§ Postponed Proceeding on Question, "That the Bill be now read a Second time," resumed.
§ Question again proposed.
§ 9.57 p.m.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
We now revert to our discussion on the Iron and Steel Bill. This is a Bill for the public supervision of the iron and steel industry, to co-ordinate private profit and the work of the trade associations, and I wish to put on record the trade union views on this Bill. I quote first from the 1952 Report of the Confederation of Engineering and Shipbuilding Trades, which says:—The Confederation Executive Council at its meeting considered the declaration contained in the speech relating to the determination of the Tory Government to introduce a Measure to annul the Iron and Steel Act. The action of the Labour Government which resulted in the nationalisation of the iron and steel industry was the result of a decisive mandate received from the electors. It is the view of the Confederation that to attempt now to place the industry in the hands of private enterprise would not be in the best interests of the nation.That resolution was sent to the Trades Union Congress who considered it, and who as a result sent a letter to the Minister reminding him that the T.U.C. has for many years advocated the public ownership of the iron and steel industry, and had given full support to the Iron and Steel Act, 1949. The letter went on:The General Council have asked me to make it clear that their views on the ownership of the iron and steel industry have not changed, and that they remain utterly opposed to any proposal to restore to private ownership the sections of the industry affected by the Act of 1949.Later they sent a further letter to the Minister, making it quite clear that the whole trade union movement is fundamentally opposed to this Bill. Therefore, no matter what individuals may say, no matter how highly placed they may be, the policy of the Trades Union Congress is opposed to this Bill.
When the right hon. and learned Member for Montgomery (Mr. C. Davies) was speaking, I referred to our 1945 General Election declaration on which we received a mandate to proceed with the nationalisation of the steel industry. Here is a further quotation that I ought to give for 385 the benefit of right hon. and hon. Members in all parts of the House.The Labour Party is a Socialist Party, and proud of it. Its ultimate purpose at home is the establishment of the Socialist Commonwealth of Great Britain—free, democratic, efficient, progressive, public-spirited—That must be read in harmony with our policy regarding the basic industries, and the policy which we ought to be reflecting in this House in all our speeches, and in our actions.
On this policy of the de-nationalisation of industry, I charge this Government with proceeding along the road to ruining this country. I charge this Government with beginning the ruining of this country. That is a terrible indictment that can be made against this Government when we come to consider that, according to the Bulletin for Industry, issued in November by the Economic Section of the Treasury, they are proceeding with this Bill at a time when the steel industry is in a better position than ever before in its history.
Here are one or two extracts from this publication.The steel outlook has recently improved considerably. … There is now little doubt that steel output this year will top the 16 million tons mark, compared with 15.64 million in 1951. … During the last 18 months, seven new blast furnaces have been blown in and another three are to come into blast shortly. … The main factor in the rapid rise in crude output has been the expansion of pig iron production.At a time when, as a result of the maximum co-operation in the industry between management and all grades of work people, working together to get the maximum result to an extent better than has ever taken place before in the history of the steel industry, the Government of the day is embarking upon this suicidal, economic policy of discouraging the people engaged in the industry.
I wish, for reasons that I shall give briefly, that Sir Stafford Cripps were now living. I know that he lay in Switzerland suffering to a certain extent as the result of overwork, and he wrote at that time a confidential letter. I derived great personal satisfaction from the contents of that letter. The reason that I am referring to this is because it is time that it was placed on record, in order that all in our own party, in particular, and in the country, in general, can consider what is going on record.
386 I have referred to him because I believe that had he returned with strength to renew his work, he would have been reinforced with vision, courage and understanding as the result of lying in Switzerland, thinking things over. He would have come back a strengthened man, determined to deal with our basic industries in the way in which it will be necessary if Britain is to hold her own in the world of the future. I believe he would have encouraged us all to pursue a real Socialist policy with courage, determination and understanding, because this is the only hope for our country in the future and the only road forward for Britain.
What I have said applies equally to Ernest Bevin. I regret some of the unworthy reviews of the book which has recently been published. I refer to him because it was my privilege to be close to and friendly with him for many years. I remember the great contribution which he made in connection with the Macmillan Report, which many hon. Members have forgotten, and I recollect how it applies to the present situation and to the steel industry in particular. I will give three extracts which ought to be placed on record because the Government have embarked upon the ruination of our country.
The Macmillan Report states on page 5:… we … have reached the stage when an era of conscious and deliberate management must succeed the era of undirected natural evolution … We must now choose our path deliberately and consciously …in order to guide the economic affairs of this country. The logic of that is nationalisation.
On page 39 the Report states:In one case we have been told that the demands for advances for industrial purposes are continually in excess of the ability of the bank to lend …The logic of that is the public financing of our basic industries, and that there ought to be no public financing of our basic industries without public ownership. The Labour Party in particular needs to remember this in future, because we ought not to be a party to private industry having one penny in any way if it is to travel along the road to ruin as it will do as a result of the Bill.
387 The final quotation comes from page 240 of the Report. Thomas Allen and Ernest Bevin, two real Socialists, submitted a minority report. It said:In fact, private enterprise having proved totally unable to lift the country out of the morass in which it is, there seems no alternative but for the State to grapple with the problem and for large measures of State planning …That was written 20 years ago. It is as true now as when the Report was written, and today this policy is the only practical way to deal with Britain's fundamental problems.
My conclusion about this is that, for financial reasons and for development reasons, in order to meet the quick technical changes in this industry and to meet the equipment needs, public finance is required, and that should result in social ownership. The best analysis that I have ever read of the structure of British industry is to be found in a paper read before the Royal Statistical Society by H. Leak and A. Maizels a few years ago. It is to be found in the Library. Anybody reading pages 28 to 31 is bound to agree that the need is for at least public ownership or complete national ownership.
What I have just said is also to be found in Command Paper 6811, where there is an examination of the industry by the Iron and Steel Federation itself in the reports which it made to the Ministry of Supply a few years ago. Any student of affairs who makes an analysis of those two publications is bound to come to the conclusion that we want either a complete national monopoly of the industry or public ownership, and there is no doubt which should be supported by those who put the interests of the country first. Eventually we will have to have one Margam for the whole of tinplate production. I venture to prophesy that, as sure as I am standing here, we will have to apply this policy in a few years' time.
Supposing that policy is to be applied to shipbuilding to get the plate required at the lowest possible cost of production, and suppose it is applied to the needs of the motor car industry in order to meet the growing competition throughout the world, then it will be necessary to have a concentration and rationalisation of 388 these industries with the largest possible plant in the various areas. No one knows that better than those hon. Members who have given their lives, as did their forefathers, to developing the steel industry of this country. On this particular aspect there ought to be no division between us. The only issue that should arise is the best policy to be applied to the industry in order that it can develop in the way I am advocating.
That would mean about 10 Margams in this country, and there cannot be 10 Margams without public finance. We ought not to be a party to granting public finance without public ownership. For technical and economic reasons, therefore, there will be a demand for this concentration, and I want to ask the Minister whether this Bill will enable us to embark on a policy of this kind with the necessary speed. Will the Government give a guarantee that the finance will be found without resorting to public finance?
I am a product of the engineering industry. I have no hesitation in saying that within that industry, in the main, the cost of production has been reduced to the barest minimum. In this country we have some of the most efficiently managed engineering concerns in the world, and during the war it was acknowledged even by the Americans that we could turn out aircraft engines at a quicker rate, with more efficiency, and of better quality than any one in the world. We have applied not only our best production methods and motion study and the latest method of micro-motion, after which we have considered the elimination of unnecessary motions.
It is not fair to expect the engineering industry to reduce its cost of production to the barest minimum in order to help in the foreign competition which is coming, and then try to meet their problems in an old fashioned way. We must remember that very few of us would be living now if it was not for the engineering industry with its large-scale exports, for by exports we are now living. Therefore, we cannot approach these problems in the way we used to.
Not only is it necessary for the engineering industry to reduce its cost of production, but the principal manufacturing costs of raw materials ought also 389 to be reduced to the barest minimum. Can we guarantee that steel will be produced in the same way that the engineering industry has applied this policy if this Bill becomes an Act of Parliament? There are rings round every material that goes into the engineering industry, and if I had time I would show that there is a bigger ring round this industry than round most others.
In 1934 the cost of British steel was 98.7; in 1938 it had gone up to 139. I could give figures of pig iron, ships plates and plates for the motor car industry which show that relatively our costs were higher in this country than they were in many others. After the formation of the British Steel Federation there was an average rise of 35 per cent. in steel prices. At the same time the average rate of profit for the 43 leading concerns in the steel industry increased by 76 per cent. The industry had more capital put into it and the rate on capital increased by 40 per cent.
I have here an extract from the "Manchester Guardian" showing how the motor car industry of this country is complaining because of the relatively high cost of steel and the rings around all the component parts of motor cars. According to a steel industry publication, there are 150 trade associations with separate organisations controlling the industry and its products. It is not fair to the industry to continue to encourage or acquiesce in the operations of these trade associations. They employ legally trained accountants skilled in the new art of concealing profits. The time has arrived when this House should demand the searching investigation which is urgently required. In that investigation we ought to insist on a comparison not between the prices before the war and now, but between the prices before the formation of the trade associations and those ruling today.
It was my privilege to address the annual conference of Foundry Workers at Blackpool this summer. As I watched delegate after delegate coming to the front and speaking I determined to try to be worthy of the men representing their fellows in the foundries. Everyone knows that their conditions for generations were disgraceful. They could be compared only to the worst mines, and had it not been for the foundry workers 390 organising themselves and taking militant action, the conditions would not have been changed to any great extent to this day.
I consider myself a lucky man. Six years ago I nearly passed through death's door. When I recovered the specialist who examined me said he thought my organs were now in a good condition, but an X-ray showed a black patch on the lungs which he could not understand. I could not understand why it should be there either, until weeks later I remembered that for some years I worked near a band-saw where there was no dust extractor and I must have been inhaling the dust for years. Fortunately it did not matter, because it was vegetable dust which does not do much harm. Had that dust been silica and had it contained grit, I should not have been living today. I am no better than the thousands who worked in the foundries of this country and who have lost their lives because the conditions gave rise to silicosis and other industrial diseases that should never have been tolerated during the past 50 years.
§ Dr. Barnett Stross (Stoke-on-Trent, Central)
I hope that my hon. Friend will agree with me when I tell him that many pattern makers who have worked for many years do, indeed, suffer from pneumoconiosis irrespective of the fact that the inhalation is wood and not silica or iron dust. It is still pneumoconiosis.
§ Mr. Ellis Smith
My hon. Friend is an expert in these matters. He has, to my knowledge, given the last 25 to 30 years in serving the pottery industry and the miners in North Staffordshire, and therefore I know that he is well informed. I was examined by a specialist, however, and he assured me that as far as this particular patient was concerned, I was all right; and to that extent I am grateful. That makes a person pleased at being able to carry on with his work, and it also reinforces him in his determination to do his best for others so that they should not suffer if it can be avoided.
Therefore, for those reasons, I welcome the proposals in the Bill for dealing with the foundries. Of course, it gives a nice precedent in that when we come in with great power, it will also be necessary for us to control all the foundries in the way that is now proposed.
391 In my view, if the Board is to function satisfactorily it must at least have the control and powers that are contained in the Bill. But even with these elementary proposals, I understand that there are interests who propose to delete control and supervision of the foundries. I hope that the Minister will stand firm in view of the black indictment against the mismanagement of foundries for generations. But, to give credit where it is due, in the main there have been great changes, and in some of the factories food can be eaten off the floor compared with the conditions 20 or 30 years ago. This only reinforces our hope that, in spite of our criticism of the Bill, the Minister will refuse to agree to the deletion of control and supervision of the foundries.
Measured by 20th century standards, British industry is being starved of capital. The United States of America, with only three times our population, have 10 times our national income. What they have achieved, we could have achieved within the Commonwealth between 1900 and 1940. The net capital formation in British industry in 1951 will have been approximately £400 million, or one-fiftieth of that in the United States. That is a very serious state of affairs. Per head of the population, our figure is only one-tenth of that in the United States, and yet we embark upon a policy of economic suicide via the Bill.
The Conservatives starved our people for years. This Bill will starve the steel industry, one of our basic industries. Between the two wars, thousands of our fellow countrymen suffered from malnutrition. This Bill will bring about industrial malnutrition by capital starvation. It is expected that the level of gross investment in manufacturing equipment in this country in 1952 will be approximately £400 million. In the United States it will be 4,400 million, yet we tinker with Bills of this kind.
§ Mr. Summers
Are we to understand from the hon. Gentleman's argument that he is opposed to the policy pursued during the past six years of restricting capital investment in this country?
§ Mr. Ellis Smith
Yes, I am answering his question by asking him another. The hon. Gentleman is well informed about the steel industry; he knows it better than most of us, and I am asking him whether he has already forgotten Shotton. He knows who is going to open it in April.
§ Mr. Summers
Will the hon. Gentleman answer the question I put to him? Is he saying that during the last six years he has been opposed to the policy pursued by the Government of this country of restricting capital investment? He has been complaining that the total capital investment in British industry is much less than it should be. How does he reconcile that statement with the policy pursued during the past six years?
§ Mr. Ellis Smith
The hon. Gentleman is quite right, but he ought to carry his question a stage further. More has been put into the hands of industry during the past six years than ever before. My difference with people who determine policy is that I think we should have adopted a policy of real planning, and, indeed, that we shall be forced to do so sooner or later if we are to hold our own in the world.
I do not mind the hon. Gentleman smiling because we shall see in a few years time who is right and who is wrong in regard to this. But now that he has asked the question, I will carry it a stage further. Where did the capital investment go before the war. It went where the best returns were to be had, in hotels, music-halls, cinemas, skating rinks, dog tracks, or in any other enterprise provided it would give a big and immediate return.
The people concerned said, "Never mind the mining and the steel industries. We will sink capital where we are going to get the biggest immediate return." But during the past six years capital investment has been sunk where the Treasury—and in my view they are not the people to do it; I am speaking factually—decided it was best to sink it in the national interest. Is the hon. Member satisfied?
I was saying that the United States gross investment in equipment per 393 worker employed in manufacturing industry is expected this year to be £275 while in Britain it will be only £45. Because of this Bill and through lack of planning the British people are fighting a losing battle for economic survival. It is because I believe this that I look upon this Bill as one of the worst Measures ever introduced into the British House of Commons.
I will conclude by asking the Minister a few questions. The first is, if in the future it is decided that the only way to save our country is by the construction of 10 Margams, will they be provided by this Bill? Does the Minister not understand what Margams are?
§ Mr. Ellis Smith
Sir Charles Bruce-Gardner and the gentleman who spoke on the wireless the other night, who proved to be so well informed, consider that this may have to be done. If it has to be done, will this Bill provide the necessary capital? If this Bill becomes an Act of Parliament, will the steel industry be able to carry on without public finance or subsidies?
We hear a great deal about efficiency. Will this Bill make the steel industry of our country more efficient? Can we be given a guarantee that if this Bill becomes law the steel industry will continue to be run in the national interest and not for private profit?
§ 10.31 p.m.
§ Mr. R. Brooman-White (Rutherglen)
I hope the hon. Member for Stoke-on-Trent. South (Mr. Ellis Smith) will forgive me if I do not follow him in the special points he has raised. I am sure that all of us wish to see everything possible done to improve the working conditions in those sections of the industry of which he has special knowledge. On that, at least, we are in agreement.
We are not in agreement with his confidence that a more closely centralised control is the only effective way of ensuring the proper deployment of our resources. During the debate considerable emphasis has been laid—which was not the case in the previous debates on the White Paper—on the supposed shortcomings of the Bill in providing the Board with the powers necessary to safeguard 394 the public interest. We have heard some most ingenious arguments, in particular those put forward by the hon. Member for Islington, North (Mr. Fienburgh). But I do not think that hon. Members, or the country as a whole, will be primarily concerned with that aspect of affairs.
The trend of events in the past has been that whenever it could be given a fair run against competition from overseas, the industry has, by and large, held its own and has met the demands which the Government of the day made upon it. We all know that the difficulties which arose before the war were primarily the difficulties of finding markets, and the difficulties which have arisen since the war have been primarily difficulties in finding essential raw materials. Any holdup in development has been mainly for those reasons.
I should like to associate myself with what has been said by my hon. Friend the Member for Aylesbury (Mr. Summers) on the possible troubles which may arise from the Schuman Plan if the machinery under this Bill does not enable us to co-operate as effectively with it as we should in the future. I think hon. Gentlemen opposite may have been at fault in the past in recoiling so violently from the dangers of the Plan in one direction, that they ran considerable risk of falling into another set of dangers in the other direction. They were so pre-occupied with not being too closely gripped by a supranational authority that they ran into the peril of not being sufficiently closely in touch or of having adequate contact with a great continental organisation which could, if our point of view is not properly put and considered, discriminate against us and put us—particularly the Scottish industry which is, above all, dependent on overseas conditions and particularly vulnerable to overseas trouble—in a most difficult position.
I think the point which will concern us most acutely—particularly in Scotland—is the whole question of development, which was raised by the hon. Member for Motherwell (Mr. Alex Anderson). I am extremely sorry that I was out of the Chamber for a short time and did not hear his remarks. Perhaps I may have lost more than he will lose by not being in his place now. But I have been told the general tenor of what he said, 395 and I understand that he was concerned with the alleged slowness of development in the industry and also the possible difficulties and dislocation likely to arise during any reorganisation.
With regard to development, we have a particularly acute problem in Scotland because of our special dependence on imported raw materials. In addition to the need for a general expansion of the industry, we face the need to reorganise some of our processes to meet the changed circumstances—the shortage of scrap and the necessity to employ more ore. It may be argued—though I do not necessarily agree—that the industry has been somewhat tardy in launching and getting on with the necessary development to meet these changes.
§ Mr. Brooman-White
I do not accept that view; but even if the steel industry had pressed forward more rapidly with its development I do not believe that the nationalised coal industry would have been in a position to meet any greatly increased demand for coking coal at the present time. If the steel furnace capacity was there the coking coal would not be.
If the private enterprise steel industry is at fault, then the nationalised coal industry is also at fault. If, as I believe, both sides have been doing pretty well all that could be expected of them in very difficult circumstances, then neither is at fault. But I do not see how it can be claimed that on one side there is a steel industry which is dragging its feet and on the other side a nationalised coal industry which is showing all that impetus and drive and efficiency and force which, it is pleaded, is needed in the steel industry and—which is also pleaded—can only be achieved by State ownership.
§ Mr. Jack Jones
I am very interested in the tenor of the remarks of the hon. Gentleman. Would he agree that had we not nationalised the coal industry we should have been still further unable to meet the needs of an expanding steel industry?
§ Mr. Brooman-White
I do not want to follow the hon. Gentleman into the depths of that subject. I do not 396 think it alters my point that the nationalised coal industry has done no better and no worse than the un-nationalised steel industry in foreseeing the present difficulties with regard to Scottish steel and the need for its development. That is the only point I am making, and I think it holds good.
Another point which concerns us—it is a particularly difficult one, and I want to be careful not to give the wrong emphasis to it—is the question of the high cost plant and how any necessary development or alteration in the structure of the industry can best be achieved in order to produce the efficiency and increased capacity which we all know to be necessary with the minimum of dislocation and suffering to the people concerned. I am not arguing that a certain reorganisation is not necessary. I am not arguing that high cost plant should be kept in production for a day longer than we can avoid. Certainly I believe that high cost plants which have been thought to be redundant have been maintained by high export prices—just as certain pits which have been thought to be redundant are being kept in production to meet circumstances which had not been foreseen. But, by and large, the fewer high cost plants we can have in the industry the better.
The right hon. Member for Vauxhall (Mr. G. R. Strauss) mentioned this point in his speech, and I find it a little difficult to follow his case. I will read it with interest in the OFFICIAL REPORT tomorrow. At the beginning of his argument I thought he was claiming that unless the industry was fully controlled by the public one could not be sure that sufficiently drastic action would be taken to get the necessary changes brought about. But later he argued that in many cases the cheapest thing was to re-equip existing plant. By and large, we want to see existing plant re-equipped where possible, and that can perfectly well be done under the provisions of this Bill. Nor need we fear, under the Bill, that in the national interest guidance cannot be given in the closing down of plants that should be closed down.
In Scotland, as in the country generally, we want to be sure that the greatest consideration is given both to the national interest and local circumstances. Experience in Scotland of decisions by 397 nationalised concerns has made us pretty gun shy of control from the centre. The Clyde piers, for example. Under the Bill there are provisions for seeing that the necessary reorganisation is carried out in the national interest, and there are also considerable safeguards to see that there is consultation and there are also rights of appeal to the Minister. There is a much better chance that local circumstances and difficulties will be given proper consideration than would be the case under nationalisation.
Might we in the Government reply to this debate, on an important but at present somewhat obscure point, have a little clarification? I refer to Clause 7 (7), which relates to prices and transport charges. As I read it, I gather it would be possible for greater preference in transport costs to be given to remoter areas in obtaining steel. If I am correct in this assumption, it will be of great interest to Highland Members. I believe it would also be possible for certain products to be conveyed not at the delivered price, but for the purchaser, in certain circumstances, to meet the cost of transport. That also might on occasions favourably affect our position in Scotland.
There have been recent cases where products in particularly short supply have not been available from the normal local source. The consumer then tries to get it elsewhere. But if the producer in the South has to pay the full delivered price, there is a disincentive for him to meet that order. It would be advantageous to have greater flexibility at that point. If I am right in my reading of the wider powers of this Clause, there may be latitude in both directions and advantages that will recommend themselves to the Scottish public as a whole, and to all of us interested in industrial development in that area.
In conclusion, as I have said on a previous occasion, I profoundly hope that the differences which arise over this Bill will not, after we have got through the Committee stage, prove such as will leave the industry uncertain and unstable or retard its development and the growth of the efficiency on which we all know the future welfare of the industry and the country depend.
§ 10.45 p.m.
§ Mr. George Chetwynd (Stockton-on-Tees)
One of the remarkable things about this debate and the previous debate on the Government's White Paper is that in no single instance has any Government spokesman sought to prove the Government's case for the Bill, either in a positive way by proving the merits or in a negative way by proving that nationalisation has failed. The bulk of their case has been based upon assertions without any shred of proof.
The Minister himself stated quite blithely that nationalisation has sapped initiative and has created among the companies an over-cautious and bureaucratic outlook, but he did not bring a single piece of evidence to support that; indeed, the record of the companies both in finance and in production clearly disproves that statement. There is among these companies now a buoyant attitude and a real spirit of emulation.
Another thing the Minister did was to make allegations that the 1949 Act created a vast State monopoly. Yet, at the same time, and in the same speech, he accused us of cutting the industry in two, having one part under nationalisation and in public hands, and another major part in private hands. Which of these statements is correct? I prefer myself that an industry such as steel, which has to be monopolistic in character, should be a public monopoly and not a private one. Yet within the overall direction of the Corporation it is clear that there has been the most keen competition between the individual firms making up the Iron and Steel Federation of Great Britain. One of the reasons why we left the companies with their former names was to encourage that kind of competition and emulation between them.
Apparently in order to solve this problem—the industry being arbitrarily split into two—the Minister now proposes to expand the supervision of the new Board over some 2,400 other companies untouched at the moment by nationalisation. In the opinion of many of these bodies, the cure is worse than the disease and they wish to be left right outside.
If we examine the facts of State ownership it is quite clear that 98 per cent. 399 of the entire output of ingot steel is produced by the publicly-owned companies; 94 per cent. of the production of iron ore is produced by public companies, and 97 per cent. of the pig iron produced is produced by the public companies. It is very difficult to find where this division into public and private sectors comes into it, because we were most careful in our Act to keep the most viable units within nationalisation, and leave others outside or make provision for hiving off where that is necessary.
The Government have not proved that the nationalisation of steel has failed. Even with the reluctant and foot dragging co-operation of the Iron and Steel Federation and the boycott of the Board by the steel barons, it is quite clear that during the seven months of control by the Corporation, there has been a good record of achievement. The Government have not been able to prove their case, and their case in my opinion is based solely on pure doctrinaire theory and political spite which pays no regard to the facts.
If we consider production, in spite of the dire forecasts of the right hon. Gentleman the Member for Bromley (Mr. H. Macmillan) and the statement of the Prime Minister that there would be dislocation, chaos and confusion on nationalisation, there has been considerable progress, and all those forecasts have been unfulfilled. The industry is working well and production is buoyant. It is 9 per cent. up on 1951 and, as we were told today, there is every prospect that it will beat the 1950 record of 16,250,000 ingot tons by a substantial margin. The Minister himself spoke of the record of continuous expansion and progress in the same breath almost as he was condemning nationalisation as a complete flop. It is very difficult to reconcile those two views.
On 19th September, 1950, the present Prime Minister moved a vote of censure on the Labour Government in these terms:I beg to move,That this House regrets the decision of His Majesty's Government to bring the Steel Nationalisation Act into immediate operation during this period of tension and danger thus needlessly dividing the nation on Party political issues and disturbing the smooth and 400 efficient working of an industry vital to our defence programme."—[OFFICIAL REPORT, 19th September, 1950; Vol. 478, c. 1719.]Facts have completely proved how false that Motion of censure was and if, today, we debated that Motion and, instead of having "nationalisation," put in "de-nationalisation" and added at the end "vital to our defence programme and economic recovery", we should be on far stronger ground today in censuring the Government than they were in those days moving the vote of censure on us.
If we judge the success of the nationalised industry by considering the financial position of the industry today, again there is a great achievement in a short time. Profits at the rate of £65 million a year—£34,500,000 in the first seven months of the Corporation's existence have been mainly brought about by better running of the industry as a co-ordinated whole, and could not have been achieved if this had not taken place. Borrowing in the industry has saved large sums of money—as much as £200,000 in seven months. Again, this could only be possible under common ownership and control.
If we consider the prices of steel we know that the Minister himself took direct action to compel the Corporation to put up its prices—even in spite of that action—which at that time I opposed and did not think necessary—the price record of the industry is still in a favourable position, perhaps with the exception of Germany, in overseas markets. The serious matter which we have to watch is how far our own firms will be priced out of competing in export markets by the action of the Minister in putting up the price of steel.
§ Mr. Sandys
I must remind the hon. Member that prices were put up in agreement with the Corporation. What he is saying is nonsense.
§ Mr. Chetwynd
They were put up in agreement with the Corporation after the Minister had disposed of the previous Chairman of the Corporation—and that was the cause of the whole trouble at that time. It was a move opposed by the Chairman at that time. [An HON. MEMBER: "And by the Corporation."] And, I gather, by the Corporation.
401 If we look at relations within the industry, it is quite clear there has been no upset there. They are as good as ever they were. Research and education are receiving every attention. On the grounds of development of the industry again it is quite clear from the report of the Corporation for its first seven months working that organisation is proceeding smoothly as far as capital resources permit. There has been regrouping of the companies with a common interest to increase their efficiency and strengthen the industry.
Again, I claim this is not possible without common ownership. The Government's proposals for the sale of the nationalised undertakings to private enterprise are clearly, in my view, against the national interest and are more than irrelevant. They are positively harmful, because the uncertainty of the sales and the consequent ownership will cause confusion. Production will be impeded by the creation of smaller units when the most important need of an efficient steel industry today is larger and more integrated units.
The proposals to sell off the industry will again militate against its more efficient grouping. They will divide it into good and bad parts. The best parts will be in private hands and the worst in public ownership. Moreover, these proposals will create uncertainty in the non-nationalised sector and are bound to create confusion at a time when we need the maximum output from all parts. As there are 2,400 firms involved, that is a significant interference.
What is involved in the replacement of the Iron and Steel Corporation of Great Britain by a supervisory Board? The first thing is that this creates a further division instead of greater integration and co-ordination. Because two distinct bodies are to be set up to replace one: a Board and a disposal Agency. The Board is to supervise the industry; the Agency is to take over and dispose of the assets now owned by the State. The Agency will act on behalf of the Treasury in a dual capacity, as a holding company and as a disposals Agency.
It is generally assumed that this process will go on for a long time and that the realisation Agency will be a holding company for a considerable period. What positive powers will they have to control 402 and run that part of the industry under their control? And how can a body of people appointed by the Treasury, primarily concerned with the parcelling out and disposal of the assets, be actively concerned with the proper control and management of an industry so vital to our economy and survival? I do not think that the Treasury could have such a split mind in this case. If the Steel Corporation is to be abolished the remaining concerns which are not sold should be the responsibility of the supervisory Board, which should be responsible to the Ministry of Supply. It should not be the preserve of a body responsible to the Treasury—a body of Dutch auctioneers and bailiffs.
My right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) has dealt with the powers of the Board. He has shown how the Board is empowered to require that all major schemes shall be submitted to it and that then it will have a power of veto, subject to appeal to the Minister. The point is that there are many schemes which can be undertaken by these companies which will not need to be submitted either to the Board or the Minister, and the total of the smaller schemes could be such as to wreck the national planning of our economic life and, by spreading our resources thinly over a wide area, we should be acting against our real interests.
Therefore, I want to know who under this set-up is responsible for drawing up an overall plan for the industry? Is it this Board or is it the Iron and Steel Federation? Is it the Minister or is it that no plan will be drawn up at all, each company being allowed to go on its own sweet way providing it does not want a major scheme of re-organisation?
Although the companies have this appeal to the Minister, the Board itself has no appeal against any of these actions of the companies. We ought to safeguard the position of the Board in this respect by making major developments subject to Parliamentary scrutiny. Otherwise, we shall get a scattering of our resources over a wide field, which will not result in the most efficient steel industry.
As regards the positive powers of the Board, these empower it to provide adequate capacity where it is uneconomic and where no firm is willing to do so. The companies cannot be compelled to 403 use the money of their shareholders, but apparently it is in order for the State to use the money of the taxpayers in unsound ventures.
Why is it unfair for the shareholders to take on an uneconomic venture, but quite in order for the taxpayer to do it? Again, on the question of the State being able to set-up new plant capacity, what is the position if the State enterprise flourishes? Is it to be handed over to private enterprise to be run by them for profit, to a so-called enterprise which failed to take the original risk? What nonsense this is to talk of restoring the old steel industry to free, competitive enterprise when anything risky and unsound has to be left to the State to pursue.
Surely these proposals mean a duplication of plant and equipment and the creation of additional capacity forced upon the Government by the anti-social actions of private enterprise? This is one of the major arguments for nationalisation. This provision in the Bill clearly proves that where there is a clash between sectional and national interests, under private enterprise the sectional interest prevails. So, if this Bill goes through, we shall have the abolition of a Corporation with complete powers of policy, overall planning and direction, which arises through its complete ownership of the shares of the companies, and a substitution of a new Board with manifold duties but no real powers.
It will be able to restrain development, but not enforce it. It will have no power to enforce amalgamation. It will have no more control over prices than exists now. It will add duplication and confusion to the purchase of raw materials. It can set up a buying agency if the Minister thinks the industry is not taking adequate steps to obtain raw materials from overseas. That is sure to mean a duplication of these resources. My firm belief is that the Board is a sham, a mere facade to give an impression of respectability to the industry because the public demands control. But, behind that facade, the masters of Steel House will be in full possession and control. If we go back to the words of Lord Nuffield, it will be an absolute ramp, and they will probably have the cigars as well.
When we look at the disposal agencies and consider the magnitude of their task 404 when they have to get rid of £250 million worth of securities, I ask, why this division? Why is it responsible to the Treasury? I think powers should be in the hands of the Board responsible to the Minister of Supply. How much of the industry does he estimate these disposal agencies will be able to sell and how quickly? Has he seen the "Observer" of 9th November, in which their Economic Correspondent put forward the view that the Government are unlikely to succeed in de-nationalising more than one-third of the steel industry before the next Election? Even that is an over-optimistic estimate. The reason it gives for that is not the promise or the threat of the Labour Party, whichever way one looks at it, to re-nationalise, but because, as it says, high costs of development and modernisation of plant will clinch the determination of private investors to leave the bulk of the steel industry safely in public ownership.
When it is said that we need a steelmaking capacity in 1957 of 20 million tons and that, even if the uneconomic and obsolete plants are closed by any slump, there still needs to be replacement and renewal to the tune of 4 million tons new capacity, it is clear that this would have to be borne by the profitable units. Therefore, any prospective buyer has to have funds to cover not only the cost of compensation and the developments undertaken by the Iron and Steel Corporation, but also the heavy cost of future development. I will not give the examples for that, but I have them with me if they are necessary.
Another thing to be taken into account, surely, is that when the first large-scale units are sold—the modern and more profitable ones—at a high cost, how much investment money will there be in the market to take over all the other parts that are left? Surely the resources of the investment market will have been strained, and it will be difficult to find takers for the other not so profitable units, unless the Treasury get over this and make the taxpayer suffer by insisting on give-away prices for this part of the industry.
I believe that the Minister has denied that that is likely to happen. If so, if the industry is not to be given away at knock-out prices, in my view there will not be adequate investment resources to 405 take over the bulk of the present holdings. Therefore, a considerable part will be left in the hands of no specified body.
I ask the Minister: How, in this unscrambling policy, are we to guard against the picking off of the best cuts of the joint, and leaving the Government to dispose of, or to retain, the less attractive remnants? What will happen to the rump—or, as I believe, the major part—of the industry? How can the State and the taxpayer be protected against loss? Are the first offers of sale to be made to those who formerly held shares at the time of nationalisation, or shall we see the "Prudentialisation" of the industry?
Who does the Minister think will come forward and buy it? I am certain that it will be the big financial concerns, and this will be another case where the new steel masters who have grown up within the last few years, who were the original office boys who took over from the old steel masters, will be dead and new office boys will reign in their mausoleums.
Rather than concentrate upon the Bill, the Government should allow the Corporation to carry on its good work and should allow the iron and steel companies to concentrate on the real, practical problems of modernisation of plant, where large sums are still needed—and there are still too many small plants—and the provision of adequate coke. We all know how pig iron production is hampered by this shortage, in spite of the more encouraging signs today. They should concentrate upon providing adequate supplies of pig iron. The programme of expansion is in progress and has already produced, I believe, a one-tenth increase over 1951, but new blast furnaces are required, and required urgently.
There should be concentration, also, upon the provision of scrap, because it was the disastrous fall in scrap from abroad which checked the expansion of the industry in the early days of nationalisation. There is a tremendous amount of work to be done in all these fields, yet all those things are to be set aside while the Government play politics with the industry.
The final results of the Government's plan will be, first, the restoration of a private economic empire at the cost of the public. Secondly, a long drawn out 406 process of division and uncertainty, which will distract Government and industry from the real issues of the time. Thirdly, the disintegration of the industry into a patchwork, not on functional grounds, but according to whether or not it can find a buyer. Fourthly, there will be a weakening of our economy at this most vital stage and, more important, a weakening of economic planning and control over investment, which may have disastrous results in a time of slackening economic activity. The Bill is conceived in venom and born of party prejudice, and it should be thrown out.
§ 11.10 p.m.
§ Mr. J. E. S. Simon (Middlesbrough, West)
It is a particular pleasure to follow an hon. Member who has, politically, been so good a neighbour to me as the hon. Member for Stockton-on-Tees (Mr. Chetwynd) and it is also a pleasure to do so because I find myself going a certain way with him in his arguments tonight, and also in the arguments of the hon. Member for Islington, North (Mr. Fienburgh). Both hon. Members started by saying that steel producing is a natural monopoly, or that it tends to monopoly. The hon. Member for Islington, North went on so far as to say that nowhere is there free enterprise in steel.
It is true that the general evolution of industry in this century—and this applies particularly to heavy industry—has been towards increasingly larger units. On technical grounds, those have proved themselves to have the advantage of efficiency. They can provide the greater resources of capital necessary. Necessarily, with that development, there has been a diminution of competition. When one has a great number of small units, competition is more active. As one has a small number of large units, or very large units, it tends to be mitigated.
But where we part company is that the two hon. Members opposite argue from that that because one has a partial monopoly, which is admittedly subject to abuse, one should superimpose on that a complete national monopoly. The main evil of monopoly, surely, is that the producer is able to influence the price of the product himself. When he can do that, whether because there is a seller's market, or because there are few units of production in the field, or because of 407 restrictive practices in the industry itself, then he can make a profit without being efficient. In other words, his profit does not depend on his efficiency.
However, it does not follow from that that one should go on to establish a complete monopoly under the State. One only mitigates some of the advantages, and imposes a great many disadvantages.
§ Mr. Palmer
How does the hon. and learned Member suggest that the Bill will prevent the evils of which he speaks?
§ Mr. Simon
I was going on to deal precisely with that point.
We have in this country enjoyed incomparable advantages in the way of a Civil Service of outstanding ability. But few, I imagine, would claim that the particular virtues which have distinguished our civil servants are those particularly suited to the carrying on of large-scale industry—especially in competitive conditions. What we suggest, and what this Bill does, is to mitigate the monopoly in two directions; which are the two reasonable directions in which it should be done. With great respect it is not reasonable to take a steam hammer to crack—I was going to say a monkey-nut, but as I do not want to be controversial—a walnut.
We want the minimum of control necessary to mitigate the monopoly in the industry, and to promote competition in the industry. If it be true that the evil of monopoly is that the producer is able to fix the price himself, without having a price imposed upon him and being obliged to respond to it by promoting his efficiency in order to get a profit, then the first and obvious solution is to have an outside agency which fixes the price. That is precisely what this Bill does.
The second way of mitigating a monopoly and of restricting those practices which prevent the free play of competition is to take steps towards the suppression and the ultimate abolition of the restrictive practices which may exist in an industry.
I propose to deal with each of those two things in turn. The Bill sets up the Iron and Steel Board precisely with the object of enforcing such control, and no more control, than is necessary to ensure that the public interest is paramount, 408 that an easy profit cannot be made, that a profit cannot automatically be made even where the producer is inefficient. In other words, it seeks to enlist those virtues of energy, enterprise and exertion which are called forth by those whose prosperity and very livelihood depend upon the display of those qualities. Where someone's livelihood depends on initiative, enterprise and exertion, one can expect to find those qualities displayed; and that is an enormous motive force which it would be frivolous in the extreme to neglect, and which it would be valuable in the extreme to harness. That is precisely the approach which this Bill makes.
I was on the question of fixing prices. I would, with respect, draw the attention of the Minister to one point where, by fixing prices, the Board can actually promote competition within the industry itself, that is to say, competition where prices are based on real costs. At present, when prices are to some extent fixed on the advice of the great national associations, there is a danger that the small firms working in the middle sections of the industry may find that prices are fixed to their disadvantage so that they cannot compete on fair terms. I would ask the Minister to consider writing into the Bill a specific injunction that the price fixing responsibility of the Board shall be used to promote fair competition.
Unless this Bill promotes competitive conditions in the industry, it will have failed in its object. It is because it has come like a breath of fresh air to blow through this industry that I believe it will be welcomed and, indeed, has been welcomed by the country as a whole, including the great steel producing centres.
I see the hon. Member for Cleveland (Mr. Palmer) shaking his head. Perhaps the result of the recent by-election in Cleveland indicates that the feeling of the steel workers is not all that the hon. Gentleman would desire.
§ Mr. Palmer
I can assure the hon. Gentleman that I did not lose any steel workers' votes, and if I may say so my opponent in the particular by-election kept fairly quiet about the de-nationalisation proposals of the Government.
§ Mr. Simon
The hon. Gentleman says that he did not lose any steel workers votes. I can only think that the ballot is less secret in his constituency than it 409 is in mine. Certainly, I claim on the best authority of all—my predecessor, the Socialist Member for Middlesbrough, West, Mr. Geoffrey Cooper—to represent, in his words, "a marginal constituency consisting mainly of steel-making electors."
§ Mr. Simon
—which was the question of restoring a full measure of competition within the industry. I hope my right hon. Friend will consider, in Committee, accepting Amendments which will accentuate what I am quite certain is his purpose, which is to restore a proper and full measure of competition inside the industry.
In this connection, I would draw attention to Clause 25 of the Bill. This leads on to the second way in which I suggested that competition could be promoted and monopoly mitigated without calling on the steam hammer of nationalisation—by mitigating restrictive practices. This Clause, I think, was referred to by the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith). It ensures that the steel industry comes under the Monopolies Commission. I suggest that there are very great advantages in giving to the Iron and Steel Board the powers of the Monopolies Commission in this respect, and indeed greater powers.
I think it is generally admitted in all parts of the House that the Monopolies Commission has not been entirely satisfactory in its operation, and it was part of the Election programme of the Conservative Party that we would endeavour to strengthen the Monopolies Commission. I suggest that where we have a Board, as we have here, empowered to demand information, it will be in a very good position to see that all those conditions in the industry which would, under 410 the 1948 Act, attract the attention of the Monopolies Commission, could be disclosed to the Board itself. I would go further and suggest that the Board in that respect should be given the power to examine those conditions; and if it finds that they are operating against the public interest it should have power by injunction to restrain them.
The second main function of the Board is to promote development. It is quite clear that any development which is in the national interest will be promoted under this Bill either by the industry itself or by the Minister. I think it was the hon. Member for Reading, South (Mr. Mikardo) who interjected in the speech of my hon. Friend the Member for Aylesbury (Mr. Summers), and suggested that there were no powers under the Bill to keep in use production facilities which the producer wanted to close down.
That is completely wrong, and obviously could only have arisen from a failure to read the Bill itself, because by Clause 4 (3):If it appears to the Minister … that any existing production facilities … which would not otherwise be kept in use ought in the national interest to be kept in use, he may, with the approval of the Treasury, himself acquire or take on lease, and use those facilities. …I say that there is no form of development which is desirable in the national interest which cannot and will not take place under this Bill.
What powers are there which are desirable which can only be conferred by national ownership? What powers are there which cannot be exercised under this Bill? The right hon. Member for Lewisham, South (Mr. H. Morrison), in the previous debate, put forward what was really the only argument we have had on this matter. He said that private companies buy up other companies which they desire to control, and that that shows that ownership is necessary for control. What sort of argument is that? If private companies want to exercise control over other companies they have to buy them up, because that is the only method known to the law of getting such control. But the Board has no need to do that because by the Bill itself it is given the power to control without ownership.
§ Mr. Simon
The hon. Gentleman says it is not; but if he would look at Clauses 4–7 and onwards he would see that it is given precisely those powers; and those are the powers I have been dealing with in detail during the last few minutes, namely, the powers to mitigate monopoly, fix prices and encourage development.
§ Mr. Simon
There are no powers for the Board to own the portion of the industry which cannot be sold; those powers are given to the Agency, during process of sale. But what we were talking about were not merely powers of ownership. The whole argument was that one cannot exercise control without ownership. I have pointed out that the Bill gives precisely those powers of control without ownership.
The only other argument which has been put forward in favour of national ownership as against mere power of control is that the industry will not, in private hands, be able to raise sufficient funds for its capital development. The hon. Member for Stockton-on-Tees put that point with great clarity. I would say that that is a matter of opinion; and on the question of finance and economic development I prefer the opinion of Her Majesty's present Government to that of hon. Gentlemen opposite who left the country in the disastrous financial and economic state which Her Majesty's Government found on taking office. On a matter of that sort—the raising of capital for industry—I should also attach very great weight to the opinion of my hon. Friends the Member for Aylesbury and the Member for Esher (Mr. Robson Brown), who have spent a life-time in the productive units of this industry.
The final argument that has been put forward against the Bill—by the hon. Member for Stockton-on-Tees the right hon. Member for Vauxhall (Mr. G. R. Strauss) and the right hon. Member for Lewisham, South—was this: Whatever the argument in favour of returning the industry to private enterprise may be, accept now a fait accompli, respect the status quo. The hon. Member for Cleveland 412 agrees with that. I wondered where I had heard those words before. Then it came back: they were the words used by Hitler on the morrow of his successful aggression in Poland. He said that whatever had gone wrong in the past, although democratic sentiment had been affronted and the mandate of the Polish people had been overturned, what he had done had been done and we should accept the status quo—let them be friends and not disturb him.
§ Mr. Jack Jones
Would the hon. and learned Member agree that Hitler, whatever his sentiments and whatever his activities brought him to, was backed by the biggest private enterpriser in steel in the world—Herr Krupp?
§ Mr. Simon
There is no question that Hitler was backed by Herr Krupp, just as the British steel producers—the whole industry—rallied in a most remarkable way and put forth supreme efforts in support of this country. But I was not dealing with Herr Krupp; I was dealing with the hon. Gentleman, who is repeating the threats and blandishments which Hitler used after he had consummated his rape of Poland. I can tell him that we pay no more regard to what he has said or this occasion than England paid to what Hitler said on that; and for the same reasons.
I turn to a matter that seems very serious from the constitutional point of view—the threat to re-nationalise. We enjoy here the benefits of democratic government under the party system which demands for its working a great deal of mutual forbearance and respect for unwritten conventions of the Constitution. Clearly, if each Government is going automatically to repeal the principal Measures enacted by its predecessor ordered progress in democratic government cannot subsist. There are three fundamental constitutional convention that govern this type of case. The first 413 is that a measure to be repealed should not have been the principal issue before the electorate at the Election before it was enacted. If I may give an illustration, there is little question that nationalisation of coalmining was a leading issue at the General Election of 1945.
§ Mr. Simon
I think it will be generally agreed that neither road haulage nor iron and steel were in any sense leading issues at that Election.
I will go on to give a second illustration. The issue of repeal should have been fairly put before the electorate in the Election before the repeal. If one takes the Elections of 1950 and 1951, there is no question that the repeal of the nationalisation of iron and steel was fairly before the electorate, and a majority of the electorate were in favour of that repeal. Thirdly, I would suggest that a good case for repeal should be made on the merits.
§ Mr. Simon
Obviously, these conditions must to some extent be weighed one against the other. But if those conditions are not satisfied, then it is the duty of the Government to try to work the Measures of their predecessors. That is not only constitutional sense and usage, but it is also the traditional approach of the Tory Party to the working of the party system. Where we have found major enactments as a major issue before the electorate, we have tried, on taking over, to work them. That essentially has been the approach of the present Government towards nationalisation Measures which were passed by the previous Government.
I should add that there is a fourth matter, which is not a constitutional convention, although it is a desideratum. That is, that when the question of repeal irises, the Government should attempt, not the mere restoration of the status quo, out a constructive compromise which Mould appeal to moderate central opinion. I claim with confidence that the present Government have in this Bill carried out 414 these constitutional conventions and that constitutional desideratum to the full.
§ Mr. Palmer
I must apologise for interrupting this constitutional argument again, but supposing that, at the next General Election, the Labour Party gets a clear majority of votes in the country and seats in this House on a programme including the re-nationalisation of iron and steel, would there be anything undemocratic and unconstitutional in so proceeding? Is that not the hon. and learned Gentleman's argument?
§ Mr. Simon
I put forward three conditions. I suggested that, to justify repeal, before the original Measure there must have been a clear mandate from the electorate. If I am right, in the last Election, there was a strong majority of the electorate in favour of repeal. It would be contrary to constitutional convention, and playing ducks and drakes with the constitution, for hon. Members opposite to go to the country to try to repeal this Measure. It shows a degree of political irresponsibility which would render nugatory the working of the party system.
We know the object of this threat by the party opposite. Not only is it irresponsible, but it is positively mischievous; because the object is to make it difficult for the Government to implement the mandate which has been given by the democracy. It is the duty of the Government to take all possible steps to carry out that mandate and to mitigate that threat. I ask my right hon. Friend to see that the industry is returned to private enterprise with some sense of urgency; and, in particular, that such expedients as selling it back on hire purchase, which would mitigate that threat and give a better price, should be tried.
The hon. Member for Islington, North gave us, in his concluding remarks, a very moving account of the impact of this sort of industry on a sensitive mind. I know the right hon. and hon. Gentlemen whom I see opposite will bear me out when I say that approaching a town like Middlesbrough from the east, one does get an extraordinary sense—an overwhelming sense of vast and beneficent power.
But there are in the industry not only machines but men. From what I have been able to see they seem to have taken on the strength, the flexibility, the resili- 415 ence and the sound toughness of the material they themselves work. We owe them a very great debt, and we owe them this responsibility: that when we have passed this Bill, when we have hammered it into the best shape we may, we shall leave this industry in peace to work out its own destiny.
§ 11.43 p.m.
§ Mr. H. A. Marquand (Middlesbrough, East)
The hon. and learned Member for Middlesbrough, West (Mr. Simon), shares with me the representation in this House of one of the most important steel towns in the country. In the town itself there are no fewer than 8,000 steel workers whose output is 16,000 ingot tons a week, and in the near neighbourhood, if the additional workers in the division represented by my hon. Friend the Member for Cleveland (Mr. Palmer) are added, there is a total of 17,500 workers with a weekly output of close on 40,000 ingot tons—about one-eighth of the steel produced in this country.
This is a very important steel producing area, and it is natural that the socialisation of the iron and steel industry has received a great deal of attention, during Elections and other political debates. I think that in view of what the hon. and learned Member for Middlesbrough, West said earlier, it is just as well one should place on record exactly what happened at the various General Elections.
The election of 1950 was particularly conspicuous in this matter because, of course, Mr. Alfred Edwards, who preceded me as the Member for Middlesbrough, East, actually left the Labour Party and ran his Election on the issue of the socialisation or otherwise of the steel industry. He changed his mind completely from the attitude he adopted in 1935 and 1945 when he was previously elected, and in 1950 he made the nationalisation of iron and steel the main issue of the Election—and, obviously, I replied to him.
My hon. Friend the Member for Rotherham (Mr. Jack Jones) came in and did his whack as well and the result was that I was not only returned as the Member for Middlesbrough, East, but the two constituencies of Middlesbrough, taken together, returned a vote of 51,145 for candidates who supported nationalisation 416 and 41,975 for candidates who were against it. The majority in favour of nationalisation for the town as a whole was 9,170.
Then, in 1951, we went through the matter all over again. The same issue was put before the electorate. In a town like that one cannot escape it if one wishes to—and I do not know that anyone did. The return of the hon. and learned Member for Middlesbrough, West, and his speech tonight, may have obscured the significance of what actually happened in 1951, because, if we take the two constituencies together, we find that the majority of voters favouring the nationalisation of the iron and steel industry in 1951 was 13,421. In 1950, the majority was 9,170.
The arguments in favour of the socialisation of this great industry which, I believe, appealed most to the men in the steelworks in Middlesbrough during both those Elections can be summarised, not unfairly, under four headings. In the first place, they believed that the proper planning of the steel industry, and the implementation of that plan in the national interest, was essential to the maintenance of full employment, not only in the steel industry, not only in the shipbuilding, engineering and other industries directly dependent upon steel, but in industry as a whole.
After all, the key to full employment is the control of investment. I am almost quoting the words of the 1944 White Paper on Full Employment. Investment does not mean pound notes or cheques as the hon. Member for Aylesbury (Mr. Summers) seemed to think. Investment means resources and resources mean steel. Without steel our investment programme is useless and worthless.
The hon. Member for Aylesbury interrupted my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) to ask why there had not been more investment in British industry. The answer is simple. Investment in British industry during the six years we were in power kept pace with the expansion of the steel industry. It could go no faster; and it certainly went no slower.
It is because the control of steel is the control of investment, because the control of investment is the control of, and the key to, full employment, that the workers 417 in Middlesbrough believed that it was necessary to have an effective control over that industry; to have a possibility of planning in the national interest for the maintenance of full employment. There is no such planning provided for in this Bill and the powers given to the Board, such as they are, are negative. The Explanatory Memorandum sets it out in more simple English than the Bill, but no doubt accurately summarises it as follows:The Board may in certain cases require schemes for the provision of additional production facilities to be submitted for their consent, which they may withhold if they think that the scheme would seriously prejudice the proper development of the industry. The Board are to consult with the industry with a view to ensuring that only schemes of major importance are required to be submitted for their consent …Only schemes of major importance, and only negatively; from the point of view of whether or not the Board will refuse consent. That is the opposite of a deliberate, well thought out, careful planning of the development of an industry.
The history of this industry between the wars shows, as my hon. Friend the Member for Islington, North (Mr. Fienburgh) pointed out correctly and eloquently, that the industry itself is capable of planning. Of course it can plan. It knows how to do it very well, but its planning has always been negative; it has been for the putting plant out of production, for the restriction of output carefully to correspond with the profitability of certain works within the industry. What is wanted is positive planning and I see no sign that we can get it out of the machinery this Bill provides.
The second argument was closely related to the first. The men in Middlesbrough, like the men in South Wales or Yorkshire or Scotland working in the steel industry, had seen the effects of arbitrary decisions to change locations or to close down obsolete plants. After all, those living in Middlesbrough are not so far from Jarrow. And if Jarrow was not a good example they were well informed about what had happened in South Wales and other steel producing areas in the country. These men are not sentimental. They know perfectly well that plant becomes obsolete. They know very well that techniques change. 418 They know very well that it has been necessary to move parts of the steel industry nearer to its sources of supply.
They know that these things must happen. They are not against improving the efficiency of the industry. They are not against rationalisation. But, they want to be assured that these things are done in the public interest. That means they want to be sure that those who take the decisions are aware of the social cost as well as the specific economic or industrial cost. The Corporation was given that duty, but now much of the industry is to be left in the hands for years to come, we are told, of a realisation Agency. For all I know, the hon. Member for Aylesbury may have been right and some of the plant to remain in the hands of the realisation Agency will be new.
But it stands to reason that a large proportion will be the older plant with the obsolescent or even obsolete equipment. The decisions as to what to do with these plants—whether they are to be closed or abandoned or whether the people working in them are to be idle, as so many tin-plate workers and others were between the wars in Wales, as I know—are to be left, not to a Corporation charged specifically with a duty of looking after the public interest and subject to direction from the Minister, but to a purely financial agency. There is no guarantee, at all, that anything but the financial interest will determine these grave questions, whereas the workers believe, as I and my hon. Friends believe very firmly, that the social interests, as well as the financial one, should be weighed in the balance before any such decisions are made.
The third argument which appealed to my electors at that time was the belief that the system of administration for the industry, which we had devised, would prove to be the right one. There is something different about nationalising a manufacturing industry, from nationalising a public utility like the railways, electricity, or gas, or nationalising an extracting industry like coal. The nationalising of a manufacturing industry, with a large number of factories, requires special provision to ensure flexibility in administration and my electors thought the form we chose—that of the holding company—was the best way of achieving that. After 419 all, the Iron and Steel Corporation was no larger than the United States' Steel Corporation. It was smaller, I am sure, than General Motors. Both of these are large corporations, which, whatever faults they may have, are not charged with inefficiency.
To compare with that method, the method suggested in this Bill, yields the most remarkable results. The method proposed is cumbersome in the extreme. It splits the industry into a whole lot of systems of control instead of having one unique control, as was done under the Act of 1949. First, there are the firms which are to be bought back by private enterprise. Secondly, there is to be our old friend, the Iron and Steel Federation, presumably closely associating with the firms bought back. Thirdly, there are the firms not bought back, which remain the property of the realisation Agency.
I hope that the Minister will explain in some detail just what he supposes the relations of the Federation are to be with the firms owned by the Agency and what the relation of the Agency with the firms is to be. It was notorious when the Corporation was in control that there were difficulties between the unique owners of the shares of the undertaking and the Federation, which is the main provider of statistics and organisation in that industry. They may say that they are denationalising and will not have the same difficulty, but is the Minister quite sure? I should like, at least, to have some explanation of what those relations are going to be.
However that may be, there are, first, the firms which are being bought back. There is the Federation. There are the firms which are not being bought back. Added to this there is the vast range of foundries and re-rolling establishments which are coming in now, under protest. Fifth, there is the Board, brooding over the industry. In other words, there are five separate kinds of institution within the industry, instead of one, with a Board brooding over the industry, with confused and doubtful powers and consisting, as far as one can see, of the very people whom it is appointed to control and supervise in the national interest.
I suggest that in such a system, with all these five different types of bodies responsible for some part or other of the planning 420 of the industry, there will be constant reference of papers, consultations, telephoning, overlapping and general muddle that that system of organisation entails, and which is far inferior to the simple, streamlined and quickly-operating system which was set up by my right hon. Friend in the Act of 1949. The fourth argument, of course, was the argument about monopoly, of which we have heard a good deal tonight, but I will not attempt to repeat what has been said by other hon. Members.
The Act of 1949 had specific provisions carefully written into it to give safeguards against the abuse of a monopoly position. It established, for example, a Consumers' Council, with direct access to the Minister. Where is the Consumers' Council now? What is to become of it? Are the consumers to have no voice now in what happens in the supervision and control of the industry? Can they no longer make any complaints? All that is to go, and in its place there is a Clause saying, simply, that there is nothing to stop the Monopolies Commission having a look at the practices of this industry if it is referred to them by the President of the Board of Trade.
I thought that in an earlier speech about his plans, the Minister seemed extraordinarily optimistic about his decision to allow the Monopolies Commission an opportunity to look at the industry. He hardly seemed to be aware at that time—no doubt he is by now—that the Monopolies Commission can do nothing unless a case is referred to them by the President of the Board of Trade. Suppose the President is asked by the Minister—I cannot imagine how in any Government with collective responsibility he would do it otherwise—to have a look at the iron and steel industry, and he asks the Commission to do so.
We know from experience that it takes the Monopolies Commission a couple of years to look at even a small industry, the sort of industry that they have been dealing with hitherto. We know also—I know, at any rate; I have good cause to know, being the only Minister who signed an Order under that Act—that even when an Order is signed under the powers given by the Act, we cannot be sure that the monopoly is broken. That is what experience has shown thus far.
421 The hon. and learned Member for Middlesbrough, West (Mr. Simon) made two suggestions to the Minister. He suggested that price fixing to preserve competition should be deliberately written into the Bill. He suggested also that the powers of the Monopolies Commission should be given to the Board. They are good suggestions for the improvement of the Bill, and I compliment the hon. and learned Gentleman on making them. As we both represent Middlesbrough and we are both well aware that numbers of people in that town are in the habit of laying wagers, perhaps he will join me in a little wager outside.
I am willing to bet him almost anything he likes that his right hon. Friend will not accept those suggestions. I should be very surprised if he did. I am sure that my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss) was right, and that the proposals are a sham and are not really intended to bring the industry under any effective kind of public control at all.
I do not complain that the price-fixing power given for the price of a product sold within this country does not apply to the price of the product when sold outside this country. But I do agree with the hon. Member for Aylesbury about the desirability of giving some information, or perhaps putting something in the Bill, about giving power of some sort over the export trade of the industry.
Particularly should the country be reassured that, in our dealings with the European Steel Community—and there must be those dealings—that if that community should reach a point where it is empowered to take certain steps for controlling output in the even of supply outrunning demand, this country will have an effective body to negotiate.
Men in my constituency are concerned about this matter. We are concerned to have continued expansion in the industry and although we hope that that will go on for a long time to come, it stands to reason that we must reach a period when supply will outrun demand; when concerted efforts must be taken to safeguard our overseas trade; and when that time comes, it will be as well to know who will conduct negotiations on our behalf.
422 Is it to be the independent Iron and Steel Federation, bringing to bear its prewar and outworn attitude of restriction, or a body charged with specific responsibility by Parliament in this country to make the best kind of arrangements possible for the maintenance of our own overseas trade and the maintenance of our full employment?
I have tried to cover a very wide range of subjects, and hope I have not trespassed too long on the time of the House; but I consider those subjects to be of importance.
§ 12.3 a.m.
§ Mr. Aubrey Jones (Birmingham, Hall Green)
The right hon. Gentleman the Member for Middlesbrough, East (Mr. Marquand) represents a constituency of steel workers. I represent a constituency of steel consumers. As such, may I tell him that I thought he showed a touching faith in the efficacy of that moribund institution, the consumers council. I should have thought that consumers' interests are more effectively safeguarded in this Bill by representation on the Board itself, and by the power entrusted to the Board to fix maximum prices, than by the provisions in the Act of 1949.
May I here make the customary declaration of interest, which one should make? It seems to me that every speech from the opposite side of the House—although that of the right hon. Gentleman was less markedly so than the others—has rested on the simple assumption that in this industry private and public interests are irreconcilable. May I suggest that the truth is, as so often is the case in life, at once more charitable and yet more complex. One can have a difference between private and public interest, but very often they do coincide. The function of the State is to facilitate that coincidence and, should there be a divergence, to apply a correction. The Bill, as I understand it, applies just that. The 1949 Act suppressed private activity. This Bill adjusts private activity to public interest.
More than one hon. Member opposite, particularly the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) spoke of the need for development, and as I share that postulate I should like to make that my starting point. I think we would all agree that the interests of the country 423 demand the maximum possible expansion of this industry consistent, of course, with not so inflating capacity as subsequently to incur a depression. That I accept. The question is, which of the two Measures which we are considering, the Act of 1949 or this Bill, is the more calculated to produce the maximum possible development?
This question, it seems to me, is the very heart, the nub of the whole matter. More than one hon. Member opposite has challenged my right hon. and hon. Friends to produce evidence of any damage caused by nationalisation. All I would say is that in the middle of this summer the British Iron and Steel Federation announced a capacity target for the next five years of 20 million tons. Almost six months have gone by, but to my knowledge—I think the statement is correct—the Iron and Steel Corporation of Great Britain have not publicly endorsed that figure.
I suggest that that tardiness is not without significance. Consider for a moment the character of a nationalised undertaking such as the Iron and Steel Corporation of Great Britain. In the first place, it is publicly accountable. I have no doubt that public accountability has many virtues, but the last thing one can say about it is that it is an encouragement to the care-free taking of risk.
In the second place, a nationalised undertaking such as the Iron and Steel Corporation of Great Britain is obliged, year in and year out, to pay a steady return on its capital. Should it make a mistake, it cannot, as can a private company, seek relief by temporarily passing a dividend. It is under a permanent obligation.
In the third and last place, a nationalised undertaking such as the Iron and Steel Corporation of Great Britain is absolutely secure in the knowledge that should it neglect a certain opportunity of expansion there is nobody else to expose this default to the public; there is no competitor. To that extent it is a monopoly, development being in the hands of one body, the Iron and Steel Corporation of Great Britain.
These seem to me to be heavy disadvantages. Every one of them inclines to caution and not to adventurousness, and 424 every one of them is operating now. Every one of them would be done away with under this Bill. Consider the change that would in fact be effected. We would have restored the financial autonomy of 80 to 90 de-nationalised firms, and each one of them, whether or not one agrees with it, would have what it now lacks, a financial motive to seize any opportunity which its rivals neglected.
I can imagine hon. Members opposite saying, "Profit, filthy lucre," but I would point out that for any one company the only way of adding to its profit is by expanding. At this point the private and the public interest coincide. A divergence between the two would arise, and this, if I surmise rightly, is the thought in the minds of hon. Members opposite, if the de-nationalised companies were to get together and deliberately restrict capacity.
That is the thought that has cropped up today in a succession of speeches from the benches opposite. I agree with the hon. Member for Islington, North (Mr. Fienburgh), who is no longer here, that the development plans of an industry like this should be looked at collectively. There are cases where it is difficult for any individual company to go charging ahead on its own. I agree, further, that if that collective consideration is done by the private firms themselves, then there may possibly be a restriction of capacity. I am not saying that there has been, but such a restriction could, in fact, arise, but to avoid that possibility is precisely the purpose of this Bill.
The collective consideration is entrusted to an independent and outside body, the Iron and Steel Board. Should the privately-owned industry, despite that provision, try to restrict capacity, there would be several means of redress. In the first place, under Clause 9—the hon. Member for Islington, North ignored this completely—the Iron and Steel Board could open the country to a flood of imports. It could say, "There is an inadequacy of supply; we will import."
Not only that, but the Iron and Steel Board—this independent and external body—would be obliged to report on the restrictionist attitude of the industry to the Minister. It could, in fact, arraign it before the public, and then if the Minister agreed with the Board he could have recourse to action. He could himself enter the industry.
425 The right hon. Member for Vauxhall (Mr. G. R. Strauss) rather deprecated this provision. He said, "It is not good enough; this is not enough of an accelerator." In the "Financial Times" this morning there was quite a powerful piece on the development plans of the National Coal Board. It is true to say that the Coal Board has a development plan which many coal consumers, rightly or wrongly—I am no judge—consider to be inadequate. Further, the execution of the programme is, in fact, lagging behind the target.
Suppose the right hon. Member for Vauxhall were the Minister of Fuel and Power, supervising this nationalised undertaking. Suppose he were to agree with the critics. No doubt, the Coal Board would have very good reasons. It could say, "We do not think it would be economic to expand more rapidly than we are doing." If that were so, the last thing the right hon. Gentleman would do would be to instruct the Coal Board, nevertheless, to go ahead. He could argue, but the most he could do would be to argue. Here, under this Bill, he could, in fact, back up his argument with action.
More than one hon. Member opposite has spoken of the past and has said that this and that mistake was committed. I suggest that that is only half an argument. They have to go further than that. They have to show that such mistakes are likely to be endemic under the system provided for in this Bill, and not one of them has attempted to complete that argument. Each one of them, in turn, has resorted, if I may borrow a phrase 426 from the speech of the right hon. Member for Vauxhall, to assertion.
It has been said that this Bill is a façade, that the real power behind the scenes would be Steel House—the British Iron and Steel Federation defying and holding at bay the publicly appointed Iron and Steel Board. Perhaps I may reply with a counter assertion. I think I can reasonably claim a fair acquaintance with the ideas which Sir Andrew Duncan had on this subject. I can affirm that the picture of the relationship between the two bodies depicted by hon. Member after hon. Member opposite today is a fantastic caricature of the conception held by Sir Andrew Duncan. It is true that Sir Andrew Duncan has gone, but I can also affirm that there are others who still hold that same conception.
Then it has been said—I think this was the theme of the hon. Member for Stoke-on-Trent, South—that there is no point in de-nationalising this industry. It was asked: where is the capital to come from for the expansion? It is quite true that there is a shortage of capital. It is true, too, that by nationalisation one can give a particular industry a privileged claim on such capital as there may be as, for instance, the British Electricity Authority has, in my submission, had a privileged claim. But that does not remedy the shortage of capital—
§ Notice taken that 40 Members were not present;
§ House counted, and 40 Members not being present, the House was adjourned, at Seventeen Minutes past Twelve o'Clock a.m. till this day.