§ Mr. Frederick Willey (Sunderland, North)
; I beg to move, in page 11, to leave out lines 33 and 34.
We return from the turbulent to the placid now that there is no question of hon. Gentlemen opposite protecting the Federation or of their lifting a corner of the curtain regarding the Conservative Party's political levy. What we are now dealing with is the Board.
This Clause deals with temporary borrowings and investment by the Board. Subsection (5) gives the Board power to invest, as they think fit, any moneys which for the time being they are not using. So far so good. So far, I congratulate the Government because this represents a considerable advance over the attitude taken by the Conservative Party during the discussion of the Iron and Steel Act, 1949.
Then, the Conservative Party did not intend the Corporation to have any power to invest at all. Led by the Solicitor-General they voted against the appropriate Clause, and so abhorrent was the suggestion of giving the Corporation power to invest that they expressed no reason for their opposition but merely voted against the Clause as a whole. They did not agree that the Corporation should have any power of investment whatsoever. What they should do with their money was a matter which the Conservative Party kept quiet about.
What the present Bill does is to give the Corporation power to invest such moneys in such way as they think proper. I think that the Parliamentary Secretary could perhaps help us later by telling us why, in this case, it should be "as they think fit." I do not know whether there is any importance in that distinction. The proviso to which the Corporation is at present subject is of an entirely different character to the one proposed here, to which we are objecting.
The present Act makes the power of the Corporation to invest, subject to the 1286 proviso that the Corporation shall have no power of making a company a subsidiary of the Corporation or of using their powers to enable the Corporation to exercise an effective influence over the policy of the company. That is an understandable proviso. It is interesting that a similar proviso is not suggested in this instance at all. It may be said that the circumstances are different, and that perhaps such a proviso would be inappropriate, but I should like to know why that procedure was not followed. It may be that, with the enthusiasm of turncoats, the Government did not take such a vigorous step and took the present one, which I hope the Committee will not accept.
What the present proviso does is to prohibit the Board from investing in iron and steel shares. I should have thought that there should be a good reason for that, and the onus is on the Parliamentary Secretary to explain why they should provide in legislation for such a proviso. Perhaps in the right hon. Gentleman's brief there is the usual reference to Caesar's wife, although on this occasion it is really irrelevant. There is no relation at all between the Board and Caesar's wife, and I think that it is bad to legislate on the assumption that the Board will take the worst possible course.
I do not think that we should assume that at all. I think that we should assume that the Minister is sincere in his enthusiasm for the Board that he intends to set up and on which there will he qualified persons of wide experience who will use their experience collectively in the interests of the industry. That being so—do not put shackles on the Board; do not put a reflection on the Board; leave it to them. I agree that it is conceivable, of course, that the Board might invest in iron and steel shares in a manner which might reflect upon the Board or bring suspicion upon the Board, but that is not a reason for legislating against that.
There is a whole series of contingencies that one could envisage. I 1287 should have thought that it was far better for the Government to say, "We are setting up this Board and will leave it to the good sense of the Board to determine how to invest such moneys—they cannot be very substantial—as may arise under this Clause." They certainly cannot say that the Board should be prevented from investing in iron and steel shares because that would be a wrong and unprofitable investment. The whole purpose of the Bill is apparently based on the assumption that it will be a profitable investment. They cannot say that the Board cannot invest in iron and steel shares because they are not knowledgeable of the advantages and disadvantages of so doing. This is a matter on which they are particularly knowledgeable. All that one can say is that it would, on the face of it, appear wrong, or might appear wrong, that there should be such financial association.
I would urge the Minister to refrain from legislating against that possibility. Of course, there is the possibility that the Board may do a lot of things which might prejudice them, but the confidence he has in the Board should express itself in the terms of this Bill, and unless he can produce some very cogent reason, which I have not been able to anticipate, I hope for the sake of the good name, prestige and respect for the Board he will accept this Amendment.
§ Mr. Low
I think that I can probably satisfy the hon. Gentleman the Member for Sunderland, North (Mr. Willey), and perhaps I should begin by giving him an assurance that there is no reference to Caesar's wife in my brief. He made the point to the Committee that the proviso in this Clause is a different proviso from that in Section 36 of the Iron and Steel Act, 1949. He gave the Committee an explanation of the reason for the proviso in the Act of 1949. I do not quarrel with the explanation, and I hope that he will not quarrel with the explanation which I shall give for the inclusion of the proviso in Clause 12 (5) of this Bill.
The reason for it is quite simple. We have, throughout this Bill, taken the view that it is essential that the Board should not be either directly responsible for any production facilities or directly engaged in any, nor have any interest in any of the firms in the industry which might affect the impartiality of the Board. The most important thing, in our view, is 1288 that the Board should be completely impartial and have no special interest in any one of the iron and steel companies, and it is for that reason that the proviso it in the Clause.
We have had the same point running through a number of the Clauses. We have from time to time differed on the point. From time to time hon. Gentlemen opposite have argued that it would be a good thing if the Board undertook certain things, but they have never argued so far that it would be a good thing for the Board to have an interest in one of the many iron and steel producers whom they have to supervise. That being the explanation, I hope the hon. Gentleman will think it right to withdraw his Amendment.
§ Mr. Raymond Gower (Barry)
I hope the hon. Member for Sunderland, North (Mr. F. Willey) will see the force of what the Parliamentary Secretary has said, and will reflect that there would appear to be an ample field for investment outside the iron and steel industry.
§ Mr. Willey
I am obliged to the Parliamentary Secretary for his explanation. I feel that he is unduly cautious, but I will not disturb his caution. I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause ordered to stand part of the Bill.
§ Clause 13.—(POWER OF BOARD TO OBTAIN INFORMATION.)
§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Sandys
This Clause deals with the question of the obtaining of information by the Board. As hon. Members know, I have tabled a revised Clause which appears on the Order Paper among the new Clauses, and I suggest that it would be to the convenience of the discussion if we postponed the debate on this Amendment, and that, if you, Mr. Bowles, or the Chairman of Ways and Means were agreeable, we might take the discussion on the new Clause in connection with my Amendment. Clause 27 also deals with the question of obtaining additional information. I think it would be a more intelligible debate if we proceeded in that way.
§ The Temporary Chairman (Mr. Bowles)
As far as I understand, that is agreeable to both sides of the Committee.
§ Mr. Jack Jones
On the assurance that any comment we may wish to make on this particular Clause will not be prejudiced on the subsequent discussion on the new Clause, we on this side of the Committee shall be perfectly happy to agree to the arrangement.
§ The Temporary Chairman
I will report that to the Chairman of Ways and Means.
Question put, and negatived.
§ Clause 14.—(ANNUAL REPORT AND ACCOUNTS OF BOARD, PUBLICATION OF STATISTICS, ETC.)
§ Mr. G. P. Stevens (Portsmouth, Langstone)
I beg to move, in page 12, line 25, at the end, to insert:
Provided that no person shall be qualified to be so appointed unless he is a member of one or more of the following bodies:
In moving this Amendment, I must declare an interest, because I am a member of the Institute of Chartered Accountants in England and Wales, the first of the bodies named in the Amendment. Approximately 120 years ago a fire occurred which burned down the then Palace of Westminster. That fire was caused by the destruction of the tools of the trade of book-keeping, by the burning of the notched wooden tally sticks, the splitting of which between the buyer and the seller was the method used at that time for recording transactions between two persons.
- The Institute of Chartered Accountants in England and Wales;
- The Society of Incorporated Accountants and Auditors;
- The Institute of Chartered Accountants of Scotland;
- The Association of Certified and Corporate Accountants;
- The Institute of Chartered Accountants in Ireland.
Thirty-five years after that fire took place a number of men met together in the City of London to decide whether or not something could be done to raise the trade of book-keeping to the level of a a science of accountancy. To that end, these men applied for and in due course were granted a Royal Charter by which 1290 no person could practise as an accountant or auditor in England or Wales and call himself a chartered accountant unless he had survived certain tests imposed by the council of the body thus formed, the Institute of Chartered Accountants in England and Wales.
It was not long before the more backward brethren of the order in Scotland established faculties in accountancy in Aberdeen, Edinburgh and Glasgow, and soon after in Ireland as well. As the years went by other bodies anxious to establish the same high standard of accountancy—I refer now to the two other bodies named in the Amendment, the Society of Incorporated Accountants and Auditors and the Association of Certified and Corporate Accountants—also set themselves a very high standard. They prevented membership of these bodies until the applicant had passed these high tests.
There is no doubt that the bodies which took these steps improved the status of their own members, but they did very much more than that. They ensured that the public was given very much better service than that given in the days of the old tally sticks. For those two reasons, it seems to me that these bodies should be rewarded. This Amendment would encourage them, and, at the same time, the public would be protected.
It is perfectly true that this is an application of the "closed shop" principle. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite say "Hear, hear." I wonder what would be their view if any of them had a house to buy or sell and the conveyance of the property was carried out by a gentleman calling himself a solicitor and a commissioner for oaths but who was, in fact, the local dustman with no qualifications whatsoever. I can imagine that they would become the most ardent advocates of the "closed shop" principle as applied to a craft union.
Furthermore, this is a closed shop with a very open door. The door is open to all those who set their sights high and who deliberately set their standards as high as the bodies named in the Amendment. I am not asking for a precedent in any shape or form because the nationalisation Acts already on the Statute Book incorporate just such a description. All 1291 I am asking for is the further encouragement of the bodies named in the Amendment and the protection of the public. For those two reasons, I hope the Committee will accept the Amendment.
§ Mr. Albu
The hon. Member for Langstone (Mr. Stevens) certainly declared his interest. He has taken us on our customary tour of the lower corridors of the House, a tour which we take when we seek to explain the origins of the building. I was glad to have the confirmation that the story which I tell to my younger constituents is strictly accurate.
I am interested in the Amendment which, as the hon. Gentleman says, is a "closed shop" Amendment, but one which, I think, provides a certain safeguard. However, I am not quite sure whether it goes wide enough. It is true, as the hon. Gentleman says, that in the nationalisation Acts which we introduced some similar safeguard for the adequacy and accuracy of the duties imposed was introduced. But in looking up the Iron and Steel Act, 1949, I find that a number of other bodies were included, and it looks as if the hon. Gentleman and his friends have attempted to narrow the field.
He referred in the course of his remarks to the fact that his friends in Scotland were rather behind hand in promoting to a profession the older craft of bookkeeping. That is something for which he will have to answer to his Scottish friends. But why has he left out of this Amendment the Society of Accountants in Edinburgh. the Institute of Accountants and Actuaries in Glasgow, and the Society of Accountants in Aberdeen, or has there, perhaps. been a merger in the interval?
§ Mr. Stevens
I did not mention those bodies for the simple reason that they no longer exist. Since the nationalisation Act they have amalgamated into the Institute of Chartered Accountants in Scotland.
§ Mr. Albu
I thank the hon. Gentleman for that information, but it is the business of the Committee to safeguard the interests not only of the consumers, but of those who work in industry and the professions, and we want to be quite sure that the hon. Gentleman and his friends are not, in fact, trying to acquire 1292 for themselves a monopoly in this particular work. I believe there are some other bodies which may be left out. We want to be careful that we do not finally exclude other bodies which may reach professional status in this field. I do not think it would arise here but it might arise in connection with some of the reports that the Board will have to make on the working of the industry.
It might be advisable to include among those who are responsible for preparing reports and sets of figures members of the Institute of Cost and Works Accountants. I fully understand that the older professional bodies always frown on any new bodies with a specialist function. I am a member of one body, the Institution of Mechanical Engineers, which sometimes is regarded as a splinter from the Institution of Civil Engineers. Senior bodies do not recognise these younger bodies, even when new functions come into operation and they become necessary for industry.
§ 6.0 p.m.
§ Mr. Stevens
I do not think the Committee should be misled. The hon. Member mentioned the Institute of Cost and Works Accountants, but he must realise that the type of work for which the members of that body are trained is completely and entirely different from the work normally done by chartered accountants.
§ Mr. Albu
Certainly, but tins Clause and the Amendment do not relate only to audits. They go a little wider than that. They deal of course with accounts, but also with other records, and we shall be coming in a few minutes to other Amendments which some of us on this side of the Committee have put down and which deal with what the reports should contain.
I am only pointing out that it might be necessary to include members of other professional bodies, including cost accountant bodies, amongst those who have to draw up the report and deal with figures and the accounts which the Board have to prepare. I am not opposing the hon. Gentleman's Amendment, but I am warning the Committee that we must be careful. We do not wish to narrow the field. The Amendment as it stands is narrow, and there may be other bodies 1293 which could attend to some of the functions which will be dealt with under this Clause. Chartered accountants may not cover all the functions in this connection, and it may be found that the bodies here mentioned are not entirely adequate for the purposes that this Clause envisages.
§ Mr. R. Jennings (Sheffield, Hallam)
I feel that in supporting this Amendment I, too, should explain my interest to the Committee. I also am a member of the Institute of Chartered Accountants. I have had the pleasure, not only on the Floor of this House but also in Standing Committee upstairs, of supporting similar Amendments in nationalisation Bills. One of the things that I feel about this matter is that there is a sort of tendency to compare one body with another. We must not be drawn down to that level.
I want to explain to the hon. Member for Edmonton (Mr. Albu) that the Amendment deals entirely with the question of audits, because if he looks at line 25, on page 12 of the Bill, he will see that it refers to the Board's accounts being audited and the accountants being approved by the Board. This is, therefore, particularly auditing. I feel that the highest possible skill should be brought into the preparing of these accounts and of the auditing of the accounts annually so that we know they have been done with the best possible skill.
I do not want to waste the time of the Committee, and I feel that anything further that I say might draw me into the comparison of one body with another. I do not want to drop to that level. The position is purely one of skill, and I know that the bodies which have been named here are the best in the country. I feel the Committee will accept the Amendment in that spirit.
§ Mr. Eric Fletcher (Islington, East)
I have a great deal of sympathy for this Amendment, but I do not know whether the Minister will accept it or not. Before we proceed further we should see where we are getting to. The hon. Member for Hallam (Mr. Jennings) said that he did not want to make comparisons, but no one can seriously support such an Amendment as this without making comparisons. I have the greatest admiration for the Institute of Chartered Accountants, the Institute of Incorporated 1294 Accountants and Auditors and the other bodies mentioned in this Amendment.
The only possible object of this Amendment can be to exclude a certain number of people who would otherwise have qualified for appointment to act for the Board. That may or may not be a good thing, but if it is a good thing in connection with this Board it may be a good thing to do generally. If it is not a good thing generally, why should it be done in connection with the Iron and Steel Board?
§ Mr. Jennings
Because I consider that the skill engaged in auditing and reporting on these accounts should be the highest possible skill in the country.
§ Mr. Fletcher
That remark seems to me to defeat the hon. Member's whole argument. The hon. Member for Langstone (Mr. Stevens), who moved this Amendment, referred to the tally sticks downstairs by which the Exchequer accounts of Her Majesty's Government in the Middle Ages used to be kept. I have not the slightest doubt that in those days the tally clerks who worked with those sticks were perfectly well skilled and efficient, but that is not the point.
The question involved in this Amendment is this: in connection with certain other professions like the law, medicine, dentistry and so on, it may well have been desirable for Parliament to lay down certain rights and general principles. It may perhaps one day be desirable for Parliament to consider the same matter in connection with the profession of accountancy. All I would say is that until we reach that stage there must be some degree of invidious distinction and comparison in introducing this kind of limitation into a Bill.
I would ask the Minister and hon. Members who support this Amendment to explain how it can be brought forward without it involving an invidious discrimination against those accountants who, for all I know, are perfectly well qualified as accountants and skilled in their profession, but who do not happen to be members of these particular bodies.
§ Mr. Stevens
If they are so very skilled can the hon. Gentleman tell us why they are not members of any of these bodies. because membership is open to all with the requisite skill?
§ Mr. Fletcher
I do not know why they are not. Presumably, they have good reasons for not being members. All know is that those gentlemen who practise as accountants but who are not members of any of these five bodies are, as the law stands at the moment, entitled to practise their profession of accountancy. Either that is desirable or it is not desirable. If it is not desirable, then I should have thought it was time that some Bill was introduced into this House in order to regulate the whole profession of accountancy on a national basis.
What I am doubtful about is whether it is wise for us as a Legislature to do something of this kind in connection with the auditing of the accounts of one particular concern. I hope in the interests of those accountants perfectly entitled to practise their profession and who will be discriminated against by this Amendment that the Minister will consider whether this is the right method of giving effect to its object.
§ Mr. Shepherd
I must say at once that I oppose the Amendment. I am satisfied that it is not necessary, because a Board of this standing would not choose accountants who were other than fully and properly qualified for the purpose. I have an objection to the Amendment which goes beyond that point. I do not like closed shops in general, and I do not like those which are arrived at by this method.
I do not know a great deal about the various accountancy bodies. Occasionally I pay accountants, and I assume that I get good value for money. I do not know. I am being asked to decide upon the competency of these bodies without knowing sufficient about them. I certainly do not know whether in 10 years' time there will be a split in a professional body and a new body will arise of accountants who will be wholly desirable and recognisable but who will be prevented by the provisions of the Bill from auditing the accounts of the Board. That seems to me quite wrong.
It may well be that it is desirable to have a standard of accountancy, and it may be that we ought to exclude certain people from acting as auditors and accountants, but if we want to do it, the Bill is not the place. If we reached a general conclusion that there should 1296 be established by statute a standard up to which people should measure before being allowed to be called "accountants" or "auditors," let us have a Bill to provide for that, as we have had for many other professions. Then we can discuss the matter. We can know what is required and Parliament can be versed in the problem. We are being asked to establish this sort of statutory standard by what are really backdoor methods without adequate knowledge of what we are doing. For the reasons I have given, I ask my right hon. Friend—I do not say this with very much optimism—to reject the Amendment.
§ Mr. George Darling (Sheffield, Hillsborough)
I think we are all in favour of the purpose of the Amendment, but, like the hon. Member for Cheadle (Mr. Shepherd), I am not sure whether this is the right way to achieve our purpose. I do not feel strongly enough against the Amendment to vote against it.
I hope that we all agree that it is right and proper that a craftsman's job should be done by a qualified craftsman, but I am not sure whether that should be achieved by statute or by the Board themselves exercising their intelligence by giving the job over to craftsmen. According to the Amendment, evidence of competent craftsmanship is membership of an organisation. There are many craftsmen in industry and trade, such as in the engineering side of industry and in the steel industry proper, whose only evidence of craftsmanship is membership of a trade union. They were not indentured apprentices. If the demand for a closed shop comes up from those sections of industry, I sincerely hope that the trade unions asking for the closed shop will be supported by hon. Gentlemen opposite, if the Amendment is carried.
§ Mr. Low
It might be a good thing if I intervened at this point of the discussion. My hon. Friend the Member for Cheadle (Mr. Shepherd) began his remarks by saying that he was quite certain that the Board would be sensible and would employ proper accountants to audit their accounts. That is the view that the Government have held about many of these matters, but from time to time doubt has been expressed, and we have thought it right to seek to amend the Bill ourselves or to recommend the Committee to accept 1297 Amendments proposed by other hon. Members in order to remedy reasonable doubts. This Amendment is just one of them.
My hon. Friend the Member for Cheadle said that this was the wrong place to insert a list of bodies recommended by Parliament as qualifications for suitable accountants. That may be his opinion, but this is now quite standard practice in a number of Acts of Parliament. The hon. Member for Edmonton (Mr. Albu) and other hon. Members have pointed out that this proviso is very similar to the proviso inserted in the 1949 Act, and in other nationalisation Acts. It has one difference, on which the hon. Member for Edmonton commented and which was most satisfactorily and accurately explained by my hon. Friend the Member for Langstone (Mr. Stevens).
§ Mr. Shepherd
I am grateful for the explanation that my hon. Friend is giving, but does not he realise that I expect more of him, and that I do not expect to be told that what the late Government did is a good precedent?
§ Mr. Low
I am quite aware of that. Nor dc I expect my hon. Friend to say that he expects much more of me before I have even got into my stride in making my speech.
The hon. Member for Islington, East (Mr. E. Fletcher), though he expressed sympathy with the Amendment, wondered if we were not excluding accountants who now have the right to, and in practice do, audit accounts. I am advised that we are excluding no such accountants. The Companies Act, 1948, which the hon. Member will probably know much better than I do, provides, I understand, that a person is not qualified to be auditor of a public company unless he is a member of a body of accountants recognised for the purpose by the Board of Trade, and the bodies of accountants recognised for the purpose by the Board of Trade are these bodies. There need be no fear in the minds of hon. Gentlemen that we are excluding any people who are now fully qualified accountants.
§ Mr. Summers
Does that mean that it will not require an Amendment of the statute if a new institute of professional people came into being and that mere 1298 recognition by the Board of Trade will have the same effect?
§ Mr. Low
It does not mean that here. I have not the advantage of having the Companies Act in front of me, but if my hon. Friend asks me a question on that point I think I should be out of order in answering it. My hon. Friend the Member for Cheadle has stated his objection—that the organised bodies of accountants are here named. The hon. Member for Edmonton suggested that it might he necessary and wise to include others, and he referred to an organisation with costing functions in industry. It has been pointed out by my hon. Friend the Member for Hallam (Mr. Jennings) that the proposed proviso refers only to the auditing of accounts. Therefore, we ought to confine our attention to the auditing of accounts.
The Government's view is that the Amendment should be accepted by the Committee. I am most grateful, as I am sure the Committee is, to my hon. Friend the Member for Langstone for the interesting way in which he introduced the Amendment. On the whole, having listened to all the arguments, we think it good that the Bill should contain a list of organisations, which will be helpful rather than unhelpful, and we recommend the Committee to accept the Amendment.
§ Mr. Mitchison
May I say how glad I am that the Treasury shows an interest in this matter, and ask whether there is not also a question of Commonwealth relations involved in this Amendment? I see that under the Bill the Board may appoint a wild Irishman whose auditing of accounts in Belfast may create difficulty. It is obvious that his supervision of the accounts in Northern Ireland may lead to trouble; and if Dublin, why not Sydney or Cape Town or a Canadian town? It is rather tactless.
§ Mr. J. Freeman
Two days ago the Minister accepted an Amendment from one of his own supporters and then, on reflection, he qualified his acceptance and said he would consider some of the arguments put to him before the Report stage. 1299 Will he do the same here? As I understand the point, it is a really important one.
I do not think any of us on this side of the Committee quarrel seriously with the contention of the hon. Member for Langstone (Mr. Stevens). I know that a list was put in a previous Bill, but it is no better for that reason. If we incorporate such a list in the statute we shall be tied to the list and, if the situation changes so that other bodies subsequently acquire professional status, there will be difficulty. If there were no alternative solution, it would not be worth pressing the point, but as there is a Board of Trade approved list, I suggest that the hon. Gentleman should consult with his right hon. Friend between now and the Report stage and adopt that solution if possible.
§ Mr. Summers
I support the idea that has been put forward. It was in my mind when I interjected during the speech of the hon. Gentleman because, subject to what the mover of the Amendment may feel, it seems to me that since there is no distinction between this list and those approved by the Board of Trade, the object would be equally attained by a provision requiring, as auditors for this Board, only those approved by the Board of Trade. That would automatically give flexibility in the future without need for revising the statute. I hope that idea will commend itself to the mover of the Amendment and to the Minister.
§ Mr. Stevens
The idea does not commend itself to me in any way. Such a suggestion would add confusion rather than reduce it. I look forward to the clay when there is one body of accountants, just as there is one for solicitors, and anything that can be done to help that day along is a good thing. I should not dream of accepting that suggestion.
§ Mr. Low
Without commenting on what my hon. Friend the Member for Langstone (Mr. Stevens) has said and without arguing against his aspirations for his Society, I will, as I have said on a number of occasions, carefully consider what has been said. The points made by the hon. Member had already been taken into account in deciding our attitude on this Amendment. There is some advantage in certainty, however, by listing the 1300 bodies that are recognised, though I see the disadvantages of it—
§ Mr. Low
Advantages to hon. Members of this Committee who would not otherwise see a list—and to a number of others. Also, it is standard practice. Despite both points, however, I will gladly consider the matter. Meanwhile, I recommend the Committee to accept this Amendment on the assurances that I have given on behalf of my right hon. Friend.
§ Mr. Jack Jones
We have had a fairly healthy and a not too long discussion of this question. It now appears that the Tory Party are in favour of the closed shop, and that some hon. Members on this side of the Committee may be supporting breakaway, splinter unions. May I say that in view of the assurances given by the hon. Gentleman, we have no intention of supporting anybody who may wish to see this Amendment defeated.
§ Mr. Jennings
I have moved and supported similar Amendments when the Opposition were in power, and the same sort of speeches were made then and on the same grounds. Yet we are still in the same position. Whatever happens hon. Members opposite will have to come back to the proposition which their own Government had to accept when in power.
Amendment agreed to.
§ Mr. Albu
I beg to move, in page 12. line 25, after the words last inserted, to insert:(3) The said report and the said statement of accounts shall show separately, so far as is practicable, the results of the performance by the Board of their functions under each of sections four, seven, nine and ten of this Act: so, however, that in the said statement of accounts the Board shall be under no obligation to divide up their expenditure in respect of remuneration, allowances or pensions to members of the Board or their administrative expenses.With your permission, Mr. Bowles, I propose to speak also on the next Amendment, to line 25, in the name of my hon. and learned Friend the Member for Kettering (Mr. Mitchison):(3) The said report shall include a statement of the circumstances of and reasons for any determination under section seven of this Act.
§ Mr. Sandys
May we be quite clear which Amendments are being taken? I thought there was yet another one.
§ Mr. Albu
The Amendment to line 33 deals with a substantially different point.
We are now on the Clause which deals with the way in which the Board will inform the Minister annually of their activities and the Minister, by laying the report and accounts of the Board before the House, will inform Parliament and the public. We have been told that the funds which the Board are to have at their disposal will be quite minor funds. Because of that, although the actual status and authority on the training of those who are to audit these rather small accounts is fairly important, it is much less important than the question as to how the Board shall report and the subjects they shall cover.
All through the stages of this Bill the Government have been at considerable pains to make clear where they differ from as on this side of the Committee in regard to the way the Board should opera to and the functions they should perform. They have continuously emphasised that they do not want the Board to perform really an executive function or to participate in any of the activities connected with the running of the industry. Their function is supervisory and advisory to the Minister in practically every case.
Nevertheless, the Government have also assured us, although we have expressed doubts about it, that it is their intention that the Board should have very considerable powers of supervision; they recognise the force of the arguments which have been used for many years by my right hon. and hon. Friends that the industry is too large and too important to be left without public supervision. After so much argument, we must begin to take the Government at their word and we must begin to believe that it is really their intention—I freely admit that the Minister has been very accommodating during the course of the debate—that the Board shall have real powers of inspection and supervision.
If the Minister accepts the view that the industry is so important that it must be supervised and that the Minister himself may from time to time have to intervene in the activities of the industry, on the advice of a Board who have been set up, it is equally important that the way 1302 in which that is done, the way that the Board fulfil their functions and what they do, should be fully open to public inspection and public debate.
The House of Commons in recent years has been considerably occupied with the way in which it should control the activities of the nationalised industries. I cannot go into very great detail, because I happen to be a member of the Select Committee which has been set up to discuss this matter and which has made only one report on one certain aspect; but I think there is no question at all that the House would not accept that a new body which is set up, not, perhaps, for managing or running an industry but, at any rate, for exercising supervision or control over it, should not be subject to the sort of Parliamentary Question and debate to which the nationalised industries are subjected, within the terms of the Bill as it is drafted. Those terms and the functions given to the Board do not satisfy us, but nevertheless the Board have very considerable functions, and the Minister has repeatedly stated that he intends that those functions shall be carried out.
The best way that the industry can avoid the sort of criticism to which it has been subjected this afternoon from this side of the Committee, and to which hon. Members opposite took so much exception, would be by having as much of its activities as possible fully open to public inspection. I cannot see any reason why there should be anything to hide. I agree entirely with the views expressed by Sidney and Beatrice Webb, who said that the best way of ensuring the efficiency of great industries in public or private hands was by measurement and publicity.
The first of the two Amendments is designed to ensure that the report that is rendered by the Board shall give due weight to all the functions which the Bill, under the various Clauses which define their functions, calls upon them to perform: the provision of production facilities, the fixing of maximum prices, the importation and distribution of raw materials, and supervising or seeing that there is adequate provision of research, training and education. Unless we get a very full description of the Board's activities under these various heads every year, it will not be possible for the House to make up its mind whether the purposes 1303 which the Board was set up to fulfil, which have been emphasised continuously throughout the debate, have in fact been fulfilled or whether they are adequate.
The right hon. Gentleman and his friends have throughout claimed that the powers that have been given are adequate. I see no reason why the Minister should object to the adequacy or otherwise of those powers being subject to debate from time to time in accordance with the report; and in order that that debate can take place in an informal way, it is important that we should have a very full description of the way in which the functions under each section of the Act have been performed during the year. That is with regard to the general report that is to be rendered to the Minister and to the House, and which, I hope, will frequently be the subject of debate.
As regards the question of price fixing, the second of the two Amendments demands that the report shouldinclude a statement of the circumstances of and reasons for any determination under section seven of this Act"—That is the price fixing Clause. The question of the fixing of prices for a whole industry is, of course, an extremely difficult one. I do not think that the difficulties are avoided by taking the duty away from the Minister and giving it to an independent Board.
We had some difficulty, for instance, over the Transport Tribunal, when the fixing of fares and rates was not so much to be undertaken as to be controlled or permitted by an independent board; but that has not prevented, at least, in the last year or two, the discussion of fares and rates in the House or political intervention in the fixing of fares and rates. I do not believe, nor do I think it is desirable, that the fixing of prices for an industry of this sort, which would have a very considerable effect on the whole economic life of the nation, should be taken away from the control of the Minister and of the House, and not be subject to any explanation as to the principles on which the prices are fixed.
We had a quite interesting debate last year on the prices of steel products when the Minister raised the prices. I do not know whether the debate was entirely satisfactory, but it is certainly the case that the principles by which steel prices 1304 are determined and the factors which are to be taken into account are of major economic interest. From time to time it is not by any means certain whether prices should be lower or higher. I can conceive of situations in which there are good economic grounds, quite apart from cost grounds, for steel prices to be high. On the other hand, the situation may be such that it is highly desirable to keep the price of steel down to the very lowest level.
However the detailed prices are fixed, there should be some statement in the annual report, when prices have been changed, as to the principles on which those prices have been fixed and on which the changes have been made, and of the factors that have been taken into account.
There was a little feeling of emotion on the other side of the Committee when my hon. and learned Friend the Member for Kettering (Mr. Mitchison) made some reference, which I thought slightly out of order, to the iron and steel control during the war and the fact that it was entirely staffed by members of the Iron and Steel Federation. I believe the hon. Member for Esher (Mr. Robson Brown) protested that these gentlemen had performed a patriotic service during the war and should be complimented. I quite agree, but on this question of prices the position was not so entirely satisfactory.
I want to remind the Committee that in repeated reports by the Comptroller and Auditor-General during and since the war he said that he was unable to obtain any information as to the factors which were taken into account or the way in which steel prices had been fixed. This argument has gone on ever since. Practically every Report of the Public Accounts Committee refers to the quarrel which has gone on between the Comptroller and Auditor-General and the Ministry of Supply on this question.
During all that period the Ministry of Supply were themselves fixing prices. I think they had some right on their side when they said, "We are fixing the prices for the whole industry and, therefore, the question of prices of steel products supplied to Government Departments or establishments is not really a matter for control by the Comptroller and Auditor-General and the Public Accounts Committee." Now the Minister, except in emergency circumstances, is handing the 1305 power to fix prices to the Board. I suggest that the Comptroller and Auditor-General and the Public Accounts Committee may again be extremely interested—more interested—in the prices at which steel products are supplied to Government establishments.
I think that their interest might be assuaged if some statement was made in the reports of the Board as to the principles on which the prices were fixed and the factors which were taken into account. It is to ensure that this shall take place that we have put down the second Amendment to line 25. It may well be that under Clause 8 the Minister himself may intervene. I think he has to lay an order and then the matter becomes public. But then it is only right and proper, if the Minister has taken any part in the fixing of prices by the Board. that that should be recorded and reasons given for it in the annual report.
I hope that no hon. Member opposite will say that in moving these Amendments we are trying again, as we have tried so frequently throughout the Bill—I freely admit it—to restore something of the powers over the industry which exist in the 1949 Act. We are doing no more than to ask that the way in which the Board carry out their functions, the reasons in detail for their actions under each Clause of the Bill and particularly the principles taken into account in fixing prices, shall be made fully public and, therefore, subject to debate in this House.
§ Mr, J. E. S. Simon (Middlesbrough, West)
I feel a great deal of sympathy with the intention behind both these Amendments. In regard to reports generally, I suggest that prima facie it should be a general principle that public functions should be performed publicly. One cannot carry that to its extreme conclusion, but certainly when we set up public boards we ought to know as much as is reasonably possible about how they are performing their functions. Otherwise this House would have no real information on which to interrogate the Minister and to see that public control is indeed being exercised in the public interest.
So far as the actual details of the Amendment are concerned, I suggest that it would be unreasonable to isolate the circumstances of Clause 7. I should have 1306 thought that the words of Clause 14 (1) are quite wide enough to cover the situation which the hon. Member for Edmonton (Mr. Albu) has in mind:The Board shall…make a report to the Minister as to the exercise and performance of their functions under this Act.Clearly, if they are to carry out that duty properly they will have to pay great attention to what, to my mind, is one of their primary functions under this Measure. That is the price determination under Clause 7. We on this side of the Committee feel, and have felt, that that price fixing by a public Board is the right way to deal with any condition of monopoly or semi-monopoly in an industry. It is clearly a matter of very great importance that in the functions of the Board, of any board, performing their duties properly—reporting properly and carrying out their duty—tomake a report to the Minister as to the exercise and performance of their functionsthey must deal fully and appropriately with that matter. On the other hand, I see no reason for singling it out in the way in which this Amendment seeks to do.
I hope my right hon. Friend will tell us whether the words as they stand are not sufficient to carry out the objects which the hon. Member for Edmonton has in mind. On price fixing the situation will be quite different from that of which the Comptroller and Auditor-General has, on occasion, complained, because here the Board will be in very much closer touch with the industry than has been possible for the Minister when working through another organisation. In this case there ought to be almost direct contact between the Board and the actual constituent producers in the industry, although no doubt there will also be full consultation with representative organisations. There is full power under the Bill and under the new Clause my right hon. Friend proposes to move to obtain information.
I also feel great sympathy with the first of these two Amendments. I would approach it from a slightly different angle that under Clause 12 the Board have very extensive powers of borrowing and investment and can make a levy on the producers in the industry. It is surely necessary, not only for the public but also for the producers who are con- 1307 tributing towards the administrative expenses of the Board, to know how the money is being spent. That is their right and the public who are contributing under Clause 12, the investment Clause, have a right to full information. What is necessary, quite clearly, is that one should have, separately, a revenue account and a capital account.
Once the residual powers of the Board under the various Clauses come into play quite a different situation arises. For example, under Clause 4, the development Clause, it would be quite unnecessary to isolate the ordinary expenses of the Board, not merely in consultation, but encouragement, correlation and so on. Similarly, with Clause 7, which is particularly mentioned in the Amendment, it is very difficult to see how any Board could isolate the expenses which are related to their price fixing duties.
§ Mrs. Eirene White (Flint, East)
In the first Amendment it is quite specifically stated that there is no obligation on the Board to try to divide up administrative expenses, remuneration and so on. Perhaps that will meet the point of the hon. and learned Gentleman.
§ Mr. Simon
I am obliged to the hon. Lady. I have seen those words and I was proposing to deal with that point. But this is more than ordinary administrative expenses. There is no obligationto divide up their expenditure in respect of remuneration, allowances or pensions to members of the Board or their administrative expenses.That does not meet the point. I do not think it would be construed in the way the hon. Lady contends, because there is an isolation of functions under Clause 7. I suggest that, under the price fixing section, that would be under expenses other than administrative expenses.
§ Mr. Mitchison
I am glad to hear the hon. and learned Member say that. This relates both to the report and the accounts. It is quite obvious that the words at the end of the Amendment, taken out of Clause 11 (1, b) and (c), cover all possible expenses except those under Clauses 9 and 10. But it has been drafted to provide for separate reporting on the four Clauses and separate accounting on the two Clauses where they put in other expenses than those of the kind in 1308 11 (1, b) and (c). If it is badly drafted, that is another matter.
§ Mr. Simon
I follow what the hon. and learned Gentleman is saying. I have already dealt with the question of the report, that any reasonable report will certainly deal separately—indeed it must—with each of the main functions under the Bill. I was addressing the Committee on the accounts and pointing out that, together with the ordinary duties relating to development, price fixing, raw materials, etc.—though not perhaps regarding research, where there is only, so to speak, the residual duty of making arrangements if existing arrangements are not satisfactory—they must supervise all existing arrangements. Certainly so far as development and raw materials is concerned the residual duties and functions of the Board are highly important, and probably will involve the expenditure of a very large amount of public money.
It is important to ensure that the accounts presented by the Board shall include both revenue and capital. One way to do it would be to say that the accounts must be such as to comply with the Companies Act, 1948. On the other hand the Companies Act, which is suitable for the protection of a shareholder and for the information of an ordinary investor, is not entirely suitable for a public board. I suggest it would be desirable to ensure specifically that the accounts are full and informative and particularly that they take account of both capital and revenue expenditure.
Concerning the first of these two Amendments, I see no reason to encourage the Board not to divide up their expenditure in respect of remuneration, allowances or pensions to members of the Board or their administrative expenses. Taking that class of expenditure in two groups, the remuneration, allowances or pensions to members of the Board ought to be dealt with separately from administrative expenses. As the Amendment is drawn, there is certainly an encouragement to the Board to lump all those matters in together under the heading of administrative expenses. Apart from that, I feel great sympathy with the spirit behind these Amendments, that the report should be full and informative as one would expect from the type of board which is being set up—and that the accounts shall be equally informative.
§ Mr. Sandys
The hon. Member for Edmonton (Mr. Albu) stressed the importance of there being adequate and detailed information upon which Parliamentary debates could take place on the progress of the iron and steel industry and the discharge by the Board of its functions under this Bill. We all agree that is desirable, and it is certainly the intention of the Government. On several occasions I have said that we recognise that Parliament should be able to review the activities of the Board through their annual report and accounts, and the powers of the Minister which appear in various parts of the Bill. The hon. Gentleman went on to say that the report should give a full description of all the main activities of the Board. There again we can agree that that is what one would expect in the report of a board of this kind.
Before I deal with the substance of the Amendment, I wish to reply to the hon. Gentleman upon a somewhat extraneous point with regard to the refusal of the Government to explain the principles on which they fix iron and steel prices. I have here the Report of the Public Accounts Committee which explains the position. It states that the Treasury, in a minute to the Committee, explain that as the Minister of Supply had a statutory obligation to fix the maximum control prices on behalf of the consumer of iron and steel products generally, and it was a main part of his duty to ensure that the consumer did not pay an exorbitant price for these products they do not think that the Committee of Public Accounts would claim the right to investigate the fairness of those prices nor to examine the precise methods by which the Minister arrives at his decisions. That does not mean that Parliament is not in a position at any time to question the principles upon which any price order is based.
§ Mr. Albu
I think that the difference here is that under Clause 7 the power to fix maximum prices is given to the Board. I am aware there is the emergency power in Clause 8, but I imagine the intention of the Government is that the prices of iron and steel products should be fixed by the Board. I think that would make a considerable difference to the Public Accounts Committee, because the prices are not now determined by the Minister as they have been in recent years.
§ 7.0 p.m.
§ Mr. Sandys
I will come to that later. I do not disagree. It is different when the Board fix prices than when the Government fix them. This Amendment, and the one which follows, seeks to prescribe in the Bill the precise form and content of the annual report and accounts of the Board. We can take it for granted that a responsible Board can be relied upon to present to Parliament a satisfactory and comprehensive report and statement of accounts, dividing them in a way which will enable Parliament to take an intelligent view of the work of the Board.
There are many thing which we have not taken for granted and, as an Amendment has been put down, I am prepared to discuss this matter in detail. This Clause requires the Board to report:as to the exercise and performance of their functions.Those are the words in this Bill, and they happen to be precisely the same words as those used in the 1949 Act. Wherever it was feasible, and where they were applicable in the same sense, we have borrowed the words from the 1949 Act. The Act of 1949 did not specify in any greater detail than that the nature of the Corporation's report to be rendered to the Minister each year.
But despite the fact that the Corporation were only given this very general instruction in exactly the same form as we have used in this Bill, they presented, in their first report, a most detailed statement of all their main activities and the progress of the industry under many heads. This made possible a close and careful examination of the progress achieved and the manner in which the Corporation were discharging their functions.
I believe that the new Board can be relied upon to be equally forthcoming. There is no objection in principle to specifying the subjects which the Board should cover in their report and the heads of their statement of accounts. But if we do this we must be sure that the list we set out in the Bill is really comprehensive. As my hon. and learned Friend the Member for Middlesbrough, West (Mr. Simon) said, there is danger in singling out certain matters because any omissions take on a new significance. The Board are bound to wonder whether the fact that certain matters have not been men- 1311 tioned implies that Parliament attaches less importance to them and that they are not normally expected to report upon them.
The Amendment specifies that the report and accounts should cover development, prices, importation of materials, research, training and education. Those are the matters covered by the Clauses mentioned in the Amendment. There is no reference to the Board's primary duty of keeping under review the efficient production of iron and steel which is the main reason for bringing the Board into existence. There is a danger in selecting certain matters and leaving others out altogether. Even if we were able between us to compile what was today a complete and comprehensive list there is no reason to suppose that it would be comprehensive for all time.
Had this Bill been passed two years ago we should not have included any reference to the Schuman Plan, but on the Order Paper there is a proposed new Clause which refers to that Plan. We do not know what other similar Plans there may be in the years ahead. There is serious danger in trying to lay down for all time a complete and comprehensive catalogue of all the subjects and all the headings under which the Board should render their report and accounts.
I come to the question of the form which the accounts should take. I accept the point made by the hon. and learned Member for Kettering (Mr. Mitchison) that the Amendment deals with the report as well as with the accounts. The Amendment requires that the accounts should cover separately the expenditure under Clauses 4, 7, 9 and 10. No expenditure is to be incurred under Clauses 4 and 7. Under Clause 9, the Board are empowered to spend money on the importation of materials, and under Clause 10 they are empowered to spend money on research, training and education. I do not think that an intelligent Board in rendering their report or accounts would mix up the importation of iron ore with arrangements for training and education; but there is nothing like being clear if the hon. and learned Member wishes it.
The Bill does not specify the form which the accounts should take. The 1949 Act laid down that the Corporation's accounts should be rendered: 1312…in such form as the Minister, with the approval of the Treasury, may direct …That definition of the form of accounts is no more precise than the words used in this Bill, which are, "proper accounts" or some such phrase. The only difference is that it reserves to the Minister the right to specify from time to time what form the accounts should take and to ask that certain items should be specifically referred to under separate heads. There is perhaps some advantage in that. It avoids the difficulty of setting out in advance a complete list of all the heads under which at all times the Board might be required to render their accounts. At the same time it gives the initiative to the Government and to Parliament, because they can bring pressure and make representations to the Government, to give necessary directions to the Board.
There is some advantage in the procedure adopted in the 1949 Act. This is especially so since the adoption of my Amendment to Clause 11 under which the Minister is now to he empowered to set a limit to the Board's expenditure under certain specific heads. Naturally the Minister will wish to verify at the end of each year that the Board have complied with the limits which he has set. I have no doubt that the Board will render their report, and accounts in such a way as to enable him to do so. On the other hand, there may be difficulty in drafting the Bill so as to put him in a position to ensure that.
§ Mr. G. R. Strauss
Is the right hon. Gentleman coming back to that point, because he has rather left us in the air? He has told us that there is advantage in drafting the Clause in such a way as the Minister may be able to instruct the Board as to the form of the report, but he is now going on to another point when he has not told us how far he agrees with that drafting.
§ Mr. Sandys
I shall come back to it, and deal with that point in a moment. I am dealing with two Amendments at the same time, and I hope to sum them up later, if that is convenient to the right hon. Gentleman.
The second Amendment asks that the report shall include a statement of the circumstances of and reasons for any determination under Section 7 of the Act, which deals with price fixing. The hon. 1313 Member, in moving the Amendment, did not really address himself to its wording. What he said was that it was desirable and necessary that the Board's policy in regard to price fixing should be brought out in its report, but he did not say that their reasons for any determination should be set out in their report. I submit to the Committee that that would be very much too detailed.
At present, we issue quite a number of price-fixing orders of various kinds, which contain hundreds, if not thousands, of different prices to be fixed, and, when the Boards are set up, I have no doubt that they will adjust prices more frequently than we do at present. Because of the procedure of laying these orders before Parliament, there is a natural desire to wait until there is a number of adjustments to be made, and then present a comprehensive order. If that procedure is no longer followed, I have no doubt that the Board will make minor adjustments as and when they are necessary, and will not always want to bring them forward in a comprehensive review, as we do now because of Parliamentary procedure. I think the hon. Member for Edmonton agrees with the point of view I am expressing, but what he said was that the report should set out the principles on which the prices are being fixed.
§ Mr. Sandys
Yes, fixed and changed; in other words, what the hon. Gentleman suggests, and I agree with him, is that the report of the Board should explain in general terms the principles which have guided them in making changes upwards or downwards in the prices during the year under review.
But the suggestion that they should give a detailed explanation in regard to any determinations made under Section 7 of the Act goes into far too much detail, and I do not believe that the House will wish to receive a report of that kind. I agree, however, that the report would not be complete without some statement of the principles and broad policy behind the fixing of the prices under Clause 7.
To sum up, for the benefit of the right hon. Gentleman and others, my view is that it is not feasible to try to set out in the Bill all the subjects and heads under which the Board should report and render their accounts each year. So far 1314 as accounts are concerned, I think there is an advantage in reverting to the formula of the 1949 Act, under which the Minister may from time to time direct the form which the accounts should take.
What I suggest to the Committee is that we might extend that formula to cover the Board's report as well; that is to say, not only will the Minister be entitled to specify the form which the accounts should take, but he should also be able to say to the Board "I would like your report in the coming year to deal specifically with the following points, in which interest has been expressed in Parliament." In that way, I think we might get the best of both worlds, and have control of the form in which the Board's report and accounts will be presented, instead of being tied to some rigid list which might rapidly get out of date. If such a solution appealed to the Committee, I should be happy to undertake to introduce an Amendment to carry it into effect on the Report stage.
§ Mr. Albu
I think the Minister's argument is very interesting, and that the suggestions he has made are generally acceptable to us, but there is one other point I should like to mention in the hope that he will think about it. I agree that it would be impossible for the Board to give reasons for their determination in every single change in price, and that was not the real intention of the Amendment, but I think there ought to be, apart from the Minister's instructions to the Board, a standing instruction to give, in some detail, a description of the factors and principles which are taken into account in the changes made during the year. It is not good enough to say, at the end of a year, that certain factors have operated during the year, and to allow that blanket to cover all the price changes which have been made. I should have thought that we might perhaps have included in the next stage of the Bill power not only to instruct the Board but also to give some permanent directions on this matter. Perhaps the right hon. Gentleman would agree to look into that point?
§ Mr. Sandys
I do not think we shall have any difficulty about this. Perhaps I may put down my Amendment, and then hon. Members will have a look at 1315 it. In addition, the Minister has power to ask the Board for any information that he requires for the discharge of his duties under the Bill. His duties under Clause 8 include price fixing, so that it is always possible to get information from the Board about the trend of policy on prices, so that the Minister may consider whether he ought to intervene under Clause 8. I do not think that, in practice, we shall have any difficulty, but I am glad that the hon. Gentleman agrees with the general idea I put forward, and, no doubt. he will look at the Amendment when I have tabled it.
§ Mr. Albu
I beg to move, in page 12, line 33, at the end, to insert:Provided that the Board shall compile and publish, or secure the compilation and publication of, the annual accounts of the companies which on the appointed day are subsidiaries of the agency constituted under Part III of this Act in such form as on or last before the appointed day was in use by those companies or in such equally comparable form as may from time to time be prescribed by the Board after consultation with such accountants or bodies representative of accountants as the Board may think fit.This Amendment is rather more controversial, and deals with a substantial point, but I hope, in view of the attitude displayed by the Minister, that it will not be considered unreasonable in present circumstances, whatever the actual form of words. We now agree that the industry should, as the Americans say, "live in a goldfish bowl," and that it should not be frightened of public examination and criticism. One of the most difficult things about dealing with the affairs of large undertakings and large companies is the difficulty of comparing their accounts.
This is an old complaint of auditors and accountants, and also, of course, of investors. In the past there were very good reasons for directors and shareholders framing their accounts in such a way that it was impossible to tell what they were doing, how they were trading or what was the value of their assets. That state of affairs has been changed very considerably since the passing of the 1316 Companies Act, 1947, which makes it easier, though not entirely easy, to understand the accounts of public companies.
Nevertheless, there are very great differences of practice in the drawing up of the accounts of companies which lead to considerable difficulty. There is no doubt that from the point of view of public examination and inspection one of the great achievements of the Iron and Steel Corporation was the bringing into uniformity both the period of accounting and the form of accounting of the companies owned by that Corporation.
I wish that the hon. Member for Langstone (Mr. Stevens) was present because he will no doubt have seen the eulogy published in the "Accountant"—the journal of the Institute of Chartered Accountants—of August last year of the activities of the Corporation in this field. It gave great credit—no doubt to some of the Institute's own members—to those who had been successful in consolidating the accounts of the companies comprising the Corporation, some of them subsidiaries of the main companies.
The journal said:Although not obliged to produce consolidated accounts in its first financial year if the task was considered impracticable, the Corporation realised that its own accounts would not sufficiently reflect the progress of the industry as a whole. Accordingly, steps were taken to ensure that the subsidiaries followed common accounting principles in preparing their accounts, and to arrange for the submission of the additional information necessary for the preparation of consolidated accounts by the Corporation.I realize, of course, that it is the intention of the Government that the industry shall not, in fact, be in a consolidated form, and nobody, of course, is suggesting that under this Bill the industry should be asked or forced in any way to produce consolidated accounts. Nevertheless, if we are to discuss the affairs of the industry in a reasonable manner, bearing in mind the factors in which Parliament will be most interested—investment, capital development, depreciation, and so on—it is essential to try to maintain the accounts of the companies in similar form. The law has, in fact, progressively tried to get public companies to produce their accounts in a comparable manner.
I realise that this may not be easy to achieve if these companies remain in private hands over a period of time. 1317 Nevertheless, I should have thought that the Board, with their supervisory powers and their power to ask for information, and so on, would be in a pretty strong position to get the companies to maintain their accounts in the form in which they are presented at the present time and for the present periods of accounting. I should like to hear arguments from hon. Members opposite connected with the industry or from the Government why this should not be done. I cannot conceive that this would in any way interfere with the competitive position of the companies. The argument that the disclosure to competitors of details of the activities of the companies might affect their trading cannot really be applied to this industry, though it may apply, I agree, to certain small undertakings.
It is very important that the industry should give the public the maximum information of every sort. They will have to go a long way in this direction if they are to succeed in winning the approbation of the chartered accountants, who say, in the article to which I have already referred:Whatever restraint has been put on the long-term policy of the Corporation by reason of the political uncertainty which has attended it since its inception, the factual and forthright manner in which its first period of stewardship has been accounted for is wholly admirable. Both the report and the separate volumes containing the accounts and consolidated accounts of the subsidiaries to September 30th, 1951—issued by the Corporation to comply with Section 38 of the Iron and Steel Act—are worthy of study not only for the insight which they give into the iron and steel industry, but also for a proper appreciation of how one of the largest and most difficult exercises in financial integration ever attempted was achieved.It would be a very great loss to those of us concerned with the economic planning and progress of this country if that stewardship of accounts was not maintained by the industry. I hope that, even if the actual form of words used in this Amendment does not entirely achieve the object we have in mind, the Minister will feel that its purpose is worthy of being carried out and will, if necessary, move a further Amendment himself to this end.
§ Mr. Sandys
This Amendment requires that the accounts of companies now nationalised should continue to be published together in the same form even after some of them have been returned to private ownership. In other words, 1318 it requires that any companies which have been nationalised shall, so far as their accounts are concerned, always be treated differently from the iron and steel companies which have not been nationalised.
It was perfectly right, I am sure, for the Corporation to publish collectively in one book the accounts of all the nationalised companies. Although I am anxious to meet the views of hon. Members opposite on this point, I really cannot see the justification for preserving after denationalisation this distinction between companies which were nationalised and companies which were not. At the moment, the nationalised companies have a common financial year ending in September, but it may be that for one reason or another they will, when de-nationalised, wish to revert to their previous accounting periods.
All accounts will, of course, have to be published in accordance with the provisions of the Companies Act, but, as hon. Members know, that Act, which was passed by the late Government, allows some latitude in the way accounts are presented. I do not think it would be right to lay down for all time that just because certain companies were nationalised they are to be deprived of the latitude allowed by the Companies Act for the presentation of their accounts. I do not see the purpose of that, and I do not understand the justification for making a permanent distinction between two classes of iron and steel companies.
Therefore, I cannot accept the Amendment. I should, however, be prepared to go a very little way, and arrange that the Agency should publish in a single book, as has been done before, the accounts of the companies which it continues to own. But I could not guarantee that the form of those accounts would continue to be precisely uniform, as it is at present. Our intention is that, after the passing of this Bill, there should be as little distinction as possible between the status of a company owned by the Agency and a privately-owned company.
We do not wish to make these distinctions, and therefore I cannot give an assurance that the form of accounts will remain precisely the same. But for the convenience of hon. Members who feel that they have a special obligation to 1319 interest themselves in the progress of companies which continue to be owned by the State, I am quite prepared to arrange that the Agency should publish together, in a convenient form, the accounts of the companies which they own.
§ Mr. Roy Jenkins (Birmingham, Stechford)
I am sorry that the Minister has not felt able to go further to meet the aim of this Amendment. I think that the reason why he did not feel able to do so was that all the time he was considering this matter of the presentation of accounts from the point of view of its being a burden on the company concerned, and not at all from the point of view of enlightening the public about the affairs of the company.
My hon. Friend the Member for Edmonton (Mr. Albu) brought forward very striking quotations from the "Accountant." It is agreed that during their existence the Corporation have worked out an admirable method of getting the accounts of all subsidiary companies presented so that they show a picture of the financial operations of the industry in a better way than it has been possible to obtain before. I should have thought that it would have been a great pity from the point of view of the Government themselves to retreat from that position. After all, the Government are now imposing on the steel industry for the future the sort of framework which presumably they want for large-scale industry in this country, and I should have thought that one of the things which hon. Members opposite would have wanted to see in the organisation of large-scale industry would have been the clear presentation of accounts.
I wonder whether hon. Members opposite have read the principal article in the business world section of the "Economist." Referring to the difficulty of getting risk capital into the industry the "Economist" said—and I thought that it attached an exaggerated importance to getting the savings of the smaller people into the industry that if small savings were to be attracted into industry it was absolutely essential to have the accounts far more clearly presented than they have been presented in the past. I agree that if one wants to have smaller savings invested in an industry like steel it is 1320 essential to present accounts much more uniformly and clearly than they have been presented in the past. The Minister ought to bear that consideration in mind.
If the right hon. Gentleman accepted the Amendment I agree that it would be a slight burden on these companies. On the other hand, the Government ought to set an example to the rest of industry by showing a clearer picture of accounts to the public generally, and I should have thought that that consideration, at least, ought to have been set alongside the considerations which the Minister advances.
§ Mr. G. R. Strauss
I want to express briefly my regret that the Minister has not been able to accept the Amendment, which is perfectly reasonable and fair. The right hon. Gentleman asked why we want to segregate this section of the industry from the other firms. The answer, quite plainly, is that the section with which we are dealing is the big section of the industry, which produces 90 to 97 per cent. of the basic iron and steel products of this country. It was exceedingly convenient that the accounts of these firms were made up in the same way. There was some point in it. The Corporation did not ask that it should be done for fun. It was done so that there could be a reasonable comparison.
This change in presentation of accounts was made and it was not difficult, though there was considerable resistance to the change on the part of some companies who were against sending in any accounts at all. They did carry out this requirement, however. The public interest lies in making sure that all these big companies continue to publish their accounts annually in the same sort of comparable form, so that we might know how they are doing while they are temporarily in private ownership. I do not see why this proposal should not be accepted by the Government.
My hon. Friend the Member for Stechford (Mr. Roy Jenkins) spoke about putting a slight burden on these companies. It is not really a burden to produce one's accounts in a perfectly intelligible form and in a way which has been accepted by leading accountants as most convenient and satisfactory from the point of view of public presentation, and on which everyone concerned has been congratulated by authorities on accounting. 1321 It is a slight restraint, wholly unimportant. I cannot imagine that anyone would want to change back into the old form, unless there are particular idiosyncrasies and whims amongst certain directorates.
I should have thought that the Government would have agreed that it is in the public interest that big firms in an industry of this sort should continue to publish their accounts in a form which would enable comparisons to be made. There cannot possibly be anything against it. I should have thought that the industry itself would not have wanted to bother to change the form of presentation of accounts, only to have to change back again in a few years when we re-nationalise the industry. I should have thought that it would have been considered unwise to do so.
I had hoped that the Government would say that these firms who, under the aegis of the Corporation have changed the presentation of their accounts in such a way as to give the public better information than was ever given before, should not break away and each one publish its accounts in its own individual way and in a form which makes comparison impossible. This is not a matter of major importance and we do not consider it to be one of the worst features of the Bill. We do not attach as much importance to it as many other features, but I think that the argument in favour of asking these firms to keep their accounts in the same form as previously is quite a strong one, and we regret that the Minister has not seen the force of our argument.
Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
§ Mr. Marquand
I should like to say a few words about a thought which occurred to me while I was listening to the discussion on the preparation of the Board's report on the working of this new scheme. I recognise that the Minister has gone a long way to try to meet the point of view expressed from this side of the Committee about the nature of the report and the kind of information which it should contain. Everyone who has spoken so far has spoken about the need to inform Parliament of what is going on. My hon. 1322 Friend the Member for Stechford (Mr. Roy Jenkins) has spoken about the desirability of giving the potential investor plenty of information about what is going on and what may happen.
I should like to remind the Committee of the need also to inform the men who work in the industry. There are in this industry many men who are perfectly capable of reading and understanding all that is in the report which is presented to Parliament. Many of the men in this industry have for a long time been pillars of the workers' educational movement. I have had the pleasure of teaching some of them in their classes in a bygone existence of mine, and I know full well that they are perfectly capable of analysing, dissecting and understanding very well the sort of report that is presented to this House.
There are others in the industry, however, who have not that particular aptitude. Therefore, I hope that the Board, when they are framing their report, will have in mind the need for an explanation and for giving plenty of information in a more simple form than are customary in blue books and the like. The National Coal Board has set a good example in what can be done in this way. I hope that the Board, as well as presenting a printed report full of illustrations, etc., for the benefit of those who are less accustomed to reading complicated documents, might also consider the desirability of presenting some part of their report from time to time in the form of a film.
I see the hon. Member for Esher (Mr. Robson Brown) looking at me, and he is probably thinking of an occasion when we were both present, and when the hon. Member for Altrincham and Sale (Mr. Erroll) introduced at a private meeting for Members in the Committee Room in Westminster Hall a film under the auspices of the British Institute of Management. Two companies had tried to set out their balance sheets in films. One was an American company and the other was Imperial Chemical Industries. I think we all felt that the film was the better of the two because it tried to do the job not as a piece of propaganda but objectively and factually, describing in a film what is usually shown in figures and words, and doing it pretty well.
1323 It is most important for good relations in industry to give the workpeople not merely information but explanation. It is necessary to explain what has happened and why it has happened. A film could show not merely the profit and loss account but the explanation of how a price was arrived at and why it was changed; all this can be done effectively in graphic form. I hope that the Board will bear that sort of idea in mind when they face their new task.
§ Mr. Robson Brown
I am pleased to follow the right hon. Member for Middlesbrough, East (Mr. Marquand) and to support what he has said because I think he has touched on a very important point. First, on the report of the Board, I should like to amplify his suggestion by saying that in addition to making the report available to all of the men in the works at all levels, it might be wise to print what we call in these days a popular issue amplifying certain sections of it in simple language, particularly that part dealing with finance and the like. The right hon. Gentleman's idea of a film might well be explored; in fact, all avenues should be explored so that the operations of the Board should be completely and conclusively understood by the steel men in the mills, the management and staff all the way through the industry.
There is another aspect of this subject of the companies' balance sheets. Many hon. Members, including myself, feel that the balance sheets should be freely available to the workpeople whom they employ, and that trouble should be taken to choose competent men to explain the implications of the balance sheets to the men either in writing or preferably once a year at a meeting of the men at some central point wherever that is feasible. In some of the larger organisations, of course, that would not be physically possible, but in many of the companies it is quite possible and it has proved to be extremely valuable and helpful to them.
This idea which we have on these benches of creating within the industry an atmosphere of good will, mutual confidence and co-operation all down the line, can be strengthened and improved on the lines suggested by the right hon. Member for Middlesbrough, East, and by means of some of the points which I have explained.
§ 7.45 p.m.
§ Mrs. White
I am sure that we were all glad to hear the hon. Member for Esher (Mr. Robson Brown) supporting the principle that accountability should be extended to the workers in the industry. If all employers had acted in the enlightened way in which he has suggested, we might have had far less industrial tension and stress in the past. We in this Committee have a particular responsibility as Members of Parliament, and I am glad that the Minister has seen fit to indicate that he is prepared to assume some additional responsibilities. That is a step in the right direction, and one which we welcome because it will enable us to perform our functions more effectively.
Those of us who have advocated public ownership of major industries have done so partly because we believe in this principle of public accountability. Therefore, it is for us to ensure that even with this hybrid organisation—this proposed organisation of the steel industry—where there will not be public ownership, the principle of public accountability shall be recognised and implemented as far as possible.
I am a little concerned about the accounts. As I read the Clause, the accounts will not be laid before Parliament. The report will be laid before Parliament, according to subsection (1), but there appears to be no obligation on the Board or on the Minister to lay the accounts before Parliament. I am well aware that the major part of the expenditure of the Board will be met from funds levied on the industry, which subject we discussed earlier this evening, but the public have nevertheless a certain financial interest in this body, because in Clause 12, to which we have agreed, the Board may in certain circumstances borrow up to £1 million under Treasury guarantee, and although the Treasury is obliged to see that Parliament has a report after the event, I should have thought that that fact in itself gave us a certain interest in the accounts.
As I read this Clause, all that the Board are obliged to do is to make available for inspection at their offices a copy of the accounts and of the auditor's report thereon. It seems to me that if we are to discharge our obligations fully, the accounts as well as the report should be 1325 laid before Parliament and the Board should also have an obligation to publish the accounts. These accounts will deal with matters such as the disposition of raw materials, education, research and training, which are of great interest to the persons to whom we have been referring, including the workers in the industry. Why should an interested worker in my constituency have to go to Chester Street or Tothill Street, or whereever the Board will be located, in order to read the accounts?
Surely it is an elementary principle of public accountability that the accounts should be available to the public at a reasonable price. In Section 38 of the 1949 Act it is specifically stated that the statement of accounts and reports shall be made available to the public at a reasonable price, and that the Minister shall lay a copy of every such statement of accounts before each House of Parliament. I recognise that the circumstances are not quite the same in the case of an industry which is not to be publicly owned. Nevertheless, there seems to be a very strong argument in favour of the course I am suggesting.
Another, and rather smaller point, is that subsection (4) says:The Board shall compile and publish, or secure the compilation and publication of, such periodical statistics and reports relating to iron and steel products as may appear to them to be expedient.The Minister has agreed that he shall take some responsibility for the form in which the accounts shall be produced. I suggest that he should also take upon himself a responsibility concerning the publication of statistics and other information. I am not saying that the steel industry is not a well-documented industry. On the contrary, I should think its statistical service is much better than most other industries. Nevertheless, one can conceive that circumstances might arise in which it would be in the public interest for some information to be made available in a certain form. Under the Bill as now drafted, the Minister would have no power to ensure that information was supplied to the public.
Reverting to the 1949 Act, Section 38 (5) says:The Corporation shall compile and publish periodical statistics and returns … and the Minister may give directions to the Corpora- 1326 tion as to the form of those returns and the manner of publication.Again, although I recognise that the circumstances are somewhat different, it might be advantageous if the Minister took upon himself a responsibility—which he would probably never have to exercise—to ensure that that information should be made available as he thinks best. For instance, in subsection (4) of this Clause statistics and returns relate to iron and steel products. There is no mention of raw material supplies, for instance. In some circumstances it might be desirable for the Board to see that those details were published.
I make these few suggestions merely because I feel that this Clause, although not highly controversial—I think we are all at one in hoping to have the best possible information available—is an important one. We are trying to establish the principle of public accountability and it is our duty as Members of Parliament to see that the means of doing so are as perfect as we can make them.
§ Mr. G. R. Strauss
Are we to have some reply from the Minister to the points raised by my hon. Friend? She has raised two important points. One was on the question whether the accounts as well as the report are to be published, and the other was concerned with the direction to publish statistics, in relation to subsection (4). I do not know whether the Minister proposes to make any comment on those two points.
§ Mr. Sandys
The right hon. Member for Middlesbrough, East (Mr. Marquand) and my hon. Friend the Member for Esher (Mr. Robson Brown) referred to the question of popularising the Board's report. The right hon. Member for Middlesbrough, East also suggested that a film of the report and accounts of the Board might be made. I must say that I would read more statements of account if they were presented as films, but I cannot give any assurance this evening that the Board will be provided with funds to enable them to go into the film business—desirable though that form of presentation might be.
All who are concerned about the productivity of industry—as we all must be—recognise how important it is that every one in industry should be kept fully informed of the progress and the problems 1327 which confront his industry. Practical problems of markets, prices, competition and all the related financial problems should be made clear to him. The more those engaged in a particular industry know what that industry is up against in the form of national and competitive difficulties the more they will work together as a team to produce better results. Therefore, anything that can be done in that direction will receive the Government's fullest support and encouragement.
The hon. Member for Flint, East (Mrs. White)—who, if I may say so, never speaks in the House without putting her ringer on some pertinent point has very briefly drawn attention to two issues. One of them is in regard to the presentation of the accounts to Parliament. She points out that these accounts are not to be presented to Parliament in the same way as the report. The reason is that under the Bill, Parliament is giving the Board certain specific duties and public functions. Parliament therefore asks the Board to report on its discharge of those duties and functions.
The expenditure of the Board is in a different class, because the money which is to be spent is not public money; it is being raised from industry. I did not know that this rather technical point was going to be raised, but I think I am right in saying that, if the Board formally presented their accounts to Parliament, although it is not spending public money it would be brought within procedure for the control of public money. This would be inappropriate in the case of a body spending money which has been raised from industry.
However, the hon. Lady has made a good point in saying that it is undesirable that she and others should have to go for a long walk in order to inspect or obtain copies of the accounts of the Board and, without saying what I can do, I shall look at it to see how any inconvenience that might be caused to hon. Members can be obviated.
The second point was in regard to the publication of statistics. The hon. Lady suggested that the Minister should assume responsibility for that. That would be going a long way. This industry publishes a great many statistics itself and the Board, supervising this whole field, will, 1328 I am sure, make it one of their most important functions to see that comprehensive statistics are published. I do not envisage that arrangement breaking down. I regard it as such an important function of the Board that it would be a pity to duplicate those duties and make the Board feel that the responsibility to provide statistics was not placed fairly and squarely on their shoulders.
Turning to the question of raw materials, I am advised that this point is covered in the Bill. It would be undesirable if the statistics did not cover raw materials, but if the hon. Lady will look at Clause 14 (4) she will see that it says,The Board shall compile and publish, or secure the compilation and publication of, such periodical statistics and reports relating to iron and steel products …I think it is quite clear that "relating to would include anything which relates to iron and steel products. Obviously, the raw materials needed to make those products would be included within the terms of the subsection.
§ Question put, and agreed to.
§ Clause, as amended, ordered to stand part of the Bill.
§ Clause 15 ordered to stand part of the Bill.