Clause 17.—(POWERS OF AGENCY IN RESPECT OF SECURITIES AND COMPANIES.)

HC Deb 23 February 1953 vol 511 cc1757-838

Mr. R. E. Winterbottom (Sheffield, Brightside)

I beg to move, in page 13, line 36, to leave out "or otherwise dispose of."

This is an exploratory Amendment put down to get an explanation of the words we seek to delete. What does the Minister mean by "dispose of "? What other ways are there of the Holding and Realisation Agency disposing of shares than by selling? We suggest that these words are unnecessary from two points of view. First, this Clause refers to the power of the Agency in the sale of securities of the present Corporation, and gives sufficient indication of the powers of the Agency to sell without including the suspicious words "otherwise dispose of."

The second point I want to emphasise relates to the definition. In the Inter- pretation Clause we are told that security means any shares, stock, debentures, debenture stock, loan stock, mortgages, income notes, income stock, funding certificates and securities of a like nature. It seems to me that all these types of security can be disposed of only by selling. I do not think that the Government intended to set up an Agency through which the present shares owned by the Corporation would either be lost or stolen, and I do not think that the Minister wishes to create a filing cabinet in which he could conveniently file them all for further reference. We want a clear explanation of what the Government have in mind in including these words, for to us they seem to be nebulous and obscure. In view of what is contained in this Clause about securities, we should be told something further about the whole subject.

Mr. Boyd-Carpenter

The hon. Member for Brightside (Mr. R. E. Winterbottom) was good enough to say that the Amendment was exploratory, and I will endeavour to be of assistance to him in his explorations. If the Clause were amended as this Amendment suggests, the only power given to the Holding and Realisation Agency would be to sell. In other words, we would be limited to outright sale. That would prevent a number of possible ways of making certain disposals of assets, temporarily or permanently. For example, it would completely rule out the exchange of the shares for Iron and Steel Stock which, the hon. Member will remember, was included in the White Paper.

Then we are dealing here, of course, also with property other than shares. We are dealing, for example, with a terrace of houses, the former property of a steel company. If this Amendment were accepted all that the Agency could do would be to sell those houses over the heads of the tenants and the possibility of granting leases would be excluded. That is another complication which would arise, and which of course, did arise—

Mr. G. R. Strauss

We are talking about securities.

Mr. R. E. Winterbottom

rose—

Mr. Boyd-Carpenter

One interruption at a time, please. Perhaps it would be as well if the hon. Member would put his point now, provided his right hon. Friend allows him.

Mr. Winterbottom

It seems to me that we are at cross-purposes here. We are talking about the new Agency disposing of assets and securities which they have. If, for instance, they have a row of houses and they intend still to collect the rents, they are not disposing of those houses nor would the question of disposal arise if they were talking in terms of sale. That is the position that is causing confusion at the moment when related to these words.

5.0 p.m.

Mr. Boyd-Carpenter

The confusion that has arisen between the hon. Member and myself is that I understand that we are discussing, at the same time, the Amendment, in page 14, line 8, to leave out from "sale" to "of". If we are not discussing that Amendment now, clearly the answer to the hon. Gentleman's argument will have to wait until we reach that Amendment. I am in the hands of the Committee.

The Chairman

I had not intended to call the Amendment to which the Financial Secretary has just referred, because I think the two Amendments should be discussed together.

Mr. Boyd-Carpenter

I am, then, at the disposal of the hon. Gentleman. Either I must answer that argument now or he will not have an answer to it.

Mr. G. R. Strauss

Might I try to help the Financial Secretary and you, Sir Charles? It was our proposal. The words of the two Amendments are similar, but we are not moving the second Amendment. We are moving only the first one, dealing with the question of the sale or disposal of securities.

Mr. Boyd-Carpenter

I am much obliged. I would not discourage the taking of these two Amendments together and I hope that nothing I have said indicates a contrary attitude.

Acceptance of this Amendment would exclude other methods of disposal of the securities including that which, hon. Members will remember, was forecast as long ago as the White Paper. That would be an important defect. I am not going to say to what extent it may be desirable or desired that that method should be used. That is a matter which must await the event. It would be unfortunate, and so far as I can see would serve no useful purpose, to exclude it from the powers of the Agency. It would, obviously, be a convenient method in some cases.

Then there is the question whether, more broadly, it will turn out to be reasonable to make an immediate sale or whether some intermediate stage might fall to be made. We must obviously deal with each case as it arises. If we want to make, as we do, the best disposal of these securities it will be wrong deliberately to limit ourselves to one method of doing so. I cannot see the sense of it. I will reassure the hon. Gentleman with this consideration: until, as the words of the Clause themselves say, the industry has been returned to private ownership, the duty of the Agency in this respect has not been discharged. "Private ownership" is defined in the definition Clause of the Bill Clause 31 if my memory serves me—and, therefore, any intermediate stage that may arise could only be on a temporary basis, because private ownership, as defined in the definition Clause, is the state which it is the duty of the Agency, in the very words of the Clause, to seek to achieve.

All we are concerned with here, apart from the special point of exchange of stock, is a question of what intermediate arrangements might, in any particular case, be convenient. I come back to what I would have thought to be the wish of hon. Members that there should be no unnecessary rigidity, and certainly no artificial difficulties, put in the way of those who are charged with the duty of dealing with the disposal of this industry.

As I said last week and repeat now, the Agency would have to bear in mind both the consideration of obtaining a fair price for the taxpayer for his very valuable property, and the equally important point of securing that the disposal leaves the industry in good shape and able, as far as possible, to carry out its heavy duties. Both those objectives will have to be borne very carefully in mind. I should have thought it was abundantly clear that we should be very foolish to limit to outright sale the things which the Agency might do. I see no useful purpose in imposing such a restriction. On the other hand, we should be in some degree prejudicing their capacity to carry out the true objective.

Mr. Roy Jenkins (Birmingham, Stechford)

Surely the Financial Secretary is not going to sit down without telling us what he has in mind under this heading of "intermediate arrangement." It holds out a very wide prospect which I find it difficult to grasp. Surely he would like to tell us what the Government have in mind.

Mr. R. E. Winterbottom

While to a certain extent the Government desire to avoid rigidity, nevertheless I think the Financial Secretary will also agree that it is equally undesirable to have ambiguous flexibility. The Clause is very flexible. There may be behind these words "otherwise dispose of" many possibilities that are not quite in line with the Government's own views. As we have a certain measure of agreement on terms of disposal—the Financial Secretary has agreed that we cannot finally dispose of them until the Agency has sold them—and as the word "dispose" is part of the subsection that we are discussing, the Government should seriously consider drafting into the Clause what they mean by "otherwise dispose of," or freeing the Clause from abiguity by withdrawing those words.

Mr. Boyd-Carpenter

I gladly respond to the hon. Gentleman, but I do not know that I can help him very much. What is obviously desired in a case of this sort— the ultimate objective being settled by the Bill, namely, the return to private ownership—is to secure that during the period before that is completely achieved the Agency shall be as little handicapped in its sensible carrying out of its job as possible. It would be quite wrong for the Government to lay down in advance what particular alternatives, temporary expedients, interim measures—call them what you like—should be adopted.

It would not only be wrong but it would be very unwise, because anything said in this Committee is said ultimately in the hearing of those who may be concerned to purchase. We do not in any way wish to weaken the hands of the Agency in dealing with these transactions. It is much the best way to leave the freedom which the Clause gives the Agency, and, at the same time, to recall to hon. Gentlemen that these disposals will be subject ultimately to the responsibility which Ministers have to the House of Commons. If any of the methods which may be used may seem in any particular case to be inappropriate, a Minister will have to answer for them. I am sure that that is the wise way to tackle the matter rather than to try to inhibit the Agency even before they start their business.

Mr. Mitchison

Whenever I listen to the Financial Secretary to the Treasury I am not able quite to decide whether I am reading Gibbon or Samuel Johnson or listening to—no, not Mr. Gladstone; I would not put that on him—but another Conservative orator of the past. I sympathise with him today. It is very difficult to say, in that sort of language, "We want to 'pop' them."

He could only give us one instance of what he wanted to do with these securities. He said, "If you want to exchange them for Iron and Steel Stock, you can only do it if you have these words in the Bill." Yet all we have to do is to sell the one and buy the other, and as we do not pay any Stamp Duty, the effect of the transaction is exactly the same. If that is what he is after, I should think he ought to accept the Amendment. The views expressed by the hon. Gentleman might have some relevancy when we come to the Finance Act, but I doubt if they make much difference here. The hon. Gentleman would not say that he might want to "pop" them or that he was going to "give them to the boys." I cannot see why these words are required.

However, I do not think it is a matter of great importance and I hope that we shall not take long over it. Since this is supposed to be the place where the public, whose property this is, is represented, I feel that the Government might have told us what they meant to do with these shares if they were not going to sell them. I am disappointed with the reply we have received.

Mr. Jack Jones

My hon. Friend the Member for Brightside (Mr. R. E. Winterbottom) said that this Amendment was an exploratory one. We realise that there are other things to be done besides selling the industry, and if we were asked to state what appropriate words we would introduce, it might lead to protracted discussions. We are afraid that the use of these words may lead to ambiguity.

For instance, there has been a suggestion that when the Agency became tired of trying to dispose of the industry— or parts of it which we could mention— they might put the shares into a national lottery or raffle. That was perhaps facetious, but my hon. Friend is afraid that some part of our national assets might be dealt with in a manner detrimental to the public interest. On the understanding that what we have said will be borne in mind by the Government, namely, that even the least valuable assets should not be wasted, we shall not press this Amendment to a Division, and I suggest to my hon. Friend that his Amendment might be withdrawn.

Mr. Boyd-Carpenter

I gladly give that assurance. Indeed, I think I have already done so. It is certainly not our intention to give away, with the proverbial half-pound of tea, valuable assets of this kind. I said previously that one of the main duties of the Agency will be to obtain a fair price for the taxpayer.

Mr. I. O. Thomas

In Clause 31 there are several interpretations of terms used throughout the Bill. If the Financial Secretary and his colleagues are clear as to the meaning of the words "or otherwise dispose of," would he consider between now and Report stage putting that definition into Clause 31 in order to remove any doubt that may still remain?

Mr. R. E. Winterbottom

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

5.15 p.m.

Sir Frank Soskice (Sheffield, Neepsend)

I beg to move, in page 13, line 37, at the end, to insert: (2) Notwithstanding anything contained in the previous subsection the Agency shall not have power to sell or otherwise dispose of any such securities except for a consideration which shall in the case of any such securities which vested in the Iron and Steel Corporation of Great Britain under the provisions of Part II of the Iron and Steel Act, 1949, be not less in value than the value of such securities as determined under or in pursuance of the said provisions, adjusted nevertheless upwards or downwards by such amount (if any) as the Treasury may determine to be reasonable to take account of any alteration which may since they were so vested have been made in the capital structure of the company or companies in which such securities are held.

The Temporary Chairman (Colonel Gomme-Duncan)

It may be for the convenience of the Committee if we discuss with this Amendment the next one in line 37: (2) Notwithstanding anything hereinbefore in this section or the previous section contained, the Agency shall not have power to sell or otherwise dispose of any securities of a company which are for the time being vested in them, or of any other assets unless the Treasury shall have before such sale or other disposal approved thereof, and the Treasury shall not give such approval unless it is satisfied that the price or other consideration to be received upon such sale or other disposal is adequate, regard being had in particular in the case of such securities to any improvement in the assets, financial position and earning power and record of the Company in which such securities are held since they vested in the Iron and Steel Corporation of Great Britain under or in pursuance o the provisions of Part II of the Iron and Steel Act. 1949.

Sir F. Soskice

Clause 17 has the limited objective of dealing with the disposal of securities. We have spent a great deal of time voicing our criticisms of the arrangements which the Government envisage are to obtain between the Agency, the Board and the Minister, but when we come to Clause 17 we are dealing with something narrower in scope and on which it is easier for the Government to accept the proposals contained in this Amendment and in the next one also, in line 37.

The standpoint from which we start in making these proposals is identical with the standpoint from which the Government start, namely, that the public is to get its full money's worth of what it parts with. Unless something has escaped my notice, there is nothing in the Bill to provide that not less than a certain minimum is to be obtained as the sale price of these securities. The only thing I have been able to discover is that Clause 16 (1) enables the Agency, instead of selling at once to postpone its sales, presumably in order to get the best price possible. Yet there is no provision for a lower limit below which that price must not fall. That is left entirely to the Agency which, in terms of the provisions of this Clause, is in that regard to act under the direction of the Treasury.

We seek to provide such a lower limit by two separate and independent provisions. We have embodied in our first Amendment what we conceive to be a simple test. In our proposal securities are not to be sold back at less than what was paid for them under Part II of the Iron and Steel Act when they were taken over. In the first place, I would remind the Committee that the Iron and Steel Act imposes as the compensation test, broadly speaking, the Stock Exchange price. When we were discussing that Act the present Government were in Opposition and they said that the Stock Exchange price was much too low. Well, let us assume for the purpose of argument that it was. If we take that price, which ex hypothesi was too low, as the price below which the assets should not now be returned, surely we should not be setting an unduly rigid test in putting that as the minimum price for which those securities are to be sold.

I am sure that the Financial Secretary and the Minister will agree about the justice of that, though they may not agree with everything I say. If the compensation had been much too high, perhaps the test which we are now seeking to impose would be too exacting, but if the Financial Secretary and the Minister have both complained of that amount as being too low—as I am sure they have and certainly their associates were loud in their outcries in that regard they cannot now say that we, in saying that the compensation amount is to be the lower limit, are arguing for any unreasonably exacting test in formulating the price below which these securities should not be sold.

Secondly, in replying to my right hon. Friend the Member for Vauxhall (Mr. G. R. Strauss), the Financial Secretary said not so long ago that all the public could expect for the securities as a whole would be to obtain what was given for them when they were taken over. He said that some might be sold below what they should fetch whereas some might be sold above that figure, but that the only concern which the public might legitimately have was that, taking all in all and adding the whole aggregate together, as much should be obtained on the sale as was given when they were taken over.

I am saying, let us provide an objective low-level test. As the Bill stands, there is not the slightest guarantee that what the hon. Gentleman said was the public's legitimate concern will be safeguarded. When the many years have rolled by which are to roll by during the disposal, it may be found that the securities have been sold at a price which was, in fact, much too low. If that is the case, nobody can make a complaint under the terms of the Bill, because the Bill sets no lower limit. It seems to us that if the Bill is passed without such a safeguard, then it will be quite outrageous, because public assets will be in risk of being disposed of at a price far below what they ought to fetch.

The Agency is not bound to dispose of them at once. In the case of the Transport Bill, the Minister of Transport said he wanted to get rid of the lorries and to hand them back to private ownership by the end of 1954, and when we proposed a similar test in the case of the disposal of road transport, the Government objected, presumably largely upon the basis that they wanted to get rid of the lorries very quickly. That is not the case under this Bill. The Agency can take its time. It is expressly empowered to create delays and to postpone individual sales. If it can take its time, then the Agency should be enjoined by the Bill not to sell at less than a minimum price; and that is what we propose.

I call attention to some of the features of our proposals. Dealing first with securities which vested under Part II of the Iron and Steel Act, we say that the Agency should see what was the Stock Exchange compensation price paid for those securities. That is easy to ascertain; there is no practical administrative difficulty about it, for it is simply a matter of looking up the records. We then recognise that, since those securities were taken over, there may have been structural alterations in the capital build up of the company which may make it necessary to provide some adjustment upwards or downwards. To deal with that, we make what we consider to be an eminently practical proposal—that it should be for the Treasury to determine what the upward or downward alteration should be.

There should be no difficulty about that. I hope the Minister will not give an answer on the basis that there is some administrative difficulty in carrying out this proposal, because I put it to both the Minister and to the Financial Secretary that there can be no such difficulty. It is for the Treasury to make a computation and to do their best to fix the upward or downward adjustment. That is what we propose in the first Amendment—a simple, objective test which is to have for its purpose the supremely important aim that the public should not be deprived of what ought to belong to it; and what ought to belong to the public is the full value of these shares, which ought to be obtained when they are sold.

Our second proposal falls in line with the first and is designed to achieve the same end. Many of these companies which were taken over under the Iron and Steel Act, 1949, have shown very great improvement in their earning capacity. As earning assets, they are now far more valuable than when they were taken over. I cannot give details of individual records of individual companies, for it would not be right to do so, but I think it is right to point out that the total aggregate of the earnings of the companies concerned last year was very greatly in excess of their total aggregate for the previous year.

It therefore stands to reason that when some of these companies are sold, they will have a much stronger financial standing than when they were taken over; they are earning more, they have expanded and they are much more valuable assets than when they were acquired under the Act of 1949. It therefore seems to hon. Members on this side of the Committee—and I can speak for all my hon. Friends—that there is no conceivable reason why those who dispose of these assets should not be enjoined by the terms of the Bill to have full regard to the effect of any change in the earning capacity of a company and in its financial strength. I can see no answer to that proposition.

It may be that the Financial Secretary or the Minister will leap to their feet and say they are only too glad to accept the proposal, but having regard to the attitude which the Government have previously adopted I suspect that they may not be quite as forthcoming as that. In framing our proposals, we have carefully thought the matter out and have endeavoured to fall directly in line with what the Government are already proposing in the structure of Clauses 16 and 17. We say that the Treasury should be given the responsibility of saying whether or not they approve or disapprove of a disposal price and that they should not approve of a disposal price unless due regard has been paid to any improvement in the asset value of a company and its earning capacity.

We are asking for only a very modest and limited extension to the provisions of Clauses 16 and 17. Already, under Clause 16, the Treasury are empowered to approve of or withhold approval of postponements and disposals under subsection (1). Equally, under Clause 17, the Treasury are empowered to give general directions to the Agency. We do not like the relationship between the Agency and the Treasury or the relationship between the Minister and the Board as at present formulated in the Bill, and we have voiced our criticisms; but if that relationship is to remain in its present form we say that we should fall in line to the extent that we couple our present proposals with the structure which the Government propose. All we say, therefore, is that as the Treasury already have the duty of approving or not approving the sales, then they shall not give their approval unless it is perfectly clear to the Treasury that due regard has been paid to the improvement in the asset value of the company concerned.

Perhaps the Government will accept this proposal, although neither Minister has been particularly forthcoming. I see a very encouraging smile from the Financial Secretary, but I do not know what it presages. Perhaps I am unduly pessimistic in my attitude; certainly I hope I am. We feel that if the Ministers cannot accept the proposal, then they cannot base their refusal on any other ground than that they are oblivious to the public interest in this crucially important matter. How can they refuse to accept these objective tests unless they are prepared to say, "We do not mind whether what is obtained for these shares is less than what ought to be obtained"?

I cannot impute any such motive to them. I am quite sure that no Minister harbours such a motive. Nevertheless, it is difficult in logic to reconcile any refusal to accept these proposals except with such an imputation—which I do not for one second make against either Minister. It may be that those experts who advise them—as they always advise Ministers who are hard pressed—have said that in this case, if the Amendments are dissected, the Minister can find something in the drafting which is wrong or some inconsistency or some anomaly which would result from the terms of the Amendment. May we say at once that we on this side of the Committee are not wedded to the terms of the Amendment. We have made the proposals in order to assert and emphasise the principle that the assets should not be disposed of at less than they ought to fetch.

With that explanation, I commend the two Amendments to the Committee. I urgently ask the Government to think very closely before they say there is some difficulty in the way of accepting them, for, if there is a difficulty, they should remove it by altering the terms of the Amendments. I urgently press upon the Ministers that they should say that in principle they agree that these proposals are necessary to supplement an otherwise extremely defective Bill.

5.30 p.m.

Mr. Boyd-Carpenter

The right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) was quite right when he said that his standpoint on this matter was identical with ours. Indeed, the only criticism I have to make of his speech is that he paid me the compliment of attributing to me certain words spoken at an earlier stage by my hon. Friend the Member for Aylesbury (Mr. Summers). To have my hon. Friend's words about steel attributed to one is a very subtle compliment which I appreciate.

The attitude of the Government on this matter has been set out as long ago as the White Paper which was laid last July. It says, in paragraph 34: In deciding the price to be asked, regard will be had to all relevant factors at the time of sale. Account will have to be taken of the important changes which have taken place since nationalisation in the physical assets, capital structure, reserves and trading prospects of many of the iron and steel companies, together with other considerations such as the monetary and market conditions prevailing at the time. It is against that background that I wish to look at the two Amendments, the first of which the right hon. and learned Gentleman has moved in his usual persuasive and effective manner. They differ appreciably, as he recognises. The first seeks, subject to a qualification where the capital structure of the company has been varied, to tie the sales to the level of compensation. The difficulty of that as a test is that there have been changes upwards and downwards in the position and value of at any rate some of the companies since nationalisation. If we were to accept as the criterion the amount of compensation paid on nationalisation, we should be inclined to get into difficulties both ways.

Some companies have had the advantage of recent modernisation showing itself in their going ahead and prospering. There is another category—here I reply to a whispered interjection by the hon. Member for Rotherham (Mr. Jack Jones)— that of the company which has made a large use of scrap and, owing to recent difficulties in getting scrap, of which the hon. Gentleman is well aware, has found that its position has worsened. Those are the sort of problems—

Mr. Jack Jones

Is the hon. Gentleman telling the House that, arising from these technical difficulties, there has been a downward trend in capital valuation and capital structure? My whispered interjection was that we should like some evidence of a downward trend arising from the difficulties which the hon. Gentleman has mentioned.

Mr. Boyd-Carpenter

I am sure the hon. Gentleman will accept that, during the intervening period, some companies have done better than others, quite independent of changes in capital structure, which is the only qualification in the Amendment.

Mr. Jack Jones

They have all done better than they used to do.

Mr. Boyd-Carpenter

I hope that the hon. Gentleman is right, but I do not think he is. It does not matter whether he is or is not right; what is important is that their relative position compared with one another has changed since nationalisation, quite apart from the capital structure. A test which might 'well impose too high a value for one would impose too ludicrously low a value for another and that is the great difficulty of the first Amendment.

Sir F. Soskice

Our Amendment proposes only a lower limit. It does not advance the argument in the least to point out what the hon. Gentleman has been saying. We are proposing that there should be a lower limit below which we should not go.

Mr. Boyd-Carpenter

What the right hon. and learned Gentleman does not appear to have appreciated is that if we put so precise a lower limit into a statute it often works out as something very near an upper limit too. The difficulty is that a potential buyer is able to point in the Act of Parliament to what was apparently considered as a reasonable level of price. [HON. MEMBERS: "No."] Indeed, that is the danger, and we should weaken considerably the bargaining position of the Agency, and that is precisely what the right hon. and learned Gentleman and all of us wish to avoid. The first Amendment seems to have very real difficulties because it takes insufficient account of the relative changes which have followed nationalisation.

The second Amendment is less unattractive from that point of view because it does not seek to tie the conception of what is a fair price to the compensation value. The difficulty of the Clause with the Amendment would be that it would give undue prominence to the question of price compared with the other considerations which we have all so far been treating as similar in their importance. Indeed, it would do exactly what the hon. Member for Rotherham in a speech a little time ago accused the Government of wanting to do, of concentrating on the "brass" It would be a little objectionable to insert here the question of price as the only consideration to which statutory force is given while ignoring the other considerations, to which I attach considerable value, of the general overall national interest—[HON. MEMBERS: "Oh."]—most certainly—and of the overall capital resources for further development which purchasers may have available, another very important consideration in an industry the development of which we all want to see going on unchecked.

Also, it does not make adequate allowance for the other consideration of —I hate the phrase, but it is the only one—re-integration, the shape of the industry or the arrangement of the industry in the most efficient form. We all know that that will be borne in mind —it has been said from this Box again and again, and I am sure all hon. Members accept it as so—but it seems to me that we should be running some risk of appearing to attribute excessive, indeed, unique importance to the consideration of price if we were to lay the price consideration by statute upon the Agency while leaving all the other equally important considerations outside.

This is the way I have been looking at the matter. I am anxious, and so is my right hon. Friend, to reassure hon. Gentlemen opposite that there is no intention of any sort or kind to dispose of the assets at an unduly low price. Indeed, it is somewhat remarkable to have it suggested that that sort of thing is a habit of Her Majesty's Treasury, which is the Department of State responsible for the disposals. It is certainly a new line of attack upon the Treasury.

Mr. John Hynd (Sheffield, Attercliffe)

Is it such a new line? Does it not depend on where the money is going? Has not the whole policy of the present Government since they were returned to power been to transfer wealth from the working classes to the wealthier classes?

Mr. Boyd-Carpenter

The answer to that question is just "No."

Mr. Hynd

It is not.

Mr. Boyd-Carpenter

Our experience of attacks made upon the Treasury by the Opposition has made us attach excessive importance to this consideration. It really seems a fantastic suggestion to make. I am, however, anxious to reassure hon. Gentlemen opposite, even though their apprehensions strike me as fantastic. I appreciate there can be different views upon this matter; and, so far as possible, my right hon. Friend and I wish to meet genuine apprehensions which, although ill-founded, are sincerely and honestly held.

If the right hon. and learned Gentleman will not press these Amendments, I should like, on Report stage, to introduce an Amendment to cover this point, that is, to lay down that a reasonable price must be one of the considerations before the Agency, and to meet the right hon. and learned Gentleman by putting that into the Bill. As has been said again and again, a provision in a statute is better than any Ministerial assurance. [HON. MEMBERS: "Hear, hear."] I have certainly said that when I was on the other side of the Committee, and I think I was right, and so I do not deny that the right hon. and learned Gentleman may be right as well.

We are prepared to table an Amendment which while covering that point, would also not exclude, expressly or by implication, consideration of the other matters to which I have referred. I hope that, as it seems to me, unnecessary assurance—given squarely and fairly to meet genuine, if ill-founded apprehensions—will be satisfactory to the Committee. For reasons I have explained, it does not seem to me that either of these Amendments can be accepted as they stand. But, if hon. Members opposite can attain what seems to them the important objective of having this safeguard put in the Bill, I do not suppose they will care very much about that. In any event I am not in a position to give the proposed wording of my Amendment, because I have only very recently made arrangements to have the drafting commenced.

I am assured that a possible form of words, not subject to the difficulties arising on these Amendments, can be evolved. Having met the right hon. and learned Gentleman in that spirit, I hope he is satisfied that we, just as much as himself, are determined to get a fair price for these assets.

Mr. Roy Jenkins

We on this side of the Committee can agree with the Financial Secretary on one of his statements, if with no other, that a provision in a statute is better than any number of Ministerial assurances. We certainly feel very strongly about that. But I am afraid his assurance about a provision in this statute did not go very far to meet the case put by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice). As I understand it, we are to have some rather vague provision, ensuring that a reasonable price shall be paid for securities sold under this Clause, but there is to be nothing relating that in any way to the 1949 prices, and nothing taking into account the specific points put forward by my right hon. and learned Friend.

Therefore, there will still be loopholes for sales to take place at prices which we should regard as thoroughly inadequate. I consider these two Amendments are absolutely crucial from the point of view of endeavouring to bind the Government. As the hon. Gentleman himself said, assurances are not enough. That is our view, and during this afternoon the hon. Gentleman has made me feel not less apprehensive, but more so, about the possible way in which these securities may be disposed of.

5.45 p.m.

When discussing the Amendment moved by my hon. Friend the Member for Brightside (Mr. R. E. Winterbottom), the hon. Gentleman suddenly introduced the most frightening concept that temporary arrangements might be made by which it would be possible for the Government to lease securities to a possible buyer, on very favourable terms, and allow that buyer eventually to buy the securities out of the profits accruing from the companies in which he held the securities. That would be a very easy way for someone to get the industry back, but not necessarily a very desirable way.

The Financial Secretary said that, in selling these securities, we should take into account, not merely the prices offered, but also the capital resources of the people who made the offers. That opens up another whole new field. The hon. Gentleman cannot complain if we wish to tie up this matter a little more than by Ministerial assurances and a little more than will be achieved by his proposed Amendment on Report stage.

My right hon. and learned Friend deployed a very powerful case. I do not want to go over it at great length, but merely to touch on one or two further points. Let us consider the first Amendment and relate this matter to the 1949 take-over prices. As I understood the argument of the hon. Gentleman, it was directed, not so much to any suggestion that this Amendment was impracticable as to the fact that it was undesirable, largely because of the changes in circumstances which have taken place since 1949, and which have affected different companies in different ways. I understood that to be his point, and not that it was impracticable to go back and uncover a few layers and get back to the 1949 position; it was not desirable to do so, because some companies have done much better than others during the intervening period I hope I understood the hon. Gentleman aright.

I think, however, that we must turn our minds back to 1949 and realise that all we are asking here is that these 1949 prices should be a minimum. The hon. Gentleman's argument, that because a minimum was put in the Bill it would automatically become a maximum, was one of the weakest I have ever heard him deploy in this House. He paints a different picture of the way in which these securities will be sold according to the Amendment with which he is dealing. Sometimes he says, "Of course, what is going to happen is that we shall have a very competitive market, with a great number of buyers bidding against each other." He said that during our discussion on Clause 16 because it then suited him.

Now the hon. Gentleman postulates a position in which we shall have only one possible buyer, and that he will point a pistol at the Government, because a certain sum is stipulated in the Bill, and will say that that is what Parliament thought to be not only the minimum but the maximum as well. It really is one of the weakest arguments I have heard. We must remember how strongly right hon. and hon. Gentlemen in the Conservative Party expressed themselves about these compensation terms in 1949. We must realise how very reasonable it is to put in those figures as being a minimum.

I wish to weary the Committee with two quotations from the Second Reading debate. The Secretary of State for the Colonies (Mr. Lyttelton) said: The Government have artificially depressed the shares and have relied on the co-operation of the industry not to increase its dividends and then bought the shares at the rigged market price. I consider the Government"— and here we have a little of the rather elephantine humour which we sometimes associate with the Colonial Secretary— should consider altering the title of the Bill to the Iron and Steal Bill. So much for compensation."—[OFFICIAL REPORT, 15th November, 1948; Vol. 458, c. 92.] Then we had the Prime Minister saying: … in the case of steel, the conduct of the Government in buying compulsorily at the market value is not only unfair, but it seems actually dishonest. We assert, and it is our sincere belief, that by their threats of steel nationalisation they have artificially depressed the value of steel shares."—[OFFICIAL REPORT, 16th November, 1948; Vol. 458, c. 229–30.] We had the party opposite taking the view at that time that these were grossly inadequate prices. If they have changed their view I think they should tell us. That would be a very interesting consideration to have in mind in discussing this Amendment. But, if they have not changed their mind, in view of the strong language then used it is not good enough to say that because there have been a few relative changes it is impossible to put in these prices which were regarded as so disgracefully inadequate three years ago.

In the four years since that debate we have not had any general fall in Stock Exchange values. They went down a bit first, then up substantially, then down and now they have gone up again. The "Financial Times" index of industrial ordinary shares is two points higher than it was when these very strong statements were made in November, 1948. There is no reason to suspect that general market conditions would have made unreasonable a minimum based on those prices.

I should have thought that it would be accepted that the general prospects for the steel industry were, if anything, brighter now than in 1948. There has come to be more general agreement that we need to carry through a substantial increase in the size of the industry as quickly as we can. Therefore, the minimum we propose is very low indeed. Unless the Government have the most sinister intentions about the disposal of these shares, I should have thought that our suggestion could have been accepted. There are no great practical difficulties. Somebody has to make a reasonable valuation from time to time, and we are asking that the Treasury should do it.

We were told by the hon. and learned Member for Middlesbrough, West (Mr. Simon) that Parliament could not pronounce judgment. I think the hon. Member for Aylesbury (Mr. Summers) said the same this afternoon. But somebody must do it if the Bill is to be made to work, unless everything is to operate in the dark, with great possibilities for private gain and public loss. Therefore, from the point of view of both the desirable and the practical, I should have thought that it was eminently reasonable to ask at any rate for the 1949 minimum to be put in. It is difficult to imagine a lower minimum. The Government's little concession to us, if it means anything at all, ought not to be confined to rather nebulous points about a reasonable price. It ought to bring in the 1949 minimum.

The Minister of Supply (Mr. Duncan Sandys):

There must have been some misunderstanding. Hon. Gentlemen opposite have always responded most generously to any sincere concession to their point of view from the Government benches. My hon. Friend the Financial Secretary went a long way toward meeting the point of the second Amendment. That was our intention. The first Amendment links the amount to be paid for the securities to the compensation paid under nationalisation. My hon. Friend explained why we did not feel that it was possible to accept that approach.

He addressed himself to the other Amendment, which, I assume, is an alternative. It was our intention to go a long way toward meeting the principle. That Amendment asks that the Treasury should be; … satisfied that the price or other consideration to be received upon such sale or other disposal is adequate, regard being had in particular in the case of such securities to any improvement in the assets, financial position and earning power and record of the Company in which such securities are held since they vested in the Iron and Steel Corporation of Great Britain … That is in close accord with paragraph 34 of the White Paper, which says: In deciding the price to be asked, regard will be had to all relevant factors at the time of sale. Account will have to be taken of the important changes which have taken place since nationalisation… That touches the same point as that of the Amendment: … in the physical assets, capital structure, reserves and trading prospects …. Earning power is mentioned in the Amendment: .…of many of the iron and steel companies, together with other considerations such as the monetary and market conditions prevailing at the time This is a genuine point. We should not like it to be thought that we had any intention of selling the industry for a song. We went out of our way in the White Paper to say that it might take some years before the work of the Agency was completed. That showed that we intended to insist upon an adequate price. If we intended to sell the industry for a song there would be no difficulty in disposing of it overnight.

We propose to introduce an Amendment on Report to incorporate the substance of paragraph 34. The only difference between that paragraph and the second of the two Amendments is that it recognises that there are other considerations which must be taken into account by the Agency. The Amendment recognises that this is not a comprehensive list. It uses the words, "in particular." There is not much between us in this matter. We are not linking up with compensation payments, but we are prepared to introduce an Amendment to give effect to paragraph 34 of the White Paper. I hope that I have removed any misunderstanding. What was said by the hon. Member for Stechford (Mr. Roy Jenkins) showed that he had not recognised how far we were prepared to go.

Sir F. Soskice

The Amendments are not alternative: they are cumulative. The Minister made a most helpful intervention in which he regretted that there should have been a misunderstanding. If there was a misunderstanding, I venture to lay responsibility at the door of the Financial Secretary. He, in his usual persuasive way, tried to get us to accept an undertaking that the Government would put down an Amendment on Report stage which would provide—I think I quote his words accurately—that a reasonable price would be a consideration. Anything less than that under-taking it is difficult to conceive. We do not expect the Government to embody in the Bill a proposal that an unreasonable price should be a consideration.

We thought that it was the minimum that anybody could contemplate that a reasonable price should be considered. We were far from satisfied with the proposal of the Financial Secretary. But the Minister has pointed out that the second Amendment incorporates what the White Paper specified. Therefore, the Amendment cannot be very far off the mark. I recommend to my hon. Friends that on the second Amendment we should wait to see what the Government do by way of implementing the undertaking given by the Minister. It may well be that the undertaking now amplified and illuminated by the Minister's intervention and extended from the jejune form in which it fell from the lips of the Financial Secretary may satisfy my hon. Friends.

6.0 p.m.

So far as the first proposal is concerned, my hon. Friends and I were in great difficulty in anticipating what answer we were to be given. We have heard of administrative difficulties being put forward, but the Minister, in trying to answer what we have put forward, was in a difficult situation and was looking up feelingly from a woefully inadequate brief, and hoping to get away with some sweet words, and nobody is a greater adept at that than the Financial Secretary. I used to try it myself before him, and I know the agonies of mind which he must have been going through.

I think that the hon. Gentleman's brief, having regard to his very great intellectual equipment for the purpose, must have been unusually inadequate. All he said to us was that if we impose a reserve price, we shall never get more than the reserve price. That is really the substance of his argument, but it is not an argument that appeals to anybody on this side of the Committee, nor will it, I think, appeal to many hon. Gentlemen opposite.

I therefore advise my hon. Friends, and I certainly desire myself, to signify our very severe disapproval of the answer which has been given to our first proposal. We think it is of great importance. We have not put down this Amendment for purposes of debate. We think the first proposal an important one, and, in these circumstances, I hope my hon. Friends will agree to the course I have suggested with regard to the first Amendment. With regard to the second Amendment, I hope they will agree with me that I should not press it, in anticipation of what the Government may do to implement the undertaking which the Financial Secretary and the Minister has just given.

Mr. Wilfred Fienburgh (Islington, North)

We really ought to weigh very carefully the results which will flow from the attitude which the Minister has taken up on these two Amendments. By accepting one Amendment which will put into the Bill the provision that an adequate price shall be sought, and, at the same time, refusing another Amendment which proposes that the 1949 compensation take-over price should be incorporated as a reserve, he has, in effect, admitted that an adequate price may very well be below the compensation price of the 1949 take-over. That is a point which I am sure will be regarded as of very great interest to those who may be thinking of buying their way back into the industry.

The only thing which could prevent sectors of the old industry from taking advantage of the Minister's admission is if there were likely to be Teal and genuine competition for the shares of the establishments in the iron and steel industry. That, indeed, was indicated by the Financial Secretary when speaking on the previous Clause. He said that we must envisage that there will be competition for these shares. I suggest that that is an entirely mistaken appreciation. In fact, there will be no competitive bidding for these shares unless there are 105 people bidding for 100 shares; if there are only 99 bidding, there will be no effective competitive bidding increasing the value of the shares.

I think we can rule out straight away the idea that the small investor is going to be falling over himself in his eagerness to buy his way back into the iron and steel industry. There will be those who are well satisfied with the compensation terms which were granted. They now, at least, have a long-term security for their assets, under the compensation granted in 1949, which they certainly would not have in an industry which is as susceptible to cyclical fluctuations as the iron and steel industry would be in private hands. The small man who is

concerned in investing wisely will not be over-eager to buy his way back into the industry; the people who will be anxious will be those groups who still regard steelmaking plant and assets as one part of a vertical trust organisation and who will prepare their long-term policy on the assumption that losses on steel-making plants will be recouped elsewhere.

Is there any likelihood that the larger groups concerned with buying their way back into the industry will be competing with one another to secure the assets of one particular plant or group? I suggest that there is not the faintest likelihood of that at all. Before nationalisation, they were very closely integrated by interlocking directorships, and they had working machinery through the conferences of the Federation. Their attitude will surely be, "I am interested in buying back part of plant A; if you, B, will lay off plant A and concentrate on plant B, all will be well." There is absolutely no likelihood that a big combine which was previously interested in Margam will suddenly start bidding to buy back the assets of a steel works in Scunthorpe or somewhere else. The whole thing will be very carefully apportioned and shared out beforehand.

In the light of the statement which the Minister has made, and of his attitude to these two Amendments, we can rid our minds of the conception that these people will compete. They will decide what uncompetitive bids they are to make for these assets, and that, in the words of the Minister's definition, will mean an "adequate price," despite the increase in profitability, despite the additional investment and the new development which has taken place, and that "adequate price" in the Minister's own mind may well be below the price at which these assets were taken over three or four years ago.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 212; Noes, 252.

Division No. 102.]	AYES	[6.8 p.m.
Acland, Sir Richard	Benn, Hon. Wedgwood	Bowden, H. W.
Albu, A. H.	Benson, G.	Bowles, F. G.
Allen, Arthur (Bosworth)	Beswick, F.	Braddock, Mrs. Elizabeth
Anderson, Frank (Whitehaven)	Blackburn, F.	Brockway, A. F.
Attlee, Rt. Hon. C. R.	Blenkinsop, A.	Brook, Dryden (Halifax)
Bacon, Miss Alice	Blyton, W. R.	Broughton, Dr. A. D. D.
Bellenger, Rt. Hon. F. J.	Boardman, H.	Brown, Rt. Hon. George (Belper)
Bence, C. R.	Bottomley, Rt. Hon. A. G.	Brown, Thomas (Ince)
Burton, Miss F. E.	Janner, B.	Reeves, J.
Butler, Herbert (Hackney, S.)	Jay, Rt. Hon. D. P. T.	Reid, Thomas (Swindon)
Castle, Mrs. B. A.	Jeger, George (Goole)	Reid, William (Camlachie)
Champion, A. J.	Jeger, Dr. Santo (St. Pancras, S.)	Rhodes, H.
Chapman, W. D.	Jenkins, R. H. (Stechford)	Richards, R.
Chetwynd, G. R.	Johnston, Douglas (Paisley)	Robens, Rt. Hon, A
Collick, P. H.	Jones, David (Hartlepool)	Roberts, Albert (Normanton)
Cove, W. G.	Jones, Frederick Elwyn (West Ham, S.)	Robinson, Kenneth (St. Pancras, N.)
Craddock, George (Bradford, S.)	Jones, Jack (Rotherham)	Rogers, George (Kensington, N.)
Crosland, C. A. R.	Jones, T. W. (Merioneth)	Ross, William
Grossman, R. H. S	Keenan, W.	Shackleton, E. A. A.
Cullen, Mrs. A.	Key, Rt. Hon. C. W.	Shinwell, Rt. Hen. E.
Daines, P.	King, Dr. H. M.	Short, E. W.
Dalton, Rt. Hon. H.	Kinley, J.	Silverman, Julius (Erdington)
Darling, George (Hillsborough)	Lee, Frederick (Newton)	Simmons, C. J. (Brierley Hill)
Davies, Ernest (Enfield, E.)	Lee, Miss Jennie (Cannock)	Smith, Norman (Nottingham, S.)
de Freitas, Geoffrey	Lever, Leslie (Ardwick)	Snow, J. W.
Deer, G.	Lewis, Arthur	Sorensen, R. W
Dedds, N. N.	Lindgren, G. S.	Soskice, Rt. Hon Sir Frank
Donnelly, D. L.	Lipton, Lt.-Col. M.	Sparks, J. A.
Dugdale, Rt. Hon. John (W. Bromwich)	MacColl, J. E.	Steele, T.
Ede, Rt. Hon. J. C.	McLeavy, F.	Stewart, Michael (Fulham, E.)
Edelman, M.	MacMillan, M. K (Western Isles)	Strachey, Rt. Hon. J.
Edwards, John (Brighouse)	McNeil, Rt. Hon. H.	Strauss, Rt. Hon. George (Vauxhall)
Edwards, W. J. (Stepney)	MacPherson, Malcolm (Stirling)	Stress, Dr. Barnett
Evans, Albert (Islington, S.W.)	Mainwaring, W. H.	Summerskill, Rt. Hon. E.
Evans, Edward (Lowestoft)	Mallalieu, E. L. (Brigg)	Swingler, S. T.
Evans, Stanley (Wednesbury)	Mann, Mrs. Jean	Sylvester, G. O.
Fernyhough, E.	Manuel, A. C.	Taylor, Bernard (Mansfield)
Fienburgh, W.	Mayhew, C. P.	Taylor, John (West Lothian)
Flotcher, Erie (Islington, E.)	Mellish, R. J.	Taylor, Rt. Hon. Robert (Morpeth)
Follick, M.	Messer, F.	Thomas Ivor Owen (Wrekin)
Foot, M. M.	Mikardo, Ian	Thomson, George (Dundee, E.)
Fraser, Thomas (Hamilton)	Mitchison, G. R.	Thorneycroft, Harry (Clayton)
Freeman, John (Watford)	Monslow, W.	Tomney, F.
Gaitskell, Rt. Hen. H. T. N	Moody, A. S.	Turner-Samuels, M.
Gibson, C. W.	Morgan, Dr. H. B. W.	Ungoed-Thomas, Sir Lynn
Glanville, James	Morley, R.	Viant, S. P.
Gordon Walker, Rt. Hon. P. C.	Morris, Percy (Swansea, W.)	Wallace, H. W.
Greenwood, Anthony (Rossendale)	Morrison, Rt. Hon. H. (Lewisham, S.)	Watkins, T. E.
Greenwood, Rt. Hn. Arthur (Wakefield)	Mort, D. L.	Webb, Rt. Hon. M. (Bradford, C.)
Griffiths, David (Rother Valley)	Moyle, A.	Weitzman, D
Griffiths, Rt. Han. James (Llanelly)	Mulley, F. W.	Wells, Percy (Faversham)
Hale, Leslie	Murray, J. D.	Wells, William (Walsall)
Hall, Rt. Hon. Glenvil (Comm Valley)	Neal, Harold (Bolsover)	West, D. G.
Hall, John T. (Gateshead, W.)	Noel-Baker, Rt. Hon. P. J.	Wheeldon, W. E.
Hamilton, W. W.	Oliver, G. H.	White, Henry (Derbyshire, N.E.)
Hannan, W.	Orbach, M.	Whiteley, Rt. Hon. W.
Hardy, E. A.	Oswald, T.	Wigg, George
Hargreaves, A.	Padley, W. E.	Wilcock, Group Capt. C. A. B.
Harrison, J. (Nottingham, E.)	Paling, Will T. (Dewsbury)	Willey, F. T.
Hayman, F. H.	Palmer, A. M. F.	Williams, Rev. Llywelyn (Abertillery)
Henderson, Rt. Hon. A. (Rowley Regis)	Pannell, Charles	Williams, Ronald (Wigan)
Hewitson, Capt. M.	Pargiter, G. A.	Williams, W. R. (Droylsden)
Holman, P.	Parker, J.	Williams, W. T. (Hammersmith, S.)
Holmes, Horace (Hemsworth)	Paton, J.	Winterbottom, Ian (Nottingham, C.)
Houghton, Douglas	Pearson, A.	Winterbottom, Richard (Brightside)
Hudson, James (Ealing, N.)	Peart, T. F.	Woodburn, Rt. Han. A.
Hughes, Emrys (S. Ayrshire)	Plummer, Sir Leslie	Yates, V. F.
Hughes, Hector (Aberdeen, N.)	Popplewell, E.	Younger, Rt. Hon. K.
Hynd, J. B. (Atterliffe)	Porter, G.
Irvine, A. J. (Edge Hill)	Price, Joseph T. (Westhoughton)	TELLERS FOR THE AYES:
Irving, W. J. (Wood Green)	Proctor, W. T.	Mr. James Johnson and
Isaacs, Rt. Hon. G. A.	Pursey, Cmdr. H.	Mr. Wilkins.
NOES
Aitken, W. T.	Bennett, F. M. (Reading, N.)	Burden, F. F. A.
Allan, R. A. (Paddington, S.)	Bennett, Dr. Reginald (Gosport)	Butcher, Sir Herbert
Alport, C. J. M.	Bevins, J. R. (Toxteth)	Campbell, Sir David
Amery, Julian (Preston, N.)	Bishop, F. P.	Carr, Robert
Amory, Heathcoat (Tiverton)	Bossom, A. C.	Cary, Sir Robert
Arbuthnot, John	Bowen, E. R.	Channon, H.
Ashton, H. (Chelmsford)	Boyd-Carpenter, J. A.	Clarke, Col. Ralph (East Grinstead)
Assheton, Rt. Hon. R. (Blackburn, W.)	Boyle, Sir Edward	Clarke, Brig. Terence (Portsmouth, W.)
Astor, Hon. J. J.	Braise, B. R.	Cole, Norman
Baldock, Lt.-Cmdr. J. M.	Braithwaite, Sir Albert (Harrow, W.)	Colegate, W. A.
Baldwin, A. E.	Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)	Conant, Maj. R. J. E.
Banks, Col. C.	Bromley-Davenport, Lt.-Cal. W. H.	Cooper, Sqn. Ldr. Albert
Barber, Anthony	Brooke, Henry (Hampstead)	Craddock, Beresford (Spelthorne)
Baxter, A. B.	Brooman-White, R. C.	Cranborne, Viscount
Beach, Maj. Hicks	Buchan-Hepburn, Rt. Hon. P. G. T.	Crookshank, Capt. Rt. Hon. H. F. C
Beamish, Maj. Tufton	Bullard, D. G.	Crouch, R. F.
Bell, Philip (Bolton, E.)	Bullock, Capt. M.	Crowder, Nitre (Ruislip—Northwood)
Bell, Ronald (Bucks, S.)	Bullus, Wing Commander E. E.	Cuthbert, W. N.

Darling, Sir William (Edinburgh, S.)	Johnson, Eric (Blackley)	Rayner, Brig. R
Davies, Rt. Hn. Clement (Montgomery)	Jones, A. (Hall Green)	Redmayne, M.
Deedes, W. F.	Joynson-Hicks, Hon L W	Remnant, Hon P.
Dodds-Parker, A. D.	Kaberry, D.	Renton, D. L. M.
Donaldson, Cmdr. C. E. McA.	Keeling, Sir Edward	Roberts, Peter (Heeley)
Donner, P. W.	Kerr, H. W.	Robertson, Sir David
Doughty, C. J. A.	Lambert, Hon. G	Robinson, Roland (Blackpool, S.)
Douglas-Hamilton, Lord Malcolm	Lambton, Viscount	Robson-Brown, W.
Dugdale, Rt. Hon. Sir T. (Richmond)	Langford-Holt, J. A	Rodgers, John (Sevenoaks)
Duncan, Capt. J. A. L.	Law, Rt. Hon. R. K.	Roper, Sir Harold
Duthie, W. S.	Legge-Bourke, Maj. E. A. H.	Ropner, Col. Sir Leonard
Eccles, Rt. Hon. D. M.	Legh, Hon. Peter (Petersfield)	Russell, R. S.
Eden, Rt. Hon. A.	Lennox-Boyd, Rt. Hon. A. T	Ryder, Capt. R E. D.
Elliot, Rt. Hon. W. E.	Linstead, H. N.	Salter, Rt. Hon. Sir Arthur
Fell, A.	Llewellyn, D. T.	Sandys, Rt. Hon. D.
Finlay, Graeme	Lloyd, Rt. Hon. Selwyn (Wirrat)	Savory, Prof. Sir Douglas
Fisher, Nigel	Lockwood, Lt.-Col. J. C.	Schofield, Lt.-Col. W. (Rochdale)
Fletcher-Cooke, C.	Longden, Gilbert	Scott-Miller, Cmdr. R.
Fort, R.	Low, A. R. W.	Shepherd, William
Foster, John	Lucas, Sir Jocelyn (Portsmouth, S.)	Simon, J. E. S. (Middlesbrough, W.)
Fraser, Sir Ian (Morecambe & Lonsdale)	Lucas, P. B. (Brentford)	Smithers, Peter (Winchester)
Fyfe, Rt. Hon. Sir David Maxwell	Lucas-Tooth, Sir Hugh	Smithers, Sir Waldron (Orpington)
Galbraith, Rt. Hon. T. D. (Pollok)	Lyttelton, Rt. Hon. O.	Smyth, Brig. J. G. (Norwood)
Galbraith, T. G. D. (Hillhead)	Macdonald, Sir Peter	Soames, Capt. C.
Gammans, L. D	McKibbin, A. J.	Spearman, A. C. M.
George, Rt. Hon. Maj. G. Lloyd	McKie, J. H. (Galloway)	Spence, H. R. (Aberdeenshire, W.)
Godber, J. B.	Maclean, Fitzroy	Spans, Sir Patrick (Kensington, S.)
Gough, C. F. H.	Macleod, Rt. Hon. Iain (Enfield, W.)	Stanley, Capt. Hon. Richard
Gower, H. R.	MacLeod, John (Ross and Cromarty)	Stevens, G. P.
Graham, Sir Fergus	Macmillan, Rt. Hon. Harold (Bromley)	Stewart, Henderson, (Fife, E.)
Gridley, Sir Arnold	Macpherson, Niall (Dumfries)	Stoddart-Scott, Col. M.
Grimond, J.	Maitland, Comdr. J. F. W. (Horncastle)	Strauss, Henry (Norwich, S.)
Grimston, Hon. John (St. Albans)	Maitland, Patrick (Lanark)	Studholme, H. G.
Grimston, Sir Robert (Westbury)	Markham, Major S. F.	Summers, G. S.
Hall, John (Wycombe)	Maude, Angus	Sutcliffe, Sir Harold
Hare, Hon. J. H	Maudling, R.	Taylor, Charles (Eastbourne)
Harris, Frederic (Croydon, N.)	Maydon, Lt.-Comdr. S. L. C.	Taylor, William (Bradford, N.)
Harrison, Col. J. H. (Eye)	Medlicott, Brig. F.	Teeling, W.
Harvey, Air Cdre. A. V. (Macclesfield)	Mellor, Sir John	Thomas, Leslie (Canterbury)
Harvey, Ian (Harrow, E.)	Molson, A. H. E.	Thomas, P. J. M. (Conway)
Harvie-Watt, Sir George	Moore, Lt.-Col. Sir Thomas	Thompson, Kenneth (Walton)
Hay, John	Nabarro, G. D. N.	Thornton-Kemsley, Col. C. N
Heald, Sir Lionel	Nicholls, Harmar	Tilney, John
Heath, Edward	Nicholson, Godfrey (Farnham)	Turner, H. F. L.
Higgs, J. M. C.	Nicolson, Nigel (Bournemouth, E.)	Turton, R. H.
Hill, Dr. Charles (Luton)	Nield, Basil (Chester)	Tweedsmuir, Lady
Hill, Mrs. E. (Wythenshawe)	Noble, Cmdr. A. H. P.	Vesper, D. F.
Hinchingbrooke, Viscount	Nugent, G. R. H.	Wakefield, Edward (Derbyshire, W.)
Hirst, Geoffrey	Nutting, Anthony	Wakefield, Sir Wavell (St. Marylebone)
Holland-Martin, C. J.	Oakshott, H. D.	Walker-Smith, D. C.
Hollis, M. C.	Odey, G. W.	Ward, Hon. George (Woroester)
Holt, A. F.	O'Neill, Phelim (Co. Antrim, N.)	Ward, Miss I. (Tynemouth)
Hopkinson, Rt. Hon. Henry	Ormsby-Gore, Hon. W. D.	Waterhouse, Capt Rt. Hon. C.
Hornsby-Smith, Miss M. P	Orr, Cape. L. P. S.	Watkinson, H. A.
Horobin, I. M.	Orr-Ewing, Charles Ian (Hendon, N.)	Webbe, Sir H. (London & Westminster)
Horsbrugh, Rt. Hon. Florence	Orr-Ewing, Sir Ian (Weston-super-Mare)	Williams, Rt. Hon. Charles (Torquay)
Howard, Gerald (Cambridgeshire)	Osborne, C.	Williams, Gerald (Tonbridge)
Howard, Hon. GrevIle (St. Ives)	Peaks, Rt. Hon. O.	Williams, Sir Herbert (Croydon, E.)
Hudson, Sir Austin (Lewisham, N.)	Peto, Brig. C. H. M.	Williams, R. Dudley (Exeter)
Hudson, W. R. A. (Hull, N.)	Peyton, J. W. W.	Wills, G.
Hulbert, Wing Cdr. N. J.	Pickthorn, K. W. M.	Wilson, Geoffrey (Truro)
Hurd, A. R.	Pilkington, Capt. R. A.	Wood, Hon. R.
Hutchinson, Sir Geoffrey (Ilford, N.)	Pitman, I. J.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Powell, J. Enoch	TELLERS FOR THE NOES:
Hutchison, James (Scotstoun)	Price, Henry (Lewisham, W.)	Mr. Drewe and
Hyde, Lt.-Col. H. M.	Prior-Palmer, Brig. O. L.	Mr. Richard Thompson.
Hylton-Foster, H. B. H.	Profumo, J. D.
Jenkins, Robert (Dulwioh)	Raikes, Sir Victor

The Temporary Chairman

The next Amendment selected is that in page 14, line 7, and I think it would be to the convenience of the Committee if we also dealt with the Amendment in page 14, line 20, at the end, to insert: (5) In exercising the powers vested in them by subsection (1) of this section, the Agency shall not sell or otherwise dispose of to any purchaser or other person any securities of a company vested in them of a class carrying voting rights unless at the same time such purchaser or other person buys or otherwise acquires for a consideration which shall have been previously approved of by the Treasury an equivalent proportion of securities of that company vested in the Agency in each class of the securities of that company which do not carry voting rights.

Mr. Roy Jenkins

I beg to move, in page 14, line 7, at the end, to insert: so, however, that they shall not so exercise their powers as to produce the result that the nominal value of the shares in any such subsidiary other than the loan capital therein and the shares therein carrying preferential rights to a fixed dividend shall be less than fifty-one per cent. of the aggregate of the nominal values of such loan capital and of such shares carrying preferential rights as aforesaid. As this raises a fairly complicated point, I will begin by trying to explain the danger we are trying to meet in these two associated Amendments and will then go on to what we actually propose in them. Under the Clause, the Agency is given power to carry out any reorganisation of the capital structure of any of its subsidiary companies. The purpose of that reorganisation would be, presumably, to make the shares of the companies more readily saleable when the reorganisation had been carried out.

My hon. Friends and I see a certain danger in that. It is our view—and we have consistently expressed it throughout the discussions on this Bill—that it may be very difficult to get great sums of private money back into the steel industry; but, none the less, there may be certain people who will be very anxious to come along with fairly limited sums of money with which to buy both the equity capital and the control of certain steel companies.

We visualise the danger that, confronted with this situation, the Agency may carry through some rather surprising reorganisations which might take the form of a very highly geared capital structure in which there is a great deal of debenture capital, unsecured loan capital, preference capital, and only a very limited amount of ordinary share capital. As I understand it, there certainly would be nothing in the Bill as drafted to prevent the most extremely highly geared structures from being imposed upon certain companies for the simple reason that private firms without very large resources would be able to get hold of control and equity capital in the industry.

I am sure that one of the arguments which the Financial Secretary will advance will be to say, "The people who will be in charge of this, and even more the Treasury officials, are reasonably minded people who will have the interests of the taxpayer and the public welfare in mind and will not dream of doing any such thing." I beg the Financial Secretary to realise that in all these matters he and those associated with him might be placed in a difficult position in which they might have a very sharp conflict of loyalty. That has worried us on this side of the Committee all through the passage of this Bill.

The conflict will be this—no doubt, all things being equal, the Financial Secretary and the other Treasury people will desire to get a very good deal for the taxpayer and will desire not to do anything that will be regarded as unreasonable. But they want to sell off the industry into private hands. That is the meaning of this Bill. If they cannot do that, then this Bill will stand as one of the most unnecessary Bills to have taken up a great deal of Parliamentary time.

There is, therefore, a possible conflict of loyalties which the Financial Secretary and others will have to face. It is no good the Financial Secretary saying, "You can trust me to look after this thing properly because I want a decent deal for the taxpayer." He does; but he may also want something which would conflict with the reasonable interests of the taxpayer. I am sure that the Financial Secretary and other hon. Members will agree that in the ordinary way it is undesirable that one should have a very highly geared capital structure of companies.

That is the danger against which we seek to guard in this Amendment. The effect of the Amendment would be that those private buyers who want to get control and hold control of the company and want the equity must put into the company an amount of money going at least some substantial part of the way towards the real value of the company, and not an amount of money which is a very small fraction of the real value of the company. I must tell the Financial Secretary that in drafting the first of these two Amendments some certain amount of error crept in. I am sure that he will be sympathetic, because I remember that on the Finance Bill last year, even with the great resources behind the hon. Gentleman, there were drafting errors in some Government Amendments.

As it now stands, the Amendment provides that when capital reorganisation has been completed, the ordinary share capital should be not less than 51 per cent. of the capital, other than ordinary share capital, including the debenture capital, whereas the intention which was more in our mind was that it should be 51 per cent. of the total capital, including the ordinary share capital. I naturally regret that this has arisen, but it is not a point of great importance because we are not so much wedded to a particular figure as to the principle that there should be inserted in the Bill some limitation upon the right of the Agency to secure a very highly geared capital structure. As the Amendment stands, it means that a third or a little more than a third of the capital structure, including the loan capital, of any company which was a subsidiary of the industry would have to be ordinary share capital after the reorganisation had been carried through.

That is not an unreasonable position. I took the opportunity earlier this afternoon of looking at the existing capital structures of some of the most prominent subsidiary companies of the present Iron and Steel Corporation. In most of those cases the ordinary share capital amounted to substantially more than a half of the total issued capital and—though I do not suggest that it is true over the whole range in all of those at which I looked it was substantially over one-third. In the case of the Lancashire Steel Corporation Ltd. it is over 65 per cent. of the issued capital and I include the debenture capital here—in the United Steel Companies Ltd. it is also over 65 per cent., Richard, Thomas and Baldwins Ltd., over 45 per cent., Colvilles Ltd., over 65 per cent., John Summers and Sons Ltd., about 48 per cent., Stewarts and Lloyds Ltd., over 65 per cent., and Dorman, Long and Co., Ltd., over 45 per cent. Therefore, what we are pressing for is not in any way broadly out of accord with the present state of affairs in the industry.

I hope, therefore, that the Financial Secretary will be able to go a very substantial way towards meeting us on this point. I hope that he will not say, "Of course, we will not carry through an unreasonable reorganisation," but that he will put a figure which will give us a specific guarantee that rather fantastic capital structures will not be worked out to make it easier to get rid of the industry into private hands.

The second Amendment to which I have referred includes a provision by which a buyer when he buys equity capital, which for this purpose is defined as a class carrying voting rights, must also take at the same time an equivalent proportion of the shares or capital of other categories in the same company. This is an Amendment which, if our first Amendment were not accepted, would become even more necessary, because it would be a kind of second line of defence against the position in which one could have a very highly geared capital structure and control and equity interest passing over for a comparatively small sum of money.

Even if our first Amendment were accepted, the second Amendment could still stand. Perhaps it would not be so necessary in those circumstances but it would be still workable and useful, because it would help to prevent a position in which the equity interest goes out to private buyers whereas the Government are left holding the fixed interest securities, which in certain cases may represent the most substantial part of the value of the company.

6.30 p.m.

Mr. Boyd-Carpenter

These two Amendments we are taking together raise, as the hon. Member for Stechford (Mr. Roy Jenkins) has properly said, different but inter-connected points. They both relate to restrictions which it is sought to impose upon the Agency in the disposal of the companies. The first one prevents what is described as a highly geared structure, and it is certain that in general it is unlikely that it would be thought either desirable or necessary to arrange so highly geared a structure as the hon. Member for Stechford seemed to contemplate.

On the general issues which the hon. Member raised, I would not wish to join issue with him, but the Amendment raises two points of some importance. I leave aside the drafting error of which I am only too glad to acquit the hon. Member. I have had some experience of committing them myself, and I would certainly never seek to make a debating point about them. There is, however, an issue of some substance, namely whether it is right and proper to put into the Bill a restriction even against a fairly improbable event of this sort.

We are anxious, as I have said more than once, to secure that the Agency has the greatest possible freedom. It is being called upon to do an important job, and the general principle, which I should have thought would have commended itself to all hon. Members, is that, having been given the job, it ought not to be inhibited by statutory restrictions of one sort or another. It ought to be allowed to do the job, and if mistakes are made my right hon. Friend is answerable to Parliament. But it is a very different thing to lay down in advance arbitrary things which in no conceivable circumstances may be done.

We are here disposing of a large and complex industry. Probably no pair of these companies are precisely the same. It would be quite wrong—and this seems to me to be the right reply not only to this Amendment but to one or two others —to lay down these meticulous restrictions which would forbid the Agency to do in the odd case—perhaps the hundredth case—what might be right in that case. It is far better to leave it free to do it and let my right hon. Friend be answerable to Parliament for it having been done.

A curious use is made of "nominal values" in this context. As the Committee are aware, nominal values may very well vary widely and, indeed, may bear no relation at all to the real value. Therefore, the precise degree of restriction which this Amendment would impose would vary from case to case, simply dependent on the extent to which the nominal value of the share differed from the real value.

There is a wide variety of value between different cases, and indeed when compensation was assessed—and on a previous Amendment hon. Members showed enthusiasm for the basis upon which compensation was assessed—it was assessed relative to the nominal value over all the industry at 102 per cent. for debentures and 214 per cent. for ordinary stock—a difference of over 100 per cent. I think that indicates that if it were desirable—I do not think it is—to put a restriction of this sort upon the Agency, to tie it to the nominal value of the shares would be to tie it to a singularly elusive and unstable connection.

The other Amendment imposes an even more damaging restriction upon the Agency in disposing of the shares. As I understand it, it would compel a purchaser to take something which he did not want in order to be allowed to buy something that he did—precisely that practice of ill-behaved traders in times of scarcity which I have heard denounced time and again in the House. It is another example of "If you want tomatoes you must buy potatoes." It seems to me a wholly unreasonable thing to do, whether as a trader or in disposing of shares.

There is a certain type of investor who, for very good and proper reasons, wants debentures. Why should he be compelled, if he wants debentures, to take equities; and if he wants equities, to take debentures? There is a different type of investor. Whether they know their own business best I do not know, but they are inclined to think they do. They want one particular kind of security. I really cannot see how we could justify compelling them to take one because they want the other.

I do not think any useful public purpose is served by this Amendment. Indeed, I think some public detriment would follow, because if there were anything calculated to diminish the price which we could get for the shares, it would be a provision of this sort. Hon. Members opposite have recently gone into the Lobby because they wanted something put into the Bill which they thought would secure that we should be able to get a better price for these shares than we otherwise would. They have just voted on that. It is inconsistent on this next Amendment to impose one of these restrictions which must diminish to some extent the attractiveness of these shares and, therefore, the price which they will fetch.

The second Amendment seems to be subject to the criticism not merely that it would hamper the disposal of the shares but that it would be a restriction of a peculiarly damaging nature from the point of view of doing what we want and getting a reasonable price for the shares. Therefore, while I fully appreciate the spirit in which these proposals have been put forward, I am afraid they are quite unacceptable because they would work so directly against the objects of which hon. Members on both sides have expressed themselves in favour from time to time.

Mr. Austen Albu (Edmonton)

I do not think that the Financial Secretary did justice to the industry which we are discussing. His argument seemed to me to be directed towards what I might call normal Stock Exchange transactions, normal investment transactions which take place from day to day, whereas we are discussing the first transaction which will take place when the Agency starts to sell what I presume will be a substantial proportion of the industry—whole companies, I presume, with practically all the shares in a given company. This is a very different sort of operation from the normal day-to-day investment activities which the Financial Secretary was talking about.

I think the Financial Secretary missed the whole point of my hon. Friend's Amendment when he referred to it as imposing meticulous restrictions. My hon. Friend was quite clear that there was a slight error in the drafting, although the principle was more important than the actual figures. The principle here is to safeguard ourselves against an operation of which we have all heard rumours, if we have not actually read it in the financial Press, namely, the proposal to turn this industry back to private enterprise. It has been suggested that a very small number of equity shares might be sold to a buyer who would then have complete control of the company and that this would then satisfy the Government's Election pledges that the industry was to be returned to private enterprise. I do not think that this would satisfy those pledges at all.

As to the second Amendment, it has been suggested that this would be a conditional sale and that the acceptance of the Amendment might affect the view of investors. Surely the same point arises. If the Financial Secretary is thinking of a relatively small number of investors putting their money into normal Stock Exchange transactions there may be something in the argument. The object of the Agency, I presume, is to refrain from carrying out any sales until they are satisfied that a substantial part of the shares in a company will be taken up or, at any rate, that the shares they sell will give control over the company. In that case, the investor is not likely to be a private person or a group of private persons; it is more likely to be a large public body, another private company, an insurance company or something of that sort. Therefore, I cannot see that the Financial Secretary's argument about a conditional sale is of much importance.

As to the question of the nominal or present quoted value of the shares, I would remind the Financial Secretary that the first Amendment deals with those cases in which the Agency are making a reorganisation or alteration of the share capital of a company by which a completely new share structure may come into being. The Amendment is directed to ensuring that in that new structure the relation between the nominal value of the ordinary shares and of other shares is of some relatively controlled order—not necessarily meticulously controlled, but not of such a nature that the control of a company could be sold for a mere bagatelle. I do not think my hon. Friend would say that that control would not be necessary if there were to be no alteration in the share structure; but when the structure is completely changed and when a new nominal value is given to the shares, surely the purpose of the Amendment is made completely clear.

Mr. Roy Jenkins

The Amendment specifically refers to the cases where there is a reorganisation, and the Financial Secretary's point is, therefore, quite invalid.

Mr. Albu

The Financial Secretary did not suggest that he accepted the view that these companies should not be sold for a mere bagatelle—for a very small equity shareholding. It would not do any good for hon. Gentlemen to say that when one has a highly-geared capital structure the risk is very great. It is perfectly true that if this were a case where a little man was putting a little money into the purchase of the equity capital and the number of ordinary shares issued was very small, the risk would be very great, but the chances are that the companies who will buy these steel companies will be very substantial ones and for them to put up a few thousand or a million pounds in order to acquire the equity capital would mean for them very little risk. Under these conditions some other large undertaking would be able to acquire control of a large steel company at a very small risk to themselves.

This does not seem to be anything like private enterprise. But then, throughout this Bill, we have had some extraordinary anomalies. I have very much welcomed the contributions we have had in other debates in Committee of the hon. Member for Hall Green (Mr. Aubrey Jones). He does not really seem to believe in private enterprise in the steel industry. I do not know quite what we shall get out of this Bill in the end; but we must be quite certain that we do not sell off cheaply the right to control some of the major companies in the industry to other large private companies or City groups.

This is only one of the Amendments which we have moved which might safeguard the position in that respect. The Financial Secretary did not address himself to that point. He made some interesting observations, but they were not directed towards the essential points of this Amendment. We say that it should not be possible to sell the control of a large and substantial company for a very small number of ordinary shares which, for the purchasing company, would be only a very small risk.

Mr. Fienburgh

I shall start by being completely out of order and congratulating you, Mr. Hynd, upon your first appearance in the Chair. I hope that we shall in future see eye to eye on the range of debate and points of order as we do politically.

I want to refer to two points which were made by the Financial Secretary. First, he argued that there is adequate political and Parliamentary control over the Holding and Realisation Agency to ensure that the bad effects we feel may follow from the Clause as drafted shall not ensue. He says that the Agency should have a reasonable degree of latitude so that it may go ahead with its job, and if it makes mistakes the Minister is responsible to the House and the House can exercise some control.

But once a mistake of this nature has been made it is, in effect, beyond control. We may very well raise a complaint. We may very well—although this is doubtful—so carry hon. Members opposite with the content of our complaint that they fell like following us into the Lobby in defiance of their Whips: but even if that happened what could we do to correct a mistake which had been made because originally this Clause was too loosely drafted? Are we to pass another Act of Parliament repurchasing on the original terms the assets which have been sold in a mistaken way? We have no sanction, other than that which we are seeking to exercise here and now, which is to put into the Bill and the Clause a provision which might prevent undesirable mistakes from being made.

My second point is in connection with the Financial Secretary's remarks about conditional sales. He had a smile on his face at the time, so I assume that he was making a joke; but his smile is so constant, because of his natural charm, that it is a little difficult to know whether it is to be regarded as the signal for a joke. He said we should abhor the conditional sale because we always grumbled when a greengrocer sought to force the sale of potatoes upon purchasers who wanted only tomatoes.

That is a silly analogy and that is why I am being charitable in assuming that he meant it as a joke. When one buys tomatoes one does not buy control of the greengrocer's shop, not even when one buys all the potatoes or all the stock available on the shelves of the shop. But when one buys the majority of the equity holdings in a public company one does, in effect, buy control of that company, and in those circumstances we suggest that a conditional sale is a right and proper thing.

6.45 p.m.

We want a conditional sale which lays it down that if a person wishes to buy his way into control of a section of this industry he must also take a share of the debt burden and the loan capital of the industry. If he does not he is buying his way in on the cheap and, what is much more serious, the Agency and, through the Agency the taxpayer, are left shouldering most of the debt burden at a fixed rate of interest and with no semblance of control over the particular firms and concerns in which the agency may happen, in terms of capital to be the majority shareholders.

That is why we reject entirely the Financial Secretary's amusing analogy of tomatoes and potatoes and insist that it will not be possible for the House of Commons to rectify a mistake which has been made, other than the ultimate rectification which will come when we wipe this particular Measure off the Statute Book when we return to power. In the terms of the Bill the House has no power to rectify these mistakes and, therefore, we must insist on using what power we have to make sure that these mistakes do not happen.

Sir F. Soskice

We have not had a satisfactory answer to the case which has been made by my three hon. Friends. It is a perfectly simple and plain case. We do not want it to be possible under the Bill for a large body to buy control of these companies cheaply and without taking their appropriate share of the loan capital. That is the short case, and it has been made very clearly by my hon. Friends.

The answer which we received was, in the first place, that it was not a good idea to bind the Agency by meticulous prohibitions. There is little I can add to what has been said, beyond this: we are not putting a whole host of prohibitions upon the Agency. Clause 17 is a crucial Clause, dealing with the disposal of securities, and the Financial Secretary will see, if he looks at the Order Paper, that there is a minimum of essential Amendments down to it. The Government have already rejected one. They have said that they will try to do something about a second. What is left is the minimum.

The Financial Secretary says, "We have not encumbered the Agency with a whole host of prohibitions; we have simply left in the Clause a few things which we believe are absolutely indispensable." That is the first point which the Financial Secretary makes. The second point he makes is simply this: why should it not be possible to buy the equity capital without taking a fair proportion of the loan capital?

That has been dealt with by my three hon. Friends, who made it quite clear that they are contemplating a case in which a large corporation buys its way to control on the cheap and without paying a fair price to the public. That is a complete answer to the question which the Financial Secretary put. The answer having been given, we are convinced that this, again, is a proposal by the Opposi- tion which is being cavalierly brushed aside with no possible reason.

I hope that my hon. Friends will think it necessary to carry the Amendment to a Division, if only to ensure that we make clear to the Government and to the country at large the gross defects in the Bill and call attention to the way in which the Government are simply sweeping aside, without giving it fair consideration, the demand which we make to provide some modest safeguards to protect the public purse.

Mr. Boyd-Carpenter

I hope that the right hon. and learned Gentleman will not think that, although I may disagree with him, I am brushing aside cavalierly anything which he or his hon. Friends say. That has not been the practice of either my right hon. Friend or myself in these discussions. Nevertheless, we must differ as to the desirability of putting what I described in my earlier speech, I think accurately, as meticulous prohibitions of this sort upon the Agency. I fully accept the concern expressed by the right hon. and learned Gentleman and the hon. Member for Islington, North (Mr. Fienburgh) about the possibility of a large business buying control of one of the companies on the cheap. I do not think they need be much concerned about that because, as has been said again and again, there is no intention to dispose of any of these assets on the cheap, and if a transaction in which control is involved is under consideration, then, quite clearly, that factor of control will be reflected in the price.

I said before, and I say again, that in general there is no intention of disposing of small but controlling packets of equity capital, leaving the Agency with a large block of loan capital. There is no such intention. On the other hand, it is quite another thing to say that it is right to put prohibitions of this sort into the Bill to cover every conceivable case which could arise. Even if a restriction of this sort were desirable, it seems to me that it is framed in such a way, perhaps inevitably, as to have a serious effect upon the price we shall get for the shares.

The right hon. and learned Gentleman brushed that aside. I would not say that he brushed it aside cavalierly, but, nevertheless, he brushed it aside, even though it is fundamental to the point with which we are all concerned. Would a restriction of this sort interfere with the disposal of the shares and adversely affect the price of the ordinary shares? The right hon. and learned Gentleman made no attempt to deal with that aspect.

Mr. Mitchison

rose—

Mr. Boyd-Carpenter

Perhaps the hon. and learned Gentleman would not mind if I do not give way at this point. The hon. Member for Stechford said that the point of choice of nominal value did not matter. With great respect, it matters a great deal. It matters sufficiently to vitiate a large part of the control which it is sought to impose, because, presumably, during the rearrangement the nominal value could be anything which the Agency liked. It therefore seemed to me that his criticism showed that if a statutory safeguard is intended this is an inadequate safeguard.

The hon. Member for Edmonton (Mr. Albu) said no small investors would

invest in the shares of the companies. It is not given either to the hon. Member for Edmonton or myself precisely to foresee the future in all its complexities, but it is certainly highly probable that small investors will invest in these shares and, indeed, it is a little odd, when restrictions of one sort or another are being suggested on the Order Paper against big investors, that anything should be done which would have the effect of deterring the small investor.

It is our hope and belief that the small investor will come into the picture. If he does, the argument of the hon. Member for Edmonton, being based on the hypothesis that he would not, falls to the ground. I am sure that the hon. Member would not wish to deter small investors. There is every likelihood that they will enter the field. We have every desire, for every reason, to encourage them.

Question put, "That those words be there inserted."

The Committee divided: Ayes. 222; Noes, 244.

Division No. 103.]	AYES	[6.58 p.m.
Acland, Sir Richard	Donnelly, D. L.	Irving, W. J. (Wood Green)
Adams, Richard	Dugdale, Rt. Hon. John (W. Bromwich)	Isaacs, Rt. Hon. G. A.
Albu, A. H.	Ede, Rt. Hon. J. C.	Janner, B.
Anderson, Frank (Whitehaven)	Edelman, M.	Jay, Rt. Hon. D. P. T.
Attlee, Rt. Hon. C. R.	Edwards, John (Brighouse)	Jeger, Dr. Santo (St. Pancras, S.)
Awbery, S. S.	Edwards, W. J. (Stepney)	Jenkins, R. H. (Stechford)
Bacon, Miss Alice	Evans, Albert (Islington, S.W.)	Johnson, James (Rugby)
Bartley, P.	Evans, Edward (Lowestoft)	Johnston, Douglas (Paisley)
Bellenger. Rt. Hon. F. J.	Evans, Stanley (Wednesbury)	Jones, David (Hartlepool)
Bence, C. R.	Fernyhough, E.	Jones, Frederick Elwyn (West Ham, S.)
Benn, Hon. Wedgwood	Fienburgh, W.	Jones, Jack (Rotherham)
Benson, G.	Finch, H. J.	Jones, T. W. (Merioneth)
Blackburn, F.	Fletcher, Eric (Islington, E.)	Keenan, W.
Blenkinsop, A.	Follick, M.	Kenyon, C.
Blyton, W. R.	Foot, M. M.	Key, Rt. Hon. C. W
Boardman, H.	Fraser, Thomas (Hamilton)	King, Dr. H. M
Bottomley, Rt. Hon. P. G.	Freeman, John (Watford)	Kinley, J.
Bowden, H. W.	Gibson, C. W.	Lee, Frederick (Newton)
Bowles, F. G.	Glanville, James	Lee, Miss Jennie (Cannock)
Braddock, Mrs. Eizabeth	Gordon Walker, Rt. Hon. P. C.	Lever, Leslie (Ardwick)
Brockway, A. F.	Greenwood, Anthony (Rossendale)	Lindgren, G. S.
Brook, Dryden (Halifax)	Griffiths, David (Rother Valley)	Lipton, Lt.-Col. M
Broughton, Dr A. D. D.	Griffiths, Rt. Hon. James (Llanelly)	MacColl, J. E.
Brown, Rt. Hon. George (Belper)	Hale, Leslie	McGovern, J.
Brown, Thomas (Ince)	Hall, Rt. Hon. Glenvil (Colne Valley)	McInnes, J.
Burton, Miss F. E.	Hall, John T. (Gateshead, W.)	McLeavy, F.
Butler, Herbert (Hackney, S.)	Hamilton, W. W.	MacMillan, M. K (Western Isles)
Castle, Mrs. B. A.	Hannan, W.	McNeil, Rt. Hon. H.
Champion, A. J.	Hardy, E. A.	MacPherson, Malcolm (Stirling)
Chapman, W. D.	Hargreaves, A.	Mainwaring, W. H.
Chetwynd, G. R.	Harrison, J. (Nottingham, E.)	Mallalieu, E. L. (Brigg)
Collick, P. H.	Hastings, S.	Mann, Mrs. Jean
Cove, W G.	Hayman, F. H.	Manuel, A. C.
Craddock, George (Bradford, S.)	Henderson, Rt. Hon. A. (Rowley Regis)	Mayhew, C. P
Crosland, C. A. R.	Hewitson, Capt. M.	Mellish, R. J
Grossman, R. H. S.	Holman, P.	Messer, F.
Cullen, Mrs. A.	Holmes, Horace (Hemsworth)	Mikardo, Ian
Daines, P.	Houghton, Douglas	Mitchison, G. R.
Dalton, Rt. Hon. H.	Hudson, James (Ealing, N.)	Monslow, W.
Darling, George (Hillsborough)	Hughes, Cledwyn (Anglesey)	Moody, A. S.
Davies, Ernest (Enfield, E.)	Hughes, Emrys (S. Ayrsh[...]e)	Morgan, Dr. H. B. W.
de Freitas, Geoffrey	Hughes, Hector (Aberdeen, N.)	Morley, R.
Deer, G.	Hynd, J. B. (Attercliffe)	Morris, Percy (Swansea, W.)
Dodds, N. N.	Irvine, A. J. (Edge Hill)	Morrison, Rt. Hon. H. (Lewisham, S.)
Mort, D. L.	Rhodes, H	Tomney, F.
Moyle, A.	Richards, R.	Turner-Samuels, M.
Mulley, F. W.	Robens, Rt. Hon. A.	Ungoed-Thomas, Sir Lynn
Murray, J. D	Roberts, Albert (Normanton)	Viant, S. P.
Nally, W.	Roberts, Goronwy (Caernarvon)	Watkins, T. E.
Neal, Harold (Bolsover)	Robinson, Kenneth (St. Pancras, N.)	Webb, Rt. Hon. M. (Bradford, C.)
Noel-Baker, Rt. Hon. P. J	Rogers, George (Kensington, N.)	Weitzman, D.
Oldfield, W. H.	Ross, William	Wells, Percy (Faversham)
Oliver, G. H.	Shackleton, E. A. A.	Wells, William (Walsall)
Orbach, M.	Shinwell, Rt. Hon. E	West, D. G.
Oswald, T.	Short, E. W.	Wheeldon, W. E.
Padley, W. E.	Silverman, Julius (Erdington)	White, Henry (Derbyshire, N.E.)
Paling, Will T. (Dewsbury)	Simmons, C. J. (Brierley Hill)	Whiteley, Rt. Hon. W.
Palmer, A. M. F	Smith, Ellis (Stoke, S.)	Wigg, George
Pannell, Charles	Smith, Norman (Nottingham, S)	Wilcock, Group Capt. C. A. B.
Pargiter, G. A	Snow, J. W.	Wilkins, W. A.
Parker, J.	Sorensen, R. W.	Willey, F. T
Paton, J.	Soskice, Rt. Hon. Sir Frank	Williams, David (Heath)
Pearson, A.	Sparks, J. A.	Williams, Rev. Llywelyn (Abertillery)
Pearl, T. F.	Steele, T.	Williams, Ronald (Wigan)
Plummer, Sir Leslie	Stewart, Michael (Fulham, E.)	Williams, W. R. (Droylsden)
Popplewell, E.	Strachey, Rt. Hon. J.	Williams, W. T. (Hammersmith, S.)
Porter, G.	Strauss, Rt. Hon. George (Vauxhall)	Winterbottom, Ian (Nottingham, c.)
Price, Joseph T. (Westhoughton)	Summerskill, Rt. Hon. E.	Winterbottom, Richard (Brightside)
Price, Philips (Gloucestershire, W.)	Sylvester, G. O.	Woodburn, Rt. Hon. A.
Proctor, W. T.	Taylor, Bernard (Mansfield)	Wyatt, W. L.
Pursey, Cmdr. H.	Taylor, John (West Lothian)	Yates, V. F.
Rankin, John	Taylor, Rt. Hon. Robert (Morpeth)	Younger, Rt. Hon. K
Reeves, J.	Thomas, Ivor Owen (Wrekin)
Reid, Thomas (Swindon)	Thomson, George (Dundee, E.)	TELLERS FOR THE AYES:
Reid, William (Camlachie)	Thorneycroft, Harry (Clayton)	Mr. Wallace and Mr. Arthur Allen.
NOES
Aitken, W. T.	Crowder, Petro (Ruislip—Northwood)	Hopkinson, Rt. Hon. Henry
Allan, R. A. (Paddington, S.)	Darling, Sir William (Edinburgh, S.)	Hornsby-Smith, Miss M. P.
Alport, C. J. M.	Davies, Rt. Hn. Clement (Montgomery)	Horobin, I. M.
Amery, Julian (Preston, N.)	Deedes, W. F.	Horsbrugh, Rt. Hon. Florence
Amory, Heathcoat (Tiverton)	Dodds-Parker, A. D.	Howard, Gerald (Cambridgeshire)
Arbuthnot, John	Donaldson, Cmdr. C. E. McA	Howard, Hon. Greville (St. Ives)
Ashton, H. (Chelmsford)	Donner, P. W.	Hudson, Sir Austin (Lewisham, N.)
Assheton, Rt. Hon R. (Blackburn, W.)	Doughty, C. J. A.	Hudson, W. R. A. (Hull, N.)
Astor, Hon. J. J.	Douglas-Hamilton, Lord Malcolm	Hulbert, Wing Cdr. N. J.
Baldock, Lt.-Cmdr. J. M.	Drewe, C.	Hurd, A. R.
Baldwin, A. E.	Dugdale, Rt. Hon. Sir T. (Richmond)	Hutchinson, Sir Geoffrey (Ilford, N.)
Banks, Col. C.	Duncan, Capt. J. A. L.	Hutshison, Lt.-Com. Clark (E'b'rgh W.)
Barber, Anthony	Duthie, W. S.	Hutchison, James (Scotstoun)
Barlow, Sir John	Etudes, Rt. Hon. D. M.	Hyde, Lt.-Col. H. M.
Baxter, A. B.	Fall, A.	Hylton-Foster, H. B. H.
Beach, Maj. Hicks	Finlay, Graeme	Jenkins, Robert (Dulwich)
Beamish, Maj. Tuften	Fisher, Nigel	Johnson, Eric (Blackley)
Bell, Philip (Bolton, E.)	Fletcher-Cooke, C	Jones, A. (Hall Green)
Bell, Ronald (Bucks, S.)	Fort, R.	Joynson-Hicks, Hon. L. W.
Bennett, F. M. (Reading, N.)	Foster, John	Kaberry, D.
Bennett, Dr. Reginald (Gosport)	Fyfe, Rt. Hon. Sir David Maxwell	Keeling, Sir Edward
Bevins, J. R. (Toxteth)	Galbraith, Rt. Hon. T. D. (Pollak)	Kerr, H. W.
Bishop, F. P.	Galbraith, T. G. D. (Hillhead)	Lambert, Hon. G.
Bowen, E. R.	Gammons, L. D.	Lambton, Viscount
Boyd-Carpenter, J. A.	George, Rt. Hon. Maj. G. Lloyd	Langford-Holt, J. A.
Boyle, Sir Edward	Godber, J. B	Law, Rt. Hon. R. K.
Brains, B. R.	Gough, C. F. H.	Legge-Bourke, Maj. E. A. H.
Braithwaite, Sir Albert (Harrow, W.)	Gower, H. R.	Legh, Hon. Peter (Petersfield)
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)	Graham, Sir Fergus	Linstead, H. N.
Brooke, Henry (Hampstead)	Gridley, Sir Arnold	Llewellyn, D. T.
Brooman-White, R. C.	Grimond, J.	Lloyd, Rt. Hon. Selwyn (Wirral)
Browne, Jack (Govan)	Grimston, Hon. John (St. Albans)	Lockwood, Lt.-Col. J. C.
Bullard, D. G.	Grimston, Sir Robert (Westbury)	Longden, Gilbert
Bullock, Capt. M	Hall, John (Wycombe)	Low, A. R. W.
Borden, F. F. A.	Hare, Hon. J. H.	Lucas, Sir Jocelyn (Portsmouth, S.)
Butcher, Sir Herbert	Harris, Frederic (Croydon, N.)	Lucas, P. B. (Brantford)
Campbell, Sir David	Harrison, Col. J. H. (Eye)	Lucas-Tooth, Sir Hugh
Carr, Robert	Harvey, Air Cdre. A. V. (Macclesfield)	Lyttelton, Rt. Hon. O.
Cary, Sir Robert	Harvey, Ian (Harrow, E.)	Macdonald, Sir Peter
Channon, H.	Harvie-Watt, Sir George	McKibbin, A. J.
Clarke, Col. Ralph (East Grinstead)	Hay, John	McKie, J. H. (Galloway)
Clarke, Brig. Terence (Portsmouth, W.)	Heald, Sir Lionel	Maclean, Fitzroy
Cole, Norman	Heath, Edward	Macleod, Rt. Hon. Iain (Enfield, W.)
Colegate, W. A.	Higgs, J. M. C.	MacLeod, John (Ross and Cromarty)
Conant, Maj. R. J. E.	Hill, Dr. Charles (Luton)	Macmillan, Rt. Hon. Harold (Bromley)
Cooper, San. Ldr. Albert	Hill, Mrs. E. (Wythenshawe)	Macpherson, Niall (Dumfries)
Craddock, Beresford (Spelthorne)	Hinchingbrooke, Viscount	Maitland, Comdr. J. F. W. (Horncastle)
Cranberne, Viscount	Hirst, Geoffrey	Maitland, Patrick (Lanark)
Crookshank, Capt. Rt. Hon. H. F. C.	Holland-Martin, C. J.	Markham, Major S. F.
Crouch, R. F.	Hollis, M. C.	Maude, Angus
Crowder, Sir John (Finchley)	Holt, A. F.	Maudling, R.

Maydon, Lt.-Comdr. S. L. C.	Rayner, Brig. R.	Studholme, H. G
Medlicott, Brig. F.	Remnant, Hon. P.	Summers, G. S.
Mellor, Sir John	Renton, D. L. M.	Sutcliffe, Sir Harold
Molson, A. H. E.	Roberts, Peter (Healey)	Taylor, Charles (Eastbourne)
Moore, Lt.-Col. Sir Thomas	Robertson, Sir David	Taylor, William (Bradford, N.)
Nabarro, G. D. N.	Robinson, Roland (Blackpool, S.)	Teeling, W.
Nicholls, Harmar	Robson-Brown, W.	Thomas, P. J. M. (Conway)
Nicholson, Godfrey (Farnham)	Rodgers, John (Sevenoaks)	Thompson, Kenneth (Walton)
Nicolson, Nigel (Bournemouth, E.)	Roper, Sir Harold	Thompson, Lt.-Cdr. R. (Croydon, W.)
Nield, Basil (Chester)	Ropner, Col. Sir Leonard	Thornton-Kemsley, Col. C. N
Noble, Cmdr. A. H. P.	Russell, R. S.	Tilney, John
Nugent, G. R. H.	Ryder, Capt. R. E. D.	Turner, H. F. L.
Nutting, Anthony	Salter, Rt. Hon. Sir Arthur	Turton, R. H.
Odey, G. W.	Sandys, Rt. Hon. D.	Tweedsmuir, Lady
O'Neill, Phelim (Co. Antrim, N.)	Savory, Prof. Sir Douglas	Vosper, D. F.
Ormsby-Gore, Hon. W. D.	Schofield, Lt.-Col. W. (Rochdale)	Wakefield, Edward (Derbyshire, W.)
Orr, Capt. L. P. S.	Scott, R. Donald	Wakefield, Sir WaveII (St. Marylebone)
Orr-Ewing, Charles Ian (Hendon, N.)	Shepherd, William	Walker-Smith, D. C.
Orr-Ewing, Sir Ian (Weston-super-Mare)	Simon, J. E. S. (Middlesbrough, W.)	Ward, Miss I. (Tynemouth)
Osborne, C.	Smithers, Peter (Winchester)	Waterhouse, Capt. Rt. Hon. C.
Peake, Rt. Hon. O.	Smithers, Sir Waldron (Orpington)	Watkinson, H. A.
Peto, Brig. C. H. M.	Smyth, Brig. J. G. (Norwood)	Webbe, Sir H. (London & Westminster)
Peyton, J. W. W.	Soames, Capt. C.	Williams, Rt. Hon. Charles (Torquay)
Pickthorn, K. W. M.	Spearman, A. C. M.	Williams, Gerald (Tonbridge)
Pilkington, Capt R. A.	Spence, H. R. (Aberdeenshire, W.)	Williams, Sir Herbert (Croydon, E.)
Pitman, I. J.	Spens, Sir Patrick (Kensington, S.)	Williams, R. Dudley (Exeter)
Powell, J. Enoch	Stanley, Capt. Hon. Richard	Wills, G.
Price, Henry (Lewisham, W.)	Stevens, G. P.	Wilson, Geoffrey (Truro)
Prior-Palmer, Brig. O. L.	Stewart, Henderson (Fife, E.)	Wood, Hon. R.
Profumo, J. D.	Stoddart-Scott, Col. M.
Raikes, Sir Victor	Strauss, Henry (Norwich, S.)	TELLERS FOR THE NOES:
		Mr. Oakshott and Mr. Redmayne.

Mr. Ian Winterbottom (Nottingham, Central)

I beg to move, in page 14, line 20, at the end, to insert: (5) In exercising their powers under this section to sell or otherwise dispose of securities vested in them the Agency shall use their best endeavours to prevent the control of any company in which such securities are held from passing to any person or persons resident outside the United Kingdom and any sale or other disposal of any such securities to any person or persons resident outside the United Kingdom shall unless such person or persons shall before the contract by or in pursuance of which such sale or other disposal is effected have disclosed to the Agency that he or they as the case may be is or are resident outside the United Kingdom be wholly void for all purposes. This subsection has the advantage over some of the other ones that, first of all, it reads like English, and second, it is a subject of which no technical knowledge is necessary to enable hon. Members to pass an opinion on it. It means what it says. Its intention is that when the Agency start to carry out their duty of disposing of the stocks and shares which they hold in the steel industry they should use their best endeavours to prevent the control of any company in which such securities are held from passing to any person or persons who are resident outside the United Kingdom; and the second half of the subsection demands that anybody applying to make such purchase should declare whether or not he is resident outside this country.

It may strike the Committee that this Amendment is somewhat chauvinistic in its temper, that it runs somewhat contrary to those Amendments urging that the Board should set up close links with the international authority established abroad, and that, in fact, it is inspired by a narrow nationalism. I wish to assure the Committee that that is not the intention of myself or my right hon. and hon. Friends. We wish that at a rather critical and difficult time in the history of the industry, when the stock is being transferred from public to private ownership. a period which, I think, everyone will agree, will be politically charged, no unnecessary complication should be introduced by permitting substantial control of a section of the steel industry to pass abroad.

I think this is important, for the following reasons. I am convinced the Minister hopes that this Bill, when it becomes law, will produce a final solution for the steel industry; that it will stabilise the position of the industry. In many ways that is a highly desirable state of affairs, but we on this side of the Committee feel that that state has not been reached yet. There has been a very remarkable evolution in Conservative thought on this subject, and the concept of public supervision of this great industry is now common philosophy on both sides of the Committee. We have argued that we expect the Minister will find, once he has brought this Board into supervision, that the powers he has given it in this Bill are too limited to enable the Board to carry out its functions of supervision, and that in due course we shall have to reinforce the powers it now possesses with the powers of ownership.

As a result of this decision, the ownership of various steel companies may change hands once or twice more in the future. The transfer from private to public ownership under the Act of 1949 went off extremely smoothly. Parliamentary control is accepted by both sides of the industry. If, however, a small section of the industry passes into foreign ownership, two considerable complications may arise. The first complication may arise during the period of transfer from public to private ownership. The workers in the industry, prompted by a proper sense of national pride, might take exception to such a transfer. However, I am convinced that my hon. Friend the Member for Rotherham (Mr. Jack Jones) can speak with greater authority for the workers in the industry.

On the other hand, in the second period, should there be a transfer back from private to public ownership, considerable complications may arise if a significant section of the industry has passed into foreign ownership. It is conceivable—though I think possibly a little far-fetched—that foreign capital might be attracted to this country to stabilise the position of the steel industry in private ownership because of the complications which might arise from large foreign investment in the British steel industry.

Let me say in advance that I am not about to compare the British steelmaster with his German counterpart. I think they are very different kinds of animals. On the other hand, it is rather instructive to look at what has been happening in Germany during the last 18 months or two years. The future of the German steel industry is still not certain. It is conceivable that the German steel industry, as well as the British, may pass into public ownership.

Some German steelmasters are very conscious of this possibility and they have been attempting to attract considerable American investment into the German steel industry. It is rather interesting to note that they employed a very wellknown American corporation lawyer, who was a member of the American Administration, to act on their behalf. There is no doubt that if there were substantial American investment in the German steel industry it would cause complications for the German Government when the time came for them to nationalise the German steel industry.

Quite frankly, whatever hon. Members opposite may think of nationalisation in this country, I am sure they will agree that the activities we have observed of one of the German steelmasters in financing one of the more neo-National Socialist movements would have been avoided if this rather reactionary German industry were under public supervision.

7.15 p.m.

Whatever may be the case in Germany, it is desirable that any unnecessary complication in the transitional period of the steel industry should be avoided, if possible. It is conceivable that large capital investment might be made by, say, an international consortium of the European Iron and Steel Community, who may consider that a large shareholding in the British steel industry would give them an insight into the workings of various aspects of the steel industry over here which would be useful to them in their business on the Continent, and I think that this risk should be avoided if possible.

I am sure that the Minister wants, just as much as we do, to avoid any unnecessary disturbance during the period of transfer from public to private ownership and back, and we advise him that the risks which heavy foreign investment in the British steel industry would bring are real and should be avoided. For this reason, we urge him to consider the safeguards contained in this Amendment.

Mr. Jack Jones

I rise to support the plea made so eloquently and ably by my hon. Friend the Member for Nottingham, Central (Mr. Ian Winterbottom), and to take a rather different line from the one he took. This industry of ours is a proud heritage. It is not only a matter of bricks and mortar, girders, rolling mills and furnaces. It is a matter of a "belonging to"; an ownership of something that has grown up with the people of our country, and particularly the steel workers in it. I make no bones about saying that we are the best people in the world at making steel. Individually, man for man, there is none to beat us, and what we must do is see to it that no action of this or any subsequent Government alters that.

We are gravely concerned about the disposal of our assets. This industry was built up over the centuries by extremely able people—not altogether the men on the shop floor, much as they took part in it. The inventive genius of individuals, subsequent discoveries and the carrying out of various methods of producing steel of all types, qualities, grades and prices has been something of which this country can be really proud. That might sound a little bit conservative; it might sound a little bit pro-British; but we on this side of the Committee are just as pro-British and just as proud of our achievements as anybody else in the country.

I am very disturbed about, not the actual material affected but the psychological effect upon the workers of our industry were it to be known that some part of it had come under the control of a foreign agency or foreign speculators. This Bill provides not only for people to buy the industry, but also for people to hire it, to lease it; in other words, to be able to come along and. if it is not avoided, to use this great industry of ours, or parts of it, as a "guinea-pig"

I could visualise a situation—and it may seem that I am being extreme—in which Germans, Japanese, Russians, may be, and certainly Americans, envying us the knowledge which we have in this great industry, would give a lot, and be prepared to sacrifice an enormous amount of wealth on a short-term policy to gain the long-term benefit that could accrue to them if they could come into possession of the "know-how" that we have in this country of steel-making. I know that it will be said from the Govment benches that the Germans are not too bad at making steel. That is true. The Germans are good workers. That is also true. They are some of the hardest workers in the world. When it comes to the actual individual knowledge of the making of advanced forms of steel and the higher grades of steel, however, we are still pre-eminent, in my opinion, in the world.

We have to avoid at all costs unnecessary opportunities—and I say unnecessary opportunities—being given to the foreigner to take advantage of this Bill. I am an internationalist, and I claim to be a good Socialist. It may be claimed that we are now being a little parochial and a little isolationist, but in an industry of this kind which has done so much and made such sacrifices and such strides we ought not to be put into an uncompetitive situation in the world's markets.

I have mentioned the question of Germany before, and it may sound to some people as if I have been rather overdoing it, but I have been seeking some advice. I have as yet no assurance that the money which is going to Herr Krupp, as a sort of incentive bonus for the destruction of his fellow men, cannot be used for this purpose. I do not know if that is so, but I hope not. Nothing worse could happen under this Bill than for the British steel workers to be told that as a result of it they will be working under a foreign boss, especially a boss of that type.

It would not be so bad if it were American capital coming in, although that in itself would be bad enough. I beg the Government to take careful note. This is the Iron and Steel Bill of Britain and the Iron and Steel Corporation is to be disposed of. As Britishers who have a fundamental love of their country, we want to see this industry stay as it is. This nation is beset with enough troubles. I hope that we shall get an assurance from the Minister on this point. I say with emphasis to the Minister that there could be nothing worse than to allow a situation such as I have visualised to happen.

I know something of the relationship that exists within the industry. I have been connected with it all my life, as was my father before me. I know something of the American attitude towards the trade union side of the industry. I also know something of American methods. I have been one of the most privileged workpeople in this country because I have seen every steel works in the world worth seeing, and that is saying a lot. I have seen the steel works in Russia, Germany, America, Luxembourg, France, and elsewhere. It has been my proud privilege to lead our workers in this country.

We are asking the Government to say that so far as possible foreign capital shall not be brought into this country of ours. It will not be so much an effort made by outsiders to buy a part of this industry. It would pay them a handsome dividend to lease or hire parts of our industry and to take them over as a long-term or short-term policy. The knowledge and information of the industry that they would get would pay them handsome dividends in the years that lie ahead.

This would not affect me at my time of life—although I am not an old man yet—but it would have a serious effect on the rising generation and a psychological effect on Britishers proud of their industry and proud of their heritage; and let us remember that they are the people who make steel second to none in the world. I know what the effect would be on myself if I had to go to work under those conditions next week. We may differ in this Committee politically, but I say to the Government, with all the strength of my convictions, that to allow this Bill to be used in the way I have described and as it may possibly be used, would have a serious effect on the industry.

It may not have an overnight effect, but it would have a long-term effect. We want to keep the capital structure of the industry as we have it. We were told that good will, fellowship and the team spirit would be destroyed by nationalisation. They have not been destroyed at all. We have never had one word of evidence to prove that since the industry was nationalised they have suffered. I say that they have not, and I hope that this Amendment will be accepted and that they will not suffer.

Mr. Boyd-Carpenter

I find myself in complete agreement with the sentiments expressed by the hon. Member for Rotherham (Mr. Jack Jones) in his own very effective way. The hon. Member for Nottingham, Central (Mr. Ian Winterbottom), in moving the Amendment, pleaded in its favour that it read like English. I can agree with him that far, although if I were to stretch that argument much further I might seem to be casting reflection on Amendments tabled by his hon. Friends, and I will therefore desist.

He referred to the Amendment as setting up safeguards. The more one looks at it, the more illusory seem the safeguards. I have read it with great care and, as I see it, it does two things. First, it tells the Agency to use their best endeavours to prevent control passing to non-residents—not in itself a very easy thing to put into the statute, although comprehensible and it then proceeds to render void sales to non-residents if the fact that the purchaser is a non-resident is not disclosed. But there is nothing in it, the Agency having sold to residents, to prevent those residents selling next day to the foreigner. Therefore, it seems to me that as a safeguard the Amendment does not take us very far. Indeed it does not take us any distance at all.

The point behind it is a serious one. I do not need the speech of the hon. Member for Rotherham to appreciate that but it certainly reinforces it. Quite apart from this Amendment, which I do not honestly think would help, there are fortunately other sources available to prevent the kind of state of affairs which he contemplates coming into being. Most important is Section 9 of the Exchange Control Act. Under this no security registered in the United Kingdom can be transferred to a transferee outside the sterling area without the permission of the Treasury. That is a general protection covering not merely steel but all quoted securities.

There seems to me to be no particular reason to assume that the steel industry would be any more vulnerable to the risk of foreign control than any other of our major industries. Indeed, our experience up to nationalisation was that when the United Kingdom steel industry was in private hands foreign interests were extremely small, even though they could have dated back long before. There does not seem to be any particular reason to pick out steel as being particularly vulnerable and needing protection over and above that given to British industry in general.

On the contrary, the British steel industry is to be subject to the supervision of the Board, under my right hon. Friend, and will, therefore, be subject to more skilled supervision than the majority of industries in this country. Accordingly it will, I think one can safely assume, be less vulnerable to the sort of risk which has been envisaged than many of our other industries. It seems to me that the case for providing special and peculiar safeguards for steel over and above those provided for British industry in general is not a particularly strong one. However, I can say that it is not our intention to see the industry fall under foreign control, and it appears to me that we have powers adequate to that purpose for the industry and other industries.

Mr. Jack Jones

When the hon. Gentleman speaks of "the industry" not falling under foreign control, does he mean "the industry" or "any part of the industry"?

7.30 p.m.

Mt. Boyd-Carpenter

I am not saying that there will not be an odd share under foreign control—that might be a good thing—but I was referring to any substantial part of the industry. The hon. Gentleman is thinking in terms of the whole industry while I am thinking in terms of the major elements in it. I do not think he and I are very far apart.

Quite apart from that, there is in any event nothing to be said for putting into the Bill what looks like a safeguard but is not one, for that would merely mislead people into believing that the position was safeguarded when it was not. For that reason alone the Amendment is unacceptable, although the point behind it is a real one. I hope that what I have said shows that on this point the Government do not find themselves at any great distance from the hon. Member.

Mr. Mikardo

The Financial Secretary's speech has been a very disappointing one. As to his point that the position is safeguarded by exchange control legislation, that is only partially true. As he clearly pointed out, those regulations deal only with transactions outside the sterling area and do not in any way act as any preventive against sales inside the sterling area. The sterling area is a substantial area and it comprises a large number of countries, including Iceland, for a strange reason which I have never been able to discover. My hon. Friend the Member for Rotherham (Mr. Jack Jones) was worried about other countries obtaining substantial control of the steel industry, and I am sure that in that he would include Iceland. We are all hoping that the sterling area will be a dynamic, expanding institution and that more and more countries will join it. Consequently, a safeguard which does not cover the sterling area is incomplete.

The Financial Secretary pointed out that the safeguard is not complete. It has not been put forward as a complete safeguard. The hon. Gentleman will agree that if we wanted a complete safeguard we should need a very long and involved Amendment and should need to set up enforcement machinery to ensure that it was carried out. While it is true that the Agency can sell to a British subject who can, the following day, sell to a foreign national, all we are seeking to ensure is that the Agency itself shall not give the cover and authority of its official existence to the beginnings of an action which transfers control of some part of our steel industry outside the country.

It is not represented that the effect of the Amendment can be any more than a psychological one, but I put it to the hon. Gentleman that there really is a difference between a private individual exercising his right to sell shares to anyone he wishes within the framework of the law and an official body, set up by a Government under a highly controversial Bill, itself engaging in transactions which directly, and of its own volition, result in some part of the industry coming under the control of a foreign Government.

While the Financial Secretary, with his usual logic and force, made out a completely convincing case for saying that this cannot be an effective safeguard, he could equally have made out a case for saying that it cannot possibly do any harm. I should have thought that he would be the first to say that it would exercise no more than a ha'porth of moral suasion in deterring anybody who was glibly rushing into transferring the securities of the steel industry to foreign hands, and I should have thought that he would he glad to accept this innocuous Amendment. He may find some fault with its wording but we should be happy to fall in with his wishes if he desired some alteration. The Amendment really cannot do any harm.

What I have so far said has been 'rather unpretentious and conciliatory; what I now have to say may be less so. I address the Committee from a back bench and can, therefore, claim to speak for nobody but myself, but I think I know enough of the reactions of my hon. Friends to be able to say this without being really individual and fatuous. If there is any substantial transfer of the assets of the industry to foreign nationals that fact will not deter us, on returning to office as the Government, from carrying out our expressly stated intention and pledge to reconvert the industry to public ownership and to do that without further charges upon the taxpayer. I felt I ought to say this although it may disturb the harmony of the Committee a little and may sound pretentious coming from the back benches. I want to impress on the Committee that I have not said it just "off the cuff"; I have said it knowing the strong feelings of my hon. Friends.

Mr. J. E. S. Simon (Middlesbrough, West)

If he has considered the matter, does not the hon. Gentleman think that what he has just said is a breach of international law?

Mr. Mikardo

I have not considered it; I am not competent to consider it. I am no authority on international law, as the hon. and learned Gentleman is, and I profoundly hope that I have not been breaking the law. What I have said is certainly not a breach of the feelings which I hold deeply and sincerely and which I know are held by many of my hon. Friends. If I get "run in" for that tomorrow morning, I shall rely upon the Solicitor-General, who is now listening with interest, to get me out of trouble.

Having made that possibly illegal point, I turn again to the Amendment and plead with the Financial Secretary to consider whether this innocuous if not highly effective Amendment could not be accepted.

Mr. Ian Winterbottom

The intervention of the hon. and learned Member for Middlesbrough, West (Mr. Simon) gives substance to our intentions. There are complications in international law in any system of nationalising assets owned by a foreign national, and that is what we are trying to avoid. I will say no worse than that the Financial Secretary's reply was legalistic. I agree with what has been said by my hon. Friend the Member for Reading, South (Mr. Mikardo). The point about the currency control is only a temporary safeguard, and I am afraid that the supervision by the Board of the Holding and Realisation Agency is not a satisfactory guarantee that the Agency will act in the way that the Opposition would like.

The point is valid that a group of individuals or a large firm could go through the whole business of negotiating with the State and purchasing an undertaking and subsequently sell the undertaking to a foreign concern, but there is no doubt that if this intermediate stage had to be gone through it would be a hindrance and a deterrent to foreign capital coming to this country with the express intention of making a major investment in the British steel industry.

If the Financial Secretary does not think that our Amendment is a good one, he might give an undertaking that his Department will give a directive to the Agency that they should watch purchasers and make full inquiries into their backgrounds to ensure that no section of the steel industry passes directly under foreign control as a result of an act by the Agency. I hope that he will be able to give the Committee that undertaking and will at least give the Agency a directive to that effect.

Mr. Boyd-Carpenter

The hon. Member for Nottingham, Central (Mr. Ian Winterbottom) referred to the Exchange Control Act as only a temporary safeguard. It is not for me to speculate on its duration, but it is perhaps a less temporary safeguard than the one in this Amendment, which refers only to the moment of disposal and not to the subsequent transactions in shares. It is a much more temporary test for a particular point in time.

In reply to the hon. Member for Reading, South (Mr. Mikardo), I should say that I am somewhat suspicious of psychological Clauses. I do not think it is a good thing in principle or in practice to put into an Act of Parliament something through which coaches and horses can be driven merely for a psychological reason. That creates in people's minds an illusion of security which is not there, and that is a bad thing to do. We have no intention of seeing parts of this industry pass into foreign control, nor have we any apprehensions that that will happen, but under the machinery set up in this Bill we have particular facilities for keeping the matter closely in view, and if it were seriously to develop then we should not hesitate, if the powers we have at present prove inadequate, to ask for more. That should really satisfy the apprehensions of hon. Members. At the moment, instead of the admittedly illusive safeguards of this Amendment, there is Section 9 of the Exchange Control Act.

The hon. Member spoke in this context about the sterling area, and on that subject I should like to say a word. The greater part of the sterling area is the Commonwealth. This Amendment, if it were effective, would prevent Commonwealth citizens, as non-residents, from investing in British industry, and I am not sure that we want to put into a statute something which would have that effect. I do not think there will be very much of that because, generally speaking, the flow of capital tends to be in the opposite direction, but it would be a little offensive to the feelings of our fellow citizens under the Crown if there were an express prohibition put upon them holding shares or controlling interests in any section of the British steel industry.

We are as conscious as the hon. Member for Rotherham (Mr. Jack Jones) of the unfortunate effect if this thing were allowed to develop, and it would be the responsibility of the Government, if any such serious threat developed, to prevent it happening. I do not anticipate it happening. It did not occur in all the years when the industry was quite free, and I do not see any particular reason to apprehend it now.

Amendment negatived.

Mr. Roy Jenkins

I beg to move, in page 14, line 20, at the end, to insert: (5) Notwithstanding anything hereinbefore in this section contained, the Agency shall not in selling or otherwise disposing of any such securities, sell or dispose of more than one-fifth of the shares of any one class in any one company to the same person and if any person purchases or otherwise acquires from the Agency any such shares as an agent or nominee for any other person in such circumstances as to produce the result that such other person would become the owner at law or in equity of more than one-fifth of any one class of the securities in any such company, such sale or acquisition shall be wholly void for all purposes. I commend this Amendment to hon. and right hon. Gentlemen opposite with a good deal of confidence, because it is an Amendment which should prove acceptable to the Conservative Party. Its purpose is simply to ensure that when the companies which are at present subsidiaries of the Iron and Steel Corporation pass under private ownership, their ownership should be reasonably diffused. We should not have one, two or three shareholders controlling very large sections of the industry; but the shareholding should be spread over a rather larger number. This Amendment is our contribution towards helping this Bill to make a property-owning democracy, and I hope that as such it will be accepted by hon. Members on the other side of the Committee.

7.45 p.m.

I hope that when the Financial Secretary replies to the debate he will not tell us that this is an unduly onerous restriction—a meticulous restriction as I think he called the last safeguard that we proposed. All that we are pressing in this Amendment is that no one shareholder should hold directly or through nominees more than 20 per cent. of the total shareholding of a particular iron and steel company. That is not an undue restriction. It means that there can be five owners of the biggest iron and steel company that there is, and even that would amount to quite a degree of concentrated ownership. What we are proposing in this direction is not anything at all extreme.

What are we afraid of? What is the danger that we are here trying to safeguard against? I know of two considerations which one can put forward in this connection. First, it might be that this industry or large parts of it would pass into the control of insurance companies or of investing trusts. It would be a question of a big deal between the Agency and some large insurance companies or similar organisation, and I do not think that any hon. Member opposite would be ready to get up and argue that that sort of ownership was what the Government had in mind when they talked about private enterprise being in control of the industry, because that is not the kind of ownership for which we are going through the trouble of considering this Bill.

The other possible development is what I might call vertical trusts, by which the ownership of steel companies passed, as was the case before nationalisation, into the hands of engineering companies which are to quite a substantial extent consumers of the products of that particular section of the steel industry. I am sure that the Financial Secretary is not a strong advocate of vertical trusts. Indeed, that form of control has certain disadvantages. It means that the holding company which owns shares in the iron and steel industry naturally buys its products from the company which it owns, and that is a great deterrent to competitive conditions in the industry. When hon. Members also talk about their desire to encourage as much competition as possible in this industry, they should bear that point in mind.

It should also be borne in mind that the sort of ownership set up in the iron and steel industry will be very much a test of the good faith of the Government when they talk about widespread participation in ownership and all the rest of it. After all, in the case of other industries they have to accept the situation as its exists. There may be forms of ownership which may not be at all desirable to the Government, but here to a certain extent the Government are not dealing with a situation which exists. They are deliberately creating a new form of ownership for a large and very important industry, and it is, therefore, incumbent upon them to take what steps they can to ensure that ownership is in accordance with their expressed wish about the sort of ownership which they desire in private industry.

From our experience earlier today, it is possible to imagine the sort of reply we will receive from the Financial Secretary. He courteously makes two speeches on these Amendments. In his first speech he will tell us that one really must not impose restrictions; he will also say that the Amendment complained of would be very unreasonable, and that a great many false points have been made in support of it. Then he will sit down and one or two other speeches will be made, after which he will make his second speech. He will tell us that the arguments advanced in support of the Amendment are most unreasonable, that of course the Agency and the Government would not think of doing anything of the sort, and even if they did then the House would have the Minister of Supply or the Chancellor of the Exchequer with whom to deal.

I do not think that that is a very adequate safeguard. Even if we could be assured of that, I do not think we are prepared to accept a bargain by which the Agency would sell off this industry on very undesirable terms, in exchange for which we are offered the political help of the Minister of Supply. It is a bad bargain, because one is worth a good deal more than the other. Therefore, we cannot accept that sort of argument. Obviously this Amendment, if it were accepted, would not be a severe restriction on the sale.

The point which the Financial Secretary made in reply to my hon. Friend the Member for Edmonton (Mr. Albu) on the last Amendment but one, that it would keep out a lot of small people whom it was hoped to get in, certainly cannot apply in this case. I hope that the Financial Secretary will not repeat his general point that it is incompatible for us, if we want to get a good price for the shares and assets of this industry, to put restrictions on the way in which they are sold, and indeed upon the price. If he thinks in those terms, it means that he accepts the alternatives that if the shares cannot be sold at a good price they have to be sold at a bad price, whereas we want the alternatives to be sale at a good price or no sale at all.

This is a reasonable Amendment. It tries to stop up a loophole. I very much hope that the Financial Secretary will consider it in the same spirit as that in which he has considered previous Amendments this afternoon.

Mr. Boyd-Carpenter

The hon. Member for Stechford (Mr. Roy Jenkins) was good enough not only to make his own very agreeable speech but also to make mine for me. I suppose that is a kind of dialectical vertical trust. The Amendment would impose a rather peculiar restriction upon the disposal of shares in the steel industry because it would be a restriction not found in other industries. Though his speech was as agreeable as usual, the hon. Gentleman did not advance any solid argument showing why this restriction should be imposed. So far as I can recall, his main argument was that it would appeal to the Comservative Party, which, in his mouth, had rather less weight than if it had come from one of my hon. Friends.

He did not establish what terrible evil he was guarding against by restricting to one-fifth of the total the holding of any particular shares. He did not indicate what terrible evils would flow, or what horrors of monopoly could arise. He merely said that it was a good thing to have lots of small investors. Of course it is, and in many cases we shall no doubt have them. What is being argued is whether a restriction of that sort should be imposed on first sale.

Mr. Roy Jenkins

Before the Financial Secretary leaves that point, he will no doubt remember that I did deal with the system known as the "vertical trust" and with the disadvantages which flow from it, and with the disadvantage of large insurance companies dominating private companies. It is not strictly accurate to say that I merely advanced the argument that the Amendment would appeal to the Conservative Party.

Mr. Boyd-Carpenter

I was dealing with the hon. Member's most weighty argument first, and was proceeding in descending order of magnitude.

His second argument was that the Bill would be a good thing for the insurance companies. I do not know how sound that argument is. It may be that the money available today for investment is in the hands of insurance companies, but I do not know of any particular reason why steps should be taken to divert its flow from the steel industry while it continues to flow in the direction of other and competing industries. The same argument applies to the question of vertical trusts. If that is a matter which ought to be dealt with by legislation, such legislation should be general. Advantage ought not to be taken of a denationalisation Bill to impose this limitation upon one industry.

Picking out the steel industry for this restriction is of importance to those concerned with the well-being of the industry. There are occasions from time to time of scarcity of capital. Industries that have imposed upon them peculiar restrictions on investment will surely be handicapped at such times in comparison with industries that have not. What the hon. Gentleman does not appear to realise, even now, is that whatever may be his dislike of vertical trusts it is not a conclusive reason for putting special limitation upon an industry which, I think we all agree, will require a good deal of capital investment in the future.

This limitation would have another disadvantage to which I must draw the attention of the Committee. I refer to the question of capital and investment, which I think most hon. Members know is extremely important. At an earlier stage of our debate I mentioned that one of the factors which would be important in the selection of possible buyers for particular parts of the industry would be the likelihood that the buyer would have sufficient capital available for future investment. That is a point which anyone concerned with the real future of the industry ought to bear in mind. It may be that such a buyer will want to buy more than one-fifth of the shares and I cannot see that the interests of the industry will be served by preventing him from so doing.

Then there is the case which may arise—it depends upon the offers made—of the return of former subsidiary companies to their parent companies. It may be that that is the right solution for the future of those companies. It may be that there were sound economic reasons for their previous relationship and integration. I do not see why we should rule out in advance any possibilities of that happening. We must be free—the Agency must be free and the Chancellor of the Exchequer must be free—to consider what is the best transaction in each case, bearing in mind the future of the industry. The Amendment would prevent re-integration, it would prevent or discourage investment in steel companies by large concerns and it would impose—I would stress this point again—restrictions upon investment peculiar to the steel industry, restrictions not imposed upon other industries in the country.

For all these reasons, although I appreciate what the hon. Gentleman has in mind, it would be very unfortunate to put into the Bill a limitation of the kind proposed. I hope that I have satisfied the hon. Gentleman about the unfortunate nature of his Amendment and about the inaccuracy of his forecast of my speech.

Amendment negatived.

Mr. George Chetwynd (Stockton-on-Tees)

I beg to move, in page 14, line 20, at the end. to insert: (5) Notwithstanding any provision to the contrary contained in the Articles of Association of any such company as aforesaid, so long as there remain vested in the Agency securities in any such company of a nominal value of not less than ten per cent. of the nominal value of the total authorised capital of such company, the Agency shall be entitled to appoint one director to the Board of such company unless they are already so entitled, in addition to any other directors the appointment of whom is already provided for in the Articles of Association of such company. Unlike some of the Amendments we have considered this afternoon, this proposal is simple and clear. It entitles the Agency to appoint a director to the Board of any steel company so long as the Agency retains not less than 10 per cent. of the capital of that company. The Amendment is designed to facilitate the work of the Agency, and to provide for the proper control by the Agency of companies for which it is responsible in whole or in part during the interim period of realisation, which I think we all agree is likely to be a long period. Unless there are to be large capital losses in the sale of these companies, it seems inevitable to us that this will take rather a long time. I believe that the Minister admitted that at an early stage of the Bill.

The Agency has the duty of realising 290 companies and, as we see it, has complete freedom to sell £250 million of securities with power under a later Clause to lend a further £150 million. It is laid down in this Clause that it is a holding company for as long as it appears to the Treasury that its duties under Clause 16 have not been substantially discharged, and it must exercise its powers to promote the efficient direction of the subsidiaries. It is to that point I want to direct the attention of the Financial Secretary.

8.0 p.m.

The Agency must have the power to direct efficiently the action of the subsidiaries. There are three possibilities in this sale. First, it may be so arranged that all the securities of a particular company are sold outright. In that case, the Agency has no further responsibility for the conduct of the company which has reverted completely to private ownership.

The second possibility is that there may be no sale at all, in which case the Agency retains full control and direction of that company. But in the vast majority of cases there may be a partial sale in which the Agency will be able to dispose of a considerable number of securities, but will also retain in its own hands for an indefinite time a substantial holding. The principle is quite clear that where there is a partial sale public money is involved, and it is necessary that it is properly used and safeguarded. The Agency will be in the position of a substantial shareholder and should have in those circumstances the right of representation on the board of the company.

The Financial Secretary may say that this imposes a restriction on the liberty of the shareholders of that company to say what their board shall be, but it is common practice for a bank or an insurance company when it provides money for a company, as frequently happened in the 'thirties, to appoint a director to the board of the company. Indeed, if that had not been so, we might have been deprived of some of the most outstanding leaders of the iron and steel industry at this time because many of them came into the industry in the first place in the 1930s as nominees of the banks and the insurance companies to protect their interests. So there is no inconsistency in this argument.

Another point which should appeal to the hon. Gentleman is an example from his own Department. Where the Development Areas Treasury Aid Committee lends money to a company in difficulties in a Development Area, it insists that it has the power and right to appoint a director to a board of that company specifically to safeguard the interests of the Treasury in that matter. That seems to be a perfect analogy. Here we have the Treasury, acting through the Agency, advancing money to what is in the main a private company to pursue certain clearly defined ends and retaining the duty of seeing that there is efficient direction of that company.

Therefore, we ask that this sensible provision should be inserted into the Bill because it will protect the rights of the Agency and the Treasury and the taxpayer without any undue restrictions upon the rights of the public company or body of shareholders.

Mr. Boyd-Carpenter

The purpose of this Amendment is excellent and, indeed, it refers to a practice which we have every intention of following in appropriate cases. However, it is unnecessary because not only have we all the powers that this would give us, but we have further powers which acceptance of this Amendment might be deemed to restrict. The matter is a little technical and if I do not succeed in making it as clear as I should, I hope that the hon. Member will be good enough to indicate that to me.

Where the position is that public ownership in any substantial proportion of the shares remains, it will be necessary to consider protecting the public interest in the way we do in the D.A.T.A.C. cases, by having a Treasury-appointed director. It is not, of course, the only way as the hon. Gentleman will appreciate. Where it is desired to use the expedient of appointing a director, it is perfectly simple, before the transfer takes place, to use the simplified procedure for holding meetings of the company for altering the articles of association appropriately. As the right hon. Member for Vauxhall (Mr. G. R. Strauss) will no doubt recall, this was provided by the Ninth Schedule to his 1949 Act and it is continued by paragraph 15 of the First Schedule to this Bill.

Where it is desired that on transfer of some part of the shares a director appointed by the Government is thought desirable, there is power to appoint one or, for that matter, to appoint two or three. The difficulty about this Amendment is that it might be thought, if these words were in the Bill, that our power to safeguard in these cases was limited to appointing one director. That is why I have come to the view that the purpose we all want to secure, that public money is properly protected, would be hindered by this provision. It is possible that as a matter of law it could be construed that we were limited to appointing the one director specified in this paragraph whereas, in its absence, our powers under the somewhat complicated chain of events which I have endeavoured to describe would remain.

Mr. John Freeman (Watford)

The hon. Gentleman was kind enough to say, when he began his explanation, that he hoped we would question him if he did not make himself entirely clear. I am looking as hard as I can at the Schedule which carries on the Schedule to the 1949 Act. I am not clear, however, what proportion of holding in a company the Agency must have before his words become true. While the Corporation exists, the Agency has a 100 per cent. holding, but as partial sales take place at what percentage do the words of the hon. Gentleman hold good? The Amendment of my hon. Friend is specific in bringing it down to 10 per cent.

Mr. Boyd-Carpenter

As I understand, the position is that it depends on how the articles of association of the company are adjusted in any specific case at the meeting called under the simplified procedure.

Mr. Freeman

Therefore, it would be fairly normal to refer to a majority shareholding. The words of the Financial Secretary would not hold good at anything like the figure in the Amendment.

Mr. Boyd-Carpenter

Quite the contrary. I must have failed to make it clear. As the sole shareholders before disposal the Agency carries out the simplified procedure and it can fix what percentage they desire. Therefore, it could be 10 per cent. or 9½ per cent. as I understand the position.

Mr. Jack Jones

Can we take it that if the Agency holding is a substantial or a reasonable proportion of the shares, there is power, as outlined by the Financial Secretary, to appoint one, two or even three directors so that a blood transfusion can take place in the case of a company which requires extra help. technical advice, and so on?

Mr. Boyd-Carpenter

It would depend on what position the Agency took prior to disposal. This Amendment seeks to give the Agency an enabling power.

Mr. Mitchison

I wish to raise a small point which occurs to me and which I would respectfully invite the Financial Secretary to consider between now and the Report stage. I appreciate myself, and no doubt my right hon. Friends do, the force of what he says, but it seems to me that this Amendment might provide for a case which would not be quite covered by the provisions of the 1949 Act.

What I have in mind is this. Supposing the Agency starts to sell the shares of a company without having made any alteration in the articles, and let us suppose that they thereby deprive themselves of the requisite majority under its articles and under the Companies Acts, which, I imagine, still regulate these matters, to change the articles. Suppose the shareholders object, as they well may, without any change having been made, we might then get circumstances in which the Agency would hold a substantial shareholding and be unable to appoint a director.

I merely put the point for consideration, because I quite appreciate the difficulty about this Amendment in its present form. Perhaps the Financial Secretary would consider that matter, and see whether that particular loophole could be stopped up, which, I am sure, as an enabling matter, he would like to do, and whether it could be dealt with by the insertion of a suitable form of words on the Report stage.

Mr. Boyd-Carpenter

I will gladly look into that point. It may well be that, at the point at which disposal had started, the difficulty which the hon. and learned Member has pointed out may arise, but it is not a point upon which I should like to give a snap answer now, and, for that reason, I will take advantage of his invitation to consider it.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. R. Brooman-White (Rutherglen)

I want to raise one consideration which has not been touched upon, and that is the question of employee shareholders. Though I raise it on this Clause, I do not want to put the emphasis in the wrong place. I would have brought it up before if there had been a discussion on Clause III stand part. This is a matter which may concern the Agency, but will certainly concern the Board, because the primary responsibility in furthering this matter on a long-term basis rests with the Board. If hon. Gentlemen opposite are right in saying that the Agency will be left with a considerable section of the industry for a considerable time then it will benefit by the experience gained and will be able to apply that benefit to the handling of further shares.

I do not want to give the impression that I am advocating that they should take this course immediately, because this is a process of evolution. I also appreciate the difficulty in writing it into the Bill, because one wants to be encouraging rather than mandatory. In questions like that of joint consultation, the pattern is already there, and everybody knows what it is. In this case, a satisfactory pattern is still to be worked out, and what we want to do is to ensure that encouragement is given to doing this. There are two issues; desirability and practicability.

On the first point, I think that, in practice, there is very little difference between us. I am sure that hon. Gentlemen opposite agree that the pattern of human relations in industry changed just as much though less obviously than mechanical processes in industry. That is inevitable. We are all looking for outlets for the ever-increasing aspirations and interests of people in industry. Joint consultation is one means. I believe that employee shareholding may be another method of achieving it. On the practical side, though I do not under-estimate such difficulties of cyclical fluctuations in the industry mentioned by the hon. Member for North Islington, I believe a pattern can be found which will give adequate benefit and make it worth while, and, at the same time, safeguard the small investor against undue risk. I do not believe that it is impossible to achieve, and I believe that hon. Members, like my hon. Friend the Member for Esher (Mr. Robson Brown), who knows a great deal about these things, are of a like opinion.

8.15 p.m.

The reason I wish to emphasise the point is that I realise that, in moving in this direction, there is no great impetus behind management or behind the trade unions, who are satisfied with the existing arrangements. If we agree that this objective is generally desirable and that it is possible to work out a satisfactory method of achieving it, as has been done already in certain other industries and fairly successfully at various times in the steel industry, the speed with which we move towards that aim will depend on the energy and ingenuity directed towards solving these particular difficulties. I very much hope that, even if it is not practicable to write anything into the Bill, the Minister will have another look at the point and will give us an assurance that he will use his influence to encourage the Board, and when occasion offers, the Agency, to see what can be done in this direction.

Mr. Jack Jones

The hon. Member for Rutherglen (Mr. Brooman-White) has made a rather strange speech. It seems to me to be a remarkable thing that an hon. Member on the Conservative benches is prepared to go into the Lobby to chase this Bill to its final stage and take away from the existing shareholders—all of us, including himself—and from the steel workers, the right to be shareholders and hand over their shares to private enterprise, and who then goes on to ask that, under the new ownership, the steel workers should become shareholders again. It seems to me to be a remarkable state of affairs.

Here is an industry being worked and managed primarily by the workers, and in which the result of their labours puts 3½ per cent. on national steel stock. Nobody will buy any of this stock until that percentage can be increased to x percentage more than that, and the first thing the steel workers will have to do when this Bill is through is to earn that additional percentage. Yet here is the hon. Member for Rutherglen suggesting that, having earned an additional percentage for people whom they do not like, the workers will then begin to invest some of their savings which will be less rather than more, because their wages will be governed by the profits of the industry.

It is a strange position which the hon. Member is taking up. The steel workers are quite happy to have the opportunity of investing in National Savings arising out of their own earnings and good conditions when working for John Bull, Unlimited, under nationalisation, and I cannot hold out much hope to the hon. Gentleman that he will get them to invest money from restricted purses in order to help to offset the results of this Bill by taking up shares, which we believe people will have great difficulty in doing.

Mr. Chetwynd

Before we part with this Clause, which I regard as one of the most important in the Bill, and certainly one of the most wrecking Clauses, because it establishes ways and means by which the Agency is to dispose of the nationalised undertaking, I must say that we have had surprisingly few guarantees to guard against our worst fears, which were expressed on Second Reading. Our fears were that the best part of this industry was to be creamed off by private individuals, and the worst part left in the hands of the State.

In the discussions which we have had on the Amendments, so far no specific undertaking has come from the Government indicating that they are opposed to that policy. How are we to guard against picking off the best pieces in this case? We have had no answer from the Treasury: indeed, we could hardly expect it from them, because their job is to see that the industry is sold and to act as a kind of holding company pending the final sale. In any event, considerable pressure will be brought to bear upon the Government both by their own back benchers and by people outside to sell the industry back to private enterprise regardless of the consequences.

We really ought to know upon what kind of principles the Treasury will ask the Agency to act in the sale of this undertaking. How are they to set about it? Are they going to parcel up the companies in their pre-nationalisation packages and sell them as such, or are they going to adopt the policy which the Corporation would have adopted of getting the best grouping possible and setting a pattern for the better running of the industry in the future?

The Annual Report of the Iron and Steel Corporation stated that they had clear, definite proposals for a re-grouping of the companies under their control with a view to getting a better organisation of the iron and steel industry. It would be a tragedy at a time when the Government are, perhaps, setting the stage for a long time ahead if those plans were pigeon-holed and not proceeded with. They should not turn away from that to a proposal which would get a quick and easy sale.

How much do the Government anticipate they are going to sell of this industry in the first year, in the second year, or, assuming they go as far, in the third year? When one talks about the third year, one is getting a little hypothetical, but we want to know what are their intentions for the first year. How much investment capital do they think will be available after the most attractive part of the industry has been sold? It is my opinion that when the more profitable and more modern parts of the industry have been sold there will be precious little money forthcoming with which to purchase the rest.

The Financial Secretary dropped a hint which rather disturbed me, because it seemed to point to the fact that where a company was to be sold and where the would-be purchasers would have to spend a considerable amount, not only on the actual purchase. but in future development, he was thinking of giving them some preferential right—a lower purchase price to offset the large amount they would have to spend on modernisation. I would have thought that a great deterrent against purchasing parts of this industry would be the very fact that the purchaser, as well as having to pay a substantial amount to buy the company, would have to commit himself or the company to long-term expenditure to put it into proper order.

This supports our argument that we should like to see the powers of the holding company strengthened to deal with a situation like that because such companies will form the major part of the industry that is left. I think we ought to be told by the Financial Secretary what the Government propose to do to protect the State and the taxpayer against loss when disposing of these businesses.

Mr. G. R. Strauss

I wish to raise what is perhaps a minor point, and I invite the Financial Secretary to give us his opinion, or that of the Government, upon it. According to paragraph 35 the White Paper issued by the Government a little time ago: In allocating securities offered for sale, the Agency will, notwithstanding the serious technical difficulties involved, give priority where practicable to applications from former shareholders. I do not know by what means the Government can give instructions to the Agency, but I assume that will be done under Clause 17 (5). If I am mistaken I should like to be informed. I should also like to know where exactly under that subsection the Government have power to give instructions to the Agency. What thought, if any, have the Government given to this very interesting subject, and what are the difficulties they have in mind?

I should particularly like to know whether, where big company A was previously in the possession of big company B, or where big company B was a major shareholder in it, company B will be given priority in purchasing company A over any other competitor, and whether, even if company B offers a substantially less sum of money than other competitors, it will still be given possession of and control over company A. Or does it mean—this is not an alternative; it may mean this as well—that the ordinary shareholder who had 100 shares in an iron and steel works will be given some form of priority when the time comes for issuing shares to the public, as no doubt shares will be issued? Is it contemplated that he will be told that if he puts in an application, such application will be given priority?

What has been the thinking of the Government on this matter? How is it to work out? Is it a propaganda point in order to satisfy the previous owners of the iron and steel industry, either the shareholders or those who controlled an iron and steel company through virtue of a majority holding? I should be very grateful if the Government would tell us this.

I agree that this is a minor point compared with the huge issues raised in this Clause, a Clause which we think is as bad as Clause 16 and which does all sorts of things which in our view are undesirable in the public interest. We have had no explanation about the point I am now putting to the Financial Secretary. As it arises on this Clause, I shall be glad to be given any available information on the subject.

Mr. Boyd-Carpenter

I do not think there is very much I can add in reply to the right hon. Member for Vauxhall (Mr. G. R. Strauss) or to the hon. Member for Stockton-on-Tees (Mr. Chetwynd) on the points they have raised. The right hon. Gentleman is quite right in saying that instructions to the Agency are covered under Clause 17 (5). As to whether priority is to be given to applications from previous shareholders, to which reference is made, as the right hon. Gentleman pointed out, in paragraph 35 of the White Paper, I would draw attention to the fact that in the same paragraph it is pointed out that serious technical difficulties are involved. I think the right hon. Gentleman will appreciate some of them. But it must be borne in mind that those who have previously operated the companies, and perhaps particularly in the case where they have previously operated them as subsidiaries of some other un-nationalised concern, may well have some special practical experience in their operation which would make them useful and valuable people to operate them again.

8.30 p.m.

That is the sort of consideration which arises and which perhaps may arise in the case to which I have just referred—that is of the subsidiary which the parent company desires to have rejoin it. I must make it clear that, for obvious reasons, that will not be the only factor in deciding whether the sale to that particular prospective purchaser is to take place. Then, of course, there is the question of the tendering of compensation stock in payment, to which reference is also made in one of the paragraphs of the White Paper which we have discussed before. It is true that compensation stock may have changed hands in the interval, but the tendering of compensation stock by previous owners will no doubt occur in a number of cases.

As the White Paper says, it is a matter of serious technical difficulties, and there is nothing in the suggestion of the right hon. Member for Vauxhall that the previous owners would be given a bargain when other and substantially better offers were tendered. Previous ownership will be one of the factors which will be considered, though express warning is given that there are serious difficulties.

Mr. Mitchison

May I ask the Financial Secretary about one thing which has puzzled me? By "technical difficulties" do the Government mean financial difficulties—difficulties in the form of handling the matter as an issue, or whatever it may be, or technical difficulties with regard to the industry?

Mr. Boyd-Carpenter

It means, I think, mainly technical difficulties with respect to the handling of the operation. I do not think that there is very much in the point raised by the hon. Member for Stockton-on-Tees, though the point has been made several times in the course of this debate. I might sum up by saying that there are two important considerations which the Agency will have to bear in mind. The first is that there must be a price which is fair and reasonable to the taxpayer. It has been urged from the benches opposite that all sorts of provisions should be put into the Bill to compel it. That is certainly our intention, and from the fact that suggestions have been made from the benches opposite I take it that hon. Members opposite agree with us.

The other consideration is that the industry shall assume an efficient new form, that the grouping and arrangement of it shall be such as to enable it to render the greatest service to the community in the highly competitive condition of the world in which we now live. Those will be the major considerations which the Agency and my right hon. Friend will bear in mind, and I do not think that I can reply to the hon. Member for Stockton-on-Tees better than by reminding him of those considerations.

Mr. Mitchison

I am afraid that I do not regard this point as quite as unimportant as has been suggested. It seems to me to involve a matter of principle of considerable importance. The Government White Paper declared that the Agency will, notwithstanding the serious technical difficulties involved, give priority where practicable to applications from former shareholders. There is one perfectly obvious point. Suppose two offers are received, one bigger than another, one from a former shareholder and the other not from a former shareholder. Which will be accepted? What does priority mean? Does it simply mean that if a number of precisely similar offers are received, then, to some extent at any rate, priority will be given to former shareholders?

Mr. Boyd-Carpenter

I am sorry if the hon. and learned Member did not fully appreciate my answer. I am sure that it was my fault. There is no intention to give to the former shareholders in this way the advantage of having better terms; but, as the hon. and learned Member knows perfectly well, in the allocation of stocks it is possible, as is often done by companies, to provide for the use of different coloured forms. The share is bought at the same price, but of the "competing" bids that on a certain coloured form gets priority. It is no more complicated than that. I hoped that I had put it clearly, but as I see that the hon. and learned Member for Kettering (Mr. Mitchison) is about to rise again, apparently I have not done so even now.

Mr. Mitchison

I am very glad to hear what the Financial Secretary has said, so far as it goes. What it comes to is this, as I understand it: we have an undertaking from the Government that the priority is not to involve any form of preference either in price or conditions. It is simply that wherever all other circumstances are equal, it is proposed to give a measure of priority to the former shareholders. If I misunderstood that, it is undoubtedly my fault and I shall be glad to be corrected now because I am going to make a comment.

The practice to which the hon. Gentleman refers prevails in very different circumstances. That practice prevails where an offer is being made either to existing shareholders in respect of their shareholdings or to existing shareholders in respect of a public issue, and it is known or anticipated beforehand that that public offer will be highly acceptable to the market. Priority is, therefore, given as a privilege to existing shareholders or whoever the group may be; it may and often should, include employees and customers. They are given a privilege of having a better chance of getting the advantage which is offered.

I regard it as a somewhat ominous parallel because when we are dealing with these stocks and shares and they are being sold by and on behalf of the public we do not want to contemplate circumstances in which they will be offered at prices so advantageous to the purchasers that there will be a positive scramble to get them and the former shareholder will be glad indeed to avail himself of his priority. I am at a loss to understand what an ordinary person, described by Macaulay as "the traveller in the Clapham omnibus." would consider this sentence in the White Paper to mean. Let us look at it.

Cutting out the verbiage it says: The Agency will give priority to applications from former shareholders. The man would think "I am going to get some advantage out of this. This is a kind Government. I have been robbed by the Socialist bandits. Lo and behold, the Tory Party are coming along and distributing justice. generosity and a finely assorted collection of the Christian virtues and Christmas presents all at once. That is very nice." That is the sort of conclusion that I myself would draw.

But when we come down to the plain English of the matter, it is this: priority does not mean any advantage whatever in the terms upon which one purchases as distinct from anybody else, unless the price which is asked or which is to be accepted is too low. If the price asked is fair and reasonable, then the priority as interpreted now has no meaning whatever. Perhaps that is a serious technical difficulty. I should have thought it was a very serious difficulty, but not quite a technical one. I see no technical difficulty whatever in working almost any of these arrangements. They are not as uncommon as all that.

But the fundamental ethical difficulty remains: If one sells at the right price—that is the best price which the public can get for their property—these words mean nothing whatever and they ought never to have been put into the White Paper. They certainly deluded a number of innocent people into believing that they were going to get something which they are not going to get. Indeed, I do not think they ought to get it. I believe that one ought to sell at the highest possible price.

Going over the history of this matter a good many years means wandering into an area of confusion between past shareholders, intermediate shareholders and stockholders, and all the rest of it. It is quite meaningless and impracticable. I am sorry that these words were put in. I suppose this is another of those quasi-Election promises which have just been dropped rather quietly overboard.

Question put.

The Committee divided: Ayes, 241; Noes, 223.

Division No. 104.]	AYES	[8.40 p.m.
Aitken, W. T.	Gridley, Sir Arnold	Noble, Cmdr. A. H. P.
Allan, R. A. (Paddington, S.)	Grimond, J.	Nutting, Anthony
Alport, C. J. M.	Grimston, Hon. John (St. Albans)	Oakshott, H. D.
Amery, Julian (Preston, N.)	Grimston, Sir Robert (Westbury)	O'Neill, Phelim (Co. Antrim, N.)
Amory, Heathcoat (Tiverton)	Hall, John (Wycombe)	Ormsby-Gore, Hon. W. D.
Arbuthnot, John	Hare, Hon. J. H.	Orr, Capt. L. P. S.
Ashton, H. (Chelmsford)	Harris, Frederic (Croydon, N.)	Orr-Ewing, Sir Ian (Weston-super-Mare)
Assheton, Rt. Hon. R. (Blackburn, W.)	Harrison, Col. J. H. (Eye)	Osborne, C.
Astor, Hon. J. J.	Harvey, Air Cdre A. V. (Macclesfield)	Peaks, Rt. Hon. O.
Baldock, Lt.-Cmdr. J. M.	Harvey, Ian (Harrow, E.)	Perkins, W. R. D.
Baldwin, A. E.	Harvie-Watt, Sir George	Peto, Brig. C. H. M.
Banks, Col. C.	Hay, John	Peyton, J. W W.
Barlow, Sir John	Heath, Edward	Pickthorn, K. W. M.
Baxter, A. B.	Higgs, J. M. C.	Pilkington, Capt. R. A.
Beach, Maj. Hicks	Hill, Dr. Charles (Luton)	Pitman, I. J.
Beamish, Maj. Tufton	Hill, Mrs. E. (Wythenshawe)	Powell, J. Enoch
Bell, Philip (Bolton, E.)	Hinchingbrooke, Viscount	Price, Henry (Lewisham, W.)
Bell, Ronald (Bucks, S.)	Hirst, Geoffrey	Prior-Palmer, Brig. O. L.
Bennett, F. M. (Reading, N.)	Holland-Martin, C. J.	Profumo, J. D.
Bevins, J. R. (Toxteth)	Hollis, M. C.	Raikes, Sir Victor
Bishop, F. P.	Holt, A. F.	Rayner, Brig. R.
Bowen, E. R.	Hopkinson, Rt. Hon. Henry	Redmayne, M.
Boyd-Carpenter, J. A.	Hornsby-Smith, Miss M. P.	Remnant, Hon. P.
Boyle, Sir Edward	Horobin, I. M.	Renton, D. L. M.
Braine, B. R.	Howard, Gerald (Cambridgeshire)	Roberts, Peter (Heeley)
Braithwaite, Sir Albert (Harrow, W.)	Howard, Hon. Greville (St Ives)	Robertson, Sir David
	Hudson, Sir Austin (Lewisham, N.)	Robinson, Roland (Blackpool, S.)
Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)	Hudson, W. R. A. (Hull, N.)	Robson Brown, W.
Brooke, Henry (Hampstead)	Hulbert, Wing Cdr. N. J.	Rodgers, John (Sevenoaks)
Brooman-White, R. C.	Hurd, A. R.	Roper, Sir Harold
Browne, Jack (Govan)	Hutchinson, Sir Geoffrey (Ilford, N.)	Ropner, Col. Sir Leonard
Buchan-Hepburn, Rt. Hon. P. G. T.	Hutchison, Lt.-Com. Clark (E'b'rgh W.)	Russell, R. S.
Bullard, D. G.	Hutchison, James (Scotstoun)	Ryder, Capt. R. E. D.
Bullock, Capt. M.	Hylton-Foster, H. B. H.	Salter, Rt. Hon. Sir Arthur
Burden, F. F. A.	Jenkins, Robert (Dulwich)	Sandys, Rt. Hon. D.
Butcher, Sir Herbert	Jennings, R.	Savory, Prof. Sir Douglas
Campbell, Sir David	Johnson, Eric (Blackley)
Carr, Robert	Jones, A. (Hall Green)	Schofield, Lt.-Col. W. (Rochdale)
Cary, Sir Robert	Joynson-Hicks, Hon. L. W.	Scott, R. Donald
Channon, H.	Keeling, Sir Edward	Shepherd, William
Churchill, Rt. Hon. W. S.	Kerr, H. W.	Simon, J. E. S. (Middlesbrough, W.)
Clarke, Col. Ralph (East Grinstead)	Lambert, Hon. G.	Smithers, Peter (Winchester)
Clarke, Brig. Terence (Portsmouth, W.)	Lambton, Viscount	Smithers, Sir Waldron (Orpington)
Cole, Norman	Langlord-Holt, J. A.	Soames, Capt. C.
Colegate, W. A.	Law, Rt. Hon. R. K.	Speir, R. M.
Conant, Maj. R. J. E.	Legge-Bourke, Maj. E. A. H.	Spence, H. R. (Aberdeenshire, W.)
Cooper, Sqn. Ldr. Albert	Legh, Hon. Peter (Petersfield)	Spens, Sir Patrick (Kensington, S.)
Craddock, Beresford (Spelthorne)	Linstead, H. N.	Stevens, G. P.
Crookshank, Capt. Rt. Hon. H. F. C.	Llewellyn, D. T.	Stewart, Henderson (Fife, E.)
Crosthwaite-Eyre, Col. O. E.	Lloyd, Rt. Hon. Selwyn (Wirral)	Stoddart-Scott, Col. M.
Crouch, R. F.	Lockwood, Lt.-Col. J. C	Storey, S.
Crowder, Sir John (Finchley)	Longden, Gilbert	Strauss, Henry (Norwich, S.)
Crowder, Petre (Ruislip—Northwood)	Low, A. R. W.	Studholme, H. G.
Darling, Sir William (Edinburgh, S.)	Lucas, Sir Jocelyn (Portsmouth, S.)	Summers, G S.
Davies, Rt. Hn. Clement (Montgomery)	Lucas, P. B. (Brentford)	Sutcliffe, Sir Harold
Deedes, W. F.	Lyttelton, Rt. Hon. O.	Taylor, Charles (Eastbourne)
Dodds-Parker, A. D.	Macdonald, Sir Peter	Taylor, William (Bradford, N.)
Donaldson, Cmdr. C. E. McA.	McKibbin, A. J.	Tooling, W.
Donner, P. W.	McKie, J. H. (Galloway)	Thomas, Leslie (Canterbury)
Doughty, C. J. A.	Maclean, Fitzroy	Thomas, P. J. M. (Conway)
Douglas-Hamilton, Lord Malcolm	Macleod, Rt. Hon. Iain (Enfield, W.)	Thompson, Kenneth (Walton)
Drayson, G. B.	MacLeod, John (Ross and Cromarty)	Thompson, Lt.-Cdr. R. (Croydon, W.)
Drewe, C.	Macmillan, Rt. Hon. Harold (Bromley)	Thornton-Kemsley, Col. C. N.
Dugdale, Rt. Hon. Sir T. (Richmond)	Macpherson, Hiatt (Dumfries)	Tilney, John
	Maitland, Comdr. J. F. W. (Horncastle)	Turner, H. F. L.
Duncan, Capt. J. A. L.	Maitland, Patrick (Lanark)	Turton, R. H.
Duthie, W. S.	Manningham-Buller, Sir R. E.	Tweedsmuir, Lady
Elliot, Rt. Hon. W. E.	Markham. Major S. F.	Vosper, D. F.
Fell, A.	Marples, A. E.	Wakefield, Edward (Derbyshire, W.)
Finlay, Graeme	Maude, Angus	Wakefield, Sir Wavell (St. Marylebone)
Fisher, Nigel	Maudling, R.	Walker-Smith, D. C.
Fletcher-Cooke, C.	Maydon, Lt.-Comdr. S. L. C.	Ward, Miss I. (Tynemouth)
Fort, R.	Medlicott, Brig. F.	Waterhouse, Capt. Rt. Hon. C.
Foster, John	Mellor, Sir John	Watkinson, H. A.
Fyfe, Rt. Hon. Sir David Maxwell	Molson, A. H. E.	Webbe, Sir H. (London & Westminster)
Galbraith, Rt. Hon. T. O. (Pollok)	Moore, Lt.-Col. Sir Thomas	Williams, Rt. Hon. Charles (Torquay)
Galbraith, T. G. D. (Hillhead)	Morrison, John (Salisbury)	Williams, Gerald (Tonbridge)
Gammons, L. D	Nabarro, G. D. N.	Williams, R. Dudley (Exeter)
Godber, J. B.	Nicholls, Harmar	Wilson, Geoffrey (Truro)
Gough, C. F. H.	Nicholson, Godfrey (Farnham)	Wood, Hon. R.
Gower, H. R.	Nicolson, Nigel (Bournemouth, E.)
Graham, Sir Fergus	Nield, Basil (Chester)	TELLERS FOR THE AYES:
		Mr. Kaberry and Mr. Wills.

NOES
Adams, Richard	Hayman, F. H.	Price, Philips (Gloucestershire, W.)
Albu, A. H.	Hewitson, Capt. M.	Proctor, W. T.
Anderson, Frank (Whitehaven)	Holman, P.	Pursey, Cmdr. H.
Attlee, Rt. Hon. C. R.	Holmes, Horace (Hemsworth)	Rankin, John
Awbery, S. S.	Houghton, Douglas	Reeves, J.
Baird, J.	Hudson, James (Ealing, N.)	Reid, Thomas (Swindon)
Barnes, Rt. Hon. A. J.	Hughes, Cledwyn (Anglesey)	Reid, William (Camlachie)
Bartley, P.	Hughes, Emrys (S. Ayrshire)	Rhodes, H.
Beitenger, Rt. Hon. F. J.	Hughes, Hector (Aberdeen, N.)	Richards, R.
Bence, C. R.	Hynd, J. B. (Attercliffe)	Robens, Rt. Hon. A
Benn, Hon. Wedgwood	Irvine, A. J. (Edge Hill)	Roberts, Albert (Normanton)
Benson, G.	Irving, W. J. (Wood Green)	Roberts, Goronwy (Caernarvon)
Blackburn, F.	Isaacs, Rt. Hon. G. A.	Rogers, George (Kensington, N.)
Blenkinsop, A.	Jay, Rt. Hon. D. P. T.	Ross, William
Blyton, W. R.	Jeger, Dr. Santo (St. Pancras, S.)
Boardman, H.	Jenkins, R. H. (Stechford)	Shackleton, E. A. A.
Bottomley, Rt. Hon. A. G.	Johnson, James (Rugby)	Shawcross, Rt. Hon. Sir Hartley
Bowden, H. W.	Johnston, Douglas (Paisley)	Shinwell, RI. Hon. E.
Bowles, F. G.	Jones, David (Hartlepool)	Short, E. W.
Braddock, Mrs. Elizabeth	Jones, Frederick Elwyn (West Ham, S.)	Silverman, Julius (Erdington)
Brockway, A. F.	Jones, Jack (Rotherham)	Simmons, C. J. (Brierley Hill)
Brook, Dryden (Halifax)	Jones, T. W. (Merioneth)	Smith, Ellis (Stoke, S.)
Broughton, Dr. A. D. D.	Keenan, W.	Smith, Norman (Nottingham, S.)
Brown, Rt. Hon. George (Belper)	Kenyon, C.	Snow, J. W.
Brown, Thomas (Ince)	Key, Rt. Hon. C. W.	Sorensen, R. W.
Burton, Miss F. E.	King, Dr. H. M.	Soskice, Rt. Hon. Sir Frank
	Kinley, J.	Sparks, J. A.
Butler, Herbert (Hackney, S.)	Lee, Frederick (Newton)	Steele, T.
Callaghan, L. J.	Lee, Miss Jennie (Cannock)	Stewart, Michael (Fulham, E.)
Castle, Mrs. B. A.	Lever, Leslie (Ardwick)	Strachey, Rt. Hon. J.
Champion, A. J.	Lindgren, G. S.	Strauss, Rt. Hon. George (Vauxhall)
Chapman, W. D.	Lipton, Lt.-Col. M	Stress, Dr. Barnett
Chetwynd, G. R.	MacColl, J. E.	Summerskill, Rt. Hon. E.
Collick, P. H.	McGovern, J.	Swingler, S. T.
Cove, W. G.	McInnes, J.	Sylvester, G. O.
Craddock, George (Bradford, S.)	MoLeavy, F.	Taylor, Bernard (Mansfield)
Crosland, C. A. R.	MacMillan, M. K. (Western Isles)	Taylor, John (West Lothian)
Grossman, R. H. S.	MoNeil, Rt. Hon. H.	Taylor, Rt. Hon. Robert (Morpeth)
Cullen, Mrs. A.	MacPherson, Malcolm (Stirling)	Thomas, Ivor Owen (Wrekin)
Daines, P.	Mainwaring, W. H.	Thomson, George (Dundee, E.)
Dalton, Rt. Hon. H.	Mallalieu, E. L. (Brigg)	Thorneycroft, Harry (Clayton)
Darling, George (Hillsborough)	Mann, Mrs. Jean	Thornton, E.
Davies, Ernest (Enfield, E.)	Manuel, A. C.	Thurtle, Ernest
Deer, G.	Mayhew, C. P.	Tomney, F.
Dodds, N. N.	Mellish, R. J.	Turner-Samuels, M.
Donnelly, O. L.	Messer, F.	Ungoed-Thomas, Sir Lynn
Dugdale, Rt. Hon. John (W. Bromwich)	Mikardo, Ian	Vianl, S. P.
Ede, Rt. Hon. J. C.	Mitchison, G. R.	Wallace, H. W.
Edelman, M.	Monslow, W.	Watkins, T. E.
Edwards, John (Brighouse)	Moody, A. S.	Webb, Rt. Hon. M. (Bradford, C.)
Edwards, W. J. (Stepney)	Morgan, Dr. H. B. W.	Weitzman, D.
Evans, Albert (Islington, S.W.)	Morley, R.	Wells, Percy (Faversham)
Evans, Edward (Lowestoft)	Morris, Percy (Swansea, W.)	Wells, William (Walsall)
Evans, Stanley (Wednesbury)	Morrison, Rt. Hon. H. (Lewisham, S.)	West, D. G.
Fernyhough, E.	Mort, D. L.	Wheeldon, W. E.
Fienburgh, W.	Moyle, A.	White, Henry (Derbyshire, N.E.)
Finch, H. J.	Murray, J. D.	Whiteley, Rt. Han. W.
Fletcher, Eric (Islington, E.)	Nally, W.	Wigg, George
Follick, M.	Neal, Harold (Bolsover)	Wilcock, Group Capt. C. A. B.
Foot, M. M.	Noel-Baker, Rt. Hon. P. J.	Wilkins, W. A.
Fraser, Thomas (Hamilton)	Oldfield, W. H.	Willey, F. T.
Freeman, John (Watford)	Oliver, G. H.	Williams, David (Neath)
Gibson, C. W.	Orbach, M.	Williams, Rev. Llywelyn (Abertillery)
Glanville, James	Oswald, T.	Williams, Ronald (Wigan)
Gordon Walker, Rt. Hon. P. C.	Padley, W. E.	Williams, W. R. (Droylsden)
Griffiths, David (Rother Valley)	Paget, R. T.	Williams, W. T. (Hammersmith, S.)
	Paling, Will T. (Dewsbury)	Winterbottom, Ian (Nottingham, C.)
Griffiths, Rt. Hon. James (Llanelly)	Palmer, A. M. F.	Winterbottom, Richard (Brightside)
Hale, Leslie.	Pannell, Charles	Woodburn, Rt. Hon. A.
Hall, Rt. Hon. Glenvil (Colne Valley)	Pargiter, G. A.	Wyatt, W. L
Hall, John T. (Gateshead, W.)	Parker, J.	Yates, V. F.
Hamilton, W. W.	Paton, J.	Younger, Rt. Hon. K.
Hannan, W.	Pearson, A.
Hardy, E. A.	Peart, T. F.	TELLERS FOR THE NOES:
Hargreaves, A.	Popplewell, E.	Mr. Kenneth Robinson and
Harrison, J. (Nottingham, E.)	Porter, G.	Mr. Arthur Allen.
Hastings, S.	Price, Joseph T. (Westhoughton)

Clause ordered to stand part of the Bill.