IRON AND STEEL (FINANCIAL PROVISIONS) BILL (Hansard, 28 March 1960)

§ Mr. Ellis Smith (Stoke-on-Trent. South)
On a point of order, Mr. Speaker. During the Committee stage some of us raised several points which received widespread support. We were rightly—[Interruption.]—

§ Mr. Speaker
I would be obliged if hon. Members would recede a little more quietly. I have difficulty in hearing what the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) is saying.

§ Mr. Ellis Smith
During the Committee stage of the Bill, some of us raised several issues which, on reflection, the various occupants of the Chair advised us were a matter not for the Committee, but for you, Mr. Speaker. It was that fact, my study of procedure this weekend, my knowledge of Parliamentary practice, and my opportunity of seeing a letter prepared by you, Mr. Speaker, which reinforced my claim on this point of order.
In my view, this Bill is not in harmony with established Parliamentary practice. It is not consistent with precedents in Erskine May on the Consolidated Fund or the Appropriation Acts. As I said, several times we tried to raise this during the Committee stage. We were stopped—and I am not complaining about that—by the Chair because it was a matter for you, Mr. Speaker. We accepted that Ruling and now I am raising it with you.
It was traditionally established, at great cost to those whom we represent, that before we vote Supply the people's grievances shall be remedied, or at least ventilated, in this House. In my view, that is at stake in the Bill now before us and I will produce, in as few words as possible—

§ Mr. Speaker
If I understand the hon. Member aright—and I hope that he will tell me if I do not, but I am hoping to save time—I would have thought that he could ventilate on the Question shortly to be before the House—namely, the Third Reading of this Bill—precisely 959 all that he wants to say. if I understand it correctly, what the Government are saying about the Bill in that it is in order that these particular loans should be registered, as it were, below the line, instead of above the line, with the result that the House will not have an annual occasion of looking at these proposed expenditures. That is what I understand the right hon. Gentleman the Minister of Power to say about it.
On the points which otherwise arise— really rather irrelevant now—that is, whether it would have been possible to discuss these loans on the Consolidated Fund Bill, it is because we have a Bill of this kind, which makes specific authority for this kind of loan, that that matter may have been left out of the issues authorised by the Consolidated Fund Bill. It is for that reason, the Consolidated Fund Bill being a different matter, that my deputy was compelled to rule that the financing of particular nationalised industries could not be discussed on that Bill. I take it that the essential issue which the hon. Member wishes to raise can be discussed during the course of the Third Reading of this Bill.

§ Mr. Ellis Smith
Thank you for that advice, Mr. Speaker, but I have made a careful study of the whole of the OFFICIAL REPORT about this. I have in mind an undertaking given by the right hon. Gentleman the Leader of the House, for whom I have very much personal respect. I remember that he said it was the practice to "let things go," with an undertaking to see how they went.
There is too much at stake in this. This is a matter for you, Mr. Speaker. It is not a matter for the Government. It is a matter for the Speaker of the House. Therefore, while I acknowledge the advice that you have given me, I wish to draw upon my Parliamentary rights to raise the point of order.
I can understand the Civil List and the requirements of the Royal Family, the judges and others, and Mr. Speaker's salary, being dealt with in this way, because they are above the political battle. However, this matter is not. This is an acute political question and there is very much at stake. Because of the importance of the matter, we have to ask for Mr. Speaker's support.
960 In my view, it should be in order, on Consolidated Fund Bill, to raise issues arising out of loans made from the Consolidated Fund, because drafts made upon the Consolidated Fund are a permanent charge. I should make it clear that I would have consulted you, Mr. Speaker, about this matter earlier if I had had the opportunity to do so, because I believe that it is only playing the game to warn people of one's intentions. But, first, my train was late and, secondly, I knew that you would be well-informed about what had happened, as was evidenced by the letter which you sent to the hon. Member for Kidderminster (Mr. Nabarro).
However, with the greatest respect, Sir, I have to tell you that I do not accept the validity of some of the points which you made in that letter and which I will mention later.

§ Mr. Speaker
I very much enjoy listening to the hon. Member at all times, but he will be the first to understand that I must try to protect the interests of other hon. Members as well. Can he put in precise form what exactly is suggested to be his point of order, when I will do my best to rule upon it? I am afraid that I must restrict him a little.

§ Mr. Ellis Smith
I have two final points to make, Sir. You will appreciate that my vocabulary has been developed differently from yours and it may be that the charge of not being precise may sometimes be laid at my door.
My first point concerns the rights of hon. Members to raise questions on the Consolidated Fund Bill.

§ Mr. Speaker
My difficulty, as I am sure the hon. Member will see, is that any questions which arise on the Third Reading of this Bill can properly be raised, but not questions relating to the Consolidated Fund Bill as though that were a general discussion on the Consolidated Fund, which it is not. That is not the problem before the House. If there is a point of order which arises on the Question now before the House, I should be glad to hear it, but I want to know what it is.

§ Mr. Ellis Smith
The difficulty is that we want to know where we are before we agree to the Third Reading of this Bill. If we agree to it, it may mean 961 that the whole House will have accepted a position which will be prejudicial to our interests, whereas if the matter is raised now and we get an explanation from you and an undertaking from you, when we discuss the Third Reading, we will be able to frame our opposition differently. In your letter you said: … the authority by which the Treasury issue out of the Consolidated Fund sums for the nationalised industries is the relevant provision in the Finance Act, 1956 … I readily accept that, but my difference with you is that one of these loans is to go to an industry which is not nationalised but which is private and which may well be making private profit out of public money.

§ Mr. Gerald Nabarro (Kidderminster)
Hear, hear.

§ Mr. Ellis Smith
Thus, while what you said in your letter may be applicable to nationalised industries, it is not applicable in this case when a loan is being made to a private firm.

§ Mr. Nabarro
Hear, hear.

§ Mr. Speaker
I think that I can help the hon. Member. That was not the issue which arose. I do not want to discus:; what was really a Ruling given publicly by my deputy during the course of the Consolidated Fund Bill. The only reason why this matter comes near me is that the hon. Member for Kidderminster (Mr. Nabarro) desired to know whether I confirmed my deputy's Ruling and I said that I did. Indiscreetly, I went on to give some explanation of the principles which showed why that Ruling was right and it is to those that the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) is now referring.
I was discussing what could and could not be discussed on the Consolidated Fund Bill. What can be discussed on the Consolidated Fund Bill depends upon the issues which the Consolidated Fund Bill authorises. The point I was making in that context—whether the target be a nationalised industry or a non-nationalised industry has no bearing on the matter—was that where the issues in question were issues not authorised by the Consolidated Fund Bill, then matters relevant to those issues could not be discussed on the Consolidated Fund Bill. I am sure that the hon. 962 Member will be in firm agreement with that.

§ Mr. Nabarro
On a point of order. This is an entirely different point of order, Sir.

§ Mr. Speaker
I think that the hon. Member for Stoke-on-Trent, South had not finished.

§ Mr. Ellis Smith
Thank you, Sir. I was not trying to misinterpret your letter and I have not quoted more of it than I considered relevant. I thank you for allowing me to raise this matter, especially as I did not give you notice of it. I should be very glad to have your advice.

§ Mr. Speaker
If I rightly understood what the hon. Member has been putting to me, in accordance with the principles of my predecessors I decline to give a hypothetical ruling on a hypothetical situation which might arise on some other question which might arise in the future on some other proceedings. I must firmly decline to do that, since the House would otherwise get no guidance. However, on the Third Reading of this Bill the hon. Member is entitled to make every protest he likes about what the Bill does, which is the matter about which he desires to protest.

§ Mr. Nabarro
I apologise for delaying proceedings, Mr. Speaker, but what I have to say is in pursuit of your guidance on a very important matter which I believe to be of general interest to right hon. and hon. Gentlemen on both sides of the House.
The Iron and Steel (Financial Provisions) Bill deals with moneys which are to be below-the-line accounting and are to be derived from the Consolidated Fund. Do I understand your Ruling, in the terms you used to the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), to be indicative of the fact that once these loans are enacted it will not be in order for them to be discussed on any future Consolidated Fund Bill? Is that the point which you have made? If so, that must colour our judgment of the Bill, for, if I have interpreted your Ruling correctly, it means that the whole of the amount provided by the Bill below the line will be an irrevocable act and that Parliament—only the House of Commons and not another place, in fact 963 —will have no jurisdiction whatever over the issue of these loans in forthcoming years and that we are dealing this afternoon with something which passes absolutely outside our control once this Third Reading is passed?
Is it your Ruling, Sir, that on future Consolidated Fund Bills it will be out of order to discuss these loans, notwithstanding the fact that the money for them comes from the Consolidated Fund?

§ Mr. Speaker
I have said that I decline to rule on a hypothetical future situation. What will be in order on a future Consolidated Fund Bill will be matters relating to the issues authorised by that Bill and if these loans are now coming into a below-the-line form as charges on the Consolidated Fund, they would not, of course, be authorised by any future Consolidated Fund Bill. That is the position.

§ Mr. Nabarro
May I press that matter with you, Mr. Speaker? Your Ruling, then, is quite explicit: once this Bill is through its Third Reading it is irrevocable and the House of Commons has no jurisdiction whatever—unless the Bill is repealed—in respect of these loans on any future Consolidated Fund Bill. That is contrary to the general understanding of the overwhelming majority of hon. Members, who have always taken the view that on the annual Consolidated Fund Bill it was perfectly in order to discuss any matter arising from sums derived directly or indirectly from the Consolidated Fund.

§ Mr. Speaker
That was the effect of the Ruling in relation to the Consolidated Fund Bill given publicly by my deputy. That is the only Ruling in this context. I think that if the hon. Member cares to look he will find that it has, on precedent, been ruled that charges on the Consolidated Fund cannot be discussed on the Consolidated Fund Bill. But I do not want to get into a hypothetical world. I have ruled on the position on this Bill, and the hon. Member has made his point clear.

§ Mr. Nabarro
Further to that point of order, Mr. Speaker. I am deeply grateful to you for this Ruling, which is illuminating to many of my hon. Friends and myself. I now beg to give notice 964 that at the outset of the proceedings on the Gas Bill, in Committee, and on Third Reading, I shall test precisely the same point, as the sums involved there within borrowing powers are again derived from the Consolidated Fund.

§ Mr. Speaker
We do not need notice from the hon. Member about what he will do on some other occasion. I hope that the House can now get on with this Bill if that matter is sufficiently concluded.

§ The President of the Board of Trade (Mr. Reginald Maudling)
I beg to move, That the Bill be now read the Third time.
The purpose of the Bill is a narrow one, though it has given rise to fairly extensive debate. Its purpose is solely to provide that the payments necessary to meet the contracts with Richard Thomas and Baldwins and the Colvilles should be provided below the line; in other words, that they should be charges on the Government for which it is proper to borrow.
I think that there has been some confusion about the purpose of the Bill. In Committee, the right hon. Member for Vauxhall (Mr. Strauss) said that this legislation was legislation confirming the agreements. It is nothing of the sort, because no such legislation was needed. The agreements were made by my right hon. Friend, or by my right hon. Friend's predecessor, under statutory powers already given by the House, and the details of the agreements were announced by myself and the then Parliamentary Secretary to the Ministry of Power, in full at the time.
At that time, apart from some questions from the right hon. Gentleman and one or two other hon. Members opposite there was no opposition to the making of these agreements. It was generally recognised that the agreements were sensible. No one claimed then that the projects themselves, the expansion of strip capacity, were wrong. I do not think that anyone could seriously have argued at the time that it would have been possible to finance expansion of this calibre from the private resources of the market.
That being so, it was clear that when these arrangements were made with 965 Richard Thomas and Baldwins and Colvilles the general expansion of strip capacity that is now taking place would not have gone ahead, and, in particular, the benefit to Scotland which we can foresee from the Colvilles expansion would not have taken place.

§ Mr. John Peyton (Yeovil)
Does my right hon. Friend feel that Colvilles would not have undertaken this expansion and this enormous addition of strip capacity unless the agreement was made.?

§ Mr. Maudling
That is not the point. The point is what would have happened at the time the agreements were made.
I want to refer to the circumstances at the time, because there was then, as the House will recall, considerable discussion about the need for a fourth strip mill. There was no doubt about the need for one, but the argument was on the timing and the location. It was felt by the Iron and Steel Board that the need for a fourth strip mill was urgent and the Government supported that point of view.
We accepted the point of view that it was very urgent to get ahead with the provision of this new capacity, and everything that has happened since, and the rapidly rising demand for strip and sheet steel, has vindicated our judgment in the matter. It was clear at Chat time that this project should go ahead. It was equally clear at that time—and this was at the end of 1958, a year before the election—that sums of this magnitude could not have been found from the money market.
Anyone who studies the terms, the dates, and the amounts left with the underwriters of the last steel issues before that date will see that what I have said is uncontroverted. Our argument is that had the Government not agreed to provide this money these projects would have been seriously delayed, and that would have been a very bad thing for the industries of this country using sheet and strip mill products.
The second question was the location of this new output. All the technical considerations tended to point towards siting the whole project at Newport, but there were social considerations of another character, of the type we discussed 966 during the Local Employment Bill, now an Act, which pointed the other way, and particularly the needs of Scotland, which weighed very heavily with the Government at that time.
Clearly, there is a considerable need for new metal using industries in Scotland. The traditional heavy industries, shipbuilding and heavy engineering, are suffering great difficulties, and it is an urgent matter, if we can, to get more industries into Scotland to provide employment in metal using trades for the excellent labour force which at present is unemployed. It was felt at that time that there was a danger of a vicious circle, that industry would be attracted to Scotland by the provision of sheet steel manufactured in Scotland, but that until industry came, and until the demand was built up on the spot, no one would go ahead with the setting-up of a strip mill. Without a mill there would be no sheet metal industry, and without a sheet metal industry one would not get the mill.
The Government, therefore, thought it right to break the vicious circle by Government initiative leading to the establishment of substantial sheet capacity in Scotland. This was not a case of private enterprise coming to the Government and asking for help. In fact, the Government sought and received the cooperation of private enterprise on social grounds. The result has been a development in the steel industry which is of the greatest possible significance to the Scottish economy. It is most important that that should be emphasised.
The basis of it, financially, is precisely the same as the basis of our general distribution of industry policy, namely, the provision of Government assistance on terms very similar to those to enable private enterprise to undertake operations which are in the interests of the areas of the country where there is a very grave unemployment problem.
The results of these agreements, particularly the result of the Colvilles agreement, underlines all the work that we are trying to do to attract more employment into Scotland. If the Government had not entered into these agreements at that time, the effect on industry generally throughout the country, and in Scotland in particular, would have been very serious indeed.
967 That was the justification and, I suggest, the overwhelming justification, for the action taken at the time by the Government in making these two agreements with Richard Thomas and Baldwins and Colvilles.

§ Mr. Frederick Lee (Newton)
Has the first tranche been paid yet?

§ Mr. Maudling
No, not yet. My right hon. Friend the Minister of Fuel and Power, who will answer the debate, will be in a position to answer these particular points. I have been trying to stress the general principles and motives of the Government in undertaking the agreements.
These agreements having been made, only two questions arise. First, should the agreements be amended? Secondly, what is the position about Parliamentary control of issues from the Exchequer? On the first point, these agreements were made by the Government in exercise of powers given to us by Parliament, and they were made by the two companies concerned in good faith. There can, therefore, be no question of a unilateral abrogation of the solemn agreements.

§ Mr. Nabarro
Nobody has ever suggested that.

§ Mr. Maudling
I am not saying that they have. I am trying to make the position clear, with my hon. Friend's permission.
In the case of Richard Thomas and Baldwins, there is little controversy, because, as has been made clear, the actual terms of the agreement are open to revision when the time comes for de-vesting the company. In the case of Colvilles, the company has said, and I think that the House is aware of it, that it will draw on the facilities given by the loan agreement as little as possible, but, clearly, the Government could not possibly deny the company the right to draw on those facilities to the extent of the agreement into which it had entered in good faith, and on the strength of which it has undertaken this very large project, which, I think everyone will agree, is in the interests of the nation generally and Scotland in particular.
On the question of Parliamentary control, I do not think that there is much disagreement with the proposition that 968 this sort of expenditure is more appropriate to below the line than above the line classification. Below the line items are generally those which are revenue-producing and which are repaid and, therefore, it is appropriate to borrow to finance them This applies to these loans. Of course, whether the payments appear above or below the line, the money will be paid over, as I must repeat, in pursuance of contracts made by the Government on the basis of powers granted to them by Parliament. That is a fact which Parliament would have to face in considering this expenditure in whatever place it appears in our national accounts.
It is appropriate that with a single undertaking of contract of this kind, Parliament should give approval of the money that is to be issued as a whole, in one operation, because it is one contract with Colvilles and one contract with Richard Thomas and Baldwins. That is precisely what the Bill does. It asks for the authority of the House for the provision of these moneys from the below the line expenditure.
The Bill puts a limit on the amount that can be issued. I am advised that it does not give any power to issue again money that may have been repaid. In any case, my right hon. Friend has assured the House that the money will be used only for these two contracts. As the House is aware, provision has been made for possible variations in the future as a result of any review of the position. Such a variation cannot involve increased public liability. My right hon. Friend has given clear undertakings to report to the House any variation and my right hon. Friend the Leader of the House has undertaken that any such report can be discussed, as can any of the annual reports that my right hon. Friend will be making.
To sum up, my case for the Bill is—

§ Mr. John Diamond (Gloucester)
The right hon. Gentleman has just said that the annual reports which his right hon. Friend will be making can be discussed. Will he say on what occasions and explain how they will come up for discussion?

§ Mr. Maudling
I cannot say on what occasions, but I repeat the undertaking given by my right hon. Friend the Leader 969 of the House that he will make provision for such reports to be discussed if the House so desires. That is an undertaking which should be entirely satisfactory to the hon. Member.

§ Mr. Nabarro
I have been intimately concerned with the question raised by the hon. Member for Gloucester (Mr. Diamond). Does my right hon. Friend not recall that we have now had the Iron and Steel Holding and Realisation Agency with us for seven, possibly eight, completed financial years and that on no occasion has the House of Commons debated its report or been given any opportunity to question it other than by Parliamentary Question, nothwithstanding the fact there is now about £150 million involved in I.S.H.R.A. loans? Is it not likely that the loans under the Bill will suffer the same fate as I.S.H.R.A. concerning Parliamentary debate?

§ Mr. Maudling
I do not see any relevance in that interjection, unless it is to cast doubt upon the sincerity of my right hon. Friend the Leader of the House in giving his undertaking, which I now quote, that if such a report is made in the first place by my right hon. Friend, or if such a report is made under Clause 1 (6) of the Bill, there shall be an opportunity given by the Government for discussion by the House."—[OFFICIAL REPORT, 22nd March, 1960; Vol. 620, c. 427.] I hope that my hon. Friend will accept the undertaking of my right hon. Friend the Leader of the House in a matter of that kind.

§ Mr. George Lawson (Motherwell)
The right hon. Gentleman has said that there will be opportunity to discuss such reports if the House wishes. Does this mean that the matter might come before the House if hon. Members request it? What will happen if other hon. Members oppose such a request and the matter is put to the vote? On that basis, an opportunity might not be given. Is the right hon. Gentleman giving an undertaking that if two or three hon. Members ask for a debate an opportunity will be given?

§ Mr. Maudling
I think that if there is a desire in the House for it to be discussed, it will certainly be brought to the notice of my right hon. Friend the Leader of the House. I do not see how any greater undertaking on this subject could possibly be given.
970 To sum up what I have been putting to the House as the arguments for the Bill, the first point is that these transactions were and are, without doubt, in the national interest. If the Government had not made these agreements at the time—I have not heard this point challenged—the provision of sheet steel for our sheet-using industries would have been badly delayed and, in particular, a development of great importance to Scotland would not have taken place. Therefore, these agreements at the time were wholly justified.

§ Mr. G. R. Mitchison (Kettering)
I remember distinctly, in the earlier discussion on the Bill, saying that the terms of the agreements might well have been varied. When the right hon. Gentleman says, "if these agreements had not been made", I cannot agree with him that there has been no protest. Had he said, "if some such agreements had not been made", that is another matter.

§ Mr. Maudling
On the detailed terms of the agreements, some questions were asked at the time, although if hon. Members opposite felt so strongly about them they should surely have put down a Motion disapproving of what we did. If these agreements, or some such agreements to provide this money from public funds had not been made, we should not have had these developments. That would have been contrary to the national interest.
Secondly, these agreements were entered into by the Government in the exercise of powers given to them by Parliament in the 1953 Act. Thirdly, in the arrangements that we are making in the Bill, there is full protection for the public purse and for the rights of Parliament.

§ Mr. Diamond
Oh.

§ Mr. Maudling
If the party opposite thinks that these agreements were so prejudicial to Parliament and to the public purse, why did it not put down a Motion at the time and say so? Why did not hon. Members opposite come along then, when the Government were committed? Now, all that we are doing is providing for the money in pursuance of solemn obligations made by the Government on Parliamentary authority, providing for where that money is coming 971 from. This is a late stage to raise these points.

§ Mr. Diamond
If the right hon. Gentleman considers it late, why did not he, on behalf of the Government, give the House an opportunity of discussing the matter then? Why did he not take the initiative and bring the matter to the House? Why does he think that £120 million should go "on the nod" without the House knowing anything about it for eighteen months?

§ Mr. Maudling
I gave full details of the agreements to the House at the time. Had Hon. Members opposite wished to challenge them, they had their normal constitutional means of doing so.
My case for the Bill is that the agreements were in the national interest. They were made in pursuance of powers given to the Government by this House, and the Bill and the method of providing the money are appropriate to this type of issue from the Exchequer and fully safeguard both the interest of the public purse and of the House. In these circumstances, I hope that the House will give the Bill a Third Reading.

§ Mr. Frederick Lee (Newton)
I asked the President of the Board of Trade a question just now about the payment of the moneys that we are discussing. He was good enough to inform the House that, as yet, no payment has been made. During the Committee stage of the Bill, my hon. and learned Friend the Member for Kettering (Mr. Mitchison) argued with the Economic Secretary to the Treasury about the present financial position. My hon. and learned Friend asked: Then what is this Bill for? The Economic Secretary told us in his reply that Under Section 5 of the 1953 Act, the moneys to be provided for the purpose of this agreement can be provided only from above the line out of voted moneys."—[OFFICIAL REPORT, 22nd March, 1960; Vol. 620, c. 380.] I have been looking at the agreement, which is now enshrined in the Bill. Under the second head of agreement we read: The loan may be drawn in eight tranches over the four years from 1st October, 1959, provided that only one tranche may be drawn 972 in any one of eight consecutive periods of six months each, the first beginning on 1st October, 1959. We now know that a tranche has not yet been paid. If it is to be paid, as I read the agreement it must be paid before next Friday. In other words, the first six months of the currency of the agreement, beginning on 1st October, 1959, will expire on 1st April, 1960, which is next Friday. The Bill will not have become an Act of Parliament by then. How are they to pay the first tranche?
The Bill is designed to enable the loan to be made below the line; to be made not by moneys voted for the right hon. Gentleman's Department, but voted in the way described in the Bill.
If I am right, the Government have until Friday next to pay the first tranche, and if they are to pay it according to the Bill, they must get the Bill on the Statute Book first. Am I right or wrong about this?

§ Mr. Nabarro
The hon. Member is wrong.

§ Mr. Lee
Then let us have a proper answer. During the passage of the Bill the Economic Secretary told us that it was no good our arguing Amendments because the agreement was already valid and had been passed. In other words, there was no point in our disputing the basis upon which the Government decided to make the agreement. As far as we were concerned, it was a fait accompli.
The right hon. Gentleman has just reminded us that it is eighteen months since we were first told that this was going on. Why have the Government not pursued the matter and paid the first tranche? The right hon. Gentleman has just told us again that this is a valid agreement, which came into operation eighteen months ago. The President of the Board of Trade has told us that the Scottish people should be bowing on their knees in gratitude to the Government. But we now know that not a halfpenny has been paid out since then, and that unless the Bill becomes law by Friday next they cannot pay within the terms of the Bill.

§ The Minister of Power (Mr. Richard Wood)
The hon. Member is quite right. If the Bill is not passed the Government 973 cannot pay more than the sum of £1 million which appeared in my Vote, against the first needs of the company. The reason why a tranche has not been drawn is that it has not yet been required. The money will be available later, when the Bill is on the Statute Book and it will then be possible for tranches to be drawn by the company as they are required.

§ Mr. Lee
I am obliged to the right hon. Gentleman. I think that he was saying that the first tranche is out already.

§ Mr. Wood
No.

§ Mr. Lee
Let me quote again from the agreement: The loan may be drawn in eight tranches over the four years from 1st October, 1959, provided that only one tranche may be drawn in any one of eight consecutive periods of six months each, the first beginning on 1st October, 1959. How can the right hon. Gentleman pay the first tranche under the provisions of the Bill when the final date by which the first tranche must be drawn will have expired—before the Bill becomes an Act?

§ Mr. Wood
tranches are not necessarily equal instalments. There need be no money drawn by 1st April of this year, or 1st July, or 1st September, but after that tranches can be drawn every so often, up to a maximum of £50 million.

§ Mr. Lee
This gets curiouser and curiouser We all agree that within a four-year period there are eight periods of six months each. The first six-monthly period finishes this Friday. I am not arguing whether or not the tranches are equal, but I am saying that the currency on the first tranche will expire this Friday. We are now told that the tranches will not be in equal amounts. In that case, why have eight tranches? Why not give them the lot in the first tranche? Is there anything to prevent that happening?
Why have we had these rather peevish suggestions, especially from the Economic Secretary, that the House should not expect to have a detailed discussion of the matter, and that we should not expect to be able to amend something because it was signed and sealed long ago? Those arguments have been revealed as a rather 974 petulent way of trying to rob the House of its rights and duties in regard to an examination of the agreement. That being so, I would still like a more detailed explanation by the right hon. Gentleman as to the suggestion I have made that the first tranche will never be drawn.

§ Mr. Harold Lever (Manchester, Cheetham)
It can be made up later.

§ Mr. Lee
The right hon. Gentleman told us that the loan to Colvilles was not a case of private enterprise coming to the Government for assistance. I shall try to develop that point as I go along. It is not clear who approached whom in these matters. In any event, when we study the Bill, and consider the discussions that we have had upon it, it becomes obvious that the Government have one claim to a place in our history books; they have managed to produce a Bill for which apparently nobody in the House can find a good word, but which, nevertheless, will reach the Statute Book. Perhaps the epithet or epitaph which best describes hon. Members' reactions to the Bill was given by the hon. Member for Shipley (Mr. Hirst), who referred to it as shattering and dastardly.
Despite its welcome from Government supporters, the Bill remains in the same state—a state in which no safeguards are provided with regard to the use of public money; where there are no assessors, no provision for an equitable distribution of profits, no representation by Government-appointed directors, and no provision to enable the House to insist upon the Government asking it for sanction in regard to any point that may arise. It remains so because our efforts to amend it were victoriously opposed by a combination of the Tories and the Liberals.

§ Mr. H. Lever
My hon. Friend has referred to the hon. Member for Shipley (Mr. Hirst) describing the agreement and. presumably, the Bill based upon it—

§ Mr. Nabarro
Speak up. Speak up. I cannot hear.

§ Mr. Lever
We are not all equipped with the same kind of bellows as those possessed by the hon. Member for Kidderminster (Mr. Nabarro)—which, although he may not think so, is rather 975 fortunate. My hon. Friend has referred to the description of the agreement, and presumably the Bill based upon it, as shattering and dastardly, by the hon. Member for Shipley. Do I understand him to quote the description given by the hon. Member for Shipley with approval, and for the same reasons? If he approves of that description for reasons different from those advanced by the hon. Member for Shipley, that hon. Member's speech cannot be prayed in aid of his argument.

§ Mr. Nabarro
That has shot the hon. Member down.

§ Mr. Lee
I have just said that the description of the hon. Member for Shipley best brought together—put into one frame, as it were—feelings expressed on both sides of the House, including those from this Box, expressed both on Second Reading and in Committee on the Bill.

§ Mr. Peyton
These feelings among the Opposition appear to have come to light very late in the day. If the hon. Gentleman cares to cast his mind back a little further to the Second Reading debate he will remember that we had a very chill, midwintery speech from his right hon. Friend, the Member for Middlesbrough, East (Mr. Marquand).

§ Mr. Lee
There was not a single speech from hon. Members opposite in support of the Bill.

§ Mr. Nabarro
Nor from the hon. Member's side.

§ Mr. Lee
We were not here to support the Bill in that sense.

§ Mr. Lawson
May I remind my hon. Friend that, as the Member for the constituency in which the strip mill in Scotland is to be built, and speaking for my hon. Friends the Members for Scottish divisions on this side of the House, I said that we were very much behind the purpose of the Bill. We had some objections about how it should be done, but we were very much behind the building of the strip mill and, in our view, if it were necessary for the money to be found publicly then it should be found publicly.

§ Mr. Lee
I am not disagreeing with that in the least. [HON. MEMBERS: "Oh."] I am not disagreeing with getting new industry into Scotland. My belief is that the Bill was brought in and a publicly-owned company was deliberately pushed in with Colvilles, and the argument about distribution policy was brought in, merely as a pretext to cover up this disgraceful loan to Colvilles.
I was describing what the Tory Party thought about the Bill. The passage of the Bill has proved a trying ordeal for hon. Members opposite. The Economic Secretary, speaking for the Government, began his arduous duty with the statement the other evening that so far as his party is concerned, "We are united in our aim." A little later he heard that unity underlined by one of the great united telling him that the sooner the Prime Minister kicked him out of office the better it would be for the Tory Party. Unity of this type is really something to be admired.

§ Mr. Nabarro
The hon. Gentleman must be fair about this. I attacked my hon. Friend the Economic Secretary simply because he was purporting to endorse Socialist practices from ten years earlier That is why I attacked him.

§ Mr. Lee
I do not want the reason for the hon. Member's attack; I was just quoting the attack itself. Who knows what reasons are behind what the hon. Member says, anyway? The Bill does not leave the hon. Member altogether unscathed. It is, indeed, a witness of the passing of his reputation as a great rebel against the Government, in that both he and his hon. Friends who breathed such venom and fire against his Front Bench in the small, still hours of the morning not only refused to vote for the Amendment, but—

§ Mr. Deputy-Speaker (Sir Gordon Touche)
May I remind the House that this is a debate on Third Reading and we are not discussing previous debates on the Bill?

§ Mr. Lee
I see the point, Mr. Deputy-Speaker, but on Third Reading we discuss that which flows from the contents of the Bill. I felt it necessary to comment that the "nobbling" of the hon. Member possibly leaves the House with a cause without a rebel. We shall watch 977 his transition towards the P.P.S. bench with the greatest sympathy.

§ Mr. Nabarro
I will sit there now if the hon. Gentleman wishes.

§ Mr. Lee
"Hope springs eternal."
The Bill itself was presented in its present form, that is, as a method of financing a public firm and a private firm for no other reason than to cushion its passage through the House. There was not the slightest reason which anybody has yet adduced why Richard Thomas and Baldwins should have been financed in this way.

§ Mr. Lee
I cannot give way again.
I repeat that there has been no single reason adduced why Richard Thomas and Baldwins should have been financed in this way. As a matter of fact, we all thought that it should have been, and could have been, financed in the usual way. The Colville loan has been tied up in the Bill because of the fears of many of my hon. Friends from Scottish constituencies, who, naturally and properly, are extremely concerned about unemployment in Scotland.
The right hon. Gentleman told us that this was not an approach by a private firm to the Government. That is not what the right hon. Gentleman the Minister of Power said when he opened the debate on Second Reading of the Bill. He said then: But in the summer of 1958, about eighteen months ago, Colvilles, of Scotland, proposed a semi-continuous strip mill additional to their developments at Ravenscraig and it was the company's ability to carry out the project in association with its new work which made this a viable and attractive proposition. It was dependent at that time on the willingness of the Government to provide finance."— [OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 1445.] In other words, the right hon. Gentleman is wrong if his right hon. Friend the President of the Board of Trade is right. In the summer of 1958, Colvilles proposed—

§ Mr. Lee
Let us have it one way or the other.

§ Mr. Maudling
The firm made that proposal after the Government had pointed out to it the desirability of 978 having a thing of this kind in Scotland. It is all quite simple.

§ Mr. Lee
We now know that the Government approached Colvilles first.

§ Mr. Lee
That is not what the right hon. Member said before. The Government really ought to make up their mind about this. The Minister of Power has stated that the initiative came from Colvilles; now the right hon. Gentleman says that the proposal was the other way around.
The contents of the Bill in regard to Colvilles—this is the gravamen of the charge from this side of the House— constitute the terms of a loan which is capable of being demanded only by a firm in a superbly strong bargaining position. Yet we are asked to believe that at times Colvilles was in an extremely weak position and that because of the threat of nationalisation it was, in fact, in a very weak bargaining position. I wonder why the Government could not have explained to Colvilles that it had no right to demand these terms and that its bargaining position, because of the imminence or dangers of nationalisation, was such that it had no right to demand the sort of terms we now see in the agreement.
The logic of this threat of nationalisation argument is that after the negotiations had taken place, after the threat of nationalisation had gone, the firm could have obtained better terms than those which we are now discussing. What is the logic of that? The hon. Member opposite argued about the awful threat of nationalisation at the time when Colvilles was able to obtain these terms from his Government. Suppose the threat of nationalisation did not obtain, would Colvilles be in a stronger position?

§ Mr. Peyton
I am obliged to the hon. Member for giving way. He has conducted a kind of bogus international match between the claims of Scotland and of Wales, but, in the case of Colvilles, the Government, rightly or wrongly— certainly rightly, in the view of the Opposition—asked the firm if it would put up a strip mill. Languishing as it was under the threats of the party opposite, it could not get the money—£50 million—to do so. The hon. Member has a responsibility in this.

§ Mr. Lee
None of which is intended to refute the basic point I made. The fact is that Colvilles knew, as we all knew and all know now, that strip production in Britain had to be stepped up. The firm knew that Government action in denationalising steel had robbed the nation of the power of making a decision over the siting or size of strip mills. This Bill represents a part of the price the taxpayer has to pay. After consulting the Iron and Steel Board, the Government agreed to give financial help, and the Prime Minister, in the House on 18th November, 1958, made a fairly long statement in which he made it clear that the Government accepted the recommendation of the Iron and Steel Board that additional capacity was necessary for the production of strip mill products.
The Bill that we now have before us is the result of the Government's panic over their failure to get sufficient strip steel. It could well become the first of a series as steel imports increase and the balance of payments position deteriorates. It is extremely interesting at this stage to look back on the parent Act of 1953. One realises why the then Minister of Supply, now the Minister of Aviation, said: When the industry has returned fully to private enterprise there will be no public money involved at all."—[OFFICIAL REPORT. 28th January, 1953; Vol. 510, c. 1138.] It is now seen by all of us, and lamented by the hon. Member for Kidderminster, that denationalisation in this industry has merely put more public money into it, not less. Having saddled us with this liability for steel, the same right hon. Gentleman seems determined to sink more public money into private aviation than into the steel industry.
I said that there were a number of reasons why we objected to the Bill. The basic objection is in the method of financing private companies which are quite able to finance themselves. More people than we are worried about this. An organ which hon. Members opposite generally subscribe to told us this on 1st March this year: Vast sums of public money are being shovelled into private industry at this moment. … Once the word gets around that gold has been struck in Whitehall, we shall see such a rush as will make Klondyke look like a Sunday school outing. There will be great forests of outstretched hands—not all over-clean. There will be pressure groups 980 packed tight to the horizon, all lobbying and manoeuvring as never before, not all of which will stop short of bribery and corruption. That was in the Daily Telegraph.
Hon. Members have given various estimates of the time factor during which, under this Bill, public money may be tied up in Colvilles. If we look at the heads of the agreement we find that head 11 says: The company will repay the loan with any unpaid interest to the date of payment not later than 1st October, 1978 ". Even if the £14 million of public money which I think is at present in Colvilles is returned, the only denationalisation before 1978 will be denationalisation of the profits and, as the equity was sold by January, 1955, that will involve a period of twenty-three years. Colvilles equity was sold early in 1955. That did not justify the need for the firm coming to the Government for this money.
Between 1955, when the £1 equity shares were sold at 26s. each, bringing gross receipts of £13 million, and Friday, 18th March, this year equities have risen to 75s. 6d., a capital appreciation of 190.4 per cent. and a monetary appreciation of 49s. 6d. In 1955, the amount of ordinary dividend after tax was £652,000 and in 1959 it was £890,000. This is not the kind of firm which is in need of public assistance which the Government are now giving to it.
I look back on some of the debates which took place on the 1953 Act, which was a Measure providing the central instrument in the agreement we are now discussing. The right hon. Gentleman the present Minister of Aviation told us on 25th November. 1952: The Bill has two main objectives. The first is to establish a comprehensive system of public supervision embracing the whole iron and steel industry, and so bring to an end the extremely harmful split created by the 1949 Act. The second is to restore independence, initiative and financial responsibility to the companies … "—(OFFICIAL REPORT, 25th November, 1952; Vol. 508, c. 266.] In the light of this Bill perhaps the party opposite will agree that "independence, initiative and financial responsibility" seem now to have a hollow sound.
In the course of the passage of the Bill, my hon. and right hon. Friends 981 have attempted to make it a better Bill. We have attempted to get public representation within the Colville organisation. We have failed because of a combination of Tories and Liberals who refused to support us in that effort.

§ Mr. Deputy-Speaker
Order. We cannot go into Amendments which are not included in the Bill.

§ Mr. Lee
I was looking at the Bill as it is now without those Amendments and deploring the fact that they are not there. I am saying what is in the Bill and what I would have liked to have gone into it.
The Bill is in this state despite our efforts to make it better. What has been revealed by a Bill of this type is that the party opposite, with its Liberal friends, is determined that the distribution of power in this country shall remain in private hands. I hope that the nation will take a lesson from this. When we have Bills of this description, so biassed in their approach, giving no guarantee of the proper use of public money and showing the determination of the present Government and the Liberal Party, I hope that the nation will see that the only way to get back to a sense of decency in which it can get value for money is to renationalise the industry.

§ Mr. Gerald Nabarro (Kidderminster)
This Bill in its passage through the House has been the subject of more criticism from every quarter than any Bill I can remember in the ten years I have sat in this place. There have been a variety of reasons, of course, for the criticisms, but every criticism has been virulent and valid, according, as I understand it, to the philosophies of the respective political parties.
Of course, I respect the views of hon. and right hon. Members opposite who say that the only answer to the problems of the steel industry is complete nationalisation. They fought the last General Election and the one before and the one before that precisely on that policy. They were defeated at all three General Elections.

§ Mr. Deputy-Speaker
Order. I am afraid that cannot be discussed on the Third Reading of this Bill.

§ Mr. Nabarro
I shall relate it exactly, Mr. Deputy-Speaker, to the Third Reading when I have finished this particular paragraph. My party takes the exactly opposite view. The purpose of this Bill, shortly expressed, is the removal of £120 million from annual Votes and putting that sum permanently as a charge on to the Consolidated Fund. That is the purpose of the Bill. Our difficulty in judging the merits of the Bill, of course, arises from the fact that £70 million out of the £120 million goes to a company which is still nationalised and the other £50 million goes to a company which is denationalised and, though a public company in the sense of the Companies Act. 1948, is a private enterprise concern.
I look beyond immediate considerations for the reasons which prompted Her Majesty's Government in this extraordinary mixture within one Bill of voting money to a public company, on the one hand, and a private company, on the other. I think the reason is the inherent artfulness in the minds of my right hon. Friend the President of the Board of Trade and my right hon. Friend the Minister of Power, for they knew that it would be exceedingly difficult for my hon. Friends and myself to vote against this Bill at any stage while those two different considerations were inherent within it, a nationalised concern, on the one hand, and a denationalised concern, on the other. They were even more artful—I address my remark particularly to my right hon. Friend the President of the Board of Trade—

§ Mr. J. T. Price (Westhoughton)
He has gone white.

§ Mr. Nabarro
Yes, he has gone white —because of the oft-repeated claim that these loans were being made in the course of honouring solemn obligations and contracts entered into before the last General Election.
This claim has again been made this afternoon from the Treasury Bench and from the Opposition Front Bench. I do not dispute it. These obligations were entered into, and, of course, in the early hours of last Wednesday morning, I was faced with the appallingly difficult decision—[Interruption.]—yes, on behalf of my hon. Friends and myself—as to whether to vote in a way which would 983 imply that I was in favour of breaching a solemn contract or whether to let a Bill go through which is anathema to my hon. Friends and myself. I decided upon the second course—

§ Mr. Peyton
We decided.

§ Mr. Nabarro
We decided. I am sorry. At least, the intervention of my hon. Friend for Yeovil (Mr. Peyton) demonstrates that I have some friends in the House. I am deeply grateful to him.
My right hon. Friend has been artfulness personified throughout this Bill. It is undoubtedly the fact that all Conservative Members are gravely apprehensive about the growth of State paternalism. It is no good my right hon. Friend the Minister of Power grinning when I say that. I hope he will stop grinning. This is a serious matter. He is laughing now, which is much worse. My hon. Friends and I are gravely concerned about the growth of State paternalism, the investment of large State funds in private industries. This, of course, has been the principal cause of our anxiety about the Bill. I cannot vote against the Third Reading of it for the same reasons that I could not—

§ Mr. Charles Loughlin (Gloucestershire, West)
The hon. Gentleman did not vote against the Second Reading.

§ Mr. Nabarro
I did not vote against the Second Reading.

§ Mr. Loughlin
Or in favour of his Amendment.

§ Mr. Nabarro
If the hon. Gentleman wishes to rise to make some intervention I will give way to him.

§ Mr, Loughlin
The point I wish to make is that the hon. Member for Kidderminster moved an Amendment the other morning and then went into the Division Lobby with the Government against his own Amendment.

§ Mr. Nabarro
It would not, of course, be in order for me to dwell on Committee matters, but I will respond to the hon. Member for Gloucestershire, West (Mr. Loughlin) in simple and explicit terms. I did not vote against the Second Reading, I shall not vote against the Third Reading, and I did not vote against the Government on my Amendment in 984 Committee, for the same explicit reason throughout, that, had I done so, I should have been asking the Government to break a solemn contract and agreement which they entered into with Colvilles before the last General Election. I will quote certain words to the hon. Gentleman. He was not here the other evening.

§ Mr. Deputy-Speaker
Order. We cannot go into these matters on Third Reading.

§ Mr. Loughlin
On a point of order, Mr. Deputy-Speaker. The hon. Member said that I was not here. I forced a Division to enable him to go into the Division Lobby.

§ Mr. Nabarro
The hon. Member was not here in the course of our debates. Had he been in the House a little longer, he would have known that we on this side have often played the same trick on the Socialists, with very good effect, when they have been afraid to vote on their own Amendments, as, for example, on the matter of National Health Service charges in 1951.

§ Mr. Deputy-Speaker
Order. I hope the hon. Gentleman will return to the Third Reading of the Bill.

§ Mr. Nabarro
I will, Mr. Deputy-Speaker. I was about to quote words which have a great relevance in any controversy about who should vote and who should not vote and on what occasions: I say at once that I would compete with any member of this Committee, including my right hon. Friend the Minister of Power, in defending the sanctity of contracts, and I do not wish to see the contract made between Her Majesty's Government and Colvilles broken, vitiated or weakened in any way, whatsoever." —[OFFICIAL REPORT, 22nd March. 1960; Vol. 620, c. 438.] In view of the Rulings given by the Chair about what is in order for discussion on the Consolidated Fund Bill annually, the only way in which my hon. Friends and I can register our sternest disapproval of the growth of State paternalism and the huge investment of public funds in private industry is by the vehicle of the very kind of Amendments which we moved late last Tuesday night and which we did not—

§ Mr. Loughlin
Which the hon. Mem-ran away from.

§ Mr. Nabarro
The hon. Member for Gloucestershire, West is still seated upon his broad backside shouting things at me. I will give way once again if he wishes. We have all got his point. The Sunday Express yesterday called it an act of cowardice on my part not to vote.

§ Mr. Deputy-Speaker
Order. We must return to the Third Reading of the Bill.

§ Mr. Nabarro
But this is the principle of the Bill, Mr. Deputy-Speaker, the investment of money in Colvilles.

§ Mr. Deputy-Speaker
The hon. Member has been arguing about various events which took place during the Committee stage.

§ Mr. Nabarro
Very well, Mr. Deputy-Speaker; I will leave the Sunday Express and say that, for precisely the same reasons, I shall not vote against the Third Reading of the Bill. I believe overwhelmingly in the sanctity of contracts. But there has been a very real lesson to my hon. Friends and myself in this Bill. We cannot vote against the Third Reading of the Bill because contracts were entered into by Her Majesty's Government eighteen months ago. This will not be so in the future when State moneys are furnished for private industry.
We have learned our lesson on this occasion. In the future, we shall not be confronted with a fait accompli and a situation wherein we have to advocate the breach of contracts in order to make our point. We shall vote where possible before the money is granted, Which is the proper time to do it. Having regard to the undertaking given by my right hon. Friend the Leader of the House that there will be ample opportunity to debate the tranches of investment in this context and in regard to other nationalised and denationalised industries, I think I can say that my hon. Friends and I have learned a salutary lesson in demanding a debate before the money is granted and not being placed in the invidious situation in which we have found ourselves throughout our proceedings on this Bill.
We are not alone in such an invidious situation. The hon. Member for Newton (Mr. Lee), who readily nods his agreement, is in the same situation on this Bill, but for different reasons. 986 Evidently, neither he nor any hon. Member opposite will vote tonight against the Bill.

§ Mr. Diamond
I will, if I can.

§ Mr. Nabarro
Jolly good. If the hon. Member is in a minority of one, that will be highly satisfactory. I shall be the first to congratulate him upon his courage and his lack of cowardice. I only regret that I cannot join him in the Lobby, because if I did so it would be again implied that I was in favour of breaching a contract.
Long before this Bill reached its Committee and Third Reading stages, very apposite words were written in an organ which I do not believe can be regarded as unduly Conservative in its outlook— not the Daily Telegraph, but the Financial Times of 25th February, 1960. I quote these words, strictly in the context of this Bill: Last summer the Prime Minister unveiled his Government's quite remarkable scheme to pay the cotton industry a large amount of money to shut down its redundant plants. Since then there has been the establishment of the Chandos Committee on the new Cunarders, the gun law handling of the aircraft industry by Mr. Sandys, and now there is Mr. Maudling's vigorous treatment of the location of the motor industry. Along the line there was also a promise of a £50 million loan to Colvilles for their expansion plan … So far there does not seem to have been any general appreciation behind these piecemeal manœ;uyres. Certainly it is much more easy to justify them individually than as a whole. Neither the Government nor industry itself seems to know how far it is prepared to go along this line of policy, how big a commitment can be supported "—

§ Mr. H. Lever
On a point of order. Is it in order for the hon. Member for Kidderminster (Mr. Nabarro) to force hon. Members who do not take the Financial Times and do not read its leading articles to hear them in extensol Is he not restricted merely to quoting briefly from documents?

§ Mr. Deputy-Speaker
The hon. Member for Kidderminster (Mr. Nabarro) is quoting a document, but a great part of it is quite irrelevant to this debate.

§ Mr. Nabarro
I am sure that you, Mr. Deputy-Speaker, heard the reference to Colvilles.

§ Mr. Deputy-Speaker
Much of the article seems to be irrelevant to the Third Reading of this Bill.

§ Mr. Nabarro
There is £50 million for Colvilles in this Bill on Third Reading. There is only one sentence to complete the quotation: The Conservative Party itself should give much more thought to this matter. I will give the quotation to the hon. Member for Manchester, Cheetham (Mr. H. Lever) so that he can read it for himself.

§ Mr. H. Lever
I have read it.

§ Mr. Nabarro
Did the hon. Member say that he wrote it?

§ Mr. Lever
I read it.

§ Mr. Nabarro
Judging from the hon. Member's antagonism to the speech from his own Front Bench and his support for Conservative principles throughout this Third Reading debate, he might have written the words himself.
Here is the second lesson to be derived. This debate and the vigorous criticism of the Treasury Bench and all its occupants—they are collectively artful and collectively responsible for the Bill—have taught a second lesson to the overwhelming majority of Conservative Members. There is a very grave threat to the philosophy of the Conservative Party and the whole of the practice and implementation of Conservative policy inherent in a system of a large-scale investing of taxpayers' money in private industries without hardly any Parliamentary accountability. You will recall, Mr. Deputy-Speaker, the statement made by the Leader of the House in the early hours of last Wednesday morning. He said, "We will see that a financial statement is laid before the House".

§ Mr. Lee
That does not mean anything.

§ Mr. Nabarro
It means something, but it does not mean very much, because we on this side are again placed in the hopelessly invidious position of not being able to amend this statement and either having to vote against it altogether or having to accept it altogether. That has been our difficulty throughout the passage of this Bill and this afternoon. We want some of the money invested but we do not want all of it invested.
I shall be applying myself with assiduity to the whole of this problem of how Parliament year by year can control 988 the huge sums of capital moneys vested in State industries as well as, in part measure, in private industries before the money is voted and before it is invested, not in retrospection eighteen months to two years removed, which is surely the scourge of every quarter of the House. Every hon. Member surely must believe that a primary duty of ours is to guard public expenditure, whether it is in the context of nationalised industries or on straightforward Departmental Votes over which, sadly, we have insufficient control.
I shall not vote against the Bill. I shall not be guilty of an act of cowardice. I am defending my reputation in industry and commerce—something which the hon. Member for Gloucestershire, West would never understand—which dictates that the sanctity of a commercial contract must at all times take precedence over every other consideration. That is why I shall not vote against the Bill and why I did not vote in the early hours of last Wednesday morning during the Committee stage.

§ Mr. Loughlin
On a point of order. Is it in order for an hon. Member to charge another hon. Member with not accepting the sanctity of contracts?

§ Mr. Nabarro
The hon. Member does not.

§ Mr. Deputy-Speaker
I do not think the hon. Member for Kidderminster (Mr. Nabarro) made that imputation.

§ Mr. Loughlin
Further to that point of order. Immediately I put the point of order to you, Sir, the hon. Member said that I do not. One can only construe that as meaning that I do not accept the sanctity of contracts.

§ Mr. Deputy-Speaker
I do not think that the hon. Member for Kidderminster made any reflection on the hon. Member's character.

§ Mr. Loughlin
Further to that point of order. I am very sorry about this Mr. Deputy-Speaker, but—

§ Mr. Nabarro
The hon. Member is very cross now.

§ Mr. Loughlin
—if an hon. Member charges another hon. Member with not accepting the sanctity of a contract, is not that a reflection on the hon. Member's character in that it suggests that the hon. Member is dishonest?

§ Mr. Deputy-Speaker
I did not hear any suggestion that the hon. Member for Gloucestershire (Mr. Loughlin) is dishonest. I do not think we should be too thin-skinned about criticism.

§ Mr. John Diamond (Gloucester)
I respect the views of the hon. Member for Kidderminster (Mr. Nabarro). We shall not make much progress in our debates unless we accept the sincerity of one another's point of view. I fully accept that the hon. Member means what he says in drawing attention to the supreme importance of honouring obligations and giving that as the reason why he will not vote against the Third Reading. I also believe that it is not necessary to say that every hon. Member also believes in the sanctity of the agreement. If I believed that the sanctity of the agreement would be called into account by voting against the Third Reading, I too would not vote against it. But, as I am satisfied that it is not being called into account, I shall do everything to vote against the Third Reading of the Bill and persuade my own Front Bench to do the same.
The Bill is not about the provision of two strip mills. It is about the provision of finance and whether it is to come above or below the line. We are debating only the financial aspect, and it is the terms of the agreement which we shall be deprecating by voting against the Third Reading, not the provision of the strip mills. If it were a fact that the strip mills would not go ahead, then we should all be in a very different position. But it is not such a fact. It has never been claimed to be such a fact by the Government Front Bench itself. The President of the Board of Trade and the Minister himself have both made it perfectly clear that this is a Bill limited to dealing with the provision of finance and to nothing else.
I am going to make clear the reasons why I, and, as I see it, any hon. Member of conscience, could not vote for the Third Reading of the Bill. In the first place, I regard this matter as a plain breach of trust. We are the trustees of the nation's resources, and under the Bill we are proposing to allow an individual firm, Colvilles—because it was made made quite clear on Second Reading that the transfer of money from the 990 State to a nationalised industry is a bookkeeping entry which concerns no one at all—to be loaned money by the Government on terms far more onerous to the nation, for which we are trustees, than need have been obtained.
I find it impossible to support a Government which does not stand on their hind legs and get the best possible terms on behalf of the beneficiaries for whom they act as trustees.

§ Mr. H. Lever
Would my hon. Friend apply the same principles to the financing, for example, of the film industry?

§ Mr. Diamond
I am not talking about the film industry, and I will not be diverted into discussing it.
I regard this matter as one of the most serious which has taken place for some time. There is great concern in the House of Commons, as there was during the Committee stage. My hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) was not present throughout the proceedings.

§ Mr. Lever
I read the proceedings very carefully afterwards.

§ Mr. Diamond
My hon. Friend says he read the proceedings very carefully afterwards. Those who take part in debates know that it matters enormously what is said and how it is said. In Committee it is not always possible to correct our speeches, and even HANSARD is not a reliable guide to the Committee stage.
I say that what is proposed is, in my view, a plain breach of trust. I gave my reasons on Second Reading and it would be wrong to repeat them all over again. Nothing which has been said from the Government Front Bench has satisfied me that it is not a breach of trust. There has not been, apart from the Government Front Bench, a supporting speech in the House, so one has had no help in that direction.
In Committee we attempted without success to improve the terms in such a way as to enable the Government honourably to deal with the matter without breaching the agreement. We made suggestions which could easily be considered with the directors of Colvilles and which could be added to the procedures envisaged under the Bill. But none of those things has been 991 accepted. We have attempted to get a rate of interest which is fair to those whose finances we are here to look after. That has been refused.
We have been told only at the very last minute that Colvilles is going to have to pay for this loan ½ per cent. less than local authorities have to pay for the money they require with which to build homes for the people. Yet we know that during the period when this loan was being negotiated Colvilles was earning, respectively, 60 per cent. and 74 per cent. on its equity capital. The figures for the last two complete years during which these negotiations took place show that in 1957–58 Colvilles made just on 60 per cent. net profit on its capital and in the following year 74 per cent. net profit.
It defies my understanding how anyone can suggest that a company with a capacity to earn such rates of net profit is unable to pay even as much as a local authority when it is borrowing money from the State. Therefore, those of us who regard our position with seriousness will not accept for one second that, so far as the loan to Colvilles is concerned, the Government exercised their responsibilities to the full in arriving at the terms of this agreement.
I repeat what the hon. Member for Shipley (Mr. Hirst) said. My hon. Friend the Member for Cheetham should have been here to listen to the hon. Member for Shipley, because he made an absolutely sincere and heartfelt speech. I am sure that my hon. Friend read it, but I am just saying that no one who listened to the hon. Member for Shipley could have one moment's doubt that he was deeply moved by what is going on. The hon. Gentleman is in the great difficulty that he cannot vote against his Government. There is no doubt about what he feels about the matter and I share his views, to quote his own words, that this is a "shattering and dastardly" contract. It is not often that a responsible back bencher on the Government side is able to describe in all sincerity an agreement made by his own Front Bench as "shattering and dastardly".
That is the first reason why I cannot support the Bill. The second reason is even more fundamental, and is one which 992 affects everyone in the House. I regard the Bill as a breach of faith as between the Government and the House of Commons—a plain breach of faith—and I shall attempt to show why.
I regard it as the duty of a Government not only to act legally, as of course they do, but to act in good faith with the House of Commons. I must, therefore, refer the House to the Act of 1953 which is referred to in the Bill and which gives the authority which the Minister has claimed and which entitles him to come to the agreement reached. Let me first of all read the Title of the Act. Remember that what we are discussing is a loan of £50 million—an investment by the country of £50 million—to a steel firm. The 1953 Act is described as an Act to repeal the Iron and Steel Act, 1949, and to dissolve the Iron and Steel Corporation of Great Britain, and, among other things, to provide for the return of iron and steel undertakings to private ownership and for the disposal of property rights, etc. That is the purpose of the Act.
Who would have thought in 1953—I was not here myself at the time; I was "resting", as they say on the stage— that this Act, which was the Act to denationalise steel, to divest the nation of its investment in the steel industry, was to be used as the authority to pump £50 million into a private denationalised firm?

§ Mr. Raymond Gower (Barry)
The hon. Gentleman will recall that the same Act also prescribed the powers of the Iron and Steel Board. Does he recall that hon. Members opposite pressed the Minister of Supply at that time, the present Minister of Aviation, to take greater powers than he now possesses to stimulate industry and new developments in the steel industry?

§ Mr. Diamond
As I explained, I was not here, and therefore I cannot recall these things. Of course, I accept what the hon. Gentleman says, though I do not think that it affects in the slightest the point which I am making.
My hon. Friends on this side of the House no doubt felt, and still feel, that that was the way in which the matter should have been handled. Had it been handled according to Labour philosophy there would have been no problem. 993 Indeed, had it been handled according to Conservative philosophy there would have been no problem. It is only because of this bastard arrangement that we are in this difficulty.

§ Mr. Walter Monslow (Barrow-in-Furness)
As some clarification of what my hon. Friend has said, is it not true that, whilst we agreed with capital investment, we also made it abundantly clear that there should be public accountability?

§ Mr. Diamond
I am grateful to my hon. Friend for making that point. As I was saying, the Government have acted in breach of faith in not bringing to the House the question of these loans and agreements which they were making under the powers contained in this Act. As every hon. Member at the time must have thought, this was an Act to divest the nation of investments and not to do the very opposite, as the present Bill seeks to do.
The provision in the Iron and Steel Act, 1953, under which the right hon. Gentleman claims these powers—and I am sure that he is right in claiming them—is Section 5, which says that if the Board is satisfied that there ought to be additional production facilities and the Board reports to the Minister that it cannot secure them by means of consultation, … the Minister may, with the approval of the Treasury, himself provide and use those facilities … Why did not the Minister provide those facilities? He could have obtained them. Those are the powers which are described in this Act and they are the powers which every hon. Member would have thought at the time he was giving authority to his Front Bench to use.
The Section goes on: … or make arrangements with any persons for the provision or use of those facilities by those persons, whether as agents for the Minister or otherwise. An agency was contemplated. Why did not the Minister appoint Colvilles as agents? There would have been no problem at all. Why did not the Minister say to Colvilles, as the Government have said to many firms on many occasions, "Will you please carry out this undertaking for us on agency terms? We will pay you a service fee. All profits and 994 all losses, capital and interest belong to the nation." Why could he not have said that? He could have done so if he had wanted to.
Nobody anticipated that these powers would be used in this way, and I regard it as a thoroughly back-door method of claiming entitlement to enter into agreements. If agreements are entered into by that back-door method, the only way that the Government can justify themselves is by coming to the House at the earliest possible opportunity, not at the last minute, and asking for approval before the agreements are entered into, or at all events, at a minimum, asking for the comments of this House before spending £120 million. The Government Front Bench seem to be absolutely mesmerised by noughts all over the place, and they seem to think that £120 million can be tossed off just like that. If I were to drop twelve £1 notes on the floor, if that were in order and supposing that I had twelve £1 notes, it would create a sensation. Everybody would notice it. We are talking here not about £12 or £120, but £120 million as to which the Govern-men have not seen fit to come and ask our approval about the arrangement made nearly eighteen months ago.
The Government have treated us worse than the company has treated its own shareholders. Colvilles did not enter into this agreement without consulting its own shareholders. Colvilles entered into a tentative arrangement with the Government, as is pointed out in the heads of agreement, and then went to the shareholders and said, I believe in February, 1959, "We have the opportunity of entering into this arrangement with the Government. We shall have an opportunity of receiving a loan of £50 million on terms which are advantageous to the shareholders. Will you, the shareholders, agree to increase borrowing powers so that we can do this?" The shareholders, knowing that they were on a good thing, did so.
The Government have not seen fit to treat the House of Commons with the same courtesy that the directors of a company treated their own shareholders. That takes a bit of answering. I regard this attitude as absolutely overbearing and over-riding. I am sorry to criticise the right hon. Gentleman because I realise that he was not responsible for 995 the situation. We know from the date of the agreement that this happened at the time of his predecessor—a predecessor who seems to be aptly named for dealing with the problems of strip mills, a predecessor who apparently may not have learned in the same hard way as we have learned the advantages of keeping the House of Commons and Parliament with you. He may not have learned the advantages of having public opinion with him. There may be other reasons—"mills within mills," as one might say.
At all events, as to the lack of consultation with this House, it is regrettable in the extreme that the Government should not have thought fit to consult us at all until they were compelled to do so. We should remember that this arose over a year ago. Why are we discussing it now? The hon. Member for Kidderminster (Mr. Nabarro) very wisely pointed out the difficulties of having opportunities of discussing this matter. It should have been in last year's Estimates. We should have discussed it then, not this year.

§ Mr. Nabarro
To be technically correct, part of it was wedged in one of the Estimates. As I cannot possibly hope to read every figure that is published in every Parliamentary paper, I confess that I missed it, but evidently everybody else missed it as well. There was a part of it in some Estimate.

§ Mr. Diamond
About £1 million, I think.

§ Mr. Nabarro
It was something very small.

§ Mr. Diamond
It was evidently misleading—[HON. MEMBERS: "No."]—it was either misleading or needed explanation. One does not expect a £120 million loan to be based on an estimate of £1 million. It was not in last year's Consolidated Fund. I do not understand why the Government have left it until this late moment, as my hon. Friend the Member for Newton (Mr. Lee) said, three or four days before the last possible date for the first tranche to be advanced, and indeed we do not know whether it is to be advanced or not. I do not know why the Government have left it to this last possible moment before consulting us about it.
996 It is then complained that these are not the circumstances of that time, that the Government are in a different mood from what they were at that time. Why did not the Government protect themselves and raise the matter at that time, if their criticism is valid? That is the way in which the matter should have been dealt with. It is extremely difficult for us as a House of Commons to exercise our rights in supervising this money. As Mr. Speaker made clear to the hon. Member for Kidderminster, there are various ways in which this can be done. Today is our only opportunity of doing it, and that is why we take this serious view about it.
I say, first, that this represents a breach of trust. Secondly, it represents a breach of faith with the House of Commons, in having acted—no doubt, strictly within the letter of the law of Section 5 of the 1953 Act—by what I call a back-door method of getting the authority for the loan and in delaying bringing the matter before the House for about eighteen months after the agreement had been entered into. The third reason why I shall vote against the Bill is that it is totally unnecessary so far as Colvilles is concerned.
The hon. Member for Kidderminster is in the same difficulty as I am, but for somewhat different reasons. It is the fault of neither of us that the Government thought fit to include both of these essentially different principles in the same Bill. It is unnecessary for several reasons. I have already indicated the first reason. The Minister himself could have provide the strip mill without going to Colvilles. Those are the powers which were already indicated in the Act.
The second reason is that he could have appointed Colvilles as agent under a management contract. There would have been no problem about what the rate of interest should have been or about any profits, equity or interest or anything else. It would have solved itself. It would all have belonged to the nation.
The third reason is that Colvilles should have got the money itself. The hon. Member for Wolverhampton, South-West (Mr. Powell) made a very accurate and devastating speech on Second Reading in which he explained carefully, with all the authority that rests in him—for he always goes to the greatest pains and is 997 always absolutely accurate in what he says—how this money should have been raised on the market.
Also, we have the experience of Colvilles in raising £6 million in debentures in January, 1958. All we know about it is that they were fully subscribed. There is also the interesting fact that in 1955 Colvilles—or rather, I suppose, I.S.H.R.A.—issued shares of Colvilles which were oversubscribed thirteen times. Here I am afraid that we have to do a tiny bit of arithmetic. The amount offered was 10 million shares at 26s. a share, in short, £13 million. This was oversubscribed thirteen times: in short, £169 million was offered, and this was in 1955. Therefore, the Colvilles directors could have kept the £13 million they required and £156 million would still have been left—three times as much as it is proposed to lend to Colvilles under the terms of this Bill.
In those circumstances, I regard it as utter nonsense to say that Colvilles could not have got the necessary funds from its own shareholders on appropriate terms. Of course, the shareholders would not have been "mugs" enough to put up the money on the terms which the Government wish to foist on the nation. But, on appropriate terms, the shareholders would have put up at least the £50 million required. As we know, they showed willing to put up three times that amount, and therefore this Bill is absolutely unnecessary.
Another reason why I shall vote against the Bill is that I am thoroughly dissatisfied with the shifty answers we have received from, at all events, the occupants of the Government Front Bench. I call the answers "shifty". The hon. Member for Kidderminster called them—

§ Mr. Nabarro
"Artful".

§ Mr. Diamond
—yes, "artful".
Let me refer first of all—I wish to go as far as I can with the hon. Member for Kidderminster—to one particularly artful reply. Let me refer to the speech of the President of the Board of Trade on 18ih February during the Second Reading of the Iron and Steel Bill. He was answering an intervention of mine when I said: Having regard to the agreement which has already been made, does the right hon. 998 Gentleman say that it is not open to the House in Committee to alter the provisions in respect of the terms of the loans? What we wanted to know at that stage was, could we do anything about this agreement? Was it open to the Committee to do anything about it? Here is how the "Artful Dodger" dodged the answer to my question. He said: It is not for me to say what may happen in Committee."—[OFFICIAL REPORT, 18th February, 1960; Vol. 617, c. 1559.] That set the tone for the unsatisfactory answers which came from the Government Front Bench.

§ Mr. Nabarro
Hear, hear.

§ Mr. Diamond
They were continued by the Economic Secretary to the Treasury. Let me be clear. I am not accusing the Minister of being either shifty or artful—he is incapable of being either. Let me be equally clear. I am saying that in their answers the President of the Board of Trade and the Economic Secretary to the Treasury disagreed among themselves, went further than they were entitled to go, were shifty, and, up to a point, misleading. Let me give details.
Let me say why I regard them as misleading. At one stage we were asking about altering the agreement, why could not it be altered and what had happened during the course of the negotiations. The argument of the Economic Secretary to the Treasury was that we could not alter this agreement. Here was a solemn agreement. I do not know why the hon. Gentleman called it "solemn". I should regard it as a stupid agreement, a silly agreement—a sinister agreement if hon. Members wish—certainly the hon. Member for Shipley regarded it as a "dastardly" agreement—"a shattering dastardly agreement". But why "solemn", I do not know.
At all events, it was the argument of the Economic Secretary to the Treasury, that we could not alter it. What did the President of the Board of Trade say? He had not said anything like that at all. He said we did not want a different agreement. We were arguing whether there should be an equity interest and the President of the Board of Trade said, There is no equity participation because we on this side of the House do not believe that when the Government lend money to industry they should have an equity interest in it."—[OFFICIAL REPORT, 18th February, 1960; Vol. 617. c. 1552.] 999 Which is right? Is it right that the Government did want it or is it right—as the Economic Secretary to the Treasury let us to believe—that the Government might have wanted all these things, but there was a fixed agreement and we could not do anything about it?
We were never told what were the negotiations. Up to this minute we have never been told what were the negotiations; what point of view the Government took; what point of view Colvilles took; whether there was any reasonable compromise or not. Today we are in the last stages of the Third Reading of the Bill, we are being asked to approve the Bill and we do not yet know what has gone on. This is indicative of the extent to which the Government Front Bench is not prepared to bring Parliament into its confidence.
The other argument which was continually advanced was, "If only you of the Opposition had said something about this earlier, we should have been able to do something about it. Why did you leave it for all this time before complaining?" In fact, we now know that this was a form of agreement entered into by the Government and no matter what we had said, or what argument we had produced, there was no possibility at all of altering any fundamental term of the agreement. But, at all events, we could have satisfied ourselves that although a stupid mistake had been made on this occasion it would not be repeated on a future occasion. We could have obtained such an assurance. It is clear that in certain circumstances if part of this money, for example, does not go to either of the two borrowers mentioned, we have authorised the issuing of money to a possible third party—perhaps to the Steel Company of Wales. We have authorised the lending of this money and, if it is not used by either of the two borrowers referred to, there is nothing in the Bill to prevent the money going to a third party. We have still had no promise from the Government that if that is to be done, an agreement will be put before this House before it is entered into.
Despite all the trouble we took during the Committee stage discussions we were not able to obtain an undertaking—even from the Leader of the House—that if 1000 on a future occasion other negotiations took place, or the agreement was varied —it could be varied, if there is an agreement between two parties they can agree to vary it—any variation would be discussed and put before this House before it was entered into. In short, the Government have shown themselves to be absolutely unaware of the need to encourage Parliament in its fundamental responsibility of controlling the expenditure of large sums of money.
For all these reasons, I find it impossible to support the Bill. I find it impossible to support a Bill where we have terms which are less favourable than any ordinary person would have been prepared to give. There is an absolutely clear breach of faith in the sense that the Government have used powers intended for an entirely different purpose, and prevented the possibility of discussing this agreement for eighteen months or more. We have had nothing but shifty and contradictory answers from the Government Front Bench.
Now we have got to the stage when, even this afternoon, the President of the Board of Trade said, "If you want to argue about this, put down a Motion." That is his sense of his responsibilities as President of the Board of Trade in the spending of £120 million of the country's resources—he says, "If you want to argue about it, put down a Motion." Why does he not come to talk to us about it? Why does he not seek the approval of Parliament? What is Parliament for? What is to be left of Parliament if we give this Bill its Third Reading?

§ Mr. John Biggs-Davison (Chigwell)
I have heard a number of speeches from the hon. Member for Gloucester (Mr. Diamond) during the course of this Bill. I hope that he will allow me to say that those speeches have been both eloquent and well informed. I feel sure that many of the criticisms he has made of this highly questionable Bill are valid. He used strong words in the speech which he has just delivered. He accused the Government of a breach of faith with the House of Commons. Changing the "d" of my hon. Friend the Member for Shipley (Mr. Hirst) for "b", he spoke of a "bastard sort of arrangement"
My hon. Friend the President of the Board of Trade seemed to say, in the 1001 speech which he made in opening the debate today, that we should not really worry too much about this because it is really a small kind of Measure. That rather recalls the story of the housemaid who gave birth to an illegitimate infant and excused herself on the ground that it was only a very little one.
I shall not be long in my remarks, because I am sure that the hon. Member for Gloucester and his hon. Friend the Member for Gloucestershire, West (Mr. Loughlin) can scarcely wait to divide against the Third Reading of the Bill— and, having heard the hon. Gentleman the Member for Newton (Mr. Lee), I feel quite sure he ought to be in the Lobby with them—but having set my signature to two Amendments which were tabled in Committee by my hon. Friend the Member for Kidderminster (Mr. Nabarro), I should just like to explain where I stand.
It is not my wish to deny either of these two important firms in this vital industry, either the one which is publicly owned still, or the one which is privately owned, the capital which they need for their expansion. Still less—and this is the crucial point—do I want the Government to break the agreement which they have entered into—admittedly, in the very different circumstances which prevailed before the General Election.
I certainly do not want the President of the Board of Trade to seek to break the pledged word of the Government or, to use the jargon dredged up from the turgid thesaurus of his Department, to undertake "a unilateral abrogation".
This debate and the debates which have preceded it mark another stage in the journey towards the better scrutiny of public expenditure, and although we do have on this side of the House a very different philosophy from that of right hon. and hon. Members opposite, they have shown a good deal of common ground between both sides of the House. The consensus of opinion expressed on both sides of the Committee on the question of the Statutory Instrument was quite remarkable, and I think that it is to the credit of the Committee as a whole, and to the credit of the House, that we were able to extract a minimum concession from my right hon. Friend the Leader of the House.
1002 What has emerged from the debates which we have had on the Bill is that on this side of the House, if we are honest with ourselves, though we do not accept the argument, we must respect the argument which has been voiced by hon. and right hon. Members opposite, that if this sort of thing is to be repeated, if the Conservative Government are to put other Measures of this kind through the House, it will become increasingly difficult for them to resist the claims which have been made opposite that there should be an assessor, that there should be a Government director, that there should be, in the words of the hon. Gentleman the Member for Newton, public representation on these companies, even that the State should be entitled to—

§ Mr. Deputy-Speaker
I must remind the hon. Member that we are now, on Third Reading, confined to the contents of the Bill.

§ Mr. Biggs-Davison
I was trying to deal with some of the arguments which we have heard in earlier speeches on the Third Reading of the Bill. The point I was trying to make was that I can well understand why right hon. and hon. Members opposite should be urging the argument that if taxpayers' money is to be put into private enterprise then the State is entitled to be represented and even to have a share of the equity of the private company concerned.
In conclusion, I would say to my hon. and right hon. Friends on the Treasury Bench that it is not very long ago that we on the back benches here, under the leadership of those right hon. and hon. Friends of ours, were denouncing the policy put forward by the party opposite in the General Election, the policy which we condemned as back-door nationalisation. My hon. Friends and I are still opposed to it, but the Government will find it hard to resist if they put other Measures of this kind before the House of Commons.

§ Mr. Harold Lever (Manchester, Cheetham)
The one non-controversial statement which can be made about the Bill is that virtually nobody until today has had a good word to say in favour of the Bill. The opposition described it as an outrageous racket. Conservative 1003 back bench Members have described it at bastard Socialism. Until today the Government rather tended to describe it as an unfortunate necessity. Therefore, there seemed to be more or less unanimous agreement that the Bill was a bad one.
As my hon. Friend the Member for Gloucester (Mr. Diamond) has pointed out, I did not attend the debates in Committee on the Bill, but I read the debates in the OFFICIAL REPORT with some care, and what has tempted me to offer the House a contribution within the discipline of Third Reading is that, when everybody agrees, as said Mark Twain, everybody is wrong, and I am rather inclined to have the feeling that that may be the case. I therefore wish to examine the various grounds offered on both sides of the House in criticism of the Bill to see what merits they have and what merits the Bill has; and quite objectively, and perhaps helped by the rules of Third Reading, the assistance of which has been somewhat denied to some hon. Members of their own choice in the course of their speeches.
Second Reading is for the comparison of the tawdry offering of a legislating Minister with the Utopian possibilities conceivable to the mind of an hon. Member then making a speech. On Third Reading, alas, we cannot traverse those pleasant pastures of Utopia. We must content ourselves with looking at the proposals actually laid down in the Bill, and say whether, on balance, we regard them as desirable or harmful. That is what I propose to do, and to examine the arguments offered to that end.
First, until this afternoon the Government's defence of the Bill consisted of three arguments. They said, "We are bound by an agreement which was signed some time ago and we cannot dishonour that agreement." The second Government argument was that the agreement was necessary because the threat of nationalisation by the Labour Party made it impossible at the time for Colvilles to envisage raising the money on the market. The third reason offered by the Government, until today, was that when the matter was raised in the House in November, 1958, nobody made much of a fuss about it, and that is another good reason for passing the Bill.
1004 I can sum up my views about these three reasons offered by the Government for supporting the Bill by saying that the first is puerile, the second is false, and the third is irrelevant. This is not a very encouraging beginning, and to some extent the Government have themselves to thank for the kind of reception which the Bill has had and the extreme mistrust with which it has been greeted. I said that the first reason was puerile, but that is not to say that it was not worth using by the Government in an effort to persuade some of their own followers.
It seems to have had considerable success with the hon. Member for Kidderminster (Mr. Nabarro) and his hon. Friends. He detests the Bill, but if it is a fact that the Government have entered into a binding agreement with Colvilles it means to the hon. Member that the House is obliged to pass the Bill or otherwise repudiate the sanctity of contract. In other words, if the Prime Minister, in the course of his wanderings, were to contract to supply a dozen maidens to a Middle East potentate's harem, and came to the House for ratification, the hon. Member for Kidderminster would be in some difficulty. He would have to support the necessary Measure to supply the specific number of virgins to complete the contract entered into by the Prime Minister, on the ground that otherwise he would be repudiating the sanctity of contract.

§ Mr. Nabarro
This is a wholly false analogy, of course. In this instance, a written contract was entered into between Her Majesty's Government and Colvilles eighteen months ago and it is that solemn contract which I seek to sanctify. The analogy which the hon. Member has made with the private whims and desires of the Prime Minister would not be ratified in a contract, quite clearly. Therefore, this is not only totally out of order, but not relevant to the Bill in any way.

§ Mr. Lever
I was trying to help the hon. Member.

§ Mr. Nabarro
Help me, indeed!

§ Mr. Lever
I was trying to help the hon. Member and also chide him with a humorous illustration, but seriously, his argument that one must support 1005 Government legislation implementing a contract, even though the contract itself is infamous, is obviously a rejection of Parliamentary control of all Government contracts. If the Government sign what has been described on both sides of the House as a dastardly contract, it is a dastardly Government, and what one must do is to kick them out and honour the contract afterwards; and one does that by kicking out the Bill. That is recognised Parliamentary practice.
The hon. Member for Kidderminster tries to escape on the back of a whim which I put to him, but the same applies if the Government, for example, negligently and foolishly entered into a contract for the manufacture of cotton cloth and the House thought that the Bill enacting it and the contract itself were horrible and yet it was said that we must ratify it, otherwise we should be repudiating the sanctity of contract. That is puerile. What is not puerile is the attitude of the hon. Member for Kidderminster, which ratifies political cowardice, political insincerity, and expediency in his conduct in the House, for he is making an assault upon the rights of the House and of hon. Members in preaching a doctrine which produces such lamentable results.

§ Mr. Nabarro
I bet that the hon. Member does not vote tonight.

§ Mr. Lever
I certainly shall if the occasion arises. Parliamentary machinery has many subtle means of expressing dissatisfaction. When an hon. Member does not agree with the Government he can abstain, he can vote, and he can make demonstrations of various kinds. I do not need lectures from the hon. Member, however well-intentioned, on how I shall express my point of view on the Bill. I shall tell the House very freely my view upon it. I merely point out that it is rather lamentable that the Government should have defended it in this stupid way.
The second point in the Government's reply on the Bill, which is false, is the argument that because of the Labour Party's threat to nationalise the steel industry Colvilles could not raise the money on the market. That is a particularly choice piece of nonsense. One would have thought that if that were true no company could have raised any money on the market, because hon. 1006 Members will recall that the Institute of Directors, and an ardent chorus of the entire Tory Press, pointed out that the Labour Party was not only going to nationalise steel but almost everything else, and especially the 500 companies which were listed in great detail.
But apparently those companies had no difficulty in raising funds. The financial market did not come to a standstill because of the Labour Party's threat of nationalisation, nor was that threat operative in stopping Colvilles raising the money at that time.

§ Mr. Gower
The hon. Member obviously would agree that no company was so threatened as the companies in the steel industry.

§ Mr. Lever
I appreciate that. I wish that the hon. Member had said that before the General Election, when we were told that every one of the 500 companies was expressly and directly threatened and there was no mention of the degree of difference which the hon. Member, with some subtlety, is now making. However, this did not stop Colvilles raising the money.
The reason why Colvilles did not raise the money under its own steam can be put very simply. The President of the Board of Trade has been smoked out a little and because of the uproar he has since talked some sense about the reasons for the Bill. The reason why Colvilles did not raise the money was the circumstances in which this deal was done. The Government came to the conclusion that it was very urgent in the interests of the country that there should be a vast increase in sheet steel production, planned, organised and financed in expectation of a greatly increased demand. The steel companies, among them Colvilles, did not take such a hopeful view of likely progress in demand. They were very unwilling to commit themselves to huge financial commitments and, not surprisingly, to meet a demand which they had no confidence would emerge.
Furthermore, the House will remember that, because of a particularly stupid phase of Tory Government policy, we were suffering a recession in the steel industry at the time that the discussions were taking place. Colvilles was not even fully engaged in its existing plant 1007 and here were the Government asking it to branch out into a new production of sheet steel on a gigantic scale and telling it rather hopefully that there would be a huge demand in future. At the time, Colvilles did not appear keen. One of the inducements held out by the Government to Colvilles was that it would be able to secure finance on other than exorbitant terms; in other words, at cost price to the Government.
It is a grotesque distortion of reality, in the light of what happened afterwards, to picture Colvilles—for whom I hold no brief and members of whose board, as far as I am aware, I do not know— as the recipients of National Assistance, as my hon. Friend the Member for Newton (Mr. Lee) did, or to criticise Colvilles for accepting the project. The truth is that this is not a profit-making bloated capitalist who is seeking to add to his bloated profits at the expense of public money. Rather, this is a more public-spirited capitalist being pressed by a Tory Government to undertake work of a particular character in Scotland, not wholly to his taste, for the reasons that I have given—that the Government and the Iron and Steel Board envisaged a huge increase in steel production, on a scale far greater than was envisaged by Colvilles itself.
I know that my right hon. Friend the Member for Battersea, North (Mr. Jay) has often been quoted critically because he said "Whitehall knows best". As a matter of fact, this is one of those occasions when Whitehall did know best, when the pessimism and shortsightedness of Colvilles' board turned out not to be justified and the Whitehall estimates of what was likely to be achieved in sheet steel demand turned out to be the case. However, we must not look at this through the spectacles of today, but at the time when the agreement was negotiated, when there was a genuine pessimism in many well-informed steel circles, when this looked like a hazardous undertaking, and when Colvilles, clearly reluctantly, were induced to engage in it because it at least knew that the finance for it would be provided by the Government at cost.
I yield to no hon. Member in expressing zeal for watching money that goes out of the public purse into the 1008 hands of private, profit-making companies. I can only say, rather ruefully, that when money was being lent under the Film Finance Bill to companies whom it was never intended should pay it back in full, the duty of exercising a zealous watchfulness over public funds fell upon my unsupported larynx, which has never fully recovered from the ordeal, not to mention the trespass on the indulgence of the House which was necessary.
I apologise to my hon. Friend the Member for Gloucester. He was not present because force majeure prevented him, though I have no doubt that he would have intervened had he been here. It seems odd to me that this hallelujah chorus should develop when £50 million is being loaned for an urgent and desirable purpose to an undoubtedly solvent company which will pay back every single farthing of it at no cost to the country, and that there is this zeal to defend the public purse when nothing was said by any hon. Member on either side of the House on that previous occasion.
The plain fact of the transaction is that what the Government get is an immense increase in the national asset of sheet steel production planned in good time, located where the country needs it in good time. What do they pay for this? I deeply respect the sincerity of my hon. Friend the Member for Gloucester. Ordinarily, I deeply respect his sagacity, but I cannot say I do so on this occasion; for this reason, that the Government get a vast new sheet steel undertaking which is vitally necessary, planned in good time, organised by experts and located where the Government want it. What do the Government pay for it? Nothing. The cost of this loan to the Government will be nothing.
If I have the honour to be in this House in 1975, when the last instalment of the loan is due, and if my hon. Friend the Member for Gloucester is here also, and if that money has not been repaid in full, with the total interest paid promptly on the due dates by Colvilles, I undertake to bring my hat into the House and to eat it in the presence of the then Speaker.

§ Mr. Diamond
Will my hon. Friend allow me to interrupt him, since he has 1009 been good enough to refer to one or two things I have said? May I draw his attention to the fact that it is not absolutely right to say that it was Whitehall that knew best? It was the considered opinion of the Iron and Steel Board, representing the sum of knowledge of all those in steel, which decided that this additional strip mill was necessary, and that, therefore, Colvilles could be criticised if it took a different view. Is my hon. Friend aware that there are various powers—

§ Mr. Deputy-Speaker
Order. I must remind the hon. Member that he has spoken once.

§ Mr. Lever
It is not open to doubt that there was an honest division of opinion in steel circles at that time, that Colvilles was far from enthusiastic, and that everything looks sure and certain now because there has been a vast trans-formation. The Government were forced to alter their economic policy to win the election, and it is not yet long enough after the election to put the engines in reverse, though no doubt that will come, so the outlook is rosy.
I have dealt with the reason for the Bill. I hope that I have pointed out that the Bill is a good Bill from the country's point of view, because we shall get some things of great importance. Now I will deal briefly with the hon. Gentleman the Member for Kidderminster and his hon. Friends. Of course, it is all right for my hon. Friend the Member for Gloucester. I am sorry to keep on quoting him, but I listened carefully to what he said. It is all right for him to talk about sincerity. I accept without hesitation that my hon. Friend is deeply moved at the idea of the Bill passing through the House unchallenged. Also I have no doubt that the hon. Member for Shipley (Mr. Hirst), the hon. Member for Kidderminster and the hon. Member for Dorset, South (Viscount Hinchingfbrooke) were all sincere, too. What is much more relevant than their sincerity is their good sense and the accuracy of their criticism.
It is no use my hon. Friend quoting the hon. Member for Shipley. He happens to be, from our point of view, an extremely reactionary gentleman who says that this is a dastardly agreement. He says that because he is a nineteenth century Manchester Liberal My hon. 1010 Friend, who rejects that, cannot turn round and say "A Daniel come to judgment." I agree with him, but for totally opposite reasons, as did my hon. Friend the Member for Newton. We have to make our case in logic. The hon. Member for Shipley thinks the Bill is dastardly because he thinks that it is dastardly to use public money to interfere with the natural movements of the finance market, which left to itself will produce a heavenly result of profit and freedom for all.
That is why the hon. Member for Shipley thinks it wrong and, broadly, why the hon. Member for Dorset, South thinks it wrong and why the hon. Member for Kidderminster thinks it wrong, with complete sincerity but completely up a gum tree. Dr. Johnson said that when a madman comes into your house you should knock him down first and sympathise with him afterwards. I shall reverse that with the hon. Members of the Tory Party to whom I have been alluding. I shall sympathise with them first and knock them down afterwards, I hope.
I sympathise with them because they happen to be born into the wrong century. They are ardent believers in nineteenth century laisser faire capitalism, Trotsky said anybody who wanted a quiet life should not have chosen this period of history to be born in. He might have added that anyone who wanted to retain a naive and virginal belief in the benefits of the unfettered choice of laisser faire capitalism should have been born at least fifty years before any of those hon. Gentlemen were born.
It needs a fairly complex technical equipment to follow the argument which proves that the moon is not made of green cheese, but to prove that laisser faire capitalism in the middle of the twentieth century is a menace and a disaster to everybody, economically and politically, one would only need not to have been blind and deaf during the last twenty years. No technical equipment is needed. One has only to see the miseries and torments of unemployment, fascism and ultimately war, brought about because of the naive belief in the benefits of unrestricted laisser faire capitalism.

§ Mr. Deputy-Speaker
Order. The hon. Member pointed out earlier that a 1011 Third Reading debate is confined to what is in the Bill.

§ Mr. Lever
Oddly enough, Mr. Deputy-Speaker—I am probably going on longer than the House would desire—the fact is, with great respect, that all I have to say has a Third Reading relevance in the sense that the Bill is a rejection of nineteenth century laisser faire capitalism. It is a rejection of almost every explicit doctrine preached by the Tory Party in all its propaganda. We have heard the agonies of Tory Members opposite, representing political anachronisms, museum pieces, chanting to themselves over and over again nineteenth century shibboleths which they think have the soothing and reassuring effect of a long remembered lullaby of childhood—why we should find any sympathy on this side of the House with those people I cannot for the life of me see.

§ Mr. Gower
Is it not true that, although my hon. Friend the Member for Kidderminster (Mr. Nabarro) may not understand the pragmatic approach of a post-war Conservative Government, it is also true that the Socialist Party does not understand why a Conservative Government is so pragmatic?

§ Mr. Deputy-Speaker
Order.

§ Mr. Lever
I am willing to admit at once that nobody can really understand the baffling contradictions, double-faced-ness, double-talking of the Conservative Party. The hon. Gentleman has made his point with great force.
Now I want to deal with the opposition from a much saner quarter than either the Government's denigration of their own Bill, or the peculiar utterances of the museum pieces of politics to whom I have referred. I must take into account the violent objection of hon. Members on my own side of the House to this Bill on the ground that it should have been on tougher terms and should have had an equity content. I will put it the other way round. The Bill does not make provision for an equity in Colvilles.
"Ah", say my hon. Friends, "£40 million of public money. True we get it back. True we get back the interest which the Government will have paid. Look at all these bloated profits going into private hands which the country 1012 should have had." That I understand as a very reasonable sort of approach. The only thing is that I am not permitted on Third Reading to say what I would have done. The only point with which we are allowed to be concerned is the effect of the Bill as it stands. It is completely wrong to say that, as the Bill stands, the advance, economically and financially, which Colvilles will achieve will not in any way be shared in by the country. It is true that we could have had convertible debentures. But there is always one great unseen shareholder on every company's register, and that is the Government.

§ Mr. J. J. Mendelson (Penistone)
What a strange doctrine.

§ Mr. Lever
My hon. Friend says, "What a strange doctrine." I am prepared to face reality. If my hon. Friend sees anything inaccurate or distorted in what I am saying, let him get up and shoot me down. We cannot ignore the fact that if Colvilles' profits go up, half of them come to the Government.

§ Mr. Mendelson
That has nothing to do with it.

§ Mr. Lever
It is all right saying it has nothing to do with it.

§ Mr. Mendelson
What we were arguing, and what my hon. Friend is now distorting, has nothing to do with not having been present during the Committee stage, because he read the debate. He is distorting our argument that there will be increased profits accruing to the company and that the nation should have a direct share in those increased profits.

§ Mr. Lever
I do not think that my my hon. Friend was at his most charming when he said that I was deliberately distorting his argument. It may be flattering to my intelligence, but not to my morals. My hon. Friend adds to his charm with every intervention. Nevertheless, if he will listen to what I say I think he will find that I have not distorted the argument. I am dealing with the first part of the argument, and I will deal with the other part later. The argument is not that we could not have done a better deal. I would have done a better deal myself, and if you, Mr. Deputy-Speaker, would kindly allow me to do so on Third Reading, I would be 1013 prepared to try to draft a much better Bill, which would give more benefits to the people.

§ Mr. Deputy-Speaker
The rules of the House forbid us learning that secret.

An Hon. Member
What would the hon. Member have done?

§ Mr. Lever
I thought I had made it clear. My hon. Friend only wakes up when he hears anything which jars on his preconceived prejudices. Apparently, he did not hear the first part of my argument, when I said that I could have done better than the Government have done. I hope that he is now thoroughly awake and will listen to this part of what I am going to say.
I have said, and I repeat, that it is true that the Government have not provided the benefits which a Labour Government would have provided. Nevertheless, it is not true to say that the people of the country will not share in any increased profits that result from this sheet steel mill. As has been said in a more august context—the hon. Member says he cannot understand me—I can provide him with an argument, but I cannot provide him with an understanding. The fact of the matter is that— blink away as much as we like—the hon. Gentleman wants more, and I do, and we might get it if we had a majority in the House of Commons; but we cannot blink away the fact that half of these profits will come to the people via the Treasury right away, and it is even more than that.

§ Mr. Lawson
Would not my hon. Friend agree that this does not apply to capital appreciation? If he bears in mind the fact that over the past two or three years this firm's equity shares have appreciated in Stock Exchange value by about £25 million, he will agree that not one penny of that £25 million will come to the Government in the shape of Income Tax.

§ Mr. Lever
The untaxed capital appreciation of shares occurs under a defective fiscal system conducted by this reactionary Government, which system I would long ago have abolished. It distinguishes between capital gains and revenue gains. I realise that my hon. Friend is quite right in saying that any 1014 capital appreciation of the shares of Colvilles will not be taxed under the present law, but we are talking about increased profits resulting to the company—

§ Mr. Mendelson
I am now questioning my hon. Friend's hearing as well as his good sense. What I said was that the point he was making was completely irrelevant. What he says about accruing taxable revenue can be said about any private company that has not received any Government money. My hon. Friend is clouding the issue.

§ Mr. Lever
I will try once again, even at the risk of provoking another discourteous response to the courtesy which I have offered to my hon. Friend.
It is not true to say that no share of the increase in profits which might be said to result from the increase in production of the Colvilles sheet steel mill will come back to the Government or the people. Half of it will come back automatically. That is obvious. If my hon. Friend says that that can be said of any other company, that does not falsify what I have said. It makes no difference my hon. Friend thinking that my argument is irrelevant. Fortunately, the House allows all hon. Members to decide for themselves—myself and others —whether their arguments are irrelevant. I will give my hon. Friend something else which he might think is irrelevant.
Out of every £100 of Colvilles profit last year, £50 went to the Government and only £10 was paid to the shareholders. If that precedent is followed at something like the same rate, then, of the increased profits, for every £10 that goes to the shareholders, the Government may reasonably expect to get £50. If my hon. Friend now says that this also applies to other companies and, therefore, it is irrelevant, I cannot help that. I think that it is very relevant.

Hon. Members
Hear, hear.

§ Mr. Mendelson
Tory cheers.

§ Mr. Lever
I am not seeking Tory cheers. What my hon. Friend must realise is that an argument is right or wrong, and the fact that it is cheered by Tories or cheered by members of the Labour Party does not make it false or true. I beg my hon. Friend not to try to inject silly prejudice in addition to 1015 he has been using for the last ten minutes in response to the courtesy that I have offered him in three interventions in five minutes.
It is absolutely false to say that, from this vast extension of the steel industry in Scotland, the nation will not share in the profits. We have a fiscal system—it does not go far enough and I should have gone further—which guarantees that the nation will have at least half of any increased profits arising from this development. It follows that the case for rejecting the Bill, on the ground that the nation will not benefit from the increased profits, fails. In the only speech on Second Reading which I found palatable, my hon. Friend the Member for Motherwell (Mr. Lawson) said that all Scotland wants this mill. How are we to get this mill? "Nationalise the industry", say my hon. Friends. If the industry is nationalised, we shall all be glad that this mill was built.

§ Mr. Mendelson
At no stage of the argument did we say that nationalisation is the only alternative. In Committee, we said that we must face the facts of life, but we said that it could have been done on very different terms with greater benefit for the nation. It is to that point that my hon. Friend must address himself, instead of setting up and knocking down Aunt Sallies.

§ Mr. Lever
I have already dealt with that point. Outside the sphere of nationalisation, Colvilles—and I regret it—does not take orders from the Labour Party. I would point out to my hon. Friend that it does not take orders from him, either.
I wish that Colvilles took orders from the Labour Party, and I very much wish that we had a Labour Government, but at the moment Colvilles is free to pick and choose whether it undertakes to provide a steel mill. As my hon. Friend the Member for Motherwell said, it is plain that unless the Government, in addition to the moral pressure which they appear to have exercised at the time, had not also offered Colvilles this money, Colvilles would not have provided a sheet steel mill in this area. All Scotland wants it there.
If the steel industry is subsequently nationalised, then we shall all say, on this 1016 side of the House, that this was a good Bill, and we shall be glad that it was passed, because it means that instead of waiting for the anachronisms of modern finance, through their free devices, to provide the steel mill, which means ten years after the demand appears, we shall have provided it by social intervention. At no cost to the country we shall have put that steel mill there in good time to meet the needs of our economy. If the Labour Party is elected in the future and if the nationalisation of steel is one of our objectives, we shall be glad to think that we helped to provide this steel mill. My hon. Friend the Member for Penistone (Mr. Mendelson) will apologise to me and will say, "You were right and I was wrong, because we have a sheet steel mill which we should not otherwise have had".
It is no good my hon. Friend avoiding the argument. Colvilles is not beholden to him to set up a steel mill on his terms. It will set up a steel mill on its own terms, unless we have nationalisation. If there is no nationalisation and if we want Colvilles to run a sheet steel mill for us, then, disagreeable as it may be, we must give Colvilles the inducement which satisfies it—not my hon. Friend—and persuades it to start a mill.

§ Mr. Mendelson
We said that we welcome the extension of the steel industry and this location for the firm. I put it seriously to my hon. Friend that he must not ignore that fact. We said it on Second Reading.

§ Mr. Lever
There is no need for my hon. Friend to repeat the argument, which I have read carefully and rejected in some detail. I have dealt with the argument. He cannot will the end, which is a sheet steel mill, unless he wills the means. That is the kind of thing that we have often said before. The only means of getting Colvilles to run a sheet steel mill, unless we have a Labour Government, is to provide the firm with finance on terms which, in negotiation, it accepts.
The only question, therefore, is whether those terms are reasonable. I respectfully submit that they are. On the question of financial control—

§ Mr. Diamond
Before he leaves this point, will my hon. Friend direct his mind to the question whether these terms the silly, venomous little cat-calls that 1017 are the most reasonable which could have been obtained? The rest of the argument is understood, but he has not attempted to deal with the main burden of the debate—apart from the question of accountability, on which he is about to speak—which is that these terms were nothing like the best terms which could have been obtained.

§ Mr. Lever
My hon. Friend asks me to deal with the argument that these are not the best terms which could have been obtained. So far, this remains an argument—a mere assertion which has been made. I have no reason to think that this is true. I cannot in all sincerity say that I am sufficiently aware of the circumstances to make a categoric statement, but, looking at all the evidence, it seems on the face of it that this agreement represents the best deal that the Government could have obtained from Colvilles. That is my sincere conviction. I do not think that the Government could have driven a harder bargain with Colvilles at that time.
I am not saying this to support the argument which the Government have adopted. It is a great pity, they say, that there was not more indication at the time of the reaction of horror and shock at the thought that Colvilles was to be financed by Government funds. I emphasise that it is not at Government "cost".
I beg my hon. Friend the Member for Newton not to talk about companies which undertake work of this kind, even for a Tory Government, as "going on public assistance." My hon. Friend does not realise that in saying that he is doing a grave disservice to the very ideals for Which he has always fought. If we want firms to co-operate with the Government, whether this or another Government, in the location of industry, in the planning of our economy and in the rejection of everything held dear by the hon. Members for Kidderminster and Shipley, then we must not go around insulting people who accept our offer and co-operate.
That is to put a premium on sabotage and on all the backwoodsmen. It means that all the decent, forward-looking, socially conscious business men will not be prepared to co-operate because they will know that they will be rewarded for their co-operation by cheap insults in the House of Commons. I say from these 1018 benches—so that it may have been said from both sides of the House, and in the interests of the ideals which I have always held—that I beg my hon. Friends not to indulge in this form of comment unless they are abundantly satisfied that what is happening morally compels it from them.

§ Mr. Lever
I am not referring to my hon. Friend. He missed the occasion, when, to my regret, our Front Bench speaker referred to Colvilles as "going on public assistance". On that view, it follows that if the board of directors had told the Government to go to the devil when they said they wanted to negotiate for a steel mill, in 1957, they would have been gentlemen but now, because they have co-operated in this socially and economically desirable project, they are to be told that they are "going on public assistance". It does not help the prospect of an intelligent and flexible planning of our economy, which is expected, at any rate for a period, to be a mixed economy, to have that sort of comment made.
I want to deal briefly with the question of public accountability. There is no need to be anxious about it. This Bill is not like the Cinematograph Film Production (Special Loans) Act and other atrocious Measures which have been introduced. This is a straightforward loan, openly declared. Unless I have misread the documents—and I hope that the right hon. Gentleman will correct me if I am wrong—not a penny has been paid, and not a penny will be paid, until Parliament passes the Bill. I do not know what it is that terrifies my hon. Friend when he talks about throwing £12 on the Floor, followed by £120 million on the Floor. I do not follow it.
Not a farthing is being paid until the House has had the most detailed debate on the subject—much more detailed than would have been the case on the Consolidated Fund. There has been a Second Reading, Committee stage and Third Reading. Everybody has been entitled to "pile in" and discuss it. Before a penny of this money is paid, it must be authorised by the House. It will not be paid until the House has sanctioned the Bill, as I am confident it 1019 will. If the hon. Member for Kidderminster were in his place I would relieve him of his anxieties about this.

§ Mr. Nabarro
I am here.

§ Mr. Lever
I am sorry that I missed the hon. Member from his accustomed place. I am glad to see him here; it is always encouraging, and in a way inspiring, to see him. He will be glad to know that I am so convinced of the merits of the Bill and so little terrified about the question of accountability that I think that the Bill will have a Third Reading and I will vote for it. It is not a case in which we have debated the Bill before we have known where the money is going. It is going into a loan to Colvilles. I am not dealing for the moment with the Richard Thomas and Baldwins part of the Bill, but with that part dealing with Colvilles.
Nobody questions the probity and financial stability of Colvilles, and there is, therefore, not the slightest doubt that we shall get the money back. In those circumstances, I cannot see why we have all the fuss over public accountability. The House will decide tonight in favour of the Third Reading, with me in the Division Lobby in favour of it, if necessary.

§ Mr. Nabarro
Is the hon. Member with me?

§ Mr. Lever
Yes. but I shall do it because I approve the purposes of the Bill; not because I have deliberately misled myself by misguided arguments. I shall go into the Lobby because I believe in the Bill and because, like my hon. Friend the Member for Motherwell, I believe that all Scotland is in favour of the Bill. All Scotland is in favour of it because it thinks that it will benefit immensely by the Bill. Scotland also thinks that it is urgent. It will provide additional work in the area of the sheet mill, to absorb existing unemployment. We must also bear in mind the problems for the technically-skilled men in the area. The steel industry is growing. Unless we take more industry to this area we shall have even further unemployment because of the displacement of workers, from existing industry due to improvements in technique.
The Bill is urgent and it is sensible. Of course, the Government dare not 1020 sing its praises or there would be a row on the Government side of the House. The Government had to come to the House piano and to play down the Bill saying, "It is one of those unfortunate things resulting from the fact that the Labour Party had put everybody in such a tangle". In the words of the popular song, the Government could say, "I try to be good, but the boys won't let me." The leading quartette of the Government could sing that song with some justification. They are forward-looking men. The trouble arises from the mixed bunch of political delinquents behind them, always dogging them and inhibiting their possibilities. When they have an enlightened moment, and do something contrary to the Tory doctrine, they must play it down.
We must not be misled into supporting the most stupid, reactionary members of the Conservative Party, who rightly claim that this Bill follows in the whole tradition of the Labour Party.

§ Mr. Nabarro
That is what I object to.

§ Mr. Lever
Precisely. The real objection, and why they think that the Bill is dastardly, is that they think it follows strictly in the path of Labour ideas, which is to reject the concept that we can have a free-for-all economy, with no Government intervention and with no planning, ignoring social considerations altogether. This Bill will reject that concept—a concept which is essential to Tory doctrine.
The Government dare not declare this, because of their followers. I have said that I am sorry for their followers. They have had a bad time. They have not even been able to reintroduce flogging and birching. All they have had is a Labour economic policy. Who knows what will happen next? We might have a tax on capital gains next week, when the Chancellor introduces his Budget.
I have trespassed too long on the indulgence of the House. I think that the Government have unfairly denigrated their own progeny, for political reasons. I think that some of my hon. Friends have been wrong and have overstressed the inadequacy of the terms of the loan. I am not saying that they could not have been more favourable to the country, but there is no evidence that they could have 1021 been more favourable with a Tory Government in power, though, on the face of it, they look reasonable and fair. The net result of the Bill is a great gain in terms of economics and finance, at no financial cost to the Government. Perhaps the greatest gain of all is that the Tory Government have been forced to abandon their own most cherished doctrine of the advantages of laisser faire capitalism.

§ Mr. Stanley R. McMaster (Belfast, East)
I have listened a long time to the discussions on this Bill, both on Second Reading and in Committee, and I have been here all through this debate, but I have listened with no greater interest than to the speech of the hon. Member for Manchester, Cheetham (Mr. H. Lever). He would make an ideal Young Conservative. Unfortunately, his ideas are not in keeping with those held by other Members of the Opposition. I find them very similar to my own, however, and I must therefore say a few words in criticism of what has been said by my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) and my hon. Friend the Member for Kidderminster (Mr. Nabarro).
We have come a long way from laisser faire economy. It is a thing of the past. We in the Conservative Party pointed out in our manifesto that we wanted a planned economy. We have a new conception today of the duties and responsibilities of Government. I saw a glimmering of light in the speech of my right hon. Friend the President of the Board of Trade, when he referred to our duties to Scotland and Wales. There are areas in this country, such as Scotland, Wales and Northern Ireland, which are plagued by heavy unemployment.
My right hon. Friend mentioned that without the new strip mill in Scotland other industries which have gone to Scotland to help to alleviate unemployment would not have gone there. One of the main functions of Government is to avoid this terrible wastage of unemployment—not only in its social effects but in its loss to the economy. I therefore support the Third Reading of this Bill because I believe it is the Government's duty to plan for expansion and prosperity.
1022 Companies such as Colvilles and Richard Thomas and Baldwins should not be tied too strictly to the money market. They should not be tied to temporary fluctuations in trade. We want capital expenditure in the economy to be spread evenly. We want to avoid the cyclical unemployment in capital goods industries which was the curse of the nineteenth century and of the first forty years of this century.
An important contributory factor to the recurrent cycle of boom and depression, which resulted in such heavy unemployment in this country, particularly between 1925 and 1935, was the difference in investment in the capital goods industries. Certain firms need large sums of money to invest from time to time, such as steel firms and others in coal, railways, aircraft, shipbuilding and nuclear power. All these firms are investing in capital expansion. They cannot depend on the stock market, because the stock market, which performs a very useful function in private industry, suffers from certain natural limitations. It depends on many investors, both small and large, and the day-to-day success of new issues depends on the psychology and the outlook of these small investors.
The hon. Member for Cheetham said that Colvilles' management was in some doubt as to whether to expand or not. It often happens—it did before the war —that the owners and managers of an industry are in doubt as to whether or not to expand from time to time. Their decisions based on their estimate of future demand and on the price which they have to pay for the money they borrow can be wrong. As a result, much of the investment in this country before the war took place during a boom, and that meant heavy unemployment in the capital industries during the slump, because there was next to no employment in shipbuilding and steel. That caused depression in consumer industries which was reflected throughout the economy.
The Conservative Party has long ago left the ideas which my hon. Friend the Member for Dorset, South and my hon. Friend the Member for Kidderminster would have liked to impress upon the Government. It has been said today that the reason why my hon. Friend the Member for Kidderminster was going to vote in favour of the Bill, and the reason why 1023 the Government were introducing this Bill, was sanctity of contract. I would like to think that there were wider reasons behind the presentation of the Bill than sanctity of contract. The debate itself was full of such platitudinous remarks as "State paternalism". That slogan, like many others, is full of prejudice and has next to no logic in it.
I therefore commend this Bill because I firmly believe that it is a function of Government, as we see it, firstly, to help to avoid unemployment; secondly to ameliorate the hardship that unemployment causes; and thirdly, to prevent the wastage of vital economic resources and manpower which arises from changes in trade and produces uneven unemployment and depression in certain areas. Finally, I would also agree that even though the Government do not take a direct financial or equitable interest in industry—and that may not be their function; I do not believe it is myself— nevertheless they have a social interest, and the Treasury has a direct interest, in the success of all British industry. The Bill is correct in its purpose, and I support it.

§ Mr, George Lawson (Motherwell)
The hon. Member for Belfast, East (Mr. McMaster) is a rather interesting example of the denizens of the party opposite. I presume that as a good Conservative he preaches the virtues of free enterprise, yet as a Member for a Northern Ireland constituency he very well recognises that free enterprise cannot meet the problems of his area. He therefore supports his Government in measures that transcend private enterprise. I do not know whether he sees a contradiction in that what he preaches he does not praotise. That is the difficulty also for this Government. It is the difficulty that has been present in our debate today, during the Committee stage and on Second Reading.

§ Mr. McMaster
I see no conflict in what I said. I see a wedding between private enterprise and State assistance. I referred to large firms—such as those in steel and nuclear power—which need more money, particularly at certain times, than the ordinary economy can provide, but, by and large, of course. I 1024 approve of private enterprise. Here in the steel industry we get the wedding between State assistance, when required, and private enterprise, which makes a strong economy competitive.

§ Mr. Lawson
In the last few years the steel industry has been boasting of its ability to stand on its own legs. It has been mooking State intervention and nationalisation. I come back to my original point. I support the Bill for reasons which I have given previously, but I want also to expose the contradictions of hon. Members opposite and the Government. The Government went to the country on the basis that free enterprise was best. If the Conservative Party does not believe in free enterprise, what does it believe in? It is difficult to know. The hon. Member for Kidderminster (Mr. Nabarro) was right to say that this was a matter of Conservative philosophy. He was very troubled about the Bill because of its direct clash with Conservative philosophy. All the difficulties which we have had in our discussions have stemmed from the fact that the Government do not practise what they preach.
For Scotland, the Bill is a very good thing. If my hon. Friend the Member for Gloucester (Mr. Diamond) were in his place, I could point out to him that for Scotland it is a very good thing that the Government are to practise other than they preach, because, like Northern Ireland, in many respects Scotland is in a bad way. Northern Ireland may be in a worse way than Scotland, but Scotland is in difficulties primarily because of the failure of free enterprise to meet Scotland's problems.
The endeavour to establish a strip mill in Scotland is one of the means by which, through Government intervention, we hope that Scotland will once again be brought into line with developments south of the Border. If anything is obvious—and I repeat this with all the emphasis at my oommand—it is that there would have been no suggestion of a strip mill for Scotland but for Government intervention.
Several hon. Members, including my hon. Friend the Member for Manchester, Cheethann (Mr. H. Lever), have said that in some respects Colvilles is a firm which we should highly respect.

§ Mr. H. Lever
I do not know whether Colvilles should be respected. I know that Colvilles is solvent, and I made that point. Secondly, I know of nothing which it has done in this connection which warrants it being subjected to insults, such as being described as taking public assistance.

§ Mr. Lawson
I accept that, but it might be useful to recall that the strip mill was suggested early in 1957 and the first proposal was that it should go to the Grangemouth area, a proposal which Colvilles opposed at that time. I am not saying that the strip mill would have gone to the Grangemouth area, but it seems that Colvilles did not want Richard Thomas and Baldwins in Scotland. It may have been that the latter firm would have provided competition for Colvilles' labour and given Colvilles' workers a much stronger bargaining position than they now have, since there is practically no other firm to employ them. However, Colvilles did show it was hostile to the establishment of a strip mill. I have said that in the House before, and I have said it in my constituency and I wrote it in my election address, so I have made no attempt to hide it. It is perfectly clear that Colvilles was approached by the Government and induced by the Government and bribed by the Government to do that which Colvilles at that stage said it was not very keen to do.
I think that Colvilles is now very keen to go ahead with the idea, and I welcome the discovery with zest to go ahead with the strip mill and hope that Colvilles will make a first-rate job. Colvilles is most efficient about producing steel, but it can be seen that the difficulties which we have had all stem from the fact that in Scotland free enterprise in steel has been letting the nation down.
Only a few years ago, Scotland regularly produced 15 per cent. of all the steel made in the United Kingdom. We are now down to a little more than 10 per cent. Year after year there has been a progressive drop in the proportion of steel produced in Scotland. What is true of the steel industry is true of many others.
Scottish Members have urged the Government to intervene, and we shall continue to do so. We believe that there will have to be much more intervention, 1026 and all my Scottish hon. Friends are solidly behind granting money to enable this venture to go ahead. We tried to make reservations, and I tried to put my point of view in Committee. However, that point of view was rejected and we are now left with the alternative of supporting or opposing the Bill as it now stands. There is no doubt among my hon. Friends—we believe that the Bill must now be passed as it is, and we shall give it our whole-hearted support.

§ The Minister of Power (Mr. Richard Wood)
Since I moved the Second Reading of the Bill about five weeks ago, from time to time I have had cause to think of amending the description which I then gave it. I said at the time that this was a small accounting Bill. For a small accounting Bill, it seems to have led to a great deal of discussion.
I want to deal with the very remarkable speech of the hon. Member for Manchester, Cheetham (Mr. H. Lever) and to say that I have no shame or apology to make for the Bill. I do not know how he detected that my right hon. Friend the President of the Board of Trade or I had any such shame. As the hon. Member for Motherwell (Mr. Lawson) said, the Bill will be of great benefit to Scotland, and I make no apology for it whatsoever.
It might be useful if I said something about the background of the Bill, to which my right hon. Friend referred. There seems to have been a suggestion that from time to time my right hon. Friend and I have made inconsistent statements. It has been clearly known for some time that the Government have been anxious to have a strip mill in Scotland. After discussions among the Government, the Iron and Steel Board and the industry, Colvilles came forward with a proposal to provide capacity in Scotland, so long as financial assistance was available on terms which would make that new development an economic proposition, taking account of the risks involved—and I want later to return to the risks involved for Colvilles at that time.
A misunderstanding seemed to develop between the hon. Member for Newton (Mr. Lee) and myself about the heads of agreement and the drawing of the loan. The heads of agreement state 1027 that the company may draw once in each period—that is, once in six months—but the amount to be taken in each period depends on the needs of the time. That is the purpose of the relevant head of agreement, and the operative word in that definition is "may". The company has eight chances—that is what it comes to—to draw the loan. It need not draw in eight bits, but the heads of agreement provide that it must not draw more than once in every six months, and it goes without saying that the company need not draw up to the maximum of £50 million.
The financing of the other loan, that to Richard Thomas and Baldwins by the Iron and Steel Holding and Realisation Agency, was raised by the hon. Member for Newton and by my hon. Friend the Member for Kidderminster (Mr. Nabarro). On other occasions, I have explained that I do not believe—and in Committee I quoted the relevant part of the 1953 Act—that the Agency was created for the purpose of financing these kinds of developments. It was created to finance such developments as would assist in the disposal of the companies still owned by the State. Therefor, I do not believe, and I repeat what I said before to my hon. Friend, that it is the purpose or the function of the Agency to finance major new developments of this kind.

§ Mr. Lee
I am grateful for what the Minister said about the agreement. It is most remarkable that we talk about there being eight tranches, when apparently the company can draw the whole thing in one tranche. Because of what the Minister said, is there any point in saying that there shall be eight tranches? Why not two, or one? In other words, it could get it all at once if it wished.

§ Mr. Wood
The point I tried to explain is that the company cannot draw two lots of money within six months. I imagine that the tranches will begin to be drawn some time in the near future, and they will continue for the rest of the period. That is the position. I want to make it clear that there is no specification in the heads of agreement that the tranches must be equal. They can vary by considerable amounts, but they would not do so because of the continued flow 1028 of the work, and the money would be drawn when it was needed. Therefore, the company would draw the money it needed in 1960, 1961 or 1962, at that time, and it would draw the money it needed later at a later date. I do not think that that is a very remarkable position.
A number of hon. Gentlemen have questioned the terms which were reached between Her Majesty's Government and Colvilles when they came to the agreement at the end of 1958. It is impossible to be dogmatic, but having made inquiries and looked closely into the matter, I am convinced that the terms— and I think I have the support of the hon. Member for Cheetham—were the best deal possible for the Government at that time, although that is open to argument. There is no way in which that kind of statement can be proved. I state my convictions, and I remind the House of what has occasionally been forgotten in this context, the considerable risk and the different atmosphere in which this deal was concluded in 1958.
I think I said this at an earlier stage. I am convinced that if things had gone differently, and if the state of the market had not moved as it has in the last two years, we should have had very little criticism of the Bill. I hate to say anything rude to the hon. Member for Gloucester (Mr. Diamond) after the kind things he said to me, but occasionally we have found him guilty—and I think my right hon. Friend found him guilty at an earlier stage—of tending to want the best of both worlds, or, in a more topical phrase, trying to back his horse after it has got past the post. I believe that the criticisms which have been made were made because of the great change that has taken place—and I admit it has —between the conclusion of this agreement and the present time.
The hon. Member for Gloucester made some serious charges about breach of faith. He suggested that my predecessor had committed some breach of trust or faith by using his powers under Section 5 of the 1953 Act for this purpose. Perhaps his recollection of this is clouded, but I think he will recall, or he can discover if he is so minded, that the Opposition at the time of the passage of the Iron and Steel Bill—and this point was made by my hon. Friend 1029 the Member for Barry (Mr. Gower)-was most anxious to give greater powers to the Minister to provide and use facilities or make arrangements for the provision or use of those facilities, if he was convinced that the capacity was likely to be greater in the future.
The hon. Gentleman's case seems to be that the Government ought to have asked for approval before the agreement was made and it was rather immoral of them to use these powers. I think that is what the hon. Gentleman said, but not before eighteen months had elapsed since the conclusion of the agreement. I apologise for reminding the House, but the fact is that although Questions were asked about this agreement at the time, when it was announced there were no murmurs of disapproval until the introduction of the Bill.
The hon. Gentleman suggested that my right hon. Friend and my hon. Friend were guilty of "shifty replies", and my hon. Friend the Member far Kidderminster used the word "artfulness" to describe my right hon. Friend's reply.

§ Mr. Diamond
He used that word to describe the Government Front Bench.

§ Mr. Nabarro
I said that the President of the Board of Trade was "artfulness personified", and that my right hon. Friend the Minister of Power was "extremely artful" in the way he had contrived this. May I correct my right hon. Friend at once? He is wrong in telling the House that there was no murmur of dissent about these steel matters. He has not referred to my three Parliamentary Questions to the Chancellor of the Exchequer on 26th January, long before the Bill came in, expressing the strongest disapproval about the antithesis of denationalisation and the fact that we were investing more and more State money in steel instead of denationalising.

§ Mr. Wood
I take my hon. Friend's amendment of the word "artfulness," but it is still fourteen to fifteen months, even if I take into consideration the trenchant Questions he put to my right hon. Friend. There was a long interval between the conclusion of the agreement and those trenchant Questions.

§ Mr. Nabarro
I have continuously asked Questions about this. I did not 1030 want to embarrass my right hon. Friend in holding his seat in Bridlington at the General Election by suggesting that he was not pursuing denationalisation as quickly as I would have liked. That would have embarrassed him too much.

§ Mr. Wood
I thank my hon. Friend for not embarrassing me at the election.
I have analysed the "shifty" or "artful" replies since the hon. Gentleman made these charges. I think there was also some suggestion that some statements made by my right hon. Friend did not concur as closely as they should have done with statements made by my hon. Friend. I cannot find anything contradictory in them. They seem to be good examples of the many-sidedness of truth.
There has been a lot of discussion this afternoon about the sanctity of contract. I was pleased to hear my hon. Friend the Member for Belfast, East (Mr. McMaster) say that in his view there were wider reasons for supporting the Bill than the sanctity of contract. That ties in with what I said at the beginning of the Bill, that this is a good Bill because its effects are not only socially desirable but will be economically beneficial to this country.
The hon. Member for Gloucester disagrees with my hon. Friend the Member for Kidderminster about the sanctity of contract. The hon. Gentleman believes that a vote against the Third Reading of the Bill, or a vote at some other stage of the Bill—and this is where he came into conflict with my hon. Friend—is not a vote against the sanctity of contract. He spoke eloquently, and to a certain extent convincingly, but I would remind him of what I said at an earlier stage, that, apart from the method of the Agency financing these loans, which I have rejected for other reasons—and I hope that the House agrees with me— this money, once agreed, can be provided only in two ways. The first is by the method chosen by the Bill, and the second would be by leaving it where it began last year, on my Vote.
The arrangement of putting this money on my Vote, which would completely swamp my Vote and make it entirely top-heavy, certainly would be to make possible the yearly examination of this arrangement. My right hon. Friend the Home Secretary has, however, promised 1031 to give time, not only to consider the report which I am obliged by the Bill to make, but also to consider reports that I might make on any variations that might take place in the loan. Therefore, to scrap the Bill and to place the money back on my Vote would make absolutely no difference to the terms of the agreement. There is no doubt between us there.
Therefore, if the hon. Member carries his protest to the extent of a vote, it will mean either that he wants the money placed on my Department's Vote or that he is fundamentally in disagreement with the terms of the agreement itself. I do not see any benefit to the House in placing the money back on my Vote, nor do I believe that that is the objective of the hon. Member himself. Therefore, I cannot see how the sanctity of this contract can be preserved, except by the method that we have chosen under the Bill.
I have given the undertaking at an earlier stage that there will be no application elsewhere of this money—that is, to no other firm but Richard Thomas and Baldwins and Colvilles. As my right hon. Friend the President of the Board of Trade said when moving the Third Reading, our legal advice is that I would be prevented from reissuing any sums of money which the Treasury might have received back and then issued to me for other purposes. Therefore, I do not see that there can be any doubt whatever, if my undertaking is accepted, that the loan is arranged and will be used only for the purposes which I have stated—to assist Colvilles and Richard Thomas and Baldwins to do the jobs which we have set before them.

§ Mr. Diamond
The undertaking which the right hon. Gentleman is now giving is a material one. Does it apply not only to any variation of the agreements with the two proposed borrowers, but to the extent that if any part of this money is not loaned to either of those two borrowers—and it is contemplated that it might be so loaned because of the revision in 1962—it will not be loaned to any other borrower in any circumstances whatever without application being made to this House?

§ Mr. Wood
I can give that undertaking quite clearly. If, for instance, 1032 only £90 million of these loans were drawn by the two companies, there is no question of using the unexpended £30 million for other purposes. Therefore. I give that undertaking clearly.

§ Mr. H. Lever
Would it not save a lot of trouble and argument if these undertakings, instead of being given at the Dispatch Box at the last moment, had been written into the Bill in plain English? That would have pleased many of my hon. Friends and would have saved a good deal of time. I am not casting any doubt on the right hon. Gentleman's undertaking, but we should not have to rely on a verbal undertaking by a Minister that he will not embezzle the money. It should be written into the Bill.

§ Mr. Wood
The Second Reading debate had lasted only seventeen and a half seconds before I gave that undertaking. Therefore, it was given as early as possible, and the hon. Member has kindly said that he is willing to accept it.
To summarise, the contracts, which have been the subject of a great deal of argument for almost three days, were made under Section 5 of the 1953 Act, under the powers which the House then gave me, and the contract was announced to the House. The hon. Member for Cheetham said that the argument that there had been little criticism between that announcement and the present day was an irrelevant one. Therefore, I shall not dwell on it again.
Before the Bill appeared, £1 million appeared on my Vote for 1959–60 in order to honour the beginning of the contract if it should become necessary. The only reason for the Bill—which, I remind the House, is a small accounting Bill—is because it was considered inconvenient and inappropriate for large sums to remain on my Vote. Therefore, we have the Bill to bring these sums below the line. It gave to the House—I make no complaint about this, because I have learned a great deal in the course of the three days—an opportunity to criticise in the circumstances of 1960 the loan agreement, which not only was not criticised in the circumstances of 1958, but was warmly welcomed, particularly by hon. Members who represent Scottish constituencies. It is only right that we should try to cast our minds back to 1033 1958, and if we may again, in the words of the hon. Member for Cheetham, look at it in the light in which it appeared then, we shall see that the contract was, on the whole, very beneficial to make. The only purpose of the Bill is to honour that contract. Therefore, I ask the House to give it a Third Reading.