HC Deb 25 June 1959 vol 607 cc1397-471

3.41 p.m.

Mr. Frederick Lee (Newton)

Today, we are asking the Committee to discuss the Government's policy towards the firm of Messrs. S. G. Brown Ltd., of Watford. At first glance, this may appear to be a matter of local or possibly secondary importance. On the contrary, we believe that the Government's decision in this matter is of major significance, and we attach the greatest importance to this debate.

The Committee will pardon me if I give a little of the history of S. G. Brown, since that is necessary to a discussion of Government policy. It may well be that as the story unfolds the Committee would agree that it is necessary to decide on the matter in the full knowledge of all that is now involved.

In pre-war days, the firm of S. G. Brown Ltd. was a small, struggling firm at Acton. It was making a gyro-compass invented by the late Mr. S. G. Brown, who was a very able inventor and engineer, although perhaps not so successful as a businessman. So very unsatisfactory was the performance of this firm during the war, when it was failing the nation in what has been described as our hour of greatest need, that, acting under one of the Defence Regulations then in force, the Admiralty took it over.

At that time, both Mr. and Mrs. Brown were connected with the firm, Mrs. Brown looking after the business side. They attempted to get the workpeople concerned to side with them against the Admiralty when the Admiralty attempted to take over the administration. Indeed, they called meetings of the employees and tried to influence them against the Admiralty controller.

The workers refused point-blank to fall for those blandishments and met the controller and assured him that they would do everything in their power to ensure maximum production of a quality job meet to the needs of the nation in those difficult days.

Invoking part of those same Defence Regulations, as they were perfectly entitled to do, Mr. and Mrs. Brown insisted upon the Admiralty buying them out. That is something which must be remembered. Subsequently, the Admiralty bought the firm's issued share capital of £55,750. It is of some importance to note that, according to the evidence of Sir John Lang to the Committee on Public Accounts, in 1949, it was the desire of the firm that it should be taken over, because it shows that in the initiation of this business it was not the Admiralty which instigated matters in what could be described as the financial take-over, but the firm itself.

At the end of the war, the Labour Government were pressed by the workers of the firm not to relinquish control. They said that they believed that, with their co-operation and that of the management, it could be made into a worth-while concern for the nation. Some of us had representations to make on the subject, and I remember that my hon. Friend the Member for Acton (Mr. Sparks) was busy in this connection. My noble Friend, Viscount Alexander of Hillsborough who was then at the Admiralty, finally agreed, with the proviso that the firm must not become a liability on the Department, saying that if that could be ensured, there was no reason why it should not remain in the Admiralty's control.

In answer to my right hon. Friend the Member for West Bromwich (Mr. Dugdale), on 16th June, the Chancellor of the Exchequer said that the production of the firm was no longer vital to the Admiralty, but I point out that at the time it was decided to retain it it was known that Government orders were unlikely to represent a large proportion of the firm's activities. Indeed, paragraph 30 of the Navy Appropriation Account for 1956–57 says: Although Government orders were unlikely to represent a large proportion of its peacetime activities, the Admiralty decided after the war to retain ownership of the company"— and I stress this— to preserve its value as war potential. In his reply of that date, the Chancellor suggested that it was no longer necessary for the Admiralty to maintain control. He said that the Admiralty had come to the conclusion that it was no longer of importance that it should do so.

Is it suggested that gyroscopic instruments capable of use in the development of intercontinental ballistic missiles, supersonic aircraft, surface aircraft and submarines, land and amphibious vehicles are no longer important as war potential? Are we to be asked to believe that in this age of the intercontinental ballistic missile, and new developments in submarine warfare and planes capable of supersonic speed, the gyro itself is no longer to be considered necessary as war potential?

In any event, supposing that the Admiralty felt that it no longer wished to retain control, why was it not handed over to the Ministry of Supply? The Ministry of Supply is the central Department in all these matters. Perhaps the Civil Lord will tell us whether there were any discussions on that point in Government circles.

I have with me an announcement by S. G. Brown Ltd., of August, 1958, saying: Five years ago we produced, in collaboration with the Royal Aircraft Establishment at Farnborough, the Brown Master Reference Gyro Mark I. Today our Master Reference Gyro is in full production. It is fitted, as standard equipment, in all the latest British fighter and very high speed research aircraft. These five different types of aircraft all have supersonic capabilities. We are incorporating the valuable experience we have gained from the successful production of our Mark I Master Reference Gyro into the development of our Mark II model. This instrument is to be smaller, lighter and yet more accurate. Vital developments have taken place in collaboration with other essential defence establishments, especially the Royal Aircraft Establishment, at Farnborough. These developments are the result of public money and research not only in Brown's, but far outside the scope of the firm.

The gyro is now fitted in all the latest types of British fighters and high-speed research aircraft, and these different types of aircraft have supersonic capabilities. Surely this is the very centre of our future defence organisation. Yet, as we heard the other day, the Chancellor invites us to believe that its development is no longer in the national interest. The Chancellor said that the onus of proof must be that it is required in the national interest. I wonder whether I have proved to the Committee that it is. If the party opposite believes that it is not, let it go on the hustings and say that it is not, but we insist that it is.

When the Admiralty decided to retain the firm three directors were appointed to run the company on commercial lines. As I understand, one director was an assistant secretary to the Admiralty. I suppose that that unfortunate gentleman now qualifies as one of the quislings which the present Minister of Pensions and National Insurance once told us was the right designation for those who go to manage nationalised industries.

In 1948, the firm moved from its premises in Acton to much larger and better premises in Watford. I will let my hon. Friends into a secret. The party opposite has debated the position. It did so last Tuesday night. There were so many broken heads that undoubtedly the party opposite is not capable of turning up at full strength to debate this today. While all the Press was looking round the Labour Party meeting for non-existent splits—[HON. MEMBERS: "Oh."]—it missed the split in the Conservative Party, which was as wide as the Grand Canyon.

Under the stimulus of public enterprise the firm grew and prospered. More share capital was provided by the Admiralty, which also advanced £165,000, secured by a debenture, for acquiring the new premises to which I have referred. Because of the rapidly increasing turnover the company needed more cash, and the Treasury agreed to the company obtaining accommodation from its bankers. Since then the range of the company's products has increased and the financing of them, which I am not sure is altogether satisfactory, has been a mixture of public money and bank overdraft.

The net result is that from its miserable start there are now 500,000 £1 issued shares, all held by the Admiralty. For the past decade the firm has been making profits, which I understand is the Tory test of efficiency. I will now quote the gross trading profits before deductions and depreciations. They start in 1949 at the modest figure of £56,000. By 1951, it was £82,000. By 1953, it was £162,000. By 1954, it was £216,000. By 1956, it was £171,000. By 1957, it was £211,000. By 1958, it was £180,000. I suggest that by those figures the firm passes the test which Toryism applies to these matters.

I realise that some of the things that I am saying are not palatable to hon. Members opposite.

The Civil Lord of the Admiralty (Mr. T. G. D. Galbraith)

I do not think that the hon. Gentleman is placing the Committee in a position to come to a decision. He is not quoting what would normally be regarded as the proper profits. He must do that.

Mr. Lee

If the hon. Gentleman had allowed me to continue, I was coming to specific instances of this. I said that the figures I was quoting were gross profits before depreciation. We are not trying to do any confidence tricks. We exist on policy, not tricks.

The Admiralty has a fixed and deliberate policy about dividends. This was raised at the Committee of Public Accounts by the hon. Member for Edinburgh, Leith (Mr. Hoy). I compliment the Admiralty for limiting the dividend to 5 per cent. It has resulted in more of the profits being put back into the industry, to the advantage of the firm. I do not know what effect this will have if we get to the point where take-over bids can be made.

I cannot take up all the time available, so I advise the Committee to read the evidence and the answers to questions given to the Committee of Public Accounts on 4th April, 1957. At the meeting my hon. Friend the Member for Leith was told that the figure of 5 per cent. had been deliberately fixed. He was told this by Sir John Lang. The hon. Member for Yeovil (Mr. Peyton) decided that things were not quite to his liking, and asked: Did you consider going into the market for this extra money and then selling some of the equity? The answer was: It is Government policy, and this was decided some years ago, that to such extent as this company does require additional capital it should be supplied through public funds and not through the market. The hon. Member for Dover (Mr. Arbuthnot) was worried about this and said: The difficulty is that we have a company which is competitive and is competing and is isolating itself from all the hazards and alarms that affect the normal competitive business which is in the same sort of trade …

Mr. Gerald Nabarro (Kidderminster)

Odhams Press.

Mr. Lee

I hope that the hon. Gentleman will be fair to his hon. Friend the Member for Dover, who said some very important things.

The hon. Member for Dover also asked: Sir John, If you were the subject of a take-over bid and the take-over bid was substantially in advance of the market figure for your shares, would you be inclined to take it? Here we have the genesis of what we are now seeing as Government policy. We know that it always goes down badly with hon. Members opposite if there is a firm which is capable of making a profit and that profit is not going into the pockets of private enterprise.

I now give the net figures. In 1956, on a capital of half a million pounds the net profit was £126,000 before tax. When the hon. Member for Yeovil suggested that that was not a very high profit, Sir John said he thought that a £126,000 profit on £½ million capital was not bad. I think that was a most reasonable attitude. I understand that on 31st March, 1958, the total assets of the company were valued at £1,219,000. The bank overdraft had risen to £270,000, a rise recorded in the Navy Appropriation Account, 1957–58, as being caused by modernisation and development resulting in increases of capital tied up in stock and work in progress. It was against this background of the gradual success of a nationalised concern that, on 8th June, a notice appeared in the works as follows: I am directed by the Secretary of the Admiralty, Sir John Lang, … to inform all employees that the Admiralty, acting on behalf of H.M. Government—the sole proprietors of S. G. Brown Limited—is making known its intention of seeking to dispose of its entire interest in the Company. I am also authorised by Sir John Lang to state that the Admiralty being fully mindful of the welfare of the staff and workpeople hope it will be possible for the business to be kept as a going concern"— The hon. Member for Kidderminster (Mr. Nabarro) will notice that the words are kept as a going concern"— and not disintegrated so that the high precision manufacturing capacity represented by the Company is maintained. Those are very nice sentiments, but I suggest to the Government that they are not worth the paper they are written on. In what way does a seller determine the future of a firm in which he no longer has an interest? How is it possible, at any time, to ensure that once an asset is disposed of it will continue in the way in which those who originally bought it operated it?

I want to ask the Government one or two questions. First, who are the bidders for this firm?

Mr. Nabarro

There are 42.

Mr. Lee

The hon. Member says that there are 42, thereby showing what a tremendous asset it is. Is it to be an open transaction, for all to take part in?

Mr. Nabarro

Hear, hear.

Mr. Lee

I hope that the hon. Member will not show too much anxiety or the price will go up.

I want to read another publication of the firm's. It deals with the Arma Brown gyroscope, and in a bracket at the bottom it says: The Arma Brown Gyroscope has behind it not only fifty years of experience by Brown, but also full resources of the Arma Division of the American Bosch Arma Corporation. Has the Bosch Arma Corporation any further interest in the affairs of S. G. Brown? It seems peculiar, with the tie-up of the full resources of the Arma division of the American Bosch Arma Corporation, that that corporation is now agreeable to this firm becoming the property of people who may well be competitors, but who have done nothing in the development of this very successful enterprise. Could we be told whether the Bosch Arma firm is interested in the future of this company?

We know what great competition that company has from Sperry's. Perhaps Sperry's are interested. Can we be told whether there is any danger of a substantial portion, or the whole, of this firm passing into the hands of American employers?

That is the background and history of the development of this firm. We are considering the question of the selling of this successful business in a soulless era of take-over bids, and wild Stock Exchange gambles directed to the one end of using industry for profit-snatching. All pride of accomplishment in the creation of useful and successful businesses has apparently gone. When I read about the things going on in the Stock Exchange I often wonder what effect they will have upon those employees who have given service far beyond that for which they are being paid—people who have actively co-operated with the managements of their firms and have felt that this was part of their existence, and now find themselves sold down the river to some kind of takeover bidder.

This will produce a cynicism among the people, who will have no interest in their industries. [Laughter.] Hon. Members can laugh, but I speak with some experience of this matter. I tell them that if they are going to break down the cooperation which now exists in the factories between the trade unions and the employers, British industry cannot survive in this period.

From the moment my noble Friend, Lord Alexander of Hillsborough, made his decision to retain this firm, the workers, conscious that they had incurred great responsibilities—because they were instrumental in asking that the firm should be retained—gave unqualified support and constructive co-operation to the management. There has been exemplary teamwork, with the shop stewards' committee helping wholeheartedly in the solution of production problems and other difficulties. To its credit, the management has met them half-way. It has reciprocated and, in consequence, by any test one wishes to apply the venture has been an outstanding, success. As one of the shop stewards said to me, speaking of his workmates, "This is our firm and we want to see it prosper".

I should like to give the Committee a few examples of the co-operation which has existed. In 1947, when the firm was struggling, the management called the shop stewards to a meeting and showed them many components which, they said, were costing the firm too much to produce. The management said, "These are mere examples. We could show you thousands more". The shop stewards' committee suggested and negotiated a timing agreement.

Those hon. Members who know something about engineering know that, as a rule, workers detest timing agreements. On many occasions I have told employers who have produced stop-watches, "Those are all right for checking whippets, but not engineers". But the shop stewards, on behalf of the workpeople, negotiated a timing agreement in 1947 which, with very little alteration, is still in existence.

There was a further occasion, about 1950, when the management had great difficulty in obtaining work. It tendered for a job called the bomb carrier, at very competitive rates, and was concerned because, after getting the contract, it was in danger of losing money on it. The shop stewards were consulted and agreed that it was an occasion for a very special effort. A request was made that all estimated times of operations were to be put on the back of the drawings. The managing director was invited by the shop stewards to address a meeting of their members and to explain the position, and the shop stewards asked their members to support the management in this job and to do all in their power to meet, or lower, the estimated times.

I wonder whether the Committee understands the risks that the shop stewards took in making such a recommendation. I have sometimes tried such a thing myself, and the kindest things I was called were "management stooge" or "lick-spittle". That is the sort of thing that those men were prepared to put up with, because they felt that they were part of the organisation, and they wanted to make it a success.

Strikes? There has never been one. Since the day this experiment began there has never been a vestige of a strike from anyone. Do the Government really want to destroy such an example, and produce bitterness and cynicism in place of harmony? I challenge them to put in their friend, Mr. Hurry, and let him have a poll among the 1,000 workers on the straight question, "Do you wish to stay in the public section or be sold out to private enterprise?"

Last night, at the annual meeting of the Confederation of Shipbuilding and Engineering Unions, which, I remind the Committee, represents over 3 million people, this resolution was passed: This Confederation annual meeting, aware of the policy of the Government in denationalising profitable sections of industry, deprecates the latest example denoted by the intention of the Admiralty to sell the nationally-owned precision instrument manufacturing firm of S. G. Brown's, of Watford, to private interests. This act of the Admiralty represents a gross betrayal of the co-operation and loyalty so generously volunteered by the workers employed and which has contributed so much to the development of a profitable undertaking. We demand that this firm should be withdrawn from sale and retained as a valuable national asset to the Admiralty. I now turn to the astounding performance of the Chancellor of the Exchequer at Question Time on 16th June. [HON. MEMBERS: "Where is he?"] It is surprising that the Chancellor has not come to the Committee today. He has taken some responsibility in this matter. He answered a Question on the 16th and I wanted to put a few points to him about it. Incidentally, I tabled the Question for answer by the Prime Minister, who slid it along—"over to you"—to the Chancellor of the Exchequer.

I asked upon what criteria Her Majesty's Government base decisions to sell firms such as Messrs. S. G. Brown, Limited, which are owned by Government Departments. I received the reply: There are very few such cases, but where a decision is called for, the Government take into account a wide range of circumstances, principally how the national interest might be affected, but also normal commercial considerations … It should be a Tory Chancellor of the Exchequer who points out the difference between national and commercial considerations, but that is a minor point.

In a supplementary question, I pointed out to the right hon. Gentleman that the firm was now making profits, was worth £1¼million, was producing a fine gyroscope, one of the best in the world, and so on. He replied: The facts that the hon. Member has given do not justify the company, however successful, necessarily being retained in public ownership. My right hon. Friend the Member for Huyton (Mr. H. Wilson), who, obviously, could not believe his own ears when he heard such a thing, repeated the point and said: Will he say whether he feels that it is right that an asset of the State which is important to our exports and to State services and is highly profitable to the State should be handed over? The Chancellor replied: I certainly do not think that because a firm is expanding or well managed that justifies it remaining in public ownership. In my fourteen years in the House of Commons, I do not believe that I have ever heard an answer which so reeked of political bias as that. It really is a fantastic situation when we are told that success of this sort does not ensure continuity of nationalisation.

If that was a shock, however, we had worse to come. My right hon. Friend the Leader of the Opposition asked the Chancellor: Is he saying that when a firm becomes profitable under public enterprise the benefits must be handed over to private enterprise? The reply was: No. What I am saying is that to justify a firm remaining in public ownership the onus of proof must be that it is required in the national interest and that the firm will prosper under public ownership but would not prosper under private enterprise."—[OFFICIAL REPORT, 16th June, 1959; Vol. 607, c. 243–4.] We note that the Chancellor is not here today.

The meaning of that is that we now have to prove not only that public ownership has been a success, but that private enterprise would fail. In a country which calls itself a democracy, such a position is positively disgusting and completely unacceptable to us. If the Chancellor were here, I would put to him the logic of that theory concerning S. G. Brown Ltd. I have related the history of the firm. I suggest that in recounting that history, I have met the grotesquely unfair demand of the Chancellor that I should prove, first, that nationalisation has succeeded, and secondly, that private enterprise failed. That, in short, is the precise meaning of the history of S. G. Brown Ltd. Despite that proof, the Chancellor still proposes to go ahead and denationalise the firm.

I ask the Committee and the country: who are the doctrinaires? Political and industrial Toryism has stood the English language on its head, for the Tories pursue this policy in what they are pleased to describe as a battle against the doctrinaires. Having laid down this diktat, however, they refuse to accept the results of it. I hesitate to say this in the Chancellor's absence—

Mr. Aneurin Bevan (Ebbw Vale)

He should be here.

Mr. Lee

—but the question of personal honour as well as political theory becomes involved.

Let us be quite clear about this. On Tuesday of last week, the most disgraceful set of conditions ever laid down was put to us: that we must prove not only that public ownership is a success, but that private enterprise would fail. My contention is that I have proved just that. That is the history of S. G. Brown Ltd., in spite of which the Government now propose to go ahead and to run away even from the disgraceful diktat which they have laid down. I say that personal honour is involved when that stage is reached.

Let us look at the broader aspects of this policy. We have recently had a report from the Transport Commission which is disturbing. Let us remember, however, that the railways, which, before and during the war, cost the taxpayer hundreds of millions of pounds, had to be taken over by the State because of the failure of private enterprise. The task of the Transport Commission has been made harder by the credit squeeze, which caused a fall in the movement of steel and coal and, in consequence, of traffic receipts.

The Transport Commission and the trade unions, however, are convinced that with hard work, sacrifices and a different type of Government from the one we have today, they can still make the railways pay. If they succeed in turning the railways into a profitable concern, are we to expect the application of this theory? If so, the price of success is elimination. Is this the incentive to co-operation in industry between employers and workers, for which the Minister of Labour so rightly asks? This is not responsible government. It is official vandalism.

As we now know that the price to be paid by nationalised industry for daring to make profits is denationalisation, it follows that it is only those industries which, though essential to the national economy, can never hope to make profits which will remain in the public sector. We have already seen the profitable parts of steel and road transport—and now S. G. Brown Ltd.—returned to the private sector for no other reason than that. Instead of it being the case, as the steel bosses and the Institute of Directors are now asserting, that the industries in the public sector fail to make profits because they are nationalised, the fact is that they remain nationalised only because they fail to make profits.

Having achieved this delightfully convenient subdivision of industry, Government supporters then argue that lack of profit proves the failure of the theory of public ownership. May I put the other side of the argument? The only nationalised industry which has ever received public money is civil aviation. If the failure to make profit without the use of public money is proof of the failure in a nationalised industry it must also be a proof of failure in private industry.

Yet the Daily Telegraph of Friday, 19th June, in a leading article, reminded us of the position of a number of firms in the aircraft industry. It said: In our country new urgency is obviously imported into the Government's consideration of how to help our production of these enormously expensive new machines. Indeed, outside the United States and Russia, production must be beyond the financial, though not the technical, resources of all national aircraft industries—even of our own, unless assisted by the Government. Is this proof of the failure of private enterprise? Are we to have a Bill for the nationalisation of the aircraft industry? The fact is that the Government will simply step up the already lavish payments of public money to private enterprise.

The Daily Telegraph is getting really annoyed. I have another quotation, for the benefit of Government supporters, of what this newspaper says. On 12th May, 1959, it said: In the queue for State aid at the moment stand the following vast private undertakings: the entire cotton industry; Colville's steel works; the Cunard line; the de Havilland Aircraft Company; the shipyards which hope to build the first atom-powered merchant ships. There may be others unknown to me: experienced spongers often prefer to work in private. This importunity seems to me as unwise as it is unseemly. It is in effect to declare, as the Socialists declare, that the present free economic system will not work. Perhaps it will not; but the independence of these great concerns will not survive its passing. From State aid to State control is but a step, and a most natural and legitimate"— "legitimate", remember that— step at that. Cash and strings go naturally together; he who pays the piper legitimately calls the tune. If these great concerns really want to be nationalised, why don't they openly say so? If not, they had better keep quiet and put their begging bowls away. It may well be that the present campaign against public ownership and against public enterprise is intended to divert from the public gaze that sort of activity and Goebbels techniques of that kind; if the big lie is stated often enough people may well believe that it is true.

I note that my right hon. Friend the Member for Belper (Mr. G. Brown) asked the Chancellor of the Exchequer on 6th May: the total amount of grants, subsidies and other financial assistance provided by the Government during the current financial year to privately-owned industry, including agriculture."—[OFFICIAL REPORT, 6th May, 1959; Vol. 605, c. 55.] The reply received from the Financial Secretary showed that £263.1 million was the total of that financial assistance. With much of this assistance we would agree. Some of it goes to agriculture and some of it is for the Development Areas.

I am not making the point that we disagree with all this, but that those who receive this sort of money are not the ones who should make a campaign about the failure of nationalised industries. It would be most interesting to have an equation made of the amount of public money being poured into private industry and the amount which private industry is expending on anti-nationalisation campaigns. I am sure that we should find that the campaign is being financed by public subscription in other forms as well.

The public forms of industry, such as S. G. Brown and the profitable parts of the steel and road transport industries, are handed back to private hands while the unprofitable parts of private industry are maintained by ever-increasing doles of public money. Trade unions and their members in such firms as S. G. Brown have given everything they possess in constructive co-operation to build up an enterprise of great value to the nation. They have received for their pains a contemptible and squalid stab in the back. The nation cannot survive in the world into which we are moving on this sort of chicanery.

Unless we can get an increase of cooperation between employers and employed, which is the only basis upon which we can live, then British industry will wither and our living standards in Britain will decline. Because we want a square deal in cases where public enterprise has been a great success we deplore the anarchy of this move and we invite the Committee to register its disapproval of it.

4.27 p.m.

The Civil Lord of the Admiralty (Mr. T. G. D. Galbraith)

We have had a fine, pugnacious, knock-about—[An HON. MEMBER: "Knock-out."]—take-over-bid speech of a kind that I would be delighted to make in my own constituency. Whether the hon. Gentleman is wise, on such a hot afternoon as this, to indulge in pyrotechnics of this kind I do not know. One thing I know is that after the smoke and the sound have cleared away—[An HON. MEMBER: "You will have had a rocket."] It will turn out that the rocket and the ammunition used by the hon. Member for Newton (Mr. Lee) have been blank and that the Admiralty's case is as strong as ever.

I intend to speak in a very much quieter and calmer way than the hon. Gentleman. [Interruption.] If I am a little duller, I apologise to the Committee. The plain fact is—[Interruption.] If hon. Gentlemen opposite do not wish to listen to me, that is their business. We listened very carefully to the points made by the hon. Member for Newton, and I would ask hon. Gentlemen opposite to listen to a quiet and calm statement of the Admiralty's case.

I would like to follow the hon. Gentleman is describing briefly the history of the company and its association with the Admiralty. He was correct in saying that the firm of S. G. Brown was established in 1933 for the manufacture of scientific instruments and that its best known product was the gyroscopic compass. In addition, it manufactured other types of scientific instruments though it did so on a fairly small scale.

When the war started, in order to increase the company's productive capacity, the Admiralty financed an extension to the factory which the company ran on the Admiralty's behalf. By 1940, relations between the company and the Admiralty had become strained. The hon. Member suggested that the reason for this was inefficiency on the part of the company. I am sorry to have to tell him that he is wrong. The reason for the deterioration in the relations between the company and the Admiralty was a conflict over war-time priorities and the unwillingness of the company to carry out the Admiralty's wishes. [HON. MEMBERS: "Oh."] That is not the same thing as inefficiency. It was a failure to respond to what the Admiralty thought was the right degree of priority and that is not the same as inefficiency. [HON. MEMBERS: "It is worse."]

The hon. Member stated that the company had been inefficient. I am simply pointing out that the Admiralty's action was not due to inefficiency. As a result of this conflict, the Admiralty decided to assume control of the company under Defence Regulations. A controller was appointed and the directors, Mr. and Mrs. Brown, were removed.

Miss Jennie Lee (Cannock)

This is private enterprise at work.

Mr. Galbraith

At this time the ownership of the company had not changed. Mr. and Mrs. Brown, who were the sole owners, asserted their rights under the Defence Regulations and asked the Admiralty, it having taken control of the company, to buy the shares. This the Admiralty did in 1941. Like the hon. Member, I wish particularly to draw the attention of the Committee to this fact, because it shows that the acquisition of these shares was not on the initiative of the Admiralty but was something asked for by the Browns under the terms of a Defence Regulation. I have been asked what the consequence of that was. The consequence of that, as I see it, was that there was no deliberate intention or wish on the part of the Admiralty to acquire ownership of the company. It just happened it was not something which was intended.

When the war was over, the policy regarding S. G. Brown was reviewed by the party opposite, which decided—[Interruption.] I should be grateful if hon. Members would listen, because this is an important point. When the war was over, the policy regarding S. G. Brown was reviewed by the party opposite, which decided to retain the company in private ownership. What is interesting about this is that it was contrary to the general policy of hon. Members opposite at that time, which was to return to private ownership companies which had been acquired under the Defence Regulations.

An exception was made in the case of S. G. Brown.—[An HON. MEMBER: "Was this the only exception?"]—It was the only exception so far as the Admiralty was concerned, anyway. There may have been one or two other companies which were returned, but the main thing done at that time was to return them to private ownership. An exception was made in the case of S. G. Brown. The Admiralty had three firms and returned two of them. The exception in the case of S. G. Brown was because its war potential as a manufacturer of high precision instruments was of great value to the Admiralty.

For some time after this, the reason for retaining the firm based on the need for war potential remained valid, but in recent years the advent of the nuclear weapon has altered thinking about the nature of a future war and the need to preserve a war potential. [HON. MEMBERS: "Oh."] This is the crux of the argument. Nowhere are we now retaining capacity because we might require it in wartime. Thus, the disposal of S. G. Brown is only another aspect of the change in defence policy which has already led, for example, to a run-down in the size of the Reserve Fleet and the consequentially reduced requirements for dockyard capacity, of which the Committee is well aware.

I do not think that the hon. Member has really appreciated this argument about war potential. Of course, we require some of the products of this firm in the same way as we require the products of other similar firms, but with regard to war potential the position now is that we no longer believe that in a future war we should be able to build up the production of warlike material above the peacetime level and, in consequence, there is now no defence justification for the Admiralty to retain control of S. G. Brown, although, of course, the Admiralty will continue to buy any products from it in the same way as it does from other similar companies.

I should now like to turn to examine the finances of the company, to which the hon. Member referred.

Mr. Nabarro

Before my hon. Friend leaves this point, could he say what is the extent of Admiralty contracts? Would he confirm, for example, that in 1958 the total value of output of this company was £1,800,000—is the aggregation of its sales—and what the Admiralty bought from it was £60,000, or only 3 per cent., of the output?

Mr. Galbraith

I do not wish to embarrass my hon. Friend, but I think that the amount done on Admiralty account is 18 per cent.

Mr. Nabarro

This is a very important point. I want to be quite precise about it. In 1958, the value of this company's sales was £1,800,000. In that year the value of Admiralty contracts placed with the firm—there would be a time lag between the two—was £60,000. [Interruption.] I shall give the following year. In 1959, that is, for the twelve months to 31st March last, the output of the firm was £1,600,000 and Admiralty contracts placed amounted to £55,000, so it was 3 per cent. These figures were given me by the Admiralty in answer to my Question.

Mr. Harold Wilson (Huyton)

On a point of order, Mr. Bowles, could not the two hon. Members settle their rows privately in the 1922 Committee?

The Temporary Chairman (Mr. Frank Bowles)

I should point out to the Committee that this debate is to be a short one. Although it is a very exciting one, perhaps hon. Members may observe a little more silence.

Mr. Galbraith

Thank you very much, Mr. Bowles.

I wish to turn to examine the finances of the company, because the financial situation reinforces the basic defence arguments in favour of disposing of the company. When the company was formed in 1933, it had a capital of £30,000. The Admiralty, as I have explained, had to purchase these shares in 1941. The price, following an independent valuation, was £55,750. After the war, when it had been decided to retain the company, its capital structure was reorganised. The authorised capital was raised from £30,000 to £250,000 and the Admiralty took up £180,000 of this at par to enable the company to purchase from the Admiralty the plant and equipment which the Admiralty had provided during the war.

Shortly after this, the firm moved from its old factory at Acton to new and larger premises at Watford. This move was financed by a debenture of £165,000, provided by the Admiralty, of which £60,500 is still outstanding. After this move, and the financial reorganisation associated with it, it was hoped that the company would be able to stand upon its own feet and finance itself from its own resources. Unfortunately, in spite of the very modest dividend of 5 per cent. which the company has paid, this has not been possible.

Mr. F. Lee

Admiralty policy.

Mr. Galbraith

It may be Admiralty policy, but I am describing what that policy has produced. Although there was a very small dividend and, therefore, most of the money was left in the company, the company has, in fact, not been able to finance its own development.

Mr. Lee


Mr. Galbraith

In 1956, further reconstruction became necessary, and the authorised capital was raised from £250,000 to £500,000, £200,000 of this representing capitalisation of reserves. At the same time, the Admiralty produced another £250,000 in cash by taking up a further 90,000 shares at par and providing an unsecured loan of £160,000 at 5 per cent., repayable over ten years, starting in 1961.

In spite of this new injection of capital, the company's liquid position has continued to deteriorate and its overdraft has increased to such an extent that in this year's Navy Estimates we have had to make provision for a further £250,000. The Committee will thus see that since the start of the war a net total of £546,000 has been provided for the company from Navy Votes, with another £250,00 in hand for this year.

Mr. Lee

Will the hon. Gentleman tell us now what are the assets of the firm?

Mr. Galbraith

I am coming to that in due course.

I do not want the Committee to think that these persistent financial difficulties are necessarily a sign of failure or inefficiency on the part of the firm. Many companies engaged in modern engineering find themselves in much the same position and require heavy capital investment if they are to develop their potentialities and remain competitive.

An example of the sort of development requiring capital, which S. G. Brown has recently undertaken, is an increase in the amount of air conditioned and temperature-controlled space now required for very high precision manufacture. If our past experience is anything to go by, further development like this will continue to be necessary.

In addition, the increased complexity of the article produced and the time taken on the job means that more and more money is tied up in the process of manufacture and, therefore, the demand for fresh capital is likely to be a continuing feature of the operations of the company for some years to come.

Mr. Ian Mikardo (Reading)

I understand that the hon. Gentleman is about to make an effort to sell this asset. I must say that I do not think much of his sales talk.

Mr. Galbraith

Let us take one step at a time. At the moment, I am trying to persuade hon. Gentlemen opposite to see this matter in its proper perspective.

Of course, I admit that a valuable asset is created in the process, both in the high skill of the labour force and the complexity of the plant. As a Service Department, however, the Admiralty is not interested in building up assets, however valuable they may be, unless they are essential to its task of running and maintaining the Navy. The primary interest of the Admiralty is to secure year to year—and I emphasise year to year, because that is the way Government finance is run—the largest possible resources for direct spending on the Navy, and while it is responsible for the development of this company it cannot do this.

Further, the dividend represents a return of just over 2½ per cent. on the equity and, unfortunately, this situation seems likely to continue for some time. Meanwhile, as I have explained, the capacity of S. G. Brown has ceased to be essential to the Navy for war purposes. Consequently, the Admiralty's Departmental interest is to realise this asset rather than keep it for the sake of possible future returns at the cost of considerable immediate and continuing capital expenditure.

Mr. Bevan

The hon. Gentleman may have established his case for the Admiralty—I do not know—but is he not speaking for the Government?

Mr. Galbraith

Of course I am, but I must first start by explaining the Admiralty's interest or, rather, lack of interest. In due course, the rest will perhaps become clear to the right hon. Gentleman if, instead of interrupting so much, he will listen to what I have to say. This difficulty—the feeling that if we keep this firm we are responsible for its future development—explains the reluctance of the Admiralty to retain the ownership of the firm. We no longer require the firm's war potential and we therefore do not wish to face the financial responsibilities involved in developing the company.

Sir Peter Agnew (Worcestershire, South)

Do I understand my hon. Friend to say from the figures that he gave on the return on the equity that the Government, representing the public, would do better if they took out the money which is invested in this company and put it into Dalton's?

Mr. Galbraith

All I am saying—I am drawing no conclusions—is that the return on the equity is 2½ per cent. I think that this reluctance of the Admiralty may seem strange when it is well known—

Mr. John Diamond (Gloucester)

It is quite inaccurate.

Mr. Galbraith

I must get on; there is a very short debate.

Mr. Diamond

Is the hon. Gentleman saying that a company which has distributed dividends of 5 per cent. and given a bonus issue of £250,000 has declared a dividend of only 2½ per cent.?

Mr. Galbraith

The hon. Gentleman has the facts quite wrong. There was no bonus issue of £250,000.

Mr. Diamond

The hon. Gentleman said so.

Mr. Galbraith

No; there was a capitalisation of reserves. [Laughter.] The hon. Member may be an accountant, but I happen to be the son, the grandson and the great grandson of an accountant, and I prefer my interpretation to his. I am talking at the moment about what may seem to be a strange reluctance on the part of the Admiralty—

Mr. John McCann (Rochdale)

To tell the truth.

Mr. Galbraith

I am busy trying to tell the truth. The trouble is that hon. Members opposite do not want to listen to it.

This reluctance on the part of the Admiralty may seem strange when it is known that the Admiralty is one of the oldest production Departments and is itself engaged on work somewhat similar to that done by S. G. Brown, for example, at the compass factory at Slough and the torpedo factory at Alexandria, in Dunbartonshire, but these are Admiralty establishments employing Admiralty staff, where the Admiralty is producing for its own use. With S. G. Brown the position is the reverse. It is run on commercial lines, and 60 per cent. of its output is on commercial account and only 18 per cent. is required for the Admiralty for peace-time uses.

The ownership of this company therefore demands, in addition to technical "know-how," which the Admiralty possesses, the exercise of commercial expertise, which the Admiralty is not organised to provide—

Mr. Sydney Silverman (Nelson and Colne)

And which you do not possess.

Mr. Galbraith

That is precisely the case which I am trying to advance, and I am glad to have the hon. Member's support. For once in a while the hon. Member is right.

While the maintenance of the firm's defence potential was necessary the Admiralty, naturally, did the best it could, working in this unfamiliar sphere, but I cannot conceal from the Committee that Departmental methods of finance, with the resulting accountability to Parliament each year, ill accord with the most fruitful ways of developing a commercial concern. Now that the defence needs for the retention of the firm no longer exist, we think that it is much better to recognise the fact and for each of us to go our separate ways.

After all, this is not the first asset which a change of defence policy has caused the Admiralty to sell. I suppose that the Admiralty could have continued to run commercially, or at least have tried to run commercially, some of those assets which it has already sold, but that would have been a radical change for a defence Department to do this and until now, as far as I know, it has never been suggested that a defence Department should retain assets which it no longer requires for defence purposes in order to try to make a profit out of their possible—I repeat "possible"—commercial value.

I do not wish the Committee to think, however, that the Admiralty is bent upon the disposal of this firm willy-nilly without regard either for the national interest or for the welfare of the men and management who, by their skill and application, have raised the firm to the highly esteemed position which it now holds. Our Departmental interest, as I have explained, is certainly to dispose of the firm, but we are aware that there are other considerations and possible dangers to which the hon. Member for Newton referred and which must be guarded against. For this reason, we are not floating the company, but intend to effect a sale by private treaty which will enable us to ensure that the purchaser complies with the various safeguards which the Government think are necessary.

In the first place, although the firm is not as large as it was during the war, there has been a considerable increase since the early days and there are now just under 940 employees. The accumulated skill and "know-how" of these men represents an asset which is a value to the nation, and, therefore, the Government—and I hope that the right hon. Member for Ebbw Vale (Mr. Bevan) noted that—intend that the sale should be governed by several important considerations.

First, the business should be kept on as a going concern under efficient management and not allowed to disintegrate. For this reason we will not sell to a purchaser unless he can convince us that he will be able not only to maintain but to develop to the full the potentialities of the high-precision manufacturing capacity which already exists in the firm. We shall require whoever purchases the firm to make full use of the facilities available at the factory at Watford and to assure us that they will carry through, as far as is practicable, projects already under development by S. G. Brown.

Mr. J. T. Price (Westhoughton)

What if they do not do so?

Mr. Galbraith

As for employment, the Admiralty has a good record in the establishments of which it has already disposed in dealing with the problem of surplus personnel, even in those establishments where closure has taken place. Of course, closure is not taking place in respect of S. G. Brown. As I have said, here we are selling a going concern. Nevertheless, we realise that the employees are bound to be worried by a change of ownership. For this reason the manager was instructed, when he saw the men at the time of the Parliamentary statement, to give an assurance that the Admiralty regarded continuity of employment as a major factor to be considered.

On Monday of this week, when I saw a deputation from the factory, I again gave this assurance. I was most impressed by the deputation's reasonable approach and appreciation of the Admiralty's point of view, even if they did not agree with it. As a result of this meeting with the deputation from the factory, I formed the impression that they were less worried about their employment than about the future of the firm. I do not want there to be any doubt, however, about the Government's attitude on this point, and I therefore once more state that we regard future employment in the firm as of the greatest importance and that we shall consider as possible purchasers only firms which can assure us of their ability to provide continuity of employment of the same highly skilled type.

A fear which the hon. Member for Newton expressed is that a monopoly might be created as a result of the sale. There might once have been a chance that this could occur, but there are now several other firms engaged in this type of business and it is an extremely unlikely eventuality. Nevertheless, the Government intend to examine each possible purchaser and to assure themselves that there is no danger of the establishment of a monopoly even in a particular branch of the work at present carried out by S. G. Brown.

We are determined, too, that the purchaser should not be under foreign control and to ensure that the purchase is not financed in such a way that the firm might be brought under foreign control. Before agreeing to a sale, therefore, the Government will assure itself of these points.

There is one other feature which we intend to safeguard. As the House knows—indeed, the hon. Member for Newton referred to this—S. G. Brown has acquired the right to manufacture under licence equipment developed by the Bosch Arma Corporation of America. This work holds considerable promise for the future, and therefore in assessing the desirability of any possible purchaser who might have some American connections the Admiralty would assure itself that this would not damage or prejudice the existing arrangement between S. G. Brown and the Bosch Arma Corporation.

The kind of purchaser for which we are looking is a go-ahead company able to stand on its own feet and with adequate financial resources to develop to the full the potentialities which exist in S. G. Brown. At the moment, the firm is a little on the small side, with a rather modest R and D programme. What it requires is to be associated with a larger firm whose own production would dovetail into and complement that of Brown's.

Mr. Bevan

I think that probably hon. Members will agree that the hon. Gentleman has stated his case about the Admiralty, but that is not our main case. Is it not a fact that every single requirement which he has so far stated would be met if the Admiralty handed over this affair to the Ministry of Supply? Why cross the river to fill the pail?

Mr. Galbraith

The right hon. Gentleman has been popping in and out of the Chamber all the time and I do not think that he has been following my points properly. First, I stated that there was no longer a defence requirement. The Ministry of Supply is also part of the defence set-up. The second point that I made was that this company requires capital and that the normal machinery for obtaining money through the House of Commons is not the most effective way to help to develop a company.

The hon. Gentleman asked if we had any inquiries about this firm. We have, in fact, had several inquiries from companies of the character which I described. It is too early yet to speak about price, but I can assure the Committee that we have in mind a figure which will not only take account of the investment made by the State in purchasing the company and bringing it up to its present state of development, but which will reflect the longer-term potentialities of the company.

I believe that there is a feeling on the opposite side of the Committee that the State took over what was a small family business and that by good management and the injection of considerable capital a spectacular success has been made of the firm. In fact, although the company is much bigger than it was in 1940, it has not grown at any greater pace than many other similar firms. I am sure that any company in this line of business in commercial hands which is well organised and properly financed has a great future, but I can assure the Committee that it is only by a vigorous and timely investment policy that this can be brought about, as experience over recent years has shown.

Mr. H. Wilson

The hon. Gentleman said that there had been applications. Can he say whether the Admiralty has had any discussions with any of the firms which he has mentioned as being interested in this matter?

Mr. Galbraith

As the right hon. Gentleman says, there have been applications. All the applicants have been sent —I would not exactly describe it as a prospectus, but something telling them about the company. There have not been serious conversations covering the points which I have enumerated.

Mr. Diamond

Send them HANSARD. The price will go up.

Mr. Galbraith

The company is not a ripe plum which is being offered for a song. We fully intend to get a good price and satisfactory payment for it, but the Committee must recognise that, although the plant is strong and has promise, its future cultivation will require much and costly attention. This is a task which is not really suitable to a Government Department. That is why it is in the best interests of the firm and its employees that it should be sold to someone able to give it proper attention and provide the wider commercial basis which will alone enable it to thrive fruitfully.

In conclusion, hon. Members opposite seem to believe that our decision to sell this firm has been primarily actuated by motives of political philosophy. [HON. MEMBERS: "Hear, hear."] I can assure them that this is not so. If it had been so, we should have acted long ago. We should not have waited until now. The basic reason for the decision to sell this company—and I should like the Committee to pay attention to this point because I think that it is important—just like the reason for retaining it in the first instance, is a defence reason. As I have tried to explain, the defence reason is supported by sound financial considerations which affect both the wellbeing of the Admiralty and the company. As for all the other fears and imaginary dangers and difficulties which have been mentioned, the safeguards about price, employment, monopoly and foreign influence which the Government are insisting upon will dispose of them and there are no grounds for objection. I would, therefore, ask the Committee to endorse the sale of this company as a sound practical decision which is also in the best interests of the future prospects of the firm and of the men who work in it.

5.5 p.m.

Mr. John Dugdale (West Bromwich)

In all my experience of the Admiralty, I never conceived it possible that I would listen to a Civil Lord make a speech such as the one which we have just heard. What the sailors and officials of the Admiralty, let alone the workers in Brown's, will think about it tomorrow morning is hard to imagine.

I am sorry for the Civil Lord, because we all know that the reason he had to make his speech was not that he or the Admiralty were anxious to sell the firm but that they have had instructions to do so from the majority of Government back bench Members. That is the long and short of it. This debate brings out the basic difference between the two parties. Some people say that there is not much difference, but this debate brings out clearly the question, should businesses be conducted for private profit or in the interests of the nation?

In order to try to prove his case, the hon. Gentleman has resorted to the most fantastic arguments. He said that there is no need to build up a war potential. That would seem to be the most staggering remark from a man who is in charge of a section of the Admiralty and who speaks, presumably, with the authority of the First Lord and for the Government. It is a remarkable philosophy, because we are at the moment spending many hundreds of millions of pounds on doing just that. If there is no need to build up a war potential, why not sell the Navy, as one of my hon. Friends said? The same thing applies to the other two Services. As I said, I did not think it possible that a Civil Lord could ever descend to an argument of that character.

Sir Spencer Summers (Aylesbury)

I think the right hon. Gentleman has either completely misunderstood or deliberately misinterpreted what my hon. Friend said. My hon. Friend said that the policy was based on the assumption that peace-time manufacture could not be stepped up during wartime for the self-evident reason that conditions would not permit it.

Mr. Dugdale

I do not think that the Civil Lord said that, but we shall see in HANSARD tomorrow. Even if he did say that, it is a complete reversal of the policy of all three Services. It is interesting to know that in future there is no intention to establish a war potential.

Having said that, the hon. Gentleman then said that it is necessary in selling the firm to take account of the needs of further development. Why? If there is no need for a war potential, why bother about further development? The hon. Gentleman's arguments are completely illogical and make no sense whatsoever.

The hon. Gentleman has laid down various conditions in the remarkable prospectus which he has issued. Apparently, the business must continue efficiently. Why? What is the need for that if the Government are no longer interested in it? He then said that in order to satisfy the workers the factory must guarantee future employment. To what organisation can this firm be sold which will guarantee future employment? How can one possibly hope to sell this firm and insert a special clause in the agreement saying, "You must guarantee future employment"? It is quite ludicrous.

We were very interested to hear the hon. Gentleman admit openly what I certainly had known before, that not only was the firm of S. G. Brown inefficient but actually guilty of what amounts to sabotage. The Civil Lord said so himself. It would not produce the goods needed by the Admiralty in the early days of the war, and that was the original reason for taking it over.

In 1946 I was associated with the decision to retain the firm, and that decision was arrived at on several grounds. First of all, at that time we wanted to keep a war potential. Today, it seems that the Admiralty is not in the least interested in a war potential at all; it is concerned solely with the peace-time Navy, which is an interesting revelation that has been made on the side. We were also influenced by the fact that to retain the firm would not cost the Admiralty anything at all. We did not then have to put any more capital into it. There was no capital expenditure involved, we owned the freehold of the business, and there seemed no reason for our not retaining it.

We realised, of course, that there would not at once be so great a demand from the Navy as there had been during the war. Therefore, we wanted to keep up the skilled staff, and the precision plant—put in, not by the firm but by the Admiralty during the war—and to sell the firm's products not only to the Admiralty but to other people.

What is wrong with that? I agree that it was not a private firm, but we thought it good that this Government firm should sell its goods both in this country and abroad. During the time that I was there, and I am sure since, many thousands of pounds worth of these goods have been sold abroad. I should have thought that desirable in itself, something that proved the success of the company, and something to which no one with the interests of the country at heart could take objection.

As I say, one reason for retaining the firm was to keep up the skilled staff, but another was to prevent the company from falling into the hands of Brown's themselves, who might have bought it back. Another factor that influenced our decision was one that has not so far been mentioned. It might have been bought by Sperry's. The only other firm making these instruments was Sperry's, and we thought it undesirable that that firm should have a virtual monopoly in these goods so necessary to the Navy.

The same reasons exist today—or so, at least, we on this side think. We do not want this company to be taken over by someone like the Browns and run inefficiently, or by Sperry's and become part of a big monopoly, or, as a third alternative,—and this seems to be the one most favoured by the Civil Lord—to be taken over by a firm which, although it might not have very much foreign capital, might have American capital. The hon. Gentleman drew a distinction between foreign capital and American capital and did not object to a large amount of American capital. I should like to know whether he would insist on at least 51 per cent. of the capital in the firm being British, or whether he does not mind it being entirely American—

Mr. Galbraith

The right hon. Gentleman may have misunderstood me. When I talked about American capital, I was worried about the arrangement that S. G. Brown have with the Bosch Arma Company of America and said that we wanted to make sure that any possible purchaser who might have a slight American connection would not be inimical to the Bosch Arma Company of America, as that would damage the development and prospects of S. G. Brown.

Mr. Dugdale

That will make it even more difficult to sell the firm. How anybody thinks that the firm will be sold after this debate, I cannot imagine—

Mr. Diamond

It will be given away.

Mr. Dugdale

Yes, it will be given away.

By taking this action, the Government are risking three things. First of all, they will put at risk an efficient source of supply. That, apparently, does not worry the Civil Lord. I realise that it might not worry his hon. Friends so much, but I am surprised that it does not worry the man who is in charge of the supply department of the Admiralty. Next, if the firm should go to Sperry's, the Admiralty may be held up to monopoly tactics. Third, it may, in fact, be handed over to a firm with large America connections.

A fourth risk, of course, is that there might be a demand for a subsidy. We know all about industries handed back to private enterprise and then demanding subsidies—and not only subsidies. Colvilles do not want a subsidy, but they do want to borrow £50 million, with all the advantages of a Government loan at cheap rate, and then pay higher dividends to their shareholders. Exactly the same kind of thing may happen here. It may well be that the buyers of the company will be told, "If you get into difficulties later on and want more capital the Government will produce it at cheap rates—as they have done in other cases."

That is a fourth risk—that the company may, in future, demand a subsidy from the Government. As has been said, it is the steel story in miniature. Firms are taken over by the Government. They are equipped to run efficiently. Then they are sold, and immediately after the sale the buyers come back asking for subsidies. We condemn the decision to denationalise Brown's because it sacrifices the needs of defence, it sacrifices the best interests of the Royal Navy and it sacrifices the livelihood of the firm's workers to the stupid Conservative slogan—"Private enterprise is always best."

5.17 p.m.

Mr. Farey-Jones (Watford)

Hon. Members probably realise that I am perhaps more interested in this debate than any other hon. Member now present. This firm is in my division. These are the people for whom I am, in fact, or allegedly, responsible—

Mr. G. A. Pargiter (Southall)

By not a very large majority.

Mr. Farey-Jones

At least I won it from the Opposition, and, if I may say so, I have every intention of winning the seat again.

At the beginning of what I have to say, it is right—because I know that I shall get "rockets" from both sides—for me to state at once one of the principles by which I live my political life. I do not believe that any Government of any colour should run the country's industry. I do not believe in nationalisation of any kind. Over the years, my own experience and observation have led me to the conclusion that nationalisation has proved to be a complete and utter failure.

Let us look exactly at what we are discussing this afternoon. The hon. Member for Newton (Mr. Lee) really had a wonderful knockabout in opening this debate, and the basis of his argument was the ownership of S. G. Brown. I am far more concerned with the guarantee of employment for the people who work in my division, the firm's future development, and the holding together of that fantastic group of technicians that are S. G. Brown's. Those are the things to which I have applied my mind in the last few days with particular emphasis, because, as the House may be aware, I have had very considerable experience of running just this type of factory.

I have come to the conclusion that to argue about who should be the owners is to start quite the wrong way. The real argument is in which way can we develop this firm so that we can add to the staff, can guarantee its future employment and can prevent it becoming a monopoly or falling into foreign hands.

I am very gravely disturbed by one feature. I am disturbed at the possibility of the firm being sold and at a later date, perhaps in a year or two, its complete control being taken over by some of the slick operators of take-over bids. I am very disturbed about that possibility.

Mr. Diamond

How does the hon. Gentleman propose to stop them?

Mr. Farey-Jones

Just a minute. I said that I would get rockets from both sides of the House, and I shall, but I think that when I am speaking about my division I am entitled to ask the House to give me a hearing.

I am very concerned about that matter because I think that this take-over bid business is actually a major menace to our national industry. I believe that at some time or other the House will have to devote its attention to dealing with just that.

Coming back again to the firm of S. G. Brown, those of us who are interested in air navigation or sea navigation, in the production of guided missiles or, in fact, in anything to do with the new era and age in which we have entered, have no qualms of conscience or anxiety about the future of this firm. The firm can go so far in the next twenty-five years that one does not need to exercise one's imagination at all. I think it is absolutely right that I should say this to the Opposition. They are not always right any more than we are.

If the shop stewards throughout Great Britain acted in exactly the same way that the shop stewards in S. G. Brown have acted over the years, this country would be streets ahead in the international field. There is no question of a stab in the back, as the hon. Member for Newton said. After all, the House cannot have it both ways. I am quite sure that when the Navy Votes were before the House, right hon. and hon. Members opposite were among the people who cut them down. One cannot expect any Service Department to go on developing organisations similar to S. G. Brown and at the same time provide its necessary contribution to the defence of the country.

I am hoping that when my right hon. Friend winds up the debate he will give me the following undertaking. Every hon. Member on both sides of the House knows the personal efforts which I made throughout last year to get the Government to underwrite various strategic projects in the aircraft industry—not only to underwrite them, but to make quite sure that certain inventions did not get into the wrong hands, were not operated by foreign bodies or became the property of foreign Governments. I feel that I am entitled to ask my right hon. Friend for an undertaking to that effect in the case of S. G. Brown.

Getting back to the future of the firm of S. G. Brown, is it the argument of the hon. Member for Newton that the grand group of fellows in this factory are only going to behave in the way they have—as an example to the whole country—if the firm belongs to the Admiralty? Is that the argument, because, if so, that is hypocrisy and humbug, as hon. Members opposite know only too well. I am supremely confident that the artisans and workmen of Watford have worked as they have because of their pride in the job and not because they belonged to the Admiralty or to anyone else. I am confident that they will continue to behave in that way.

I had certain very considerable anxieties when listening to the final sentences of my hon. Friend's speech, but I have had an undertaking that the firm will be preserved as a going concern. I have had a further undertaking that in any transactions that may take place—and do not let us forget that at this stage we are only being served with an intention to sell, and, of course, it may not be quite so easy to sell—[HON. MEMBERS: "Hear, hear"] On the other hand, between now and the actual sale, it may be that, as a result of this concentration of effort and thought, the people in S. G. Brown will have different ideas. It may be that my hon. Friend will have different ideas. I am not certain that the hon. Member for Newton will not have a quite different idea, if he really sticks to the suggestion that only if the firm belongs to the Admiralty or to the Ministry of Supply will it be a continued success, because I can tell him that S. G. Brown will remain a success and will go on from success to success over the years. I will help to see that it does.

Whatever happens to S. G. Brown, I am fully aware of the problems that are going to face all the strategic industries in the country, and that is why, as an hon. Member on this side of the House, I have put my suggestion to the Government concerning how in the future we can underwrite our strategic industries.

As I said at the beginning of my speech, I do not believe in nationalisation. I never have and never will. Indeed, I believe that the vast majority of people in the country do not believe in nationalisation either. Obviously, if S. G. Brown is to develop its full potential it must and should, and I hope it will, associate with an organisation or an industry in this country so that together in partnership they will be able to develop its fullest potential.

One further point.

Mr. Joseph Slater (Sedgefield)

The hon. Gentleman is running away from the case.

Mr. Farey-Jones

I can assure the hon. Gentleman that I never run away from anything in this kind of debate. Will the hon. Gentleman bear in mind that these people will be my electors at the next election? I am quite certain that what I am saying today will be accepted as part of the pride and intention of Watford as a whole.

Lastly, there is the matter of the Arma gyroscope, the latest development of S. G. Brown. Those hon. Members who are fully informed will know that this latest production of this very remarkable firm is a world-beater. There may be points of view on the benches opposite about letting the firm stay in the Admiralty, but I do not think that any Government Department, whether the Admiralty, the Ministry of Supply or any other Department, can develop something like this gyroscope and sell it on the world market as must be done.

Therefore, in my own division, they will appreciate the issues involved. I think that the sale—under the proper guarantees provided this afternoon—is right and proper.

5.30 p.m.

Mr. G. A. Pargiter (Southall)

Under the circumstances, I am sorry for the hon. Member for Watford (Mr. Farey-Jones). He has done his best in the difficult situation in which the Admiralty has put him. One can appreciate and accept his declaration that he does not believe in the nationalisation of any industry and that he believes that the workers of the firm would do just as well under private enterprise ownership as under the control of the Admiralty. The answer is that these workers, at the time when it was decided not to retain this firm, made representations to the Admiralty that it should be retained. They were then told, "All right, this is an experiment in Socialism".

The workers were heart and soul in an experiment for Socialism, but it is asking too much of them to expect that they shall be heart and soul in an experiment in capitalism in precisely the same way. They will do their job, and they will be proud in doing it, but if it comes to a question of the amount of time spent on the job or if the firm gets into difficulty, they will be inclined to say. "Well, this firm is under capitalist management; you will have to handle this." Before, they would have been prepared to tackle such problems and make sacrifices which no private enterprise management could ask them to make.

The Paymaster-General (Mr. Reginald Maudling)

Is the hon. Gentleman saying that it is right for Admiralty funds to be used to finance an experiment in Socialism?

Mr. Pargiter

If that is the best argument we are going to hear, that cheap kind of jibe, it is a very good illustration of the weakness of the case from the Government Front Bench for the disposal of this firm.

Mr. Bevan

They have not got a case.

Mr. Pargiter

Let us look at this matter as an experiment in Socialism.

Mr. Bevan

Let us sell the Navy.

Mr. Pargiter

Apart from loans, the Government have invested, approximately, £300,000 in the company. Over a period of years they have taken approximately £154,000 in dividends, which is not too bad. I admit that it is not on the scale that private investors demand, but it is not too bad. They now hold £500,000 share capital and have assets worth £1,250,000. That is not a bad experiment in Socialism, is it?

Mr. Diamond

And they have a world-beater.

Mr. Pargiter

It is so successful that the company has to be disposed of before we on this side of the House come into power because we might be inclined to continue an experiment of this kind. Such things as this must be got rid of. It is necessary, in the view of the Government, to dispose of anything which could possibly be regarded as a success in case there is a tendency on the part of a future Labour Government to pursue such a successful experiment.

Let us look at some of the other factors. I do not wish to go into the question of the overdraft and why it is there. Because the Admiralty has financed the company badly, it does not constitute a case against the company, and there is no case at all for disposing of it. The criticism of the way in which the Admiralty financed the company cannot be regarded as a request to dispose of it, but rather that the Admiralty should put its house in order regarding its financing of the company and put it on a sound financial basis. To that, the reply of the Admiralty was, "All right, we will sell it."

Let us come now to the products of the company which are, perhaps, some of the important things about which we should be concerned. First, there is the gyro-compass. That is the basis of the prosperity of S. G. Brown, and has been for a long time. It is the only compass of its kind which is not American-owned or controlled in some way. It is the only one which is completely independent. S. G. Brown has a world-wide service organisation—or the Admiralty has on its behalf—which has a good name throughout the world. That is the basis of the company's prosperity. Why should it be disposed of?

Now we come to another product, the Master Reference Gyro. This is rather important, and I hope that the Minister will make some notes about what I am saying. Again, I understand, it is the only one of its kind in the world. There may be other kinds. This was developed from a design provided by the Royal Aircraft Establishment. There is nothing of private enterprise about this. The Royal Aircraft Establishment brought the design to S. G. Brown to be developed, very largely because it was undesirable that the design should get into outside hands or that it should get outside the Government Departments at that stage in its development. And so it was brought to a firm of repute which had facilities and resources to develop the design such as were not possessed by the Aircraft Establishment. And it has been successful.

We have heard about the small amount of purchases from this firm by the Admiralty, but no one has said anything about what other Government Departments were purchasing, or what were their interests in the firm.

Mr. Nabarro

The hon. Gentleman is referring to my intervention. But I do not disguise this matter in any way, and the right hon. Member for Ebbw Vale (Mr. Bevan) referred to that question. Out of last year's sales of £1,600,000, sales to the Admiralty amounted to 18 per cent.; sales to the Ministry of Supply amounted to 24 per cent. The point I was trying to make was the declining interest of the Admiralty.

Mr. Pargiter

I hope I may be allowed to make my own speech.

We have this factory which is the only one of its kind. It was a story of the development of part of the defence requirements. This is a defence requirement if ever there was one, but this is one which is to come up for sale to private enterprise.

Now we come to the Bosch Arma unit. I believe it is a cardinal factor for defence purposes so far as America is concerned, if not from the point of view of Britain, that the company can undertake any arrangements only if it retains a direct interest in the concern. We ought to know what is the Bosch Arma tie-up. May we be told exactly what it is? We are told that this is a world-beater and something which is to be very wonderful.

Why did Bosch Arma, with its facilities and resources, want to manufacture here? Why does it want the manufacture to be carried out by a Government concern, by S. G. Brown? I doubt whether we shall be told the whole story. All of it would make an interesting story. I should like to know what are the arrangements regarding the possible manufacture and sale, and so on.

I think it is true that Bosch Arma, in its own sphere, is in competition in other parts of the world with the American Sperry Company. Do not let us be under any illusions about the Sperry Company and who controls it. We had better have that clear in case there is any talk of this company going over to Sperry's.

Mr. Galbraith indicated dissent.

Mr. Pargiter

I see that the Civil Lord of the Admiralty shakes his head. Suppose that the company taking up a large share of this were the Arma Bosch company in some other disguise. Suppose this is the reason for its interest. Suppose it is part of the general set-up of this intensive competition in which the company is engaged with the other well-known company to which I have referred.

Not enough facts have been revealed. It is interesting to note, after the Questions and the interventions on this subject last week, that as I was interested in this matter on behalf of the shop stewards I wrote to the Chancellor of the Exchequer asking that no steps be taken regarding the disposal of this firm until after we had had a debate on the matter in the House. I had a reply from the First Lord. The matter had been referred to him. Having enunciated the policy, the Chancellor was no longer interested in the detail. He shoved it over, saying, "This is a bit too warm for me. You can have this back."

It was interesting to note that the principal paragraph of the letter said: All our negotiations for disposal are still at a very early stage.

Mr. Nabarro

When was that?

Mr. Pargiter

Of course, the statement about an intention to dispose, which, one presumes, would be presented to Parliament before any negotiations took place, was made only last Thursday week. The workers were informed only last Thursday week after the statement in the House that it was the intention of the Admiralty to dispose of the undertaking. Negotiations were in an early stage. Things must have been moving very fast if negotiations were begun since last Thursday week. May we know what negotiations were carried on before any announcement was made?

Mr. Bevan

And how?

Mr. Pargiter

May we have some facts about it? The further we go into it the worse it becomes.

Mr. Julian Snow (Lichfield and Tamworth)

My hon. Friend referred just now to certain background possibilities in connection with the Bosch Arma company, and he referred to Sperry as being competitors. Would it not also be pertinent to inquire whether there is, in some part of the world, a licensing arrangement between those two great companies?

Mr. Pargiter

That carries the argument a little further. I am grateful to my hon. Friend for that intervention.

Mr. Bevan

Worse and worse.

Mr. Pargiter

This company has been able to establish by competitive contracts, a place for itself and, incidentally, a place for British instrument making in many parts of the world. Because it has done it so successfully, the Admiralty says that it cannot carry it on. What an argument! Here we have the Admiralty, with the resources of the State, saying that it cannot run a commercial undertaking. Of course, the Government do not want to run a commercial undertaking if it is successful. That is the real basis of the matter.

We want more explanation, and I hope that we shall have it from the "maid of all work" who seems to have to come in on every occasion to answer for the Government when they are in trouble. May we be told about the guarantees which are to be given and required and about how far they can be effective? The only effective way by which this Government can ensure that their policy will be pursued in the long run, not in the short run, is to maintain a major holding in the capital of the company in order that they may have the necessary voice in its control. That is the only way.

Mr. Diamond

Of course it is.

Mr. Pargiter

I am quite satisfied about this. Why is there so much competition in take-over bids about who has 51 per cent. of the shares? It is obviously an important question. Who has the control? In this case, all the guarantees in the world will be valueless unless the Admiralty has some undertaking that it can take the company back in the event of the guarantees not being observed—I should be interested to know whether any company would accept that or would be willing to pay good money in those circumstances—or, alternatively, it must maintain the major shareholding in the company.

If the Admiralty maintains the major shareholding, why not retain the lot? The arguments on this basis alone come down to quite simple issues, apart from the political problems and ideologies of both sides of the Committee. Simply from a commercial point of view, there is here a successful undertaking which has returned dividends to the Admiralty. It has given the Admiralty a value out of proportion to what was put in, a considerable enhancement of value over and above what has been invested. The basic investment has been the skill and ability of the workers and management, not the skill of the Admiralty.

Those people have done what they did because they believed in what they were doing, because they believed in their work as an experiment in Socialism; I come back to those words. We on this side are proud of it. Hon. Members opposite may be ashamed of it, but we shall shout it from the housetops because we believe it to be good. We believe that they have done well. We believe that the workers, whose desire it is to continue in the service of the country, through the Admiralty, should be permitted to continue. On that basis, I hope that we shall divide the House and win the day.

5.45 p.m.

Mr. Gerald Nabarro (Kidderminster)

The right hon. Member for West Bromwich (Mr. Dugdale) said that the resale of S. G. Brown Ltd. to private enterprise interests, among other things, "sacrifices defence". Those were the words he used. The case he made depended largely on the fact that, if the production of specialised instruments and associated equipment at Brown's works in Watford ceased as a result of the sale of the company to private enterprise interests, then Sperry would have a monopoly. I think that that was the gravamen of his case.

I have been at great pains, before entering the debate, to establish exactly the character of the production of S. G. Brown Ltd. and to establish where comparable highly specialised scientific instruments are made in other works, in this country. I am assured that there is no question whatever that the Admiralty and other Government Departments would, even in the absence of S. G. Brown—the production of S. G. Brown Ltd., in any event would not be denied to them were it operated as a private enterprise interest—would not be able to obtain those instruments from an amalgam of any or all of the following companies which are engaged in similar work: Ferranti, Pullin, Elliott Brothers, Vickers, Barr & Stroud, McTaggart Scott.

There is, therefore, no question whatever, even in the very unlikely event of S. G. Brown Ltd. ceasing production altogether of specialised scientific instruments of the kind it makes, that a monopoly would repose with Sperry or with anybody else.

On the strategic issue, to which the right hon. Gentleman referred, it is true that, in 1946, as he himself declared—I believe that he was Parliamentary and Financial Secretary to the Admiralty at the time—the right hon. Gentleman made the decision to continue this company in public ownership.

Mr. Dugdale

It was a decision of the First Lord, obviously.

Mr. Nabarro

The First Lord's decision, obviously, but the right hon. Gentleman was a contributor.

At that time, strategic requirements were manifestly different from what they are today, thirteen years later. In those days, there were no considerations of thermo-nuclear weapons in our defence arrangements. The first and the second atomic bombs had, sadly, been dropped in 1945, which had hastened the end of the war.

Today, strategic and defence considerations are entirely different. Without entering into too much detail about the possibilities of thermo-nuclear attack upon this country, I should have thought that we should be very unwise to place strategic defence needs for equipment, especially highly scientific equipment, on the same basis as we did thirteen years ago, having regard to the enormous technological advances which have been made, since that date. I hope that those two points alone will demolish the argument of the right hon. Gentleman that strategic needs require that this factory should remain in Government ownership.

Then, says the right hon. Gentleman, the factory is to be "given away" by a Government Department. The accounts of the company—I am sure that my right hon. Friend the Paymaster-General will readily confirm this when he replies—are available for any hon. Member of the Committee to see.

Mr. Diamond

Where are they?

Mr. Nabarro

At Somerset House, of course. The hon. Member for Gloucester (Mr. Diamond) claims to be a chartered accountant. When I wanted to know about the finances of S. G. Brown Limited, I went to Somerset House for a copy of the last balance sheet and statement of accounts.

Mr. Diamond rose

Mr. Nabarro

The right hon. Member for Huyton (Mr. H. Wilson) wants to reply to the debate at six o'clock. I have only ten minutes.

Mr. Diamond

The hon. Gentleman should not refer to Members present, then.

Mr. Nabarro

All right. I will give way.

Mr. Diamond

I am grateful to the hon. Gentleman. Of course, we all know that the accounts are there, but why was it not intended that they should be made available to the Committee, so that we could all consider the matter sensibly? The accounts should have been distributed and the figures should have been given from the Government Front Bench, instead of being withheld and concealed.

Mr. Nabarro

The hon. Member is a qualified chartered accountant. I am not. I am a mere simpleton in commerce, but I know how to read a set of accounts and where to go for them. Evidently, the hon. Member for Gloucester does not. I obtained a set of accounts for S. G. Brown Ltd.

Mr. Diamond rose

The Temporary Chairman (Sir James Duncan)

If the hon. Member for Kidderminster (Mr. Nabarro) does not give way, the hon. Member for Gloucester (Mr. Diamond) must resume his seat.

Mr. Nabarro

I obtained a set of accounts. Sir James, I have not given way, but the hon. Member for Gloucester is still on his feet.

Mr. Diamond

On a point of order, Sir James.

The Temporary Chairman

It is not a point of order.

Mr. Diamond

I thought that you, Sir James, had raised it as a point of order. That is why I referred to your Ruling. Is it not normal, is it not in order and is it not also courteous for an hon. Member to give way when he challenges another hon. Member by name?

Mr. Nabarro

I have already given way once to the hon. Member for Gloucester.

The Temporary Chairman

I am not concerned with courtesy. I am concerned only with matters of order. If the hon. Member who holds the Floor does not give way, the hon. Member for Gloucester must resume his seat.

Mr. Jack Jones (Rotherham)

We cannot expect courtesy from the hon. Member.

Mr. Nabarro

I hear the hon. Member for Rotherham (Mr. Jack Jones) say that his hon. Friend need not expect courtesy from me. I gave way once to the hon. Member for Gloucester. As the right hon. Member for Huyton wishes to begin winding up for the Opposition at six o'clock, I do not intend to give way a second time.

The hon. Member for Gloucester is a chartered accountant. He should know where to go for company accounts. I know where to go for them. This morning—

Mr. Diamond

On a point of order. I asked you for your Ruling, Sir James, and you gave it. Immediately following your Ruling, the hon. Member for Kidderminster returned to a personal attack, naming me personally. It may be that you are not responsible for courtesy, but you are in charge of this Committee. Can you not give a Ruling which will show the hon. Member for Kidderminster where his responsibility lies?

The Temporary Chairman

Up to now, the hon. Member for Kidderminster has not said anything out of order. In that event, I am not in a position to stop the hon. Member saying anything, because he has not said anything out of order. I say nothing about courtesy. That is not a matter for me.

Mr. Nabarro

I am deeply grateful to you, Sir James, as always, for your support.

I ascertained from Somerset House that the last set of accounts available was in respect of the year ended 31st March, 1958. No further set of accounts has been filed. I asked the Admiralty by telephone whether a further set of accounts for the year ended 31st March, 1959, was available. Those accounts are not yet available, though the books of the company have been audited and the accounts should be available in a few weeks time.

Over the last year or two this company has made an average profit before taxation and after depreciation of about £130,000. That is a profit assessable to Income Tax and Profits Tax which, the hon. Member for Newton (Mr. Lee) might note is the correct way to express a company's profit. The right hon. Member for West Bromwich talked about "a give away" when the company is sold. The assets of the company comprise: public moneys injected, £546,250; reserves of one kind and another as at 31st March, 1958, a further £603,374, making a total of £1,149,624. If we add a sum in respect of the last trading year ending on 31st March, 1959, it is probable that the aggregation of capital moneys and reserves is about £11 million. It would be correct to say that when this company is sold approximately a three to four year capitalisation of net profits should be added to the figure of £1¼ million. That is the usual basis.

Mr. Jack Jones

It is the hon. Gentleman's basis.

Mr. Nabarro

It is not my basis. The hon. Member for Rotherham knows how to pour steel, but not how to buy companies. One and a quarter million pounds, plus a three to four-year capitalisation of net profits, would give a sale figure of about £1½ million if this company was sold today.

Mr. Pargiter

Is the hon. Member giving that advice to potential purchasers?

Mr. Nabarro

No. I am stating the figure as a reasonable assessment of the values derived from the balance sheet, from last year's profits and all the other relevant facts which are readily available to any hon. Member. The trouble with hon. Members opposite is that many of them have not consulted these figures. This company today is worth about £1½ million. It is a very valuable asset. Having regard to its specialised character, there might be an exceptional emolument placed on the figure I have mentioned, which might run it up to £1¾ million.

Interest in the sale is manifest. Forty-two applications to purchase had been received by the Admiralty up to yesterday. I should like the Paymaster-General, when he replies, first, to confirm the figure of forty-two applications and, secondly, to say how many of them came from American or other foreign interests. I was delighted to have the assurance of the Civil Lord that this company will not be sold abroad, but it would put matters in their correct perspective if my right hon. Friend the Paymaster-General would confirm my figure of 42 applications up to yesterday and say how many of them are applications from companies in this country and how many have come from abroad.

My right hon. Friend also might confirm that there will be no objection on the part of Her Majesty's Government to selling this company to an engineering group of companies, or a company in a similar line of business in this country, notwithstanding that a take-over bid would be involved. Of course, this is a take-over bid. It is, perhaps, a different sort of take-over bid to the affairs in the last day or two of Harrods Stores, Debenhams and the House of Fraser in the distributive trade. Take-over bids seem to be anathema to right hon. and hon. Gentlemen opposite. They are even anathema to one or two of my hon. Friends.

Mr. Diamond

There is one in front of the hon. Gentleman, namely, the hon. Member for Watford (Mr. Farey-Jones).

Mr. Nabarro

I am a naïve fellow. I do not understand why they should be anathema. A take-over bid is involved here, and it is an interesting reflection to think about what happened a year or two ago with the parlous financial condition of that eminent daily journal the Daily Herald. There was a take-over bid for that paper.

Mr. Emrys Hughes (South Ayrshire)

It has improved.

Mr. Nabarro

The hon. Member says that it has improved. There was a takeover bid for the Daily Herald by Odhams Press. [An HON. MEMBER: "The hon. Member should read it."] I read it every day. It is my favourite journal. The Daily Worker and the Daily Herald are first at my breakfast table every morning. That is why I always know the answers. I would not learn them anywhere else. I believe in the hustings, as the hon. Member for Nelson and Colne (Mr. S. Silverman) has so often found when he has been debating against me elsewhere.

Odhams Press made a take-over bid for the Daily Herald. Odhams Press would also have been taking over an Income Tax loss forward from the Daily Herald. The Daily Herald is a Socialist enterprise. So is the loss. A loss is invariably a Socialist enterprise. Odhams Press buy the loss forward in the Socialist Daily Herald, but then Odhams Press, with its deep Socialist interests, makes a takeover bid for Newnes Publications and competes with the News of the World for that valuable magazine chain—

Mr. Jack Jones

"Comic Cuts"?

Mr. Nabarro

I agree that they are all in the chain. Odhams Press and the Daily Herald love to be associated with "Comic Cuts". [Interruption.] I have some small children, and "Comic Cuts" is often in the household.

Take-over bids and purchases of losses forward for Income Tax purposes transcend all party political considerations. It is only the hypocrisy and humbug of the Opposition in this Committee which would try to make the general public think they feel otherwise. Of course, we must sell S. G. Brown Ltd. It is no part of Conservative philosophy to retain in public ownership such enterprises, which produce goods of a competitive character that are better produced by private industrial concerns, whether it is public houses in Carlisle or gyroscopes in Watford, or the rural buses or the rump of British Road Services. [An HON. MEMBER: "Or false moustaches in Kidderminster."] No, it is not false, as I said the other day. The hon. Member did not take the point I made to the Chancellor. I said that carpets were made in Kidderminster and that moustaches were not analogous in any way.

It is no part of the philosophy of the Tory Party to sustain public ownership in any field. I am sorry that the hon. Member of Newton has left his place now, for in the course of his interesting speech, gravely inaccurate in many respects, he accused the Tory Party of selling all public undertakings which showed a profit or earned a surplus year by year, and of retaining in public ownership only such undertakings as made a loss, so that the Tory Party, he said, could demonstrate to the country the fallacies of nationalisation.

The hon. Member for Newton was surely gravely inaccurate in his comments. The electricity boards earned a substantial surplus last year. The Tory Party has not endeavoured to sell them. [HON. MEMBERS: "Not yet"] No, not yet. There may come a time—I hope there will—when we shall do so. I am not ashamed of my political convictions. I do not believe in these worn-out shibboleths of public ownership. We have made no attempt to sell the electricity boards. Neither have we made any attempt to sell the gas boards. There are many undertakings in the country which are in public ownership, and which are earning a surplus, and which we have made no attempt whatever to dispose of. But those are of a different character from the company which we are discussing today.

The reason for the difference is not very hard to seek. Electricity is almost completely a statutory monopoly. So are gas, coal and the railways almost completely statutory monopolies. But we are today discussing a company which is neither of a statutory character nor a monopoly. It is a highly competitive commercial enterprise, which, due to fortuitous circumstances, the Government acquired for war purposes. These circumstances arose from unpatriotic behaviour on the part of a tiny minority of capitalists in 1940, in exactly the same way as there was a tiny and insignificant minority of unpatriotic trade unionists in 1940.

There is always a tiny and insignificant minority of unpatriotic elements in this country—capitalist or trade unionist. Later, as a result of defence needs in 1946, possibly rightly—I do not argue about that; it is thirteen years ago—the company was continued in public ownership. But it is no part of a Conservative Government's philosophy in the highly competitive times in which we live today—

Mr. John Hynd (Sheffield, Attercliffe)

How does the hon. Gentleman justify his reference to a highly competitive situation when the whole trend of private enterprise at the moment is destroying competition by the vast take-over bids?

Mr. Nabarro

I am not sure whether the hon. Gentleman was here a moment ago when I was talking about that. I will respond at once to his point. At Question Time, a few days ago, I referred to an affinity of interest between companies which amalgamate or where takeover bids are involved. Affinity of interest is a justifiable cause for an almagamation or a take-over bid. There may well be in the case of S. G. Brown an affinity of interest with the company which buys it. It may be a question of vertical combination in industry or lateral combination in industry, but there may well he an affinity of interest which Treasury Ministers recognise often improves efficiency. [Interruption.]

Hon. Members

The hon. Gentleman has been told to sit down.

Mr. Nabarro

My right hon. Friend the Paymaster-General has written on this sheet of paper, which has been passed to me, "Congratulations on your admirable speech."

I was talking about an affinity of interest. Obviously, there is one between my right hon. Friend and myself in these matters. There was a recently widely-publicised effort at a take-over bid when Schweppes Ltd., on the one hand, and St. Martin's Preserving Company, on the other—

Mr. H. Wilson

On a point of order, Sir James. This is an important debate and many hon. Members want to participate. We shall be debating these matters on Monday. Is it in order to talk about Schweppes' take-over bid on the Admiralty Vote?

The Temporary Chairman

I think that the hon. Gentleman is going a little wide, but it was clear from the opening speech which I heard, although I was not in the Chair, that some wider policy question was involved. Therefore, it is a little difficult to rule an hon. Member out of order when he also refers to a wider question.

Mr. Nabarro

"Schweppervescence" is always fortifying on these occasions. There is obviously an affinity of interest between a jam manufacturer, a jelly manufacturer and a mineral water manufacturer, and it might be in the interests of efficiency and lower prices to the consumer if the take-over bid succeeded. In this case, as so much interest has centred upon who is to acquire this important company of S. G. Brown Ltd., I want my right hon. Friend to make it perfectly clear that if it is a matter of vertical or lateral combination with another British concern which has an affinity of interest, it is very desirable in the longer term that those should be the arrangements.

I strongly support the disposal of the assets of this company for the substantial sum of £1½million to £2 million. It is a sound take-over bid by private enterprise from the nationalised section of industry. I hope that it will be followed in the course of the next few years by similar disposals—Carlisle public houses, the buses, the rump of British Road Services and the remainder of the nationalised steel industry—before we proceed perhaps with such undertakings as the gas and electricity boards and a few of the better coal mines.

6.10 p.m.

Mr. Ian Mikardo (Reading)

Until 25 minutes ago we were engaged in a serious debate into the affairs of S. G. Brown, Ltd., and I am sorry that 25 minutes of the short time available for the debate was taken up by the hon. Member for Kidderminster (Mr. Nabarro), talking, with characteristic modesty, about himself, all the way from his moustache to his breakfast reading. I hope that we may now turn our attention once again to the affairs of S. G. Brown Ltd.

As I understood him, the Civil Lord argued the case for the disposal of this firm on three grounds: first that a Government Department ought not to retain the ownership of a manufacturing enterprise whose products were not needed for national purposes or strategic purposes; secondly, that this company required capital and a Government Department ought not to retain the ownership of a company which requires capital when it could use this money for other purposes; and, thirdly, that a Government Department is not organised to be able and is not able to run a factory of this sort properly. I want to say something about each of those three contentions.

I find myself completely puzzled by the suggestion by the Civil Lord that the fact that the products of this company may not be needed—I do not know the facts about that—for war purposes means that ownership can now be passed to some other private enterprise. Suppose this company were now in private ownership and somebody were proposing to transfer it to public ownership, I would then say that the Civil Lord's argument would be a weighty argument for not making the change, if he said, "We do not want to take into public ownership a company whose products we do not need". I think that would be a weighty argument indeed.

I think that it has far less weight, if it has any weight at all, if he is putting it forward as an argument for turning upside down and disturbing—because one cannot make the change of ownership without such disturbance, as we see from the reaction of the workers—an enterprise which, admittedly, is functioning very well and, admittedly, is a successful enterprise.

I want to make a second comment on the Civil Lord's argument that the question whether the nation needs the products of a certain company is the criterion whether that company should be in national ownership. I beg him to understand that that argument can be turned round, and I beg him to consider the implications of this if it is turned round, because if he is arguing that the question whether an enterprise should be in private or public ownership should be decided on the criterion of whether the products of that enterprise are of strategic value or necessary to the national needs I am prepared to go along with him. I am quite prepared to say, "All right, let us take into public ownership every enterprise whose products are needed in the national interest."

The Civil Lord cannot have it both ways. If he is saying that if a company is manufacturing products which are not required in the national interest that means that it must be privately owned, then he is saying, inferentially, that if the company's products are needed the company ought to be publicly owned.

I am prepared to take the hon. Gentleman up on that and do a deal with him, and make a take-over bid. Let him have this take-over bid for S. G. Brown Ltd. if we can go through the list of the Admiralty suppliers and through the list of the Ministry of Supply suppliers whose products are needed in the national interest, and through the list of those people supplying essential equipment to the railways, because the railways are a strategic weapon, and say, "All right, let us decide that those companies on this basis should be taken within public ownership because their products are needed by the nation."

We have only to look at the argument the other way round to see what nonsense it is to claim that this question whether products are needed in the national interest should act in any way, even in a remote way, as the criterion of how businesses ought to be owned.

The Civil Lord's second point was that this firm requires capital. O.K. I am quite prepared to have a look at every firm in that light as well. My hon. Friend the Member for Newton (Mr. Lee) reeled off a whole list of companies which, to recall the piece in the Daily Telegraph which he quoted, are standing out with a begging bowl. This, too, is no criterion at all of what are the proper boundaries between private ownership and public ownership.

Then he said that a Government Department is not competent to run a business of this sort. Government Departments have run with great efficiency businesses much bigger, much more difficult to operate, and much more complex than S. G. Brown, Limited. Of course, it demands a great deal of managerial skill. Although I do not wish to be unkind, I am bound to say that listening to the Civil Lord today I should not be very happy to work in a firm he was running if his speech today was any evidence of his managerial competence. But, thank goodness, he is not a permanent fixture and will not be there much longer.

Indeed, under other Ministers, senior and junior, it is a fact that enterprises of great complexity, technical complexity, administrative complexity, have been very well run by Government Departments, and I have sometimes wished that some of the publicly-owned industries at present under the care of autonomous public corporations were being run by Government Departments instead, because I think that that would make a substantial improvement.

Finally, the Civil Lord said, "Do not let anybody worry. I am making some concessions to the protests which have been received"—both public and the secret ones in the 1922 Committee, or in some other committee where the Civil Lord got a "bashing" the other night. "I am very well aware," says the Civil Lord, "that this is a serious matter. The occupation and perhaps the livelihood of 940 employees of S. G. Brown, Limited, and constituents of the hon. Member for Watford (Mr. Farey-Jones), are at stake. I therefore realise that this is a serious matter. I can understand if people are perturbed, and justifiably so." Therefore, he reeled off a list of guarantees he was going to demand from the prospective purchaser.

The hon. Gentleman knows that hon. Members of this Committee are not children in arms. The hon. Member for Kidderminster is not the only man who can read a set of accounts, though other people do not boast about it as much as he does. He knows that we are not children in arms. He knows that residual power in an enterprise rests with the holders of the equity shares, and that when the First Lord, or whoever holds the shares as his nominee, has given up the equity shareholding the extent to which he can exercise influence over what is done by the purchaser is limited both in scope and in time.

If the Civil Lord is to ask the prospective purchaser to give guarantees for all time he will not be able to sell the business for counterfeit money let alone real money, because no purchaser will give guarantees for all time, or even for a very long time in this uncertain world. The guarantees that the Civil Lord read out today are not worth the paper of the brief from which he read them, because the purchaser can come along and certainly sign an undertaking, and honourably intend to carry it out, that he will do his best to maintain the employment of the 940 workers, and so on.

But what happens if the product has a slump? What happens if somebody comes along with another take-over bid? What is the guarantee worth then? [HON. MEMBERS: "Nothing."] Is the new purchaser going to give the same guarantees? Does the Civil Lord really think that the new purchaser will renew the guarantee that the business will not fall into foreign hands, that the first purchaser can get the new purchaser to give an undertaking that if he wants to sell the company he will sell only to a British company, and that if the second purchaser should wish to sell to a third he will be able to obtain like undertakings from the third purchaser, and so on ad infinitum?

As my hon. Friend the Member for Southall (Mr. Pargiter) said, there is only one way in which one can determine the policies and the actions of a company and that is to hold its shares. When the Government give them up they know that they are giving up any power at all to have carried out the policy which they say they want carried out. To that extent, I regret to say, there is an element not only of foolishness but even of dishonesty in the case put forward, and I hope that the Committee will make plain what it thinks about it.

6.20 p.m.

Mr. Harold Wilson (Huyton)

In many ways, the interest shown in the debate suggests that it is a pity that more time was not provided for this very important case, though, as I have already indicated on a point of order, I think that there will be an opportunity on Monday of discussing some of the more general considerations which have been brought up in a number of speeches, starting with that of my hon. Friend the Member for Newton (Mr. Lee) this afternoon.

We have not had much of an answer from the Civil Lord of the Admiralty, but I understand that we are to have a winding-up speech from the Paymaster-General. I think it was on the Finance Bill about a fortnight ago that I indicated that when the Government have a really bad case the one motto that echoed round Whitehall was "Send for Reggie". [An HON. MEMBER: "Not the Attorney-General?"] Oh, no. I think that the speech which the Paymaster-General made on that occasion proved my point. He has an even worse case to defend today. Not only has he to reply to the points made by my hon. Friends, and to any further points which I may advance, but he has still to reply to the main case advanced by my hon. Friend the Member for Newton, because the Civil Lord never even began to reply to it.

My hon. Friend outlined the main developments in the history of this affair, and I think that it is not necessary for me to repeat them, though it is, perhaps, worth while to remind the Committee of some figures. Here we have a firm with a pre-war capital of £30,000 and of £50,000 at the time of take-over and a present-day value of certainly not less than £1,200,000. The hon. Member for Kidderminster (Mr. Nabarro) has done his own private valuation and he says that it is worth about £1,500,000. We have had figures given of the gross trading profits, which in the last five years averaged £190,000 a year, which is not bad on £50,000 in those war-time conditions.

The plain fact is, and no one has attempted to deny it, apart from certain denigrations in the speech of the Civil Lord, that this is a thriving firm. But in spite of—perhaps it would be more accurate to say because of—that fact, the Government are now offering it to their friends in private business. We have found this before. It is almost exactly three years ago today that we debated the Trinidad Oil sell-out whey the then Chancellor, now the Prime Minister, was attempting to defend considerations of this kind. As we found with the Trinidad Oil sell-out, when the patriotism of hon. Members opposite is weighed against private profit it is the patriotic part that suffers.

It is clear from the Civil Lord that he, at any rate—and it is true of his party generally—has no pride in national assets. It does not suit the book of the party opposite to say what national assets have been built up. It is very rare to hear any tributes from them to the achievements of public enterprise, which they know in their heart of hearts has been the remarkable success story of this post-war world, if they believe that any of these nationalised industries are capable of earning a profit for private owners, it pleases them to take the sort of decision which we have had announced in this case. One of my hon. Friends, who was perhaps going a little far, said that they would even denationalise the Navy if they thought that it would provide pickings for private enterprise. I do not put that forward seriously.

As my hon. Friend the Member for Newton has shown, this case is consistent with Government policy over months and years past. It is completely consistent with the policy of handing back the more profitable part of public enterprise—steel and road transport, particularly—to private hands. It is consistent with the rumours that we hear more and more every day that if by any mischance the party opposite were re-elected to power in the forthcoming election, it would be the policy of hon. and right hon. Gentlemen opposite to hand back still more of the profitable parts of public industry, leaving the inevitably unprofitable parts in public hands as a permanent political argument for them to use. We hear, for example, that they propose to take some of the more profitable transport hotels out of the hands of the British Transport Commission and hand them over to their private enterprise friends, and point to what is left, what the hon. Member for Kidderminster calls the "rump", of the public transport system.

This is consistent also with the Government's refusal to allow the British Transport Commission to develop valuable sites in its possession, which could yield a tremendous capital advantage to the Commission, in the centre not only of the City of London but of other towns and cities. It is consistent with their refusal to allow the Commission to do that, in order that it should be forced to sell the site to private developers at bargain prices. All this is all of a piece with Government policy.

It is consistent, within the defence field, with the policy, debated in the House on many occasions, of transferring work from the Royal Ordnance Factories and other Government Departments to private industry and then closing down the Government establishments, which, of course, then have no work. As I am sure all who heard him would agree, my hon. Friend the Member for Newton made a extremely strong case. It is only for me, in as kindly a fashion as I can adopt, to deal with the Civil Lord's attempt to reply. The Civil Lord made a point that my hon. Friend referred to the firm being taken over on grounds of inefficiency. Apparently, according to the Civil Lord, it was not inefficient. The firm was taken over by the Admiralty in war-time not because of inefficiency, but because it refused to observe war priorities laid down by a national Government in war-time. I am sure that I speak for my hon. Friend when I say that we will not quarrel—it was not inefficiency, it was sabotage of the war effort.

Then, having proved the need—and I think that he proved it as well as we could want him to do—for this firm to be kept under public ownership, because every one of his arguments proved that what he sincerely wanted to achieve could be achieved only under public ownership, having done that and entirely failed to prove that private ownership could have done or could in the future do the job better, the Civil Lord went on to speak of the Admiralty. He relapsed into his Departmental brief. He said that the Admiralty is not, of course, the sort of Department that can be concerned with building up national assets. The Admiralty's concern is only with the satisfaction of Departmental requirements for defence supplies for the Navy.

We entered this debate in the mistaken understanding that the Civil Lord was replying not for the Admiralty but for the Government, but he never attempted to answer the much broader arguments put forward by my hon. Friend. Is not the Admiralty part of the Government under this Administration? I hope that the Paymaster-General, who has a rather broader approach to some of these questions, will deal with this. Even if Samuel Pepys is still running the Admiralty, as was pretty clear this afternoon, have we not a Ministry of Supply? If the right hon. Gentleman tells us that the Ministry of Supply is not the appropriate organisation to take over the firm—and the Paymaster-General in his peregrinations has been Minister of Supply at one time or another—could not the Chancellor, who seems to have taken some responsibility for this, set up a public corporation with the Treasury holding the shares?

Incidentally, many of us have been wondering this afternoon where the Chancellor of the Exchequer has been, because it was the inept replies of the right hon. Gentleman to the Questions put to him a few days ago by my hon. Friend the Member for Newton and some of my right hon. Friends, which made it clear to us that the Government's approach to this matter is clearly and unashamedly ideological. One would have thought that the Chancellor, having got his colleagues into that mess with those Answers, would have been here this afternoon at least to defend the line he took. Indeed, it might not have been inappropriate if, instead of "sending for Reggie", they had let the Chancellor stand up at the Box and defend the extraordinary remarks he made on that occasion, which were quoted by my hon. Friend.

We were told this afternoon that this is not a job for the Admiralty. There was no attempt, however, to answer the question of whether the Government had a responsibility. The Civil Lord was put up to speak for the Government, and if the Admiralty has so narrow a conception of the public interest, an early priority is that we should nationalise the Admiralty. [An HON. MEMBER: "That would be a revolution."] An even bigger revolution would be to nationalise the Treasury.

Mr. Cyril Osborne (Louth) rose

Mr. Wilson

I am sorry that the hon. Member has not got into the debate. Did he wish to say something?

Mr. Osborne

The right hon. Gentleman said it would be a very good thing if we nationalised the Treasury. That was exactly what his right hon. Friend the Member for Ebbw Vale (Mr. Bevan) said in 1951 to the right hon. Member for Leeds, South-East (Mr. Gaitskell) when he disowned him.

Mr. Wilson

I have heard that intervention many times before from the hon. Gentleman and it does not improve on repetition. However, I can inform him that the job of nationalising the Treasury is not one that could be done within the lifetime of any one Parliament.

The Civil Lord went on to say what were the plans of the Admiralty. He was proposing a sale by private treaty. Some of us are getting a little suspicious about sales by private treaty. There was the extremely fishy business about the sale of some of the Trinidad Oil shares three years ago, when it was our regrettable duty to point out how far short the present Tory Front Bench fell of the ideals laid down for them by Disraeli in respect of the purchase of Suez Canal shares. Now we hear of the "rump" of these shares—to use a word which the hon. Member for Kidderminster would use—being disposed of by private treaty in a manner which has caused great concern and criticism in the City. One would like to know about the method by which the Admiralty—or in this case the Treasury—hawk their goods around to certain favoured customers instead of on a general basis.

This House has always been extremely jealous of the allocation of contracts, whether for sale or for purchase, by public Departments. It has rightly been very jealous of this and has laid down over more than a century the conditions under which such sales or purchases should be made, and they have been strictly observed. They were strictly observed under the Labour Government. I remember when I was in a very junior Ministerial position—Parliamentary Secretary to the Ministry of Works—being in charge of a committee which dealt with every sale or purchase or contract let by the Ministry of Works which was not let as a result of public tender. Each required Ministerial approval and careful vetting and specification.

Now we are hearing about sales by private treaty and the Civil Lord did nothing to reassure my anxieties this afternoon on that point. I want to ask the Civil Lord or the Paymaster-General whether they have a firm in mind.

Mr. Maudling indicated dissent.

Mr. Wilson

I am glad to have the right hon. Gentleman's assurance because he has already been asked to give us a few figures. Although I do not remember this being stated by the Government, the hon. Member for Kidderminster told us how many applications there had been. The hon. Gentleman seems to know a lot about it. He told us, before the Civil Lord had said a word on the point, that there had been forty-two. The hon. Gentleman also asked how many were American firms, because he wanted them ruled out right away, as we all do. So I hope the Paymaster-General will tell us more about this sale by private treaty and how generalised the offer will be. At any rate, I am glad to have his reassurance that there is no firm already in mind.

If there is no firm already in mind, how is the Civil Lord so sure that on the conditions he has laid down—pretty rigid conditions which I am sure have become a great deal more rigid since the debate was announced; indeed, I think that the firm was to be disposed of in a very cavalier manner before the question was raised in the House—he will get rid of the firm at a satisfactory price and with the fulfilment of the conditions he has laid down?

Let us go over the conditions he has laid down, many of which are unexceptionable. The hon. Gentleman said it was essential to preserve the firm as a going concern. He said that it must continue to provide employment. As far as one could gather from his speech, he meant not just employment in total but employment for the skilled team which operates there. We all sympathised with the hon. Member for Watford (Mr. Farey-Jones) in his predicament this afternoon. The pull between his constituency and party loyalty must be strong. The hon. Gentleman referred to it as a fantastic team. He used that word at Question Time a few days ago and also this afternoon. He probably meant that its members are unique in their skill and ability to work together.

I hope I am right in assuming that the Civil Lord is giving us an assurance that the team will be kept together; not merely that a similar number of workers will be found jobs as a result of the sale. I hope he will also give us an assurance on the point raised by my hon. Friend the Member for Newton on the question of monopolies. The hon. Gentleman gave a list of the conditions, many of them unexceptionable, as I have said, but how will he enforce them on any private firm? The only way he can be sure of enforcing the conditions is to hold on to the management and ownership of the firm through public ownership. The hon. Gentleman did not answer that point. All the conditions can be enforced as long as the firm is in public ownership.

I want to ask the Paymaster-General to take up what the Civil Lord said about possible alien influences in the future ownership of the firm. I think I am right in saying that the Civil Lord gave an assurance that the ownership would not pass into American hands or into the hands of any other country—

Mr. Maudling indicated assent.

Mr. Wilson

—at any rate as a result of the first sale by the Government. How does he know, having disposed of the firm to perhaps a reputable British firm, that it will not in twelve months, two years or some other time, be sold to a consortium, possibly dominated by American interests, or sold outright to an American firm? How does he know—I presume the shares will be dealt in on the open market—that there will not be portfolio investment in the firm by American concerns? There have been some amazing success stories on the part of American share buying in the past few months. We saw them clearly buying in shares through nominees but no one knew who was doing it. How do we know it will not happen again? I hope that the Paymaster-General will reassure us on that point.

Finally, I want to underline one or two of the general considerations raised by this case. First, there is the question of our defence preparedness, which is not a party issue but one of concern to the whole Committee. My right hon. Friend the Member for West Bromwich (Mr. Dugdale) was right in saying that the Civil Lord's argument about this seemed to show a very remarkable change in the Government's policy on defence preparedness. If the gyros and other things are not essential to our future defence, if there is no question of building a war potential, I should be glad to see the resultant cut in Government expenditure on armaments which would result from that policy.

Secondly, insufficient attention has been paid, especially by the Civil Lord, to this experiment in industrial relations to which my hon. Friend the Member for Newton referred. Some years ago many hon. Members in all parts of the House saw a remarkable film called, "Chance of a Lifetime". The reason why we saw it was that it had been refused a circuit release by the big cinema circuits. It showed the story of a firm where the shop stewards and the management got together and made a great success of industrial production, which had not previously been possible.

That is the story of the firm which we are debating today. It is clear that on many occasions and in many respects a degree of industrial relations has been created which is not usually found in British industry. I noticed that the hon. Member for Watford said that if similar industrial relations applied in other firms in British industry, Britain would be streets ahead of her industrial rivals.

That is our point exactly. This is 4 publicly-owned industry. Despite that great tribute paid to it by the hon. Member for Watford, not only the Government but also the hon. Member for Watford are conniving at destroying this very successful experiment in industrial relations. [Interruption.] I will put it in its very lowest terms. Hon. Gentlemen opposite can continue mouthing the phrase "free enterprise" until they are blue in the face. We are concerned here with a successful piece of public enterprise which the hon. Member for Watford and his right hon. and hon. Friends will endanger by what is proposed by the Government.

A third general consideration was raised by my hon. Friend the Member for Newton—the question of consultation with the workers in this case. On 2nd June we had some Questions with regard to what would be done about take-over bids made by Mr. Clore and others. On that occasion the Parliamentary Secretary to the Board of Trade, not attempting to answer the question put to him, turned to me and said: … I wonder whether the right hon. Member would like to give an assurance that before any further nationalisation he would secure the views of the workers, for example, in the iron and steel industry, and of the shareholders, including the trade unions?"—[OFFICIAL REPORT, 2nd June, 1959; Vol. 606. c. 24.] I will not deal with that this afternoon—[HON. MEMBERS: "Why not?"]—because I hope to have a chance to deal with it on Monday. In any case, it was dealt with far more effectively than any eloquence of mine by the votes of the workers at Penistone last week.

If it is right for the Parliamentary Secretary to say that before one considers nationalising the steel industry one must consult the workers, by the same token the Government should have consulted the workers before proposing to denationalise this firm. As my hon. Friend the Member for Newton said, let us have a poll, for none of us would fear the result.

Here we have the big issue before the Committee. We have a successful firm built up by public enterprise, with sound expansion based on the ploughing back of profits, based on a very prudent dividend policy. That has been made quite clear. Probably private owners would not have been satisfied with the dividend policy. Now the firm is to be handed over to private enterprise to get the pickings and any future inflation of share values. Do we want to see great fluctuations in share values of the firm? Do we want the management to be watching their share values all the time, to be looking over their shoulders at possible take-over bids, instead of getting on with the job of production, at which they have had such a successful record? [HON. MEMBERS: "Exaggeration."] It is not an exaggeration. This is a very accurate picture of British industry today.

We have an entirely different argument the other way round. When private firms are in a mess and the Government have to bail them out with a subsidy or some other financial help, there is never any suggestion then that the State should take a share in the equity which it is helping to preserve. We have seen what happened in steel.

There is one thing, however, which the Civil Lord did not know, apparently. We had it from the lips of the hon. Member for Watford. This firm has some new development, and the hon. Member for Watford, who claims to be an expert in this field—we grant him his claim—said that the product is a world-beater. It is just at this moment of time that the Civil Lord decides to sell the firm to private enterprise, just when it has developed a new world-beater. That, of course, is why the Government are handing it over.

We have not had a proper explanation today. Even Conservative hon. Members had said—the hon. Member for Kidderminster said it—"This is in accordance with Tory philosophy. That is why we are doing it". In that case, one wonders why they have not done it before. They have had eight years in which to do it. Or are they waiting until the firm has been really successfully built up before handing it over to their friends? Are they having a last-minute check-up on the opportunities for private enterprise fearful, as they have every right to be, of the result of the forthcoming General Election, and making certain that they dispose of the last really profitable elements of public enterprise before the General Election takes place? This case bears all the signs of the Government deciding to try to get their loot while the going is still good.

6.46 p.m.

The Paymaster-General (Mr. Reginald Maudling)

We have had a wide range of speeches, starting with the rather vigorous introduction by the hon. Member for Newton (Mr. Lee), and ending with the remarks of the right hon. Member for Huyton (Mr. H. Wilson), who put to me several questions which I will answer. In between, we have had an impressive speech from my hon. Friend the Member for Watford (Mr. Farey-Jones). I think that the whole committee was struck by the clarity and candour with which he spoke on the subject, which, rightly, affects him so much.

There are three parties to the matter—the firm and its employees, the Admiralty, and the taxpayer. It is our belief that in all three cases the sale of the company will be an advantage and not a disadvantage. That is the reason why we are taking the present step.

First, with regard to the firm and its employees, the interest of the firm and the employees is in the greatest degree of commercial expansion. It is our belief that as the firm is predominantly engaged in civil work it is more likely to expand if it is free from Government control.

Secondly, we believe that the firm will need great further injections of capital. Even the right hon. Member for Ebbw Vale (Mr. Bevan) nodded at that. We believe that the firm is more likely to get the capital it needs satisfactorily from sources other than annual Votes by this House [HON. MEMBERS: "Why?"] Because of the working of the Government's financial system.

Thirdly, we believe that the future of the company will be greatly enhanced by association with another company with strong research and development resources and with products complementary to its own. In all these ways, the company will grow stronger, and as the firm grows stronger, its employees will be better off.

The second party is the Admiralty. The Admiralty, by this sale, will divest itself of responsibilities for the company, responsibilities which the Admiralty is not designed to carry on properly. Even more important, it will relieve itself of a serious and continuing load upon Admiralty Estimates. When we know how carefully Admiralty Estimates are now checked by the House, it is right that the Admiralty should do everything it can to reduce its Estimates and not right that those Estimates should be left with large, regular sums for investment in a commercial undertaking. Finally, the Admiralty's Estimates should not be used for large-scale financing of commercial activities.

The third party is the taxpayer. The taxpayer will no longer have to provide money for the firm. As my hon. Friend the Member for Worcestershire, South (Sir P. Agnew) pointed out, the money which is provided has to be borrowed at a substantial rate of interest. The taxpayer will not have to provide money for investment in a business which, although good, is clearly of a speculative character. [HON. MEMBERS: "Oh."] The Labour Party is always saying that all private enterprise is speculative and that all commercial activities are speculative. This is a commercial activity, and its future cannot be predicted because its future lies in its competitive strength and nothing else.

Those are the reasons why we have acted as we have done, for the benefit of the firm, the Admiralty and the taxpayer.

What about the objections that are raised? First, it is said that the employees may suffer. Why? Do hon. Gentlemen opposite really believe that the Government, as a matter of principle, are better employers than private industry? [HON. MEMBERS: "Yes"] I do not accept that. Secondly, do right hon. and hon. Gentlemen opposite really pretend that the Government can guarantee full employment in this firm? This is the point that has been made. This is the pretence which is being offered, that employment is guaranteed if the firm remains a State enterprise. That is nonsense, of course.

Mr. Lee

Did not the Civil Lord say that that was one of the conditions which the Government would enforce?

Mr. Maudling

He did not say that. He said that we were trying to make sure that any firm which took over could assure us of its ability to provide continuity of employment of the same highly skilled type. That is all that a firm can do, and it is all that the Government can do. It is nonsense for the party opposite to pretend that under private enterprise jobs in this firm will be any less safe than they are under the Government.

It was a pity that the hon. Member for Newton said so much about the effect on industrial relations of this firm being not handed back, as has been said—but sold back to private enterprise. My hon. Friend the Member for Watford took that point up very well, I thought. On both sides of the Committee, we have accepted that this company is doing well and that it has done well for some time, and that much of this clearly depends upon the relations between management and men, but it is suggested by the hon. Member that these relations are good only because the Government own the company. I thought that a rather poor comment on the men concerned. It is quite clear that that is the implication. If it is argued that the sale of the company will worsen industrial relations, it must follow that he is arguing that industrial relations are only as good as they are because it is publicly owned.

Mr. Lee

The right hon. Gentleman is distorting what I said. I pointed out that the workers there have had a very great say, in the first place, in the company being retained in public ownership. They then accepted certain responsibilities which flowed from that. In consequence of accepting those responsibilities, they did more than any Government or private employer could expect to ensure the success of the company, but, in consequence of what they have done since, the Government stab them in the back and hand the firm back to private enterprise.

Mr. Maudling

I prefer the views of my hon. Friend that it is pride in their job which has led to the high standard of work in the factory. It is very interesting to note that the hon. Gentleman, as well as the hon. Member for Southall (Mr. Pargiter) talked about an experiment in Socialism. The workers in the factory were told it was to be an experiment in Socialism, and that was why the firm was not sold back. That is not what Parliament was told. Parliament was told something quite different. It was told that the company was being retained because of defence reasons. Was that the reason? Or was it, as we have since come to hear, because it was to be an experiment in Socialism?

Mr. Pargiter rose

Mr. Maudling

I am rather short of time, and I think the hon. Gentleman himself was only once interrupted.

On the question of the security of the jobs, why is it assumed, as it appears to be by the party opposite, that a private purchaser would not wish to develop the business? Obviously, the main purpose would be to develop it, because by development there would be better prospects for everybody employed in it. It is a nonsensical argument that the conditions of employment in the firm will be damaged by its disposal to private enterprise.

Secondly, it is argued that the defence requirements of the Admiralty may be affected by the disposal of this firm. It is said that it was retained in 1946 because it was part of the war potential, but my hon. Friend the Member for Kidderminster (Mr. Nabarro) has pointed out that times have changed a good deal since then. Now, we have no longer the concept of a war potential as needing reserve capacity available for rapid ex- pansion in time of war. With the advent of nuclear weapons, that time has surely passed away. Therefore, it is no longer necessary to retain this firm as valuable war potential, any more than we retained other firms as war potential.

The defence interest is in the ability of the Admiralty to buy the equipment which it wants, and which they can now buy from other firms. Therefore, I see no reason whatever why the disposal of this firm should prevent the Admiralty from buying the equipment which they want from it. To follow up what was said by the hon. Member for Reading (Mr. Mikardo), if it is argued that defence needs can only be supplied from nationalised industries, presumably the party opposite, if returned to power, intends to nationalise all the industries from which any defence equipment is bought.

Mr. Mikardo

I only wish that what the right hon. Gentleman was saying were true, but it is not. He has misquoted me. What I said was that the Civil Lord must face the reverse side of his own argument. If he says that if the Government do not need a product, its manufacture must be private, he must face the fact that the reverse argument is that if they do need it, that is a case for public ownership. He made the case, not I.

Mr. Maudling

My hon. Friend would not fall into the simple errors of hon. Members opposite. My hon. Friend said that the case for retaining it on the ground of war potential no longer existed. It is no longer a reason for retaining this company in Government ownership that it is part of our war potential. It will be just as possible for the Admiralty to buy what it requires from this firm if it passes out of Admiralty ownership.

Then there is the question of monopoly. The Government have recognised that it would be bad if a monopoly were created as a result of the disposal of this firm, and, therefore, we have said that that is one of the conditions that we shall make for any sale.

Finally, there is the position of the taxpayer and the question of the method of disposal of this asset, which is a national asset, as hon. Members opposite say. Of course, it is a national asset, but all thriving industry of this kind is a national asset. This happens to be a State asset as well, or a taxpayers' asset, and though we are disposing of it—not handing it back, which is a meaningless phrase, but are to sell it—we shall obtain the best price we can; and unless we can obtain a satisfactory price it will not be sold. That has been made quite clear by the Government.

The right hon. Gentleman also asked me why we are selling it by private treaty. He should know a little more about this phraseology. Sale by private treaty is the normal alternative to public issue. If we had a public issue in this case, we should not be able to obtain the guarantees about the continuity of the business for which we ask. It is clear, and the advice of those with knowledge in these matters confirms it, that we are more likely to obtain a satisfactory price from a sale by private treaty, because a private treaty sale will be competitive. There will be public tenders. Anyone will be entitled to tender, and that was the purpose of the announcement in the House.

Mr. H. Wilson

Was there a public tender in the case of the Suez Canal shares? It was that case which raised our suspicions about this one.

Mr. Maudling

That seems to me to be a particularly red herring. I am answering—indeed, I have answered—the questions which the right hon. Gentleman asked me—one, the serious and important question as to why this

company is being disposed of by private treaty. Private treaty means competitive private treaty, like the sale of a house or of any other chattel. There has been a public announcement that it is to be sold. We shall be happy to receive inquiries from anyone and we will hope to dispose of it at a satisfactory price. [HON. MEMBERS: "Sacrifice?"] I notice that at this stage of the debate the Opposition are beginning, as usual, to prefer noise to argument.

The fact is that this case has been argued by the party opposite solely on doctrinal grounds. It became apparent why they did not wish to see this asset sold. It came out in the speech of the hon. Member for Southall and in an intervention by the hon. Member for Newton. It was made perfectly clear that they do not want this firm sold, because they regard it as an experiment in Socialism, to be pursued at the cost of the taxpayer, the Admiralty, the firm and employees, and the country.

Mr. H. Wilson

When the right hon. Gentleman nearly stumbled into using the word "sacrificial", not only was his own subconscious showing but that of the whole Government.

I beg to move, That a sum not exceeding £9,358,900 be granted for the said Service.

Question put:

The Committee divided: Ayes 215, Noes 264.

Division No. 148.] AYES [7.1 p.m.
Ainsley, J. W. Butler, Mrs. Joyce (Wood Green) Fletcher, Eric
Albu, A. H. Callaghan, L. J. Foot D. M.
Allaun, Frank (Salford, E.) Carmichael, J. Forman, J. C.
Allen, Arthur (Bosworth) Castle, Mrs. B. A. Fraser, Thomas (Hamilton)
Allen, Scholefield (Crewe) Chetwynd, G. R. Gaitskell, Rt. Hon. H. T. N.
Awbery, S. S. Cliffe, Michael George, Lady Megan Lloyd (Car'then)
Bacon, Miss Alice Clunie, J. Gibson, C. W.
Baird, J. Coldrick, W. Gooch, E. G.
Balfour, A. Craddock, George (Bradford, S.) Gordon Walker, Rt. Hon. P. C.
Bellenger, Rt. Hon. F. J. Cronin, J. D. Greenwood, Anthony
Benn, Hn. Wedgwood (Bristol, S.E.) Crossman, R. H. S. Griffiths, David (Rother Valley)
Benson, Sir George Cullen, Mrs. A. Griffiths, Rt. Hon. James (Llanelly)
Beswick, Frank Davies, Harold (Leek) Griffiths, William (Exchange)
Bevan, Rt. Hon. A. (Ebbw Vale) Davies, S. O. (Merthyr) Hale, Leslie
Blackburn, F. de Freitas, Geoffrey Hamilton, W. W.
Blenkinsop, A. Delargy, H. J. Hannan, W.
Blyton, W. R. Diamond, John Hastings, S.
Boardman, H. Dodds, N. N. Hayman, F. H.
Bottomley, Rt. Hon. A. G. Donnelly D. L. Healey, Denis
Bowden, H. W. (Leicester, S.W.) Dugdale, Rt. Hn. John (W. Brmwch) Henderson, Rt. Hn. A. (Rwly Regis)
Boyd, T. C. Ede, Rt. Hon. J. C. Herbison, Miss M.
Braddock, Mrs. Elizabeth Edelman, M. Hewitson, Capt. M.
Brockway, A. F. Edwards, Robert (Bilston) Hilton, A. V.
Broughton, Dr. A. D. D. Edwards, W. J. (Stepney) Hobson, C. R. (Keighley)
Brown, Rt. Hon. George (Belper) Evans, Albert (Islington, S.W.) Holman, P.
Brown, Thomas (Ince) Evans, Edward (Lowestoft) Holmes, Horace
Burton, Miss F. E. Fernyhough, E. Houghton, Douglas
Butler, Herbert (Hackney, C.) Fitch, A. E. (Wigan) Howell, Denis (All Saints)
Hoy, J. H. Moyle, A. Smith, Ellis (Stoke, S.)
Hughes, Emrys (S. Ayrshire) Mulley, F. W. Snow J. W.
Hunter, A. E. Neal, Harold (Bolsover) Sorensen, R. W.
Hynd, H. (Accrington) Noel-Baker, Francis (Swindon) Soskice, Rt. Hon. Sir Frank
Hynd, J. B. (Attercliffe) Noel-Baker, Rt. Hon. P. (Derby, S.) Steele, T.
Irvine, A. J. (Edge Hill) O'Brien, Sir Thomas Stewart, Michael (Fulham)
Irving, Sydney (Dartford) Oliver, G. H. Stonehouse, John
Isaacs, Rt. Hon. G. A. Oram, A. E. Stones, W. (Consett)
Janner, B. Orbach, M. Strachey, Rt. Hon. J.
Jay, Rt. Hon. D. P. T. Owen, W. J. Stross, Dr. Barnett (Stoke-on-Trent, C.)
Jeger, George (Goole) Padley, W. E. Summerskill, Rt. Hon. E.
Jeger, Mrs. Lena (Holbn & St. Pncs, S.) Paget, R. T. Swingler, S. T.
Jenkins, Roy (Stechford) Paling, Rt. Hon. W. (Dearne Valley) Sylvester, G. O.
Johnson, James (Rugby) Paling, Will T. (Dewsbury) Taylor, John (West Lothian)
Johnston, Douglas (Paisley) Palmer, A. M. F. Thomas, George (Cardiff)
Jones, Rt. Hon. A. Creech (Wakefield) Pargiter, G. A. Thomson, George (Dundee, E.)
Jones, Elwyn (W. Ham, S.) Parker, J. Thornton, E.
Jones, Jack (Rotherham) Parkin, B. T. Tomney, F.
Kenyon, C. Paton, John Ungoed-Thomas, Sir Lynn
Key, Rt. Hon. C. W. Pearson, A. Usborne, H. C.
King, Dr. H. M. Peart, T. F. Viant, S. P.
Lawson, G. M. Pentland, N. Warbey, W. N.
Ledger, R. J. Plummer, Sir Leslie Weitzman, D.
Lee, Frederick (Newton) Popplewell, E. Wells, Percy (Faversham)
Lee, Miss Jennie (Cannock) Price, J. T. (Westhoughton) Wells, William (Walsall, N.)
Lever, Harold (Cheetham) Price, Phillips (Gloucestershire, W.) White, Mrs. Eirene (E. Flint)
Lever, Leslie (Ardwick) Probert, A. R. White, Henry (Derbyshire, N. E.)
Lewis, Arthur Proctor, W. T. Wigg, George
Lipton, Marcus Pursey, Cmdr. H. Wilcock, Group Capt. C. A. B.
McAlister, Mrs. Mary Randall, H. E. Wilkins, W. A.
McCann, J. Rankin, John Willey, Frederick
MacColl, J. E. Redhead, E. C. Williams, Rev. Llywelyn (Ab'tillery)
MacDermot, Niall Reid, William Williams W. R. (Openshaw)
MacPherson, Malcolm (Stirling) Reynolds, G. W. Williams, W. T. (Barons Court)
McInnes, J. Roberts, Albert (Normanton) Willis, Eustace (Edinburgh, E.)
McKay, John (Wallsend) Roberts, Goronwy (Caernarvon) Wilson, Rt. Hon. Harold (Huyton)
Mallalieu, E. L. (Brigg) Robinson, Kenneth (St. Pancras, N.) Winterbottom, Richard
Marquand, Rt. Hon. H. A. Ross, William Woodburn, Rt. Hon. A.
Mayhew, C. P. Shinwell, Rt. Hon. E. Woof, R. E.
Mellish, R. J. Silverman, Julius (Aston) Yates, V. (Ladywood)
Mendelson, J. J. Silverman, Sydney (Nelson) Zilliacus, K.
Mikardo, Ian Simmons, C. J. (Brierley Hill)
Mitchison, G. R. Skeffington, A. M. TELLERS FOR THE AYES:
Moody, A. S. Slater, Mrs. H. (Stoke, N.) Mr. Short and Mr. Deer.
Morrison, Rt. Hn. Herbert (Lewit'm, S.) Slater, J. (Sedgefield)
Agnew, Sir Peter Browne, J. Nixon (Craigton) Eden, J. B. (Bournemouth, West)
Aitken, W. T. Bryan, P. Elliott, R. W. (Ne'castle upon Tyne, N.)
Allan, R. A. (Paddington, S.) Bullus, Wing commander E. E. Emmet, Hon. Mrs. Evelyn
Alport, C. J. M. Burden, F. F. A. Errington, Sir Eric
Amery, Julian (Preston, N.) Butcher, Sir Herbert Erroll, F. J.
Amory, Rt. Hn. Heathcoat (Tiverton) Butler, Rt. Hn. R. A. (Saffron Walden) Farey-Jones, F. W.
Arbuthnot, John Campbell, Sir David Fell, A.
Armstrong, C. W. Carr, Robert Finlay, Graeme
Ashton, Sir Hubert Cary, Sir Robert Fisher, Nigel
Astor, Hon. J. J. Channon, H. P. G. Fletcher-Cooke, C.
Atkins, H. E. Chichester-Clark, R. Foster, John
Baldock, Lt.-Cmdr. J. M. Clarke, Brig. Terence (Portsmth, W.) Eraser, Hon. Hugh (Stone)
Baldwin, Sir Archer Cole, Norman Freeth, Denzil
Barber, Anthony Conant, Maj. Sir Roger Galbraith, Hon. T. G. D.
Barlow, Sir John Cooke, Robert Gammans, Lady
Barter, John Cooper, A. E. Garner-Evans, E. H.
Batsford, Brian Cooper-Key, E. M. Gibson-Watt, D.
Baxter, Sir Beverley Cordeaux, Lt.-Col. J. K. Glover, D.
Beamish, Col. Tufton Corfield, F. V. Glyn, Col. Richard H.
Bell, Philip (Bolton, E.) Courtney, Cdr. Anthony Godber, J. B.
Bell, Ronald (Bucks, S.) Craddock, Beresford (Spelthorne) Goodhart, Philip
Bennett, F. M. (Torquay) Crosthwaite-Eyre, Col. O. E. Gough, C. F. H.
Bidgood, J. C. Crowder, Sir John (Finchley) Graham, Sir Fergus
Biggs-Davison, J. A. Crowder, Petre (Ruislip—Northwood) Grant, Rt. Hon. W. (Woodside)
Bingham, R. M. Cunningham, Knox Grant-Ferris, Wg Cdr. R. (Nantwich)
Birch, Rt. Hon, Nigel Currie, G. B. H. Green, A.
Bishop, F. P. Dance, J. C. G. Grimond, J.
Black, Sir Cyril D'Avigdor-Goldsmid, Sir Henry Grimston, Hon. John (St. Albans)
Bonham Carter, Mark Deedes, W. F. Grosvenor, Lt.-Col. R. G.
Bossom, Sir Alfred de Ferranti, Basil Gurden, Harold
Bowen, E. R. (Cardigan) Dodds-Parker, A. D. Hall, John (Wycombe)
Boyle, Sir Edward Donaldson, Cmdr. C. E. McA. Harris, Frederic (Croydon, N. W.)
Braine, B. R. Doughty, C. J. A. Harrison, A. B. C. (Maldon)
Brewis, John Drayson, G. B. Harrison, Col. J. H. (Eye)
Bromley-Davenport, Lt.-Col. W. H. du Cann, E. D. L. Harvey, Sir Arthur Vere (Macclesf'd)
Brooke, Rt. Hon. Henry Duthie, Sir William Harvey, John (Walthamstow, E.)
Brooman-White, R. C. Eccles, Rt. Hon. Sir David Harvie-Watt, Sir George
Head, Rt. Hon. A. H. Macdonald, Sir Peter Ridsdale, J. E.
Heald, Rt. Hon. Sir Lionel McLaughlin, Mrs. P. Rippon, A. G. F.
Heath, Rt. Hon. E. R. G. Maclay, Rt. Hon. John Roberts, Sir Peter (Heeley)
Henderson-Stewart, Sir James Maclean, Sir Fitzroy (Lancaster) Robertson, Sir David
Hesketh, R. F. Macmillan, Rt. Hn. Harold (Bromley) Ropner, Col. Sir Leonard
Hicks-Beach, Maj. W. W. Macmillan, Maurice (Halifax) Sharples, R. C.
Hill, Rt. Hon. Charles (Luton) Macpherson, Niall (Dumfries) Shepherd, William
Hill, John (S. Norfolk) Maddan, Martin Simon, J. E. S. (Middlesbrough, W.)
Hinchingbrooke, Viscount Maitland, Hon. Patrick (Lanark) Smithers, Peter (Winchester)
Hirst, Geoffrey Manningham-Buller, Rt. Hn. Sir R. Soames, Rt. Hon. Christopher
Hobson, John (Warwick & Leam'gt'n) Markham, Major Sir Frank Spearman, Sir Alexander
Hope, Lord John Marlowe, A. A. H. Speir, R. M.
Hornby, R. P. Marples, Rt. Hon. A. E. Spence, H. R. (Aberdeen, W.)
Hornsby-Smith, Miss M. P. Mathew, R. Stanley, Capt. Hon. Richard
Horobin, Sir Ian Maudling, Rt. Hon. R. Stevens, Geoffrey
Horsbrugh, Rt. Hon. Dame Florence Mawby, R. L. Steward, Sir William (Woolwich, W.)
Howard, Gerald (Cambridgeshire) Maydon, Lt-Cmdr, S. L. C. Stoddart-Scott, Col. Sir Malcolm
Howard, John (Test) Medlicott, Sir Frank Storey, S.
Hughes Hallett, Vice-Admiral J. Milligan, Rt. Hon. W. R. Studholme, Sir Henry
Hughes-Young, M. H. C. Morrison, John (Salisbury) Summers, Sir Spencer
Hurd, Sir Anthony Mott-Radclyffe, Sir Charles Sumner, W. D. M. (Orpington)
Hutchison, Michael Clark (E'b'gh, S.) Nabarro, G. D. N. Taylor, Sir Charles (Eastbourne)
Hutchison, Sir Ian Clark (E'b'gh, W.) Nairn, D. L. S. Teeling, W.
Hylton-Foster, Rt. Hon. Sir Harry Neave, Airey Temple, John M.
Iremonger, T. L. Nicholson, Sir Godfrey (Farnham) Thomas, Leslie (Canterbury)
Irvine, Bryant Godman (Rye) Nicolson, N. (B'n'm'th, E. & Chr'ch) Thomas, P. J. M. (Conway)
Jenkins, Robert (Dulwich) Noble, Comdr. Rt. Hon. Sir Allan Thompson, R. (Croydon, S.)
Jennings, J. C. (Burton) Nugent, Richard Tiley, A. (Bradford, W.)
Johnson, Dr. Donald (Carlisle) Oakshott, Sir Hendrie Tilney, John (Wavertree)
Johnson, Eric (Blackley) O'Neill, Hn. Phelim (Co. Antrim, N.) Turton, Rt. Hon. R. H.
Jones, Rt. Hon. Aubrey (Hall Green) Ormsby-Gore, Rt. Hon. W. D. Vane, W. M. F.
Keegan, D. Orr-Ewing, C. Ian (Hendon, N.) Vaughan-Morgan, J. K.
Kerr, Sir Hamilton Osborne, C. Vickers, Miss Joan
Kershaw, J. A. Page, R. G. Vosper, Rt. Hon. D. F.
Kimball, M. Pannell, N. A. (Kirkdale) Wakefield, Sir Wavell (St. M'lebone)
Kirk, P. M. Partridge, E. Walker-Smith, Rt. Hon. Derek
Lagden, G. W. Peel, W. J. Wall, Patrick
Lambton, Viscount Pickthorn, Sir Kenneth Ward, Rt. Hon. G. R. (Worcester)
Leather, E. H. C. Pike, Miss Mervyn Ward, Dame Irene (Tynemouth)
Leavey, J. A. Pitman, I. J. Watkinson, Rt. Hon. Harold
Leburn, W. G. Pott, H. P. Webbe, Sir H.
Legge-Bourke, Maj. E. A. H. Powell, J. Enoch Whitelaw, W. S. I.
Lindsay, Martin (Solihull) Price David (Eastleigh) Williams, Paul (Sunderland, S.)
Linstead, Sir H. N. Price, Henry (Lewisham, W.) Williams, R. Dudley (Exeter)
Lloyd, Rt. Hon. G. (Sutton Coldfield) Prior-Palmer, Brig. Sir Otho Wilson, Geoffrey (Truro)
Lloyd, Maj. Sir Guy (Renfrew, E.) Profumo, J. D. Wolrige-Gordon, Patrick
Longden, Gilbert Ramsden, J. E. Wood, Hon. R.
Low, Rt. Hon. Sir Toby Rawlinson, Peter Wooliam, John Victor
Lucas, Sir Jocelyn (Portsmouth, S.) Redmayne, M. Yates, William (The Wrekin)
Lucas, P. B. (Brentford & Chiswick) Rees-Davies, W. R.
Lucas-Tooth, Sir Hugh Remnant, Hon. P. TELLERS FOR THE NOES:
McAdden, S. J. Penton, D. L. M. Mr. Legh and Mr. E. Wakefield

Original Question again proposed.

Motion, by leave, withdrawn.

Motion made, and Question proposed, That a further sum, not exceeding £20, be granted to Her Majesty, towards defraying the charges for the year ending on the 31st day of March, 1960, for the following services connected with Housing in London, namely:—

Civil Estimates, 1959–60
Class V. Vote 1 (Ministry of Housing and Local Government) 10
Class V, Vote 2 (Housing, England and Wales) 10
Total £ 20