United Steel Companies (Hansard, 12 November 1953)

§ 42. Mr. G. R. Strauss
asked the Chancellor of the Exchequer if he will give an estimate, on the basis of the dividend proposed to shareholders in the prospectus issued by the Iron and Steel Holding Realisation Agency in respect of the United Steel companies; and, on the basis of the present cost of Government borrowing, of how much additional money will be paid out annually by these companies to their shareholders, compared to the interest which would have been paid out by the companies in interest, if they had remained nationally owned.

§ Mr. Boyd-Carpenter
As the right hon. Gentleman will be aware, the capital of these companies has been increased as the result of their reorganisation. But the actual amount which will be paid out in future years will depend, among other things, on the amount of new capital raised in future, the efficiency of the way in which the companies are managed, the distribution policy adopted, the level of steel prices, and general trade conditions. No accurate estimate of the figure asked for is therefore possible.

§ Mr. Strauss
Is the Financial Secretary aware that I did not ask for an accurate estimate, which, I agree, is impossible, but is it not possible to give a rough estimate? Would he disagree if I said that the figure must amount to between £5 million and £10 million a year, which, in future, will be paid out to shareholders in the steel industry who contribute nothing whatsoever to the welfare of the industry?

§ Mr. Boyd-Carpenter
In the first place the right hon. Gentleman asked for an estimate. Estimates given from this Bench are accurate estimates. [HON. MEMBERS: "Oh."] Perhaps that is a change from the practice of two years ago, with which right hon. Gentlemen are familiar. I am afraid that as I cannot give anything like an accurate estimate, I really cannot give the right hon. Gentleman an estimate at all; except to say that his own figures are fantastically wide of the mark.

§ Mr. Strauss
Would the Financial Secretary agree that, as the difference in the rate is something between 3½ and 7¼ per cent. on a substantial proportion of the capital involved, the difference must amount to many millions?

§ Mr. Boyd-Carpenter
The right hon. Gentleman is begging the question. As to the future distribution which it is thought possible and appropriate for these companies to undertake, his calculations have to be based on certain assumptions, which rest, of course, on wholly unsubstantiated guesses.

§ 43. Mr. G. R. Strauss
asked the Chancellor of the Exchequer the underwriting and other charges arising from the flotation of the United Steel Companies stock.

§ Mr. Boyd-Carpenter
The total expenses payable by the Iron and Steel Holding and Realisation Agency in this connection are provisionally estimated at about £460,000. Of this, £350,000 is commission to the consortium of issuing houses who have taken part in the arangements.

§ Mr. Strauss
Does the Financial Secretary agree, in this case at any rate, that if the rest of the publicly-owned iron and steel companies are sold off in a similar way many millions of pounds will have to be paid out of the resources of the iron and steel companies for wholly unproductive purposes?

§ Mr. Boyd-Carpenter
No, Sir. This is part of a process of implementing the decision of the electorate that the steel industry should be denationalised. I can assure the right hon. Gentleman that the money to which he refers will play a very useful part in carrying out that social process.

§ Mr. Jay
Does the Financial Secretary realise that, in addition to that rake-off, this transaction was carried out on terms which gave the private investor a yield of at least 1 per cent. more than he would get on comparable shares? Does he feel, in these circumstances, that his right hon. Friend has carried out his duty to protect the public interest?

§ Mr. Boyd-Carpenter
I assume that the right hon. Gentleman is aware of the different rates of interest on Government securities and on industrials.