. Jones

The facts are that there has been more steel to be allocated since nationalisation than ever before in our history. But we will get down to how much is being produced when we come to the question of who shall control the industry.

We find various Members following one another with claims for priority. My hon. Friend who moved the Prayer suggested sufficient steel for light industries in Sheffield; and my hon. Friend who seconded asked for the "umpteenth" time for alloy, sheet, and tube steels for the cycle and motorcar industry of Coventry; an education expert came forward with a request that schools should be built, which meant section steels; and the agricultural experts want steel for agricultural implements to increase food production. I am surprised we have not got the anti-armament experts here to suggest that if we were not to carry on with re-armament we might be able to find sufficient steel to meet all the various requests.

The House must concern itself with facts. The bare facts are that present production out of the existing capacity—improved during the last five years—has not met the demand of a fully-employed nation, plus the re-armament programme. Therefore, the new Minister has got a plateful in trying to satisfy all the requests made to him. His job is to see that the enormous black market, the wicked grey market, the under-the-counter business, and all the things going on, not only among the small people, shall cease. The ex-Minister of Supply has referred to what we found in the last three or four years.

The motorcar people, particularly in Coventry, are now saying that they are entitled to get sheet steel to achieve a higher production than the figures that they were not entitled to produce, be cause they got more sheets than they were entitled to.

Mr. Edelman

I recognise the expert knowledge of my hon. Friend on this subject, but he has missed one of the points that I certainly tried to make, particularly in relation to Coventry production. The importance of Coventry is not simply that it is a constituency but it is the place where one of the most important commodities of our export programme is manufactured, and unless that industry gets its steel to enable it to carry on our export programme as a whole and the country will suffer because of our difficulties.

Mr. Jones

I agree with every word of that, but I am pointing out the impracticability of my hon. Friend's suggestions. One cannot put sheet steel into cars and, at the same time, put in into railway wagons. We cannot put the sheet steel into tanks and manganese steel into tank tractors, and, at the same time, put that high quality managanese steel into agricultural tractors. It is impossible to have it both ways.

I agree that if we could divert our present indigenous materials and supplies from our own country into exports and get the dollars to get the food, and forget all about re-armament, that would be all right. But we cannot do that—we must face the facts as they are.

My last word is about the allocation of the steel that is to come from America. I ask the Minister to take particular note of what I say. If he finds, as has been suggested by my right hon. Friend the former Minister, that the proposed supply from America is likely to fall down, I ask him to make certain that in lieu of the semi-finished, finished or ingot steel, we get raw materials.

To buy a million tons of steel from America when our own furnaces are standing idle, and our own people are under-employed on the production side in Sheffield, Rotherham and everywhere else in the industry, is bad business. We should, if possible, get the raw materials, so that we employ our people on them and get the great conversion value from the finished products in this country. It is far better to spend one-third of the money in getting the raw materials than to spend the total amount involved in getting the semi-finished products which America will unload, and particularly the stuff that they themselves can manage very nicely without.

There is not sufficient steel to meet a fully employed democracy plus a rearmament programme. This means that whatever is done by the Order, somebody, somewhere, will feel hurt. My appeal is that the steel that is available for this country shall be allocated where it can earn the best possible living for our people and where at the same time there will be the least demand upon it for the needs of the re-armament programme, which, after all, is a non-profitable venture.

12.2 a.m.

The Minister of Supply (Mr. Duncan Sandys)

I am sure that everyone, in all parts of the House, can agree with the broad sentiments, principles and objectives enunciated by the hon. Member for Rotherham (Mr. Jack Jones) in the last few sentences of his speech. The problem of steel allocation is to apply those general principles in detail over a vast field, and to very many firms with varied problems.

Without trespassing upon your Ruling, Mr. Speaker, I should like, in a very few words, to reply to the last question of the right hon. Member for Vauxhall (Mr. G. R. Strauss) about the outlook for steel allocations and the prospect of increasing them in the second, third and fourth quarters of the year.

To try to help firms in their planning, we have already issued the allocations for the second quarter. In fact, we got them out within 10 days or a fortnight of the beginning of the first period. There was a very slight increase in the amount of steel allocated in the second quarter.

The right hon. Gentleman asked what were the prospects for importations. There is no doubt that, unless something goes seriously wrong with the arrangements that have been made to obtain additional steel from America, imports of steel will increase substantially in the third and fourth quarters. However, I certainly will not venture to forecast what allocations we can make until I know much more about the prospects of home production, because imports and home production together make the total amount of steel which can be allocated.

I express my thanks to the hon. Member for Sheffield, Park (Mr. Mulley), for the extremely moderate and constructive way in which he moved the Prayer. The general tenor of the debate has been constructive, helpful and inquiring. It is in that spirit that I propose to reply. There was perhaps one serious exception; that was the speech of the seconder of the Motion, the hon. Member for Coventry, North (Mr. Edelman), and I will have something to say about his remarks later. I do not propose to spend any time arguing the necessity for steel allocations. I think that is common ground among all Members. I do, however, think it worth while to remind the House of the statement made by the former Chancellor of the Exchequer last June, which marked the beginning of the re-introduction of this scheme.

On 28th June he said in a statement to the House: In the case of steel, though production is not likely to be seriously below last year's record level, demand is rising. This year's total requirements, including those of defence, are likely to exceed available supplies. The extent of the gap will vary according to the type of steel, and is not likely to exceed 10 per cent. on the average. But if defence requirements and those of the most important civilian users are to be met in full the shortage will be somewhat greater for other users. Sheet steel and tin plate are already subject to allocation; in the circumstances the Government have decided that full allocation schemes must now be prepared for all other types."—[OFFICIAL REPORT, 28th June, 1951; Vol. 489, c. 1578.] Thus an average shortage of 10 per cent. was expected last June. At the same time the former Chancellor of the Exchequer anticipated that production in 1951 would approximately be equal to production the year before. In fact the right hon. Gentleman's forecast was somewhat over-optimistic. In 1951 we produced only 15.6 million ingot tons compared with 16.3 million ingot tons the year before. That falling off in production has, of course, only accentuated the steel shortage, and so has increased the necessity and urgency for a rationing scheme.

I have been asked by hon. Gentlemen opposite—and I have also seen the question in newspapers—whether the Government are stockpiling or building up a reserve of steel. I only wish that were so. If we had something up our sleeve it would certainly make things very much easier, I can assure hon. Gentlemen that we have no steel hidden away at all. They can search me.

The mover of the Motion asked what were the principles upon which our allocation system was based. The hon. Member for Workington (Mr. Peart) asked in this connection whether we were going ahead on the principle of starving the agricultural industry. The hon. Member for Coventry, North asked whether we were trying to force men out of work. This allocation scheme has no relation to such ideas. It has come into being because of the shortage of steel, and its one and only object is to see that the inadequate supplies available are put to the best possible use in the national interest.

Our policy seeks to achieve, or to help achieve, two fundamental national objectives—military security and financial solvency. Both these objectives are essential for the independence of our country and for the safety and well-being of our people. Translated into terms of steel allocations these broad principles mean priority, and in answering the right hon. Gentleman I would say equal priority, for three things: priority for exports, priority for re-armament and also priority for the basic industries, such as coal mining and electricity, upon which the prospects of expanding the nation's productivity ultimately depend.

Mr. Edelman

The right hon. Gentleman has spoken about three priorities. The important question is: How do these priorities stand in relation to each other? Which comes first, and what is the sequence?

Mr. Sandys

I did use the word "equal." Priorities can, of course, only be accorded, as the word implies, at the expense of something else. In this case that can only be home consumption and domestic capital investment. We have, therefore, reluctantly been obliged severely to reduce the allocations of steel to numerous companies who manufactured mainly for the home trade.

In the case of companies with a large overseas trade our aim has been to assure to them sufficient steel to maintain and, if possible, to expand their exports. But I would point this out, because the point was raised in the debate: that it does not mean that because a company exports a substantial part of its output it is entitled to expect that it will receive enough steel, not only to maintain its exports, but also to keep its home trade at the previous level. There is, consequently, no inconsistency whatever in asking a company to reduce its total consumption of steel and at the same time press it to increase its exports. That is in fact what we are doing in very many cases at the present time.

The application of any system of priorities necessarily involves some changes in the pattern of production. Naturally, we would have preferred to introduce these changes more gradually so as to cause as little disturbance and hardship as possible to the industries and individuals concerned. But, having regard to the critical financial position of the country, we took the view that we just could not afford any delay whatsoever in taking action to expand our exports in the struggle to re-establish the balance of trade and to restore the strength of the pound. I think the House will agree that every single month counts.

That is the general background against which our allocations must be viewed. In the present critical situation I do not believe that any responsible Government of any political complexion could adopt any very different policy from the present one. It is, of course, possible for the party opposite to agree that the policy is right, but, as did the right hon. Member for Vauxhall in very mild terms, to inquire whether the administration and execution of that policy might be at fault.

I therefore turn to the question of administration. The hon. Member for Brighouse and Spenborough (Mr. J. Edwards) asked about Government machinery; in view of his experience, he is certainly in a position to express a worth while opinion on this. I would say to him that, without knowing precisely what were the arrangements under the late Government, from his description they seem to have been the same as at present. They are very simple. There is a Materials Allocations Committee of officials with a Minister as chairman; that Committee reports to a committee of Ministers which lays down the broad principles to be followed.

The Ministerial committee also has the task of dividing the total amount of steel available among the various Government Departments in proportion to the needs of the industries they sponsor. The priorities and the main allocations having been settled in this way, each Department sub-divides the slice allotted to it among the firms for which it is responsible.

Mr. J. Edwards

Could the Minister tell the House if the Chancellor of the Duchy is chairman of the Materials Allocations Committee?

Mr. Sandys

I do not think that it is normal practice to mention which Ministers are members of Cabinet or other Government committees.

Mr. Edwards

But in evidence before the Public Accounts Committee last year there was a long description of a whole lot of machinery, in which I was named as chairman. Secondly, when we debated the setting up of the Ministry of Materials, the whole matter was made plain. This is not a Cabinet committee, and facts about it used to be made known until the Minister and his right hon. Friends came to office.

Mr. Sandys

It is a well-established principle that the names of Ministers who are chairmen or members of Government committees are not made public, but I suggest that the hon. Gentleman puts down a Question on the subject; though it makes no difference to the general arrangements which I am explaining to the House.

Hon. Members will not expect me, although I have been asked about a great number of industries and firms, to state the allocations made either to particular industries or firms. However, without going into figures, I should like to say something about one industry which was mentioned a lot tonight, and whose difficulties seem to have given rise to the wildest and, if I may say so, most irresponsible accusations against the Government. The hon. Member for Coventry, North, stated that short time working and redundancy in the motor industry were due, so far as I could make out, to my "bungling"; so he will not mind if I dwell rather longer on that subject than I would otherwise have done.

I am well aware of the difficulties of the motor industry; I am in close and constant touch with it on the subjects the hon. Member has mentioned. But, as my hon. Friend the Member for Heeley (Mr. P. Roberts) pointed out, this is not a new problem. These difficulties in the motor industry are not new and it is no use hon. Members opposite trying to pretend that the shortage of steel and the redundancy of workers in the motor industry, started on 4th February last, when the Order came into force.

Mr. Edelman

My claim is simply this, that today redundancy, unemployment and under-employment is greater than it has been at any time during the last six years.

Mr. Sandys

That is not what the hon. Gentleman said. I took down his words. He said "Is it not a fact that under the Labour Government there was full employment? Now there is under-employment and redundancy." That is a different thing.

These difficulties in the motor industry are of long standing. For a long time motorcar manufacturers have been short of steel. For a long time there has been short-time working in that industry, and, on and off, for a long time there have been large-scale dismissals from the industry. Does the hon. Gentleman deny that?

Mr. Edelman

Yes, I do.

Mr. Sandys

Then I would like to refer him to a Question which he put in this House on 22nd February, 1949. The hon. Gentleman asked the then Minister of Labour What action he is taking to secure the reemployment of 300 workers declared redundant at short notice by Messrs. Daimler Limited; Coventry."—[OFFICIAL REPORT, 22nd Feb. 1949; Vol. 461, c. 265.] Again, on 29th January. 1951, he asked the then Minister of Supply to bear in mind that there is already redundancy of men and machines in the Coventry area due to the shortage of steel."—[OFFICIAL REPORT, 29th January, 1951; Vol. 483, c. 553.]

Mr. Edelman

The fact is that when I asked that Question the then Minister of Supply took action, and the 300 men who had been declared redundant were promptly restored to employment. That is what I am asking the right hon. Gentleman to do now.

Mr. Sandys

I have another here. On 20th March, 1951, the hon. Gentleman asked the then Minister of Supply Whether his attention has been drawn to the notice of dismissal from their employment to several hundreds of workers in the motor industry owing to a shortage of sheet steel. This is the reply he received from the then Parliamentary Secretary, the hon. Member for Watford (Mr. J. Freeman): Yes, Every effort is being made to obtain sheet steel from abroad, but I am afraid that some reduction of supplies to the motor industry cannot be avoided until home production increases."—[OFFICIAL REPORT, 20th March, 1951 Vol. 485, c. 271.] This does not suggest that they were immediately reinstated.

Mr. Edelman

The right hon. Gentleman has taken the trouble to assemble all this evidence simply to prove that I am concerned about the possibility of redundancy in my own constituency. My charge against him is that, unlike the former Minister of Supply, he has not shown energy and competence in seeing that the men are absorbed.

Mr. Sandys

My charge against the hon. Gentleman is that he, knowing the facts, is trying, not to mislead the House—because he will not do that—but to go around the country making accusations which he knows are baseless.

He asks me whether it is our policy to contract the motor industry. My reply is that we are, in similar circumstances, pursuing towards the motor industry exactly the same policy as that pursued by the Labour Government. The general problem which confronted them, and still confronts us, was set out fairly in the Economic Survey for 1951 presented to this House by the late Chancellor of the Exchequer last April. I would like to read a short extract from it: The production of motor vehicles has been increasing rapidly in the past few years, but this expansion has been checked by raw material shortages. Supplies of sheet steel had to be reduced in the first quarter of this year to 15 per cent. below the level of the last quarter of 1950, mainly as a result of a reduction in supplies from the United States. Short-time working has become necessary, and home supplies of civilian vehicles are being curtailed in order to maintain exports. The allocation of new cars to the home market has therefore been reduced from 110,000 in 1950 to 80,000 in 1951, and there is to be a corresponding fall in home supplies of commercial vehicles from 105,000 to 80,000. That sets out the position and the policy of the late Government. The conditions now are the same and so is the policy which we are pursuing. That statement was followed up by a warning to the industry that even this home quota of 80,000 cars might have to be even further reduced.

Mr. Roy Jenkins (Birmingham, Stechford) rose—

Mr. Sandys

I am sorry, I cannot give way. I have given way a good deal.

As the House knows, my right hon. Friend, the present Chancellor of the Exchequer, explained to the House the other day that we had reluctantly felt obliged to ask the motor industry to reduce the home quota in 1952 to 60,000 motor cars and 60,000 commercial vehicles. Provided that this home quota is not exceeded, we hope to be able to assure to the motor industry sufficient steel to maintain their present level of exports. Furthermore, if the state of overseas markets justifies the hope that increased sales are possible, we shall certainly try to increase further the allocation of steel to the motor industry for that purpose.

In view of the complexity of the problem of steel allocation—and I am grateful to the right hon. Member for Vauxhall for having very generously recognised the difficulties of this scheme, which he knows so well from his own experience—it was obvious that there would be initial difficulties in introducing it. It was, from the start, inevitable that the first allocations we made would require considerable revisions and adjustments. There are several reasons for this, apart from the ones that have been mentioned this evening.

In the first place no adequate statistics had been built up during the past two years upon which our allocations could be based. We were mainly dependent—as the party opposite would have been had it still been in office—upon the statistics of allocations and deliveries for the first part of 1950, that is to say, the last period during which a full-scale steel allocation was in force.

The mover of the Prayer this evening said that the 1950 figures were not a sound basis. We agree with him; but those were the only figures which we had. It is true that the 1950 figures cannot reflect the considerable changes in the pattern of production and the expansions in many industries which have occurred since then. We have, naturally, done our best in making allocations to adjust for the changes which we know to have taken place in the interval.

Mr. J. Edwards

I understood the right hon. Gentleman to say that he was working on figures no later than 1950; that he had no later material. Is it not true, in fact, that the Ministry of Supply was in possession of quite full returns for a much later date, in anticipation of the introduction of the new scheme?

Mr. Sandys

The last substantial body of figures on which we could work was that for the 1950 allocation. This is not a party matter. The preparation of this allocation scheme was already well advanced when the change of Government took place. We took over the figures, the policy and all the difficulties which went with them. We have had other figures since then, on which we based adjustments, but the basic figures were those for the last period of the former allocation scheme.

Even those 1950 figures were unreliable and incomplete. The figures were incomplete because they related to whole industries, and even to groups of industries and were not broken down to show deliveries to individual firms. They were also unreliable for a reason mentioned by the right hon. Member for Vauxhall (Mr. Strauss)—and that is that, in its closing months, the old scheme was not very strictly enforced, and considerable evasions took place. As the right hon. Gentleman said, the motor industry was particularly successful in supplementing its allocations by unauthorised purchases, which, naturally, were not included in the statistics on which we had to work. The fact that the statistics could not include unauthorised purchases is one of the reasons why the motor industry received a smaller allocation in the first period of this year than it would have received if we had known its real consumption. As far as we can, we have adjusted this for the second quarter the year.

Another factor which has complicated the issue has been the running-down of stocks. Numerous manufacturers have told us that, owing to the difficulty of obtaining steel, they dipped heavily into their stocks last year. That meant that they were consuming steel at a rate substantially in excess of the rate of current deliveries. Since total deliveries for the first half of this year are, by and large, much the same as in 1951, the House will understand that companies which have been drawing heavily upon their stocks and are no longer able to do so will, to that extent, be obliged to reduce their output—quite apart from the effect of the allocation scheme.

Many figures have been quoted of the allocations of different firms, and there has been comment upon the nonsense which they are alleged to make. All I would ask is that hon. Members should treat these figures with great caution. The right hon. Member for Vauxhall was good enough to say that the figures which are given by firms are not always reliable. In fact, one of the serious complications has been an almost universal tendency for firms to overstate their requirements.

The total amount of steel applied for is about 40 per cent. more than the rate of consumption in 1951. It is obvious, therefore, that these figures cannot be accepted at their face value and the difficulty which faced us was to know how much we should, discount the figures of individual firms.

The adjustment of the figures necessitated numerous discussions between the various Government Departments and representatives of industries and companies. As a result, we have made corrections and adjustments to the allocations of the first period which are reflected in the allocations for the second quarter. I do not claim, and it would be absurd to do so, that even the allocations for the second quarter are anything approaching perfect. There are still, no doubt, cases—although I hope they are much fewer—of companies not receiving as large a share of the steel available as their contribution to the national economy perhaps justifies.

Mr. Blenkinsop (Newcastle-upon-Tyne, East)

Can the Minister make some reference to the particular position of the shipbuilding industry which has particular importance for the export trade?

Mr. Sandys

So many different industries have been mentioned that I do not think I can go into them all.

That is one for which I am not responsible and I would not like to make a detailed statement about it. If I did so I would have to deal with bicycles, agriculture, railways and all the others. I only mentioned the motor car industry because I was directly attacked on it. We shall continue to examine carefully all representations which may be made by firms which feel that they have not had an equitable allocation and we shall certainly do our utmost to rectify any injustices which may become apparent.

I would, however, ask the House to recognise that no system of steel rationing, however excellently devised or efficiently administered, can be anything but unsatisfactory. The fact that rationing is necessary implies that there is not enough steel to go round and no amount of juggling with figures is going to alter the position. The only real remedy is to increase the supply of steel. I can assure the House that the Government is doing everything in its power to tackle this urgent problem at its source.

The Parliamentary Secretary to the Treasury (Mr. P. G. T. Buchan-Hepburn) rose in his place and claimed to move, "That the Question be now put."

Mr. E. Fernyhough (Jarrow)

On a point of order. If, after a debate of two and a half hours, the Government are trying to gag the Opposition, then it should be understood that some of us will act as irresponsibly in this Parliament as Members opposite did in the last by putting down Prayers every night.

Question put accordingly, and negatived.