§ Mr, Jack Jones
I beg to move, in page 16, line 13, after "Treasury," to insert "and of the Board."
This Amendment raises the question of the duties and the work of the Board. We suggest that in the selling of one of John Bull's best assets—the steel industry—the Board should come into the picture at the earliest possible stage and that their opinion and approval should be sought in regard to the Treasury proposals.
The Treasury officials who will be concerned with the selling of the assets will probably be persons who know as much about the steel industry as I know about the Treasury—and that is extremely little. We do not expect Treasury officials to know anything about the technical aspects and the long-term production of the industry. It would be very easy to accept offers for the whole or part of the industry on a financial basis and to make a quick sale which might have a very serious long-term effect upon the industry from the technical and productive point of view.
We suggest that this Board, which will consist of the best brains that the Minister can get together having regard to all the circumstances, should come into the picture, not after damage has been done, but before it can be done. This Amendment makes provision for that, so that in the period between the Board being set up and the prospectus being floated, in whatever form it may take, the opinion of the Board is sought.
1318 I notice that the Financial Secretary to the Treasury is here, and he will no doubt tell us that in page 17, line 40:… the Agency shall consult with the Board …But we are not satisfied on this question of consultation. We know that consultation will take place; that will be only common sense; but we want the Board to give their approval. The Treasury and the Board should jointly approve the sale of these assets.
We are vitally concerned with this problem. Here is an opportunity for the industry to be put into shape both technically and strategically. Questions have often been raised as to whether the industry shall expand and who shall own it, but nobody has paid much regard to the question of the strategic situation. I do not want to prolong this discussion, but I could talk for a long time about the mistake Germany made by putting all her eggs in one basket in the Ruhr. The Minister should have given consideration to this matter. He has very often heard our opinions, and I know that he has been impressed by the technical and constructive knowledge possessed by this side of the House. This debate has taken a constructive line rather than the politically venomous one which some people might have expected.
It is vitally important that the Board should be called in before the assets have been disposed of and that they should not have to go to the Minister afterwards and say, "If we had had the opportunity to state our opinion previously, what we are now prevented from doing could have been done." That position could easily arise. There may not be a tremendous rush to purchase a lot of the industry, but there may be a grab for some of it, and it is that part which will be easily saleable which could be grouped with advantage from the long-term point of view—the promotion of the efficient, economic and adequate supply of steel.
This Amendment has nothing but a constructive outlook, and it is put forward on the premise that the Board shall be called in to deal with long-term technical and other problems, rather than the short-term question of, "Sell what you can and then start to remedy the defects that arise from so doing."
§ The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter)
As the hon. Member for Rotherham (Mr. Jack Jones) said, we discussed this identical Amendment at some length on the Committee stage. Since then I have studied what was said by hon. Members opposite, but I have not been convinced that we were wrong in the attitude we adopted on that occasion.
As the hon. Member for Rotherham will recall, I said—and on reconsideration I think I was right—that in a small way this was an Amendment which would affect the whole scheme and system of the Bill—the system of a Board responsible to the Minister and an Agency responsible to my right hon. Friend the Chancellor of the Exchequer. I cannot help feeling that if the Board are brought in as this Amendment would bring them in we should completely confuse the direct chain of responsibility of the Agency to my right hon. Friend and my right hon. Friend's responsibility to this House for the actions of the Agency.
Hon. Members will remember that during the course of the Committee stage debate, which roamed over the whole of the relations between the Board and the Agency both under this Clause and the following one, the greatest anxiety was shown on the benches opposite about their relationship in connection with regrouping. I must not anticipate an Amendment on the Order Paper, but I may say that we are endeavouring to meet that point and that at a later stage I hope to have the opportunity of moving an Amendment dealing with regrouping. That was not the only thing which was in the minds of hon. Members opposite but it was, on the other hand, a substantial point which we have endeavoured to meet.
On the broad issue, we find it impossible to accept a proposal which would cut right across the main scheme of the Bill and would prevent my right hon. Friends being directly responsible to this House, clearly and without limitation, for the actions of the bodies for which they are responsible under the Bill. There will not be very much practical inconvenience arising under the present scheme of the Bill. There will be not only the closest consultation between the Agency and the Board but equally, at 1320 their level, consultation between the Departments of State over which my right hon. Friends preside.
As the Parliamentary Secretary said on a previous Amendment, we are at least as anxious as hon. Members opposite that this scheme shall work properly, and on thinking this matter over as dispassionately as I can in the light of what was said, I think we should be making a great mistake if we turned the powers of the Board into the sort of powers which this Amendment would involve in their relationship with the Agency. Therefore, on the general consideration of the propriety, desirability and essentiality of the closest consultation taking place, we consider that it is better to leave the Bill as it stands and let my right hon. Friends—if the apprehensions of hon. Members opposite are justified—answer to this House clearly and openly for what is done.
While I appreciate the tone in which the hon. Member for Rotherham moved this Amendment, for the reasons I have given and in view of the fact that we have had ample opportunity to consider it and, on the previous occasion, to discuss it, I cannot advise my right hon. Friend to accept it.
§ Mr. Jack Jones
We made it very clear on the Committee stage that we had no desire that the Board should have anything to do with financial arrangements between buyers and sellers once the physical and technical question of what should be sold had been settled. Those of us who know the industry can tell the Minister that this matter is of extreme importance and we fear that the Government will learn when it is probably too late to remedy it. We ask that it be given consideration now.
§ 5.0 p.m.
§ Mr. Boyd-Carpenter
The hon. Gentleman can rest assured that no one will deal with the complex affairs of this important and technical industry without taking advantage of all the technical advice which is available. In my right hon. Friend's Department, as the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) will know, there is a great deal of technical knowledge. There will be ample opportunity for the Board—I was grateful to the hon. Member for Rotherham for his kindly references to the Board—to take advantage of 1321 all the technical information available. Obviously any Minister of the Crown who is to answer to the House for handling a matter of this sort will not ignore the technical advice available. The hon. Gentleman need not be apprehensive that we shall deal with the industry other than on the basis of taking the very best advice.
§ Mr. G. R. Strauss
The hon. Gentleman has put forward the best possible case against the Amendment, but we are still unconvinced. We believe that the Board should come formally into the matter and be consulted and give its approval on technical grounds before any sale takes place. However, as we have yet to deal with Amendments of even greater importance than this one, we do not propose to divide the House.
§ Amendment negatived.
§ Mr. Boyd-Carpenter
I beg to move, in page 16, line 13, after "determine," to insert:and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate.The Amendment covers the same ground in its context as a later Amendment in the name of my right hon. Friend—in page 17, line 36—and I hope it may be for the convenience of the House, and in accordance with Mr. Speaker's Ruling, for discussion to take place upon both Amendments at the same time. I understand that will be convenient to the Opposition and that the right hon. Gentleman the Member for Vauxhall (Mr. G. R. Strauss) desires to move an Amendment to the second Amendment later.
The House will recall that on the Committee stage there was considerable discussion on the general question whether it was intended to dispose of the industry for, as someone poetically suggested, a song. We assured the Committee on a number of occasions—I should have thought it was an assurance that hardly needed to be given by a Treasury Minister—that we should attempt to secure a fair price for the taxpayer for this very valuable property. I believe hon. Members on both sides of the Committee accepted that that was our view, but, not unnaturally, a preference was expressed for a provision in 1322 a statute as superior to the most sincere of Ministerial assurances. Therefore, I undertook to see if we could put words into the Bill in order to make quite clear that what has always been our intention should be in the Act itself.
It is for that reason that we have put down the two Amendments. I do not think I need comment on them at any length because they are clear in their drafting and make it apparent that the price to be obtained on the disposal of the industry or of shares in it must be treated as a most important consideration. Hon. Members will recall that I resisted the suggestion which appeared to be made from the benches opposite that the price should be the only consideration to be in the Act. As they will see from the terms of the first Amendment, it is made clear that other relevant matters shall be taken into account; that is to say, price is not the only consideration which must be taken into account in disposal.
Hon. Members who compare the second Amendment with paragraph 34 of the White Paper will see that it carries out, almost word for word, the undertaking which the Minister gave during the Committee stage that we would seek to put into the Bill the words of the White Paper. When due allowance is made for the difference in phraseology between the words of a statute and the words of a White Paper, hon. Members will see that we have done our best to carry out almost literally what my right hon. Friend indicated.
I put these Amendments forward not as indicating any change whatever in our approach to the problem, but as an attempt to meet apprehensions expressed by the Opposition which, though we believe them to be ill-founded, we recognise were sincerely held. We hope that by doing this we have made clear to hon. Members opposite what was always our intention. By the use of appropriate language, we are making it clear once again that we have every intention of getting a fair and proper price for the very valuable property of which we have to dispose.
§ Sir Frank Soskice (Sheffield, Neepsend)
The Government have certainly made an attempt to go some distance in the way we wanted them to go. However, in the view of my hon. Friends and 1323 myself, they have not gone nearly far enough. When we put down the Amendments to the Clause which were discussed in the Committee stage, what we were most anxious to secure was that there should be an objective test. We wanted to make certain, for example, that the compensation values which were paid when the securities were taken over would be, as far as possible, reflected in the prices actually obtained when the securities are sold.
What the Government have done is to provide that the Agency is to secure that a financially adequate consideration is obtained upon the disposal of assets. That is going part of the way. It is an absolute obligation so far as it goes, but the anxiety that we have always felt is that unless the Clause contains specific obligations to measure the consideration which is obtained by reference to certain tests, it may well turn out that when there have rolled by the long years which must elapse before the securities and assets are finally disposed of, if they are ever finally disposed of, there may be a great void between the price which should be obtained if a really fair value is got in the price which is in fact turned into the coffers of the State. That is our anxiety and, looking at the Government's Amendment, we still say that there is absolutely no objective test by reference to which the consideration is to be measured.
When we were formulating our Amendments for the Committee stage, we sought to find what objective test could be provided. The obvious objective test is that of the compensation values actually paid. We put down an Amendment—it appears again upon the Order Paper, but I understand that it has not been selected—making the compensation values one of those tests, adjusted upwards or downwards by reference to any subsequent change in the capital structure of the company concerned. That was a test which one could measure, as it were, in actual concrete figures. One would be able to say with reference to the sale of any securities that if what was obtained upon their sale fell far below the compensation value paid, obviously the consideration was an inadequate one and could not, within the scope of the Act, be accepted. That, we think, really is an essential safeguard.
1324 The Government, when that Amendment was put forward, raised the usual technical and administrative difficulties. They said that this, that or the other would be an obstacle which they could not see their way to get round. It may, no doubt, be the case that there are considerations which have to be borne in mind in applying such an objective test as we have suggested, but I cannot believe that those considerations, if there were really good will in the matter, and the Government really wanted to ensure a safeguard such as we think is necessary, could not have been surmounted.
Nothing, in fact, has been done to do that. All that has been done is to place an obligation upon the Holding and Realisation Agency to see that the financial consideration is adequate. Of course, that begs the whole question. The question is what in that context we mean by adequate. It may well turn out that the Agency can get only a fifth or a third of what they really ought to have. If that is the best price that can be obtained in the circumstances, it will be argued on their behalf by the Government that that is an adequate consideration because it is the only consideration that in the circumstances could be obtained. If that is the argument, and if that is how the business is to be done, these securities are virtually going to be given away—given away in the sense that they are being parted with for nothing like what was paid for them and nothing like what should be in fact obtained on their disposal.
In these circumstances, an Amendment has been put down. Although, as I say quite frankly, the Government have made an attempt to meet us, it does not seem to us on this side of the House to go anything like far enough. It still leaves the matter wholly in the realm of speculation. It depends on what the circumstances are at the time when the securities are sold whether we can say that the consideration obtained is financially adequate. It may be said to be financially adequate if it is the best consideration that can be obtained. What we want to say is, "If you cannot get the price they are really worth, do not sell them at all. The public should retain them, unless what they are really worth can in fact be obtained." The Agency may say, "We have done our best. We cannot obtain more than this. 1325 Therefore this is, in fact, the adequate price."
The wording of the Government's Amendment is hopelessly ambiguous. It leaves a hundred different methods of getting round the matter, and we think the Government's proposals really do not meet the point we have made. We cannot be content with the Minister's second Amendment. The Amendment in our own form, perhaps, is in words not the most felicitously chosen, but in words which we think best express our purpose, and those words are again designed to reintroduce what I have earlier described as the objective test. We have said, "You are selling securities, and you should try as far as you can to obtain the actual compensation value paid." We have put forward an Amendment that in selling publicly-owned assets we should take into account the sale price, what was paid for those assets, as a measure of the actual price of the compensation paid for the securities which represent those assets. We think really that an Amendment on these lines is an indispensable prerequisite in any safeguard for the public.
You have not actually called that Amendment, Mr. Deputy-Speaker, but I thought it might be convenient if I simply adumbrated the purpose of that Amendment, as you may well think it right to call it later on. It is with the purpose of indicating what that Amendment does that I have argued that the Government's proposals fall far short of the minimum requirement that publicly-owned assets disposed of by the Agency shall not be thrown away or given away. For these reasons, although the Government have gone some way to meet us, I cannot pretend that the Government's proposals are anything like adequate to achieve the purpose that ought to be achieved in this particular context.
§ Mr. Spencer Summers (Aylesbury)
I think it is proper to point out one or two matters here to which it is rather difficult to find a solution. As I understand it, hon. and right hon. Gentlemen on the other side are, in fact, saying that any sale of these assets below the compensation price is one that ought not to be made because it would involve the State in loss.
§ Sir F. Soskice
Adjusted upwards or downwards by reference to any change 1326 in the capital structure of the company in which the securities are held.
§ 5.15 p.m.
§ Mr. Summers
All right. That does not in the least vitiate the point I was going to make. When these assets were bought they were not paid for at their true worth. They were paid for on Stock Exchange values, which does not necessarily imply the same thing at all. [Interruption.] What I have said I think is quite accurate. Stock Exchange values were used to assess them.
§ Sir F. Soskice
Certainly. I entirely agree, and the Opposition, as they then were—the present Government—complained that those values were far too low. What we are saying is that the minimum low level value should be those Stock Exchange values. Surely, therefore, we are not being unreasonable in the test we seek to impose.
§ Mr. Summers
Perhaps the right hon. and learned Gentleman will allow me to make my point. His comment has no bearing whatever on it. The Government at that time took over those assets on Stock Exchange values, and in seeking to judge what is a fair price for the sale of them he is deliberately attempting to exclude the changes in market conditions which have occurred since them. He is saying there should be regard to any changes in the capital structure—perhaps, even in undistributed profits—and so forth that may have occurred since then, but he is deliberately seeking to exclude the very important fact which must be taken into account, namely, the change in the stock market owing to the rise in the cost of money which has occurred since that time.
§ Mr. G. R. Mitchison (Kettering)
If the hon. Gentleman looks at the second Government Amendment, he will see that it provides for regard being had to the monetary and market conditions prevailing at the time of sale. The Amendment to which my right hon. and learned Friend referred just now does not seek to delete those words but to add to them.
§ Mr. Summers
What I am dealing with is the speech of the right hon. and learned Gentleman. He made it quite clear that he was seeking a yardstick, and it was the 1327 absence of a yardstick by which the fairness of the price could be measured which was the gravamen of his complaint.
§ Sir F. Soskice rose——
§ Mr. Summers
I really must be allowed to make this point. I hardly get a sentence out but some hon. or right hon. Gentleman opposite tries to interrupt me. I must go on, for we have not all that much time. As I have said on earlier occasions in these debates, the Holding and Realisation Agency, charged with the duty of realising those assets, should get the best price they can get. What I think is quite wrong is to assume that no regard can be paid to the change in the situation arising out of the increased value of money.
There is one other point that, I think, has not been alluded to but which, I think, it is important should be apparent. There are only two ways really by which the State can avoid loss in the sale of these assets. One is by allowing the price of the Iron and Steel Stock to be at its face value rather than at its market value if it is offered as tender for the sale of the assets. That would be one way. There are objections, which I do not propose to elaborate at this moment, to that course, but, at any rate, that would be one way by which loss to the State could be eliminated. It would greatly facilitate the transactions.
The other way is one which I foresee playing a prominent part in this business, namely, the issuing of shares from the undistributed profits of the companies to the Agency in order that they may be able to sell them for cash to the public subsequently, and so bridge the gap between the value of the shares when this industry was bought by the State and the comparable value of the shares prevailing when the State comes to sell them. The consequence of that will be that the capital in the industry will be deliberately deflated and interest paid on such shares in perpetuity in consequence of that method of attempting to eliminate the loss. It may well have far-reaching consequences in the long run. Every effort must be made to get as near to the compensation price as is reasonable, but I think that in the methods and decisions 1328 taken by those charged with this responsibility regard must be paid to the changes consequent upon the altered value of money.
§ Mr. Albu
The hon. Member for Aylesbury (Mr. Summers) has drawn attention to one of the great defects of introducing this Bill at this time. He is, in fact, saying—as was said in the "Investors' Chronicle" this week—that it may well be difficult to find buyers for these securities unless, previous to that, the securities have been re-arranged in companies and higher dividends have already been paid out. It seems to me to indicate quite clearly that, if the Agency proceeds with haste in this matter, it must inevitably proceed on the basis of very much higher capital charges than the industry is bearing at the present time.
§ Mr. Summers
I am sure the hon. Gentleman would not want to misrepresent me. I have not seen the article to which he refers, but the paraphrase of it which he gave seemed to me extremely different from what I have just said.
§ Mr. Albu
I think it was very similar to what the hon. Gentleman was trying to say. He referred to the changed market conditions and the higher rates of interest on money. These higher rates of interest on money have been reflected recently in changes in market quotations. Dividends have been rising, and stock values have been rising as a consequence. As the hon. Gentleman does not seem to agree with me, perhaps I could quote the article:Admittedly, market prices now are slightly higher than they were in October, 1948 … but one of the principal reasons for this apparent steadiness has been the substantial increase of around 20 per cent. in dividends.This seems to me to be one of the difficulties. We are very anxious that the Agency shall not be in too much of a hurry to sell the securities back into private hands at a time when they may have to do it under market conditions which are not very favourable.
The difficulty about discussing the whole question of the sale of these securities or the assets is that we do not know in what way the Agency will go about its business. Nor is it at all clear who the possible customers will be. We do not know whether there will be very simple transactions between the Agency and one or two large investors, or 1329 whether the Agency will reconstruct the capital structure of the companies and then slowly try to sell them off on the market. What we are trying to safeguard is that the capital sum which the Agency shall receive for these securities shall not be less than the sum the State paid for them, and at the same time we are anxious to ensure that this should not be achieved by the method of issuing or promising to issue, in the meantime, very much higher dividends.
§ Mr. Summers
Will the hon. Gentleman answer one relatively simple question? Why should the State be regarded as the only stockholder who shall be immune from changes in the value of shares on the stock market?
§ Mr. Albu
That depends on the attitude one takes of the industry we are discussing. We take a very different attitude, of course, and one of the advantages of the financing of the industry under the existing Act has been that a certain amount of the financing has been internally within the industry.
§ Mr. Albu
No, but nevertheless—[Interruption.] Well, we on this side were entirely opposed to the raising of the rates of interest, especially for substantial and basic capital investment, and we remain so. We have no desire to see the very necessary expansion of the industry taking place in future under what may be very adverse financial conditions.
The point I am trying to make in support of what my right hon. and learned Friend said is that it is not only a question of ensuring that the sum paid for the capital assets or the securities shall be not less than that which was paid by the State when they were nationalised, but that the Agency shall not be in too much of a hurry to sell off securities under what may be adverse financial conditions which may exist at present. I believe that if they take their time over this—and I hope it is an awfully long time—they will probably find that they will obtain much better prices for them.
§ Mr. Roy Jenkins (Birmingham, Stechford)
The hon. Member for Aylesbury (Mr. Summers) introduced a new and interesting point into these discussions, but 1330 I am not sure that it was a valid point, and for that reason I am not sure that his question to my hon. Friend the Member for Edmonton (Mr. Albu) was a valid one. As I understood it, the point the hon. Gentleman was making was this: "You cannot really compare conditions today with conditions at the time the take-over price was based"—that is, the autumn of 1948—" because of the big changes which have come over stock markets generally." In his speech and in his question to my hon. Friend he was all the time assuming that, as a result of the changes in the value of money and other factors, the prices of shares on the Stock Exchange had generally gone down since 1948.
§ Mr. Jenkins
That is not true. The index of industrial ordinary shares is, in fact, two points higher than it was in the autumn of 1948, on which the takeover prices were based. I therefore suggest that his new argument and his question to my hon. Friend were entirely invalid.
§ Mr. Summers
We may differ on the main point, but surely the hon. Gentleman would agree that those shares on which interest is virtually paid, be they Government stock or industrial stock, must inevitably fall in value with the increase in the cost of money.
§ Mr. Jenkins
One would certainly agree that if the long-term rate of interest goes up from 3½ per cent. to 4½ per cent. gilt-edged stock will fall in value, but the point is that the index of industrial ordinary shares, which takes into account a great number of factors, and which is really the comparable thing, has gone up and not down. Certainly the position on which we based the take-over price in 1948 was the value of industrial ordinary shares—industrial shares in the steel industry—at a date in 1948. Since 1948 the value of most industrial securities has risen. Therefore, it would surely be reasonable to expect it to be possible for the steel industry to be sold off at a price not less than that which was paid in 1948.
That is the burden of the case we put in Committee, and which we are now putting to the Financial Secretary. While I certainly recognise that in this Amendment he has gone some way to meet us, I am sorry that he did not go a little further, and in particular that he could 1331 not accept what we were asking for in our Amendment in Committee. That was a Clause based on 1949 values. He could have inserted in the Amendment he has moved a provision that the 1949 values ought at the very least to be one of the considerations to be taken into account in determining what a reasonable price should be.
I think that we are missing a great opportunity to carry out a very interesting exercise here. There has always been a great dispute between the two sides of the House on the various nationalisation Measures as to what is a fair take-over price, and in the days of the Labour Government different methods were used for different industries. The Opposition of that day disliked, on the whole, the Stock Exchange valuation method more than they disliked any other, and claimed that it was an impossible method.
Although there are many obvious disadvantages to nationalising an industry in 1949 and de-nationalising it in 1953, one of the very few advantages of the Government presenting its accounts in the way we want them presented is that it would enable us to get near an objective test of what is fair compensation. We shall be both buying and selling the industry within a relatively short time, and we shall, therefore, be able to test the take-over price against the price at which the public are willing to take the industry back in the fairly near future.
The Government seem to be determined not to allow that comparison to be made, so far as they possibly can. I think that it would be extremely interesting if we could make these comparisons between the price paid in 1949 and the price which it proves possible to obtain for comparable securities under these conditions.
I think that from that point of view and from the point of view of my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice) of having some sort of guarantee that this industry is not sold off at prices which are extremely unfair to the public, at the very least there ought to be in this Amendment a provision that the 1949 price should be taken into account as one of the considerations in determining what is a reasonable price.
§ Mr. Frederick Mulley (Sheffield, Park)
I want to refer to the fallacy which the hon. Member for Aylesbury (Mr. Summers) tried to put across the House. He said quite rightly, because it is beyond dispute, that the value of money today is less than it was at the time of the take-over of this industry. If it is proposed to hand back the capital assets which are today worth more because of the fall in the value of money than in 1948, surely his argument was addressed to the point that the 1949 valuations should be increased by the percentage by which money had fallen as the floor below which the securities should not be sold. His argument about the fall in the value of money as compared with the assets of the industry is surely in support of our contention that the 1949 valuation should be the absolute minimum.
I think that the Financial Secretary ought to face up to the question that if the Government do not insert in the Bill, in some way, regard for the 1949 value, we must assume from their refusal to do so that the Minister and the Government today take the view—very different from that of 1949—that, in fact, the industry was bought at too high a price. Surely their refusal now to make this concession for which we ask can only mean that they think that the price at which we bought the industry in 1949 was too high.
I think that the Financial Secretary—whose prestige in the country and in his own party has already increased and is going further to increase—should say that he thinks that a mistake was made in 1949 and too much compensation was paid. If he would do that, it would be of great interest to us, especially when we come to look at this industry again, as we shall in the future.
The final point which I want to put to the Financial Secretary—and this is gratuitous advice which I venture to suggest—is that when he meets the criticism which we hear from the benches opposite about the need to economise on the use of the taxpayers' money, and the great difficulty with which the Government are faced in connection with increasing expenditure, and so on, this is a field in which the taxpayers' money can be safeguarded, and he can do that by seeing that a very fair price is received in respect of such securities as the Agency sell.
§ Mr. Wilfred Fienburgh (Islington, North)
I want to intervene to add my word of praise to the Financial Secretary from this side of the House. He is the only Member of the House who can successfully insert 10 parenthetical clauses in one sentence to emerge triumphant with his final predicate successfully linked to his original subject. But he has rather overreached himself, I suggest, in an argument which he made, first, in Committee and, secondly, on this Report stage.
He has twice told us, with an air almost of injured innocence, that we ought not to expect the Treasury as custodians of the nation's finances to be prepared to sell anything at a price lower than that which they might expect to get in the course of normal financial transactions. He may be right, but, frankly, this is not a financial transaction; it is a political transaction. It is an act of faith on the part of the Conservative Party.
It is part of their general belief that the efficacy and efficiency of this industry will, on balance, be greater in private than in public hands. If they believe that, we can envisage circumstances in which normal financial criteria will not apply at all. This, therefore, is not an issue concerning normal finance, it is a political act of the first magnitude to which different criteria apply. In those circumstances, we are quite convinced that the Treasury might well, in order to justify the reams of speeches in HANSARD and the thousands of speeches made in the country by hon. Members opposite, be prepared to take a loss on the purely financial transaction in order to live up in some degree to their political faith.
§ Mr. Boyd-Carpenter
May I reply with the leave of the House, which I ask to be given on my undertaking to keep my pronouncements down to the minimum? As I understand the debate which took place on the Amendment which I moved a few minutes ago, the Amendment has, in general, been considered acceptable. The right hon. and learned Member for Neepsend (Sir F. Soskice), I think, looked the gift horse in the mouth with a view to looking even further down its throat. That is to say, he would rather that we had gone a little further.
The argument which he adduced, and which one or two of his hon. Friends adduced, was almost entirely centred on whether we should not put into the Bill 1334 what he described as the objective test of linking the compensation values to some extent with the sale prices. That is an issue which arises on the Amendment to our Amendment in the name of right hon. Gentleman opposite, but as it was an issue which was discussed on my Amendment I think it would be for the convenience of the House if I tried to deal with it now.
We start, I think, on the basis that our objectives are the same. We want, while paying due regard to all the major considerations—the efficiency of the industry, leaving it in good shape, and so on—at the same time to secure, consistently with these considerations, a fair price for the taxpayer.
Therefore, the really practical question which the House has to decide is whether, aye or no, we are more likely to do so if we bring in, as the Opposition suggest, the test of compensation values or if we do not. If we were to write into the Bill either the words which the right hon. Gentleman proposes, although he proposed them with very becoming modesty as to their effect, or some similar words which bring in compensation levels as a test, the advice which I am bound to offer to the House is that we should get a less good price than if we left them out. May I explain that argument in a few words.
If we put into the Bill for all to see and in particular for all prospective or potential purchasers to see that this is, in the words of the Amendment, a "material factor" to be taken into account, that must suggest that the Agency ought to be satisfied if it gets the compensation value. That will be a point, which let me tell the House at once, prospective buyers will not hesitate to take. They will say, "We are offering you the equivalent of the compensation value. In your own Act the compensation value is set as a proper figure to accept. You ought, therefore, to accept that figure." That will be the argument. I must advise the House that the object, which we all want to see achieved, of getting a fair and proper price for what we have all described as this "valuable piece of property," would be prejudiced by putting this test into the Bill and, therefore, this argument into the mouths of those with whom we may have to negotiate purchases. 1335 The hon. Member for Sheffield, Park (Mr. Mulley) and the hon. Member for Islington, North (Mr. Fienburgh) both raised the question whether the compensation value was too high or too low. I am bound to express the opinion that in many cases, at any rate, it was too low. That view, of course, reinforces from my point of view the difficulties and the dangers that I see in adopting compensation value as a test to be put into the Bill; because if, as I and many of my hon. Friends think, those values were too low, we would be giving an absolute hostage to fortune in negotiation by putting that, in many cases, too low figure into the Bill.
§ Mr. Mulley
Does the hon. Gentleman not realise also that the Agency will have the option of not selling? The Financial Secretary talks about people refusing to buy if this term is included in the Bill. If the Agency cannot find a purchaser at a price which they think is adequate for the industry, surely they are under no obligation to sell.
§ Mr. Boyd-Carpenter
I follow that argument, but I thought that although hon. Members opposite do not in any way like the principle of the Bill, we were discussing it at this stage on the basis of making it as effective for its purpose as possible. And one of the ways of making it as effective for its job as possible is, surely, to see that it is so drafted as to give a fair chance of obtaining the best price in negotiation.
I fully recognise that hon. Gentlemen opposite would like to see this principle defeated. The House has argued that matter, and may do so again, but at this stage what we are concerned with is to to make it as good a Bill as possible. I should have thought that the hon. Gentleman would agree that the argument he has just adduced did not apply, because he seems to be admitting my argument that the price we should be getting with this condition in the Bill would be less good than if it were out. Therefore, the hon. Gentleman is conceding the whole case I have been trying to make——
§ Mr. Mulley indicated dissent.1336
§ Mr. Boyd-Carpenter
—and which, incidentally, I have made without any parenthesis whatever. Therefore, I remain not only unconvinced of the merits, but convinced of the dangers, of the proposal made from the benches opposite on this point of view.
However we may argue at this stage about the price that may be obtained, these transactions will be subject to approval by my right hon. Friend the Chancellor of the Exchequer, and therefore, of course, my right hon. Friend is responsible to the House. I should have thought that as Parliamentarians all hon. Members might agree that far more effective than what has been proposed is the sanction of ultimate responsibility to Parliament.
If hon. Members are right, and if, as has again been suggested, though rather half-heartedly, we sought to dispose of valuable national property at an inadequate price, the House would lack neither the means nor, I hope, the will to hold my right hon. Friend responsible for such a dereliction of duty.
§ Mr. Mitchison
I understand the hon. Gentleman with admirable consistency to take the same view that he took in opposition: that, generally speaking, the compensation paid was too little. In those circumstances, can he on behalf of the Treasury give any sort of undertaking, however qualified, that the price accepted for those securities will not be below the compensation paid?
§ Mr. Boyd-Carpenter
I said, as the hon. and learned Member who is always accurate in these things will bear me out, that in many cases it was too low—that, I am sure, is the fact. There are also many factors that have changed, although I do not want to go again over the Commitee stage debate; there are the companies that have come up, and there are those that have gone down. The hon. and learned Member will, I think, acknowledge that it has throughout been my argument that the compensation value is largely an irrelevancy to this issue. Accepting that view, quite obviously I cannot accept the hon. and learned Member's proposal, with its implication that the compensation values have relevance.
§ 5.45 p.m.
§ Sir F. Soskice
With the permission of the House, I should like to add a few words to the debate on this point in order to bring it, I hope, to a close. The Financial Secretary to the Treasury says that he felt bound to offer certain advice to the House. By that, I suppose he meant that that was the opinion that he held. I do not know whether he meant that he was reluctant to offer that advice. It is the advice that he offered to the House when we discussed this matter on the Committee stage, and it seems to me to be the most fallacious argument.
The argument, as I understand it, is that if the Agency are not to be allowed to sell below compensation values, they will never get a penny more. That is the most obvious non sequitur——
§ Mr. Boyd-Carpenter indicated dissent.
§ Sir F. Soskice
That argument, as I understand it, is the most obvious non sequitur to which we have ever listened in the House.
The Minister's own Amendment requires that the appropriate Department are to take into account all relevant circumstances—capital structure, reserves, trading prospects and all the rest; and that the Minister derives from an Amendment that we put on the Order Paper during the Committee stage. All those things have to be taken into account. All I can say is that, supposing there is a low level minimum of the compensation values, and either the Agency or the appropriate Department accept that low level minimum, they will be flying straight in the face of the Minister's Amendment. It certainly does not follow that because a low level minimum is put into the Bill, nothing will ever be obtained above it.
I do not want again to go over the ground we have already traversed, both today and in earlier debates on this matter. We on this side feel very disappointed at the Government's attitude. and still more disappointed at the reasons for that attitude. The only reason that the Financial Secretary, in spite of his growing stature, which we are all glad to recognise, can find is that nothing would ever be obtained higher than the low-level minimum.
1338 That is completely incorrect reasoning. There is not the slightest reason to suppose that, and if the Agency or the Department agree to a sale at the low-level minimum, they really will be making a mockery of the responsibility which under the Bill, imperfectly drafted as it is, they are called upon to undertake.
But there are other matters on the Order Paper which are of equal, if not greater, importance. Disappointed as we are, we feel that there would not be any advantage to be gained by further probing into this matter, and we on this side are content simply to indicate in the plainest terms our disapproval of the attitude which the Government have taken. Then, I hope, we may go on to discuss some of the more urgent matters which still remain.
§ Amendment agreed to.
§ Mr. E. L. Mallalieu (Brigg)
I beg to move, in page 16, line 16, at the end, to insert:and—Provided also that no sale or other disposal of any securities or other assets by the Agency the total consideration for which exceeds one million pounds shall be valid unless the Minister shall have previously signified his approval thereof; and his approval shall not be effective, until he shall have so signified it by a direction in that behalf to be given by a statutory instrument which shall be laid before the Commons House of Parliament and shall not come into operation unless and until affirmed by a resolution of that House.The two objects of this quite plain Amendment are to see that when assets of this valuable industry are sold for sums in excess of £1 million, two things shall happen. First, the Minister will have to give his consent, which shall be expressed in the form of a Statutory Instrument; and, second, that Statutory Instrument shall be approved by an affirmative Resolution of the House. The main idea underlying these two objectives of our Amendment is that we should prevent the handing over of valuable assets, which may be worth many millions of pounds, to private hands and, maybe, to obnoxious hands, at prices and under conditions of which this House might very easily disapprove, either on grounds relating to the functions of the industry itself or on grounds relating to the wider national interest.
I hope that the Financial Secretary, or whoever replies, will not take what 1339 I hope I may describe as a "great aunt-ly" attitude towards the House of Commons—the sort of attitude that a maidenly great aunt might take. Let him not say that Members of the House of Commons cannot possibly have the knowledge necessary to make well-found criticism about individual deals. After all, great aunts sometimes find that their great nieces and nephews know far more about the facts of life than they do themselves.
In any case, even if individual hon. Members have no personal experience of the industry necessary to make well found criticism—which I must say a great many of them often have—they have sources of information open to them. There are all sorts of people, with or without axes to grind, who are only too willing to supply immense quantities of information. Hon. Members become adept in sorting out the good from the bad. If that were not so there would be no case at all for asking the opinion of the House on any major matter of public policy. So I hope we shall not hear that particular argument put forward.
I know there is fear that in a matter of a commercial transaction such as all these disposals of assets must be that while the House is deliberating, or perhaps before it begins to deliberate, upon an affirmative Resolution which may be put forward by the Minister, the buyer might go off. The Financial Secretary said with some melodramatic effect that he feared that might happen. But, if the buyer did go off before the affirmative Resolution was passed, he would be subject, as any other breaker of a contract is subject, to the laws for breach of contract—[An HON. MEMBER: "He will not have a contract."] Of course he will have a contract. Can anyone imagine any sensible Agency taking no sort of deposit or making no agreement?
The agreement would obviously be with the prospective buyer, and it would be that he should buy, subject to the affirmative Resolution of the House. If he refused to carry out his bargain for any other reason than that the affirmative Resolution was not forthcoming it would be a breach of contract.
§ Mr. Arthur Colegate (Burton)
Do I understand that the hon. and learned 1340 Member is proposing a one-sided contract by which the buyer cannot go off but the Government can?
§ Mr. Mallalieu
I do not see why we should not make that sort of agreement, but it certainly is not what I suggested. I suggested that there would be an agreement which involves two sides. When there is an agreement between two people like that, if one goes off of course he can be caught in the net of breach of contract.
When decisions of this magnitude are being considered we contend that Parliament should have an opportunity of expressing its view and, making inquiry and offering criticism and, if necessary, withholding consent. All these things should be: and someone should have the responsibility of coming to the House and justifying the proposed deal. We ask who better could there be to come forward and justify the proposed deal before this House than the Minister, who has special responsibility for, and knowledge of, the iron and steel industry, namely, the Minister of Supply. He should justify to the House any deal of this magnitude that there may be.
Today again the Financial Secretary has referred to his desire to avoid any splitting of responsibility as between the Chancellor of the Exchequer, the Minister or the Board. Like him, we on this side of the House would very much regret to see a division of responsibility. We would not like to see the national interest falling between two stools—the hard, high stool of the Treasury and the more ample and, let us hope, comfortable, although similar piece of furniture in the Ministry of Supply. We say that the minute any prospective deal exceeds £1 million in value the responsibility should be put firmly on the Minister of Supply. There is no question of division of responsibility there. It is on one Minister only. We put forward that argument very strongly.
I sum up in this way. The larger any of these deals becomes the greater, inside that deal, will become the content of non-financial consideration. If some very tiny works are disposed of there cannot possibly be some of these nonfinancial effects or detriments which might be the case if an immense works or combine were sold. We say that the larger the deal the greater the non-financial content of the national interest involved in 1341 that deal, therefore, the less the Chancellor of the Exchequer should have to deal with it, and the more the Minister, whose main responsibility this industry is, should have control and should have to give his consent and have to come to this House to justify the giving of that consent.
§ Mr. Boyd-Carpenter
This Amendment, I think the hon. and learned Member for Brigg (Mr. E. L. Mallalieu) will agree, is very much the same as one moved during the Committee stage, except that the one moved in Committee had a figure of £100,000 and in this one hon. Members opposite have "raised the ante" and inserted £1 million. I am afraid that the higher figure does not really diminish the inevitable difficulties of the proposal.
In the first place, it really is contrary to the normal principles adopted when Ministers of the Crown have to make contracts, whether for the acquisition or the disposal of property, to insist on procedure of this sort. It is a very familiar aspect of our public life in these days that it falls to Ministers in any Government to enter into very large-scale transactions both by way of purchase and of sale. Indeed, the late Administration went out of their way in the Minister of Food (Financial Powers) Act, 1949, to authorise the Minister of Food to make long-term contracts without Parliamentary approval.
The principle has been generally accepted under a variety of Governments in connection with any of these transactions of either sort which Ministers have to undertake to give them the utmost freedom in making them, but then to hold them to account if they make a bad one. That is the principle of Parliamentary responsibility—to allow the Ministers freedom to do their duty as they see it and then hold them responsible if they make a mess of it. I suggest that that is the right way to handle transactions of this sort, and that the altering of the figure from £100,000, as proposed in Committee, to £1 million now, does not in any degree diminish the soundness of that principle. Nor, equally, does it diminish the extent to which this proposal departs from precedents of recent years.
1342 Of course, there is the fact that in any case securities of steel companies will be disposed of by the process of public issue on offer for sale. If the procedure outlined here were to be carried out it would be very difficult indeed to make such issues. Hon. Gentlemen who are familiar with the procedure will realise that when these issues have to be made terms have to be settled in the light of the market conditions existing, sometimes on quite a short-term basis. If the precise terms of an issue had to be embodied in a statute and then subjected to the affirmative Resolution procedure it might very well be that conditions would have changed for the better or for the worse before it was possible to effect the issue.
There is the further difficulty that under the affirmative procedure no sales could be made in the Parliamentary Recess. An affirmative Resolution must be approved before a sale could take place, and that would impose upon the Agency the considerable difficulty of there being a number of months when it would be impossible to arrange a sale. That does not seem to carry any advantage. We are once again back to the principle which I have previously urged upon the House, that the Agency shall dispose of the companies and of their shares in the best possible way. We seem to be violating that principle if we impose such a handicap upon them.
§ Mr. E. L. Mallalieu
If that is still the attitude of the Government—I thought they would stick about the Recess point—would they be prepared to accept the negative Resolution procedure?
§ Mr. Boyd-Carpenter
The difficulties of the negative Resolution procedure, though obviously smaller, are still very serious. It would presumably render necessary the laying of a Statutory Instrument, and transactions would take place either before the Resolution was framed in each case, in which case the whole procedure would be nugatory, or else the transactions would have to be held up while time was given to pray against the Statutory Instrument.
§ Mr. Mitchison
May I call the hon. Gentleman's attention to the fact that 1343 his point about the Recess is quite reasonably met by a Government Amendment which appears later on the Order Paper?
§ Mr. Boyd-Carpenter
But not in the Amendment that we are discussing and which, I take it, hon. Gentlemen opposite are urging upon us. It is clear that these transactions could not take place unless and until there had been an affirmative Resolution of the House of Commons, and that could not come into operation during the Recess.
The final point, although it is a lesser one, is that this Amendment would introduce the Minister of Supply into that field of responsibility which is allotted under the Bill to the Chancellor of the Exchequer. The House may have become almost weary of hearing it repeated that the general scheme of the Bill has been to make the Chancellor of the Exchequer responsible for the Agency and the Minister of Supply generally responsible for the Board and supervision of the industry. The Amendment, as the hon. Member for Brigg went out of his way to point out, brings the Minister of Supply into the first area, and, therefore, confuses the issue of the general chain of responsibility.
The Amendment seeks to introduce a rather novel procedure for this sort of transaction. It would make disposal at a fair price more difficult and would introduce difficulties if negotiations had to be suspended for the affirmative Resolution procedure. It would be quite contrary to recent precedent, which is that of leaving a Minister of the Crown to be responsible for a transaction and of having to answer for it afterwards. By introducing the figure £1 million the Amendment would certainly reduce the number of transactions which the procedure would otherwise affect, but it would still be harmful to the disposal of these assets at a proper price, and I regret to say that I must resist it.
§ Mr. G. R. Strauss
We remain unconvinced. I am not going to repeat the reasons why we remain unconvinced. They have been admirably stated by my hon. Friends today and on a previous occasion. We agree that this Amendment 1344 is novel, but we say that the novel procedure is justified by novel circumstances. Never before have a Government proposed to sell £240 million worth of assets in conditions which will be almost those of a forced sale. The Government are determined to sell these assets. The Parliamentary Secretary has told us that we have accepted the principle that these assets shall be disposed of, but we have a strong feeling that the Government are determined to sell them at the best price they can get, and that if they cannot get a good price it will be a bad price; but disposed of they must be.
This is a political decision to sell the publicly-owned iron and steel industry back to private owners at whatever price can be obtained, and we believe that very often, because the buyers know that, a bad price will be obtained. When the Government are faced with the option of no sale or sale at a bad price I do not believe they will accept the alternative of no sale. They will then say: "We have to sell at a bad price." Because of our fears that this will take place we ask that Parliament should keep an eye on the disposal of these assets and shall see to it that public property shall not be sold at substantially below its true value.
If there is any big sale to take place—we suggest a minimum figure of £1 million, but if the Government say: "We accept the principle, if it is £2 million" we will agree—for an enormous sale of property, assets or securities under those special conditions the matter should be reported first to the Minister, and then to Parliament. If Parliament says, "It's O.K." then it is O.K. We believe that in many cases it will not be O.K. We believe that the Bill will permit sales at rotten prices and that Parliament will not be consulted.
We had intended dividing the House upon the Amendment, because we think it is a matter of first-class principle, but time presses and other Amendments on the Paper, some put there by the Government and some by us, await us. Only because of time we do not divide the House. We are very sorry indeed, although not surprised, that the Government have refused to accept the Amendment, which is put forward for the protection of the public in entirely new and unprecedented circumstances. We think that our Amendment is essential if public 1345 assets are not to be given away or sold at prices well below the value which the public ought to receive for them.
§ Amendment negatived.
§ Mr. Boyd-Carpenter
I beg to move, in page 16, line 27, at the end, to insert:(5) Before appointing a person to be a member of the Agency, the Treasury shall satisfy themselves that that person has no such financial or other interest as is likely to affect prejudicially the exercise or performance by him of his functions as a member of the Agency and the Treasury shall also satisfy themselves from time to time with respect to every member of the Agency that he has no such interest; and any person who is, or whom the Treasury propose to appoint and who has consented to be, a member of the Agency shall, whenever requested by the Treasury so to do, furnish to them such information as the Treasury consider necessary for the performance by them of their duties under this subsection.Hon. Members may recall that during the Committee stage, in the course of a debate upon an Amendment moved by the hon. Member for Lichfield and Tamworth (Mr. Snow), I undertook to see whether it was possible to produce at this stage a form of words to meet the intentions of that Amendment. I indicated that I could give no definite undertaking, as I had doubts whether it would be possible to frame a suitable Amendment.
I claim to be a little better than my word in being able to bring this Amendment forward now. Hon. Members will appreciate that it is always a difficult and delicate question to secure that in appointments involving public responsibility the persons appointed are free from conflict between their private interests and their official duties, and that they are not only so free but are obviously known and seen to be so free.
My inquiries into the matter resulted in finding this form of words which I think will commend themselves, to hon. Members opposite at any rate, by reason of the fact that they are taken from Section 1 (6) of the Iron and Steel Act, 1949. Whether my hon. Friends will be similarly impressed by their parentage, I would not like to say. However, they are the words then thought appropriate for achieving that purpose and I think they are apt for that purpose. They make the duty of my right hon. Friend in making these appointments quite clear in the statute, and I hope they will be 1346 taken as a genuine attempt to do a little better than I promised.
§ Mr. G. R. Strauss
In our view, the Amendment fully carries out the undertaking which the hon. Gentleman gave in Committee and we thank him and the Government for it.
§ Amendment agreed to.