§ 4.6 p.m
§ Mr. Harold Wilson (Huyton)
Before I come to the main issue that we are raising—the marketing of State-owned steel shares and stocks—I want to register a forcible protest against the absence of the Chancellor of the Exchequer from the debate, because it is his actions and his policies that we are debating today.
It is not good enough to put up a junior Minister to reply to the case that we shall put forward, partly because we are pressing for radical changes in policy and only the Chancellor can initiate them, whereas a junior Minister will speak from the usual brief on policies already decided, and also because the record with which we have to charge the Government involves some very serious financial manœuvrings on which the House as a whole will want to express its concern.
I know that the Chancellor is abroad on official business, but I submit that, except where major issues of national policy are involved, it is the Chancellor's duty to be present for a debate of this kind on the Consolidated Fund Bill, where his own record is involved. We all know that his journey abroad raises no major issues. Indeed, in The Times today there is the headline:Germans ask: 'Is Mr. Lloyd's journey necessary?'The report goes on to say:Official circles profess to be a little puzzled why the Chancellor has come to Bonn.We are puzzled, too, why he has gone there.
The report goes onMr. Watkinson … raised the matter of increased German purchases from Britain … the earlier repayment of the balance of the German debt is not a matter of dispute.596 It also says:The fault lies to some extent with Britain, who has observed excessive discretion about the sterling balance of payments difficulties in order not to queer the American pitch while the dollar troubles were under discussion.The Germans tend to question why the Chancellor has had to go to Bonn to discuss matters. I do not want to go into that wide issue. We shall no doubt hear about it in the Budget debate. But I suggest that it is extremely important, whatever kind of gains the Chancellor may have made in our financial relations with Germany, that he should have been here to defend the losses he has been making in the marketing of steel shares. We are all the more alarmed because when the Chancellor has had any discussions with the German financial people he has come back having lost still more of his country's interests so far as finance is concerned.
I now turn to steel. Today, we are debating some very shabby financial manœuvring, the sale, first, of the Staveley and Llanelly undertakings and the sale of prior charge steel stocks of a nominal value of £105 million. These are national assets, and right hon. Gentlemen opposite are disposing of them to their friends at a substantial loss to the taxpayers. Behind all this is a much bigger issue than mere financial fiddling. Behind the debate is the much bigger issue of the ownership and control of this essential basic industry.
On the one hand, we have the Tory Party, not without substantial prompting from the vested interests which poured so much wealth into their General Election campaign—figures have been published of the estimated expenditure on the campaign by the steel companies—standing for the handing over of this national asset whose prosperity is the result of the national effort in economic affairs and national demands. Steel cannot be prosperous without an expanding economy.
Hon. Gentlemen opposite are proposing to hand over the rest of this national asset to private shareholders so that a small minority of people shall get the very rich pickings which attach to equity shares in this industry. The Tory philosophy on this was well expressed in the original debate on denationalisation. On that occasion, now some eight or nine 597 years ago, Mr. John Freeman, then speaking from this Box on behalf of the Opposition, complained about the Government's proposal to hand over this industry from the nation to the shareholders. One Conservative Member of Parliament was moved to utter the memorable classic of Tory philosophy when he used these words, "Shareholders are the nation." That is the position of the Tories. I am saying this because this is all part of the background to the rather narrow debate that we are having.
On the other hand, the Labour Party stands four square and resolved behind the proposition that the steel industry must be renationalised, that this essential industry must be owned and controlled by the nation and accountable to the nation which it exists, or should exist, to serve. That is the basic issue between us in this debate. I hope that there will be no shadow of any misunderstanding about the difference between the two sides of the House on this.
Nearly five years ago we debated the Trinidad Oil deal. That was the sellout for which the Prime Minister was responsible. I said then that while the Conservative Party always makes a great show of being patriotic, when patriotism and private profit come into conflict it is, of course, patriotism that suffers, as it did on that occasion. So we find that right hon. and hon. Members opposite, not given to schizophrenic tendencies in their private life, basing their public life on the fundamentally inconsistent proposition that while the British people must in no circumstances control their own steel industry, it does not matter at all if foreign interests are allowed to own our essential industries. Indeed, when such a test comes before the House, we always find hon. Members opposite trooping into the Lobby in enthusiastic support of that proposition.
After having said that in terms of the general difference which underlines the debate, I turn to the Llanelly Steel Company and the Staveley Iron and Chemical Company. The resale of the Llanelly undertaking to Dupont Limited for £1¾ million meant a loss to the taxpayer of £1½ million. If one looks at the record of this company—not one of the most strikingly successful—it is true that there have been losses, though over the last 598 eight years the profits considerably outweigh the losses.
But if one looks at it year by year one finds that the main losses were incurred during the period of recession which followed the economic policies of the then Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. Thorneycroft), now Minister for Aviation. And, of course, the rather poor showing of this company over the last two or three years was very much connected with the effects of the recession on the demand for the company's products. That demand, of course, later improved.
As my hon. Friend the Member for Aberavon (Mr. Morris) wrote last autumn:Two years ago its steel department was on short time: in the past year, 300 men have been taken on.Therefore, at a time when it was becoming more prosperous, this company, with a book value of £3¼ million, was sold for £1¾ million, a loss to the taxpayer of £1½ million—and we have never had any explanation or apology from the Government Front Bench on this question.
I turn now to the Staveley Company—a case which is, in many ways, more serious. This was sold to Stewarts and Lloyds for £6 million and, as the Financial Times said on 13th September:The Exchequer will have lost just over £2 million.That was the Financial Times, not Tribune.
When Staveley and the associated companies were denationalised, compensation was assessed at £10½ million. If one makes allowance for the Sheep-bridge Company within this grouping I think that it can be said, and that the Government cannot deny it, that the two companies taken together, valued at £10½ million, have been sold to Stewarts and Lloyds for £6 million, and there is no question of a bad profit record.
Staveley's profits have been over £1 million a year ever since nationalisation, except in the one year, 1958–59, when they fell to £650,000, and that fall was the result of the depression, the recession in demand for steel which all of us remember and which we know followed the policies of Her Majesty's Government. In 1957–58, the profits were £1.8 million in a single year, and yet 599 the Government think it right to sell off the whole asset for £6 million. Obviously, this valuation was based on a depression year even though, as the Financial Times said at the time of the sale:A substantial recovery is expected in the current year.This is how right hon. Gentlemen opposite discharge their responsibilities to the taxpayer. First, they engineer a depression. This cuts the profits of State steel, and then they use the reduced profits to justify, if that is the word, the cheap price when they sell that industry to their friends.
I want the Economic Secretary, if he can, to justify the terms of this sale in relation to the figures I have given. I do not want to under-rate in any way the importance of political gratitude, because that is a quality in which the right hon. Gentlemen opposite, deficient in so many other qualities, are not deficient. It is well-known that Stewarts and Lloyds, the beneficiaries of this public scandal as I believe it to be—of this scandalous transaction—spent during the last General Election, it has been estimated, no less than £269,000 on advertising designed to benefit the Conservative Party. We have £269,000 spent in 1959 and a deal with the Treasury in 1960 which involves a loss of at least £2 million to the taxpayer. That is the record in two successive years. [An HON. MEMBER: "A good investment."] Yes, a very good investment, as I have calculated in terms of return.
The present Government, time after time, day after day, night after night until the late hours of the morning, talk in the House about the financial stringency that the country is facing and, at the same time, in the most calculated fashion, they can hand over assets of this kind to their friends. If, in private affairs, trustees were to behave in this manner in respect of investments that they were supposed to look after, they would end up in gaol. The Chancellor of the Exchequer and his colleagues nevertheless glory in the way in which they have sacrificed the taxpayer to private interest.
We want an answer from the Government. Section 18 of the denationalisation Iron and Steel Act, 1953, says, quite 600 clearly, and I would ask the Economic Secretary to read it:Provided that the Agency may discharge their duty under this section in such manner, and by such stages, and with such postponements of the sale of securities or other assets, as they may with the approval of the Treasury determine, and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate …In other words, the 1953 Act lays on the Agency a clear statutory duty to obtain a return which was financially adequate. What is more, for what it is worth, the Act places on the Treasury the duty of approving these arrangements.
I wonder whether the Economic Secretary will tell us that the Treasury has approved these arrangements. I ask whether any hon. Member opposite, in view of the figures I have given, can put his hand on his heart and say that the consideration in these two cases was financially adequate. Is there one hon. Member opposite prepared to get up and say that it was?
If there is not, a very serious state of affairs arises. That is why my hon. Friend the Member for Newton (Mr. Lee) and myself, in the debate on the Address last November, pressed for an independent inquiry into these two transactions. I think that the House is entitled to ask for it under Section 18 of the 1953 Act, and because we have not had even a reply from the Government I repeat the demand from this side of the House that this very serious sacrifice of State property and this loss of the taxpayers' money should be fully and independently investigated.
I should have thought that, in view of the relation in time, at any rate between 1950 and 1960, between the General Election propaganda and this transaction, the Government would have been only too ready to come forward with an inquiry.
There is another point of importance. The sale of this asset to Stewarts and Lloyds creates a monopoly in certain products which did not previously exist—in cast-iron pipes and other essential products required by local authorities for housing other work. Is this in accordance with the Government's policy? Is it their policy to create private monopolies in the production of 601 equipment needed by local authorities? We all know that when a monopoly of this kind is created, a private monopoly, one must expect an increase in costs and, ultimately, a further increase in the burdens falling on the ratepayers and taxpayers. Is this the Government's policy? I hope that the hon. Gentleman will give me an answer on this monopoly aspect?
The President of the Board of Trade, who, rather to my surprise is also absent from this debate, is supposed to represent this House in the continuing battle against abuses of monopoly power. That is his duty as custodian of the consumer's interests against monopoly. Yet, while these very deals had been going on—and I imagine that they must have had Cabinet approval—creating a monopoly which did not exist before, the President of the Board of Trade, in a speech which he made in the country last November, said:We are a party of private enterprise and we must be a party of competition. You may find that the number of competitors"—He was referring to the take-over bids—is reduced from six or seven to two or three, but as long as there are competitors there is competition.That was his argument.
Here was a case where, as I say, by the sale of this particular company to Stewart and Lloyds, competition was wiped out. I know that hon. Members opposite will say that when it was nationalised there was no competition. This is wrong. Under the nationalisation procedure there was very real competition between these particular State-owned undertakings and very real protection for the consumer. I wonder whether the President of the Board of Trade was consulted about this deal. Did he approve of it? I hope that we shall hear a good deal about that from the Economic Secretary in the course of the debate.
I turn to the latest episode, and the most urgent and immediate episode—the announcement by the Chancellor of the Exchequer of the sale to private individuals of the greater part of the prior charge capital of the steel industry. This was announced at the end of last month, during the night, in fact, when the House was sitting very late, debating the Health Service charges. The announcement said that the Chancellor 602 of the Exchequer was putting up for sale 12 securities of seven companies—Colvilles, Consett Iron, Dorman Long, the Steel Company of Wales, Stewarts and Lloyds, John Summers, and United Steel, with a total nominal value of £105 million, out of which £63 million was debenture stock, £10 million loan stock, and £32 million preference shares.
All these securities were offered by the fairy godmother of the Treasury—whose absence we deplore today—at prices giving yields of about 6⅝ per cent. on debentures, 6¾ per cent. on loan stock, and 7⅛ per cent. on preference shares. These are considered fair rates in a deal of this kind. The usurers have never had it so good. I can understand why they say, "Don't let Labour ruin it". Labour might reduce interest rates for the benefit of local authorities, owner-occupiers and other people of that kind.
In this deal, the offers for sale involve coupon rates varying from 5¾ per cent. to 4½ per cent. They are offered at substantial discounts, so the cash value of the offer is reduced to £85 million. I would suggest that a figure of about £100 million, even if we accept the policy of sale, would be more reasonable.
Of course, the finance houses had to cut into this. The "old boy" network of the City was involved. Here are the names: Morgan Grenfell, Baring Brothers, Robert Benson, Lonsdale, Hambros, Herbert Wagg, Lazard Bros., N. W. Rothschild, and J. Henry Schroder. They were all involved in this highly-organised operation. They did wonderfully well out of it. I challenge the Minister to tell the House this afternoon—because the House has a right to know, as the protector of the taxpayers' interests—how much these finance houses in the City made on the first day out of this deal. After all, anything that they made was at the expense of the taxpayer. The amount they made, of course, reflects the extent to which the price was undervalued when this offer was made. I tell the Minister that we expect an answer to this and that he will get no peace until we get it.
Even if we accept the denationalisation policy, which we do not accept, these were handed over at giveaway prices. The premiums on the sale price were established right away on the 603 first day's dealings, and today most of the stocks stand a great deal higher than when they were offered by the Government. I do not intend to weary the House with a full statement of the gains made since subscriptions were invited on 2nd March, only three weeks ago.
One of the companies, and this is the biggest in terms of the volume of stock offered, the Steel Company of Wales, on today's prices, shows no increase. It has been up and down, but at the moment it is still at the issue price. Consett 5 per cent. debentures, which were issued at £10, stand today at only £11—they have only made 10 per cent. profit in three weeks, obviously an unsatisfactory return. Colvilles 4½ per cent. debentures were sold a month ago at £10 and now stand at £13. Dorman Long offered at £10 now stand at £12. United Steel offered at £10 now stand at £13¾. In other words, anybody who was rich enough to put £10,000 into this would today have £13,750, a capital gain of £3,750 on £10,000 in three weeks—not bad going even by the standards set by hon. Members opposite. All this was at a time when the House of Commons was sitting day and night, talking about health charges. There were worse cases than that. Stocks sold three weeks ago at 2s. in the case of Colvilles at 5½ per cent. cumulative preference now stand at 3s., or a 50 per cent. profit.
I think that the Economic Secretary had better get a team of Parliamentary Private Secretaries if he wants to reply to all this. He does not have enough messengers.
§ The Economic Secretary to the Treasury (Mr. Anthony Barber)
I thought that as the right hon. Gentleman had asked all these questions he would want answers to some of them, and I was hoping to give answers to some of them when I replied. As they involve certain technical details, I am doing my best to obtain them. I hope that he has no objection.
§ Mr. Wilson
I was not being offensive to the hon. Gentleman. I sympathise with his difficulty. I hoped that he would know these facts before he came to the House. They were in The Times this morning and have been in The Times every morning. I welcome the willing- 604 ness of the hon. Gentleman to answer all the questions I have put to him. I was only sympathising with him at the small number of people that he has at his disposal for getting the answers to these questions. I was hoping that it might be possible for the Whips to go outside and get a few more, so that we could get the fullest answers. I am bound to tell him that I have a few more questions and a few more stocks to quote.
Dorman Long 5½ per cent. cumulative preference and Stewart & Lloyds 5½ per cent. redeemable preference, and also their 5½ per cent. cumulative preference, now stand at 2s. 6d. They have gone up 25 per cent. in three weeks. Summers 5½ per cent., cumulative preference and United Steel 4½ per cent. cumulative preference shares stand at 2s. 10½d. They have gone up by 10½d., or 37½ per cent. The 5¾ per cent. redeemable preference shares of United Steel stand at 3s. That is another straightforward case of a 50 per cent. increase. As I have said, in these cases there is up to a 50 per cent. appreciation—and on some days the stock has been still higher than that—in a matter of just over three weeks.
§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)
I am sure that the right hon. Gentleman does not want to mislead the House. These are initial payments on stocks of a value of £1. Those who undertook to purchase the stocks undertook to pay all the final payments. The initial payment of 2s. on Colvilles is 2s. towards 20s. Therefore, the rise from 2s. to 3s. gives a value to the stock of 21s., or an appreciation of 5 per cent., not 50 per cent. I am sure that the right hon. Gentleman does not want me to go through the arithmetic of all the others. Equally, he has had his little joke and he should accept that the position is not quite as he has suggested.
§ Mr. Wilson
I am quoting the exact position as stated in the Press this morning. The figures which I have given are the accurate figures. The whole House knows that there has been this big capital appreciation. Different stocks are treated differently. Some are 2s. paid and some are on an entirely different basis where they are sold in stock units costing £10. The fact is that anyone rich enough to invest in these stocks or shares has done extremely well 605 out of them in the course of the past three weeks. All this is the action of the same Government which, under the alleged pressure of financial stringency, has imposed the health charges and the poll tax contribution.
Our charge is that the taxpayer has been sacrificed to the capital gains speculators. That view is supported. What I quote now is not wisdom after the event. This was said by the City Editor of the Spectator, writing on 24th February, before any of us could forecast with accuracy how these stocks would stand. He said then:Only a set of doctrinaire, pompous politicians bent on rubbing Socialist noses in denationalisation could have insisted on the Treasury taking such a heavy loss on these unwanted re-issues.That was an informed City judgment at the time, before it was possible for any of us to be certain about what would happen.
It should be remembered that these sales of prior-charge stocks in these companies have followed, over a series of years, the sale at inadequate prices of equities in the same companies followed by spectacular rises and capital gains over the years. Let me give the House these estimates of the increases in the value of steel shares between nationalisation and the present time, after allowing for bonus and rights issues. These are the same companies of which I have been speaking. United Steel equities sold to the investing public, if that is the right phrase, on 9th November, 1953, have appreciated to a figure of 371 per cent. of the issue price—that is, an increase of 271 per cent. on the money then put in. Stewarts and Lloyds, sold on 25th June, 1954, have risen to 225 per cent. of the issue price, or an increase of 125 per cent.
John Summers, sold on 8th October, 1954, have risen to 426 per cent. of the issue price, or an increase of 326 per cent. Dorman Long, sold on 19th November, 1954, have risen to 232 per cent., an increase of 132 per cent. Consett Iron, sold on 16th December, 1955, have actually fallen to 21 per cent. Colvilles', sold on 20th January, 1955, have risen to 190 per cent., an increase of 90 per cent. The Steel Company of Wales, sold on 14th March, 1957, have increased by 37 per cent.
606 That is one of the more disappointing performances. These figures show values two, three and four times the denationalisation price. They show case after case where an investor or speculator investing £10,000 at the time of sale in 1953, 1954 or 1955 has made £20,000 or £30,000 capital profit over this period, all of it tax-free. This is still not dealt with by the Chancellor of the Exchequer in the shape of a capital gains tax or by any other means.
One other aspect of this to which I have drawn attention previously is the effect of these transactions on the gilt-edged market. Hon. Members on both sides have raised this question a good number of times both in debates and at Question Time. All of us know of people who have conceived it to be their patriotic duty to buy gilt-edged stock, War Loan, and so on, to lend their money to the nation, and who now are having a very hard time because of the collapse of the gilt-edged market. All of us, on both sides of the House, get letters about this and hear from constituents about the serious difficulties involved. We all know that the main cause of collapse of the gilt-edged market is the Government's blind reliance on monetary policies and the high interest rates which they have had to support.
This special steel financing has been a further factor in knocking the bottom out of the gilt-edged market, which, in recent weeks, has touched an all-time low. We have reached a very serious moment of time concerning gilt-edged. I hope that I am wrong about this and that the Government will do something to put it right, but many informed commentators in the City, of all shades of opinion, Right, Left and Centre—if there are any Left ones there—are expressing deep concern about the ability of Governments in the future to borrow in view of the very harsh treatment of those who have lent to the Government in the past. It is a serious matter that this situation, which was already a matter for grave anxiety even in 1959 and 1960, should have been made so much worse by the Government's irresponsible actions in relation to these steel stocks.
It is a conservative calculation that the effect on the gilt-edged market of these transactions—and a good part of 607 the effect occurred before the transactions took place, because it was known that this volume of stock was overhanging the market—over the period on gilt-edged was at least four points. The market has fallen by four points in total over the period as a result of this transaction.
§ Sir H. d'Avigdor-Goldsmid
I can correct the right hon. Gentleman. I have the actual figures. The actual fall in the price of War Loan, which, I suppose, is an indicative stock, is from 60¾ to 57⅞, or 3 per cent. The fall in the Financial Times index of Government securities is from 80.58 to 79.05, or 1½ per cent.
§ Sir H. d'Avigdor-Goldsmid
To 28th October, which was the day after my right hon. Friend announced this impending operation, and I am comparing it with 27th February, when the prospectuses were published in The Times. They seem to me to be too fair dates. The fall is 1½ per cent. in the Financial Times index.
§ Mr. Wilson
Not at all. One cannot prove anything about causality by taking the dates at those two different times. Everybody knows that many other factors were at work during that period and that, because of their fears of the effect of this operation, the Government were taking other measures that they would not have had to take to cause an offsetting move in gilt-edged in the opposite direction.
Most people realise that there were great fears that if the Government stood aside there would be a fall in gilt-edged simply because of the banks having to sell gilt-edged stocks in the early months of the year during the tax-gathering period. Obviously, the Government eased up on that, on funding and all the rest, which otherwise they would have done, to prevent their steel transactions having the full effect on the gilt- 608 edged market which otherwise would have occurred. I was giving what I described as a conservative calculation—a different type of Conservative from the hon. Member—that the effect on the gilt-edged market over this period, allowing for all the factors which I had mentioned, was at least four points because of this operation.
I ask hon. Members opposite to go to their constituencies and honestly admit to their constituents, and particularly to those constituents who have a little stake in the country and have invested in gilt-edged and who were misguided enough to vote for hon. Members opposite in 1959, that these policies have had such a serious effect on the gilt-edged market since that time and have created the hardship which I have mentioned.
I have been dealing with a relatively restricted field of Government action. I have not dealt with the even greater act of pillage to which the Government have committed themselves, the sale of Richard Thomas and Baldwins. In a whole series of debates we have argued unanswerably the case for retaining this fine, successful, efficient and progressive State-owned asset in the hands of the community. In not one of those debates have we had an answer from Members opposite, except that they are to do it—and we know their motives.
No doubt my hon. Friend the Member for Ebbw Vale (Mr. M. Foot), my hon. Friend the Member for Newton and other hon. Members, if they catch your eye, Mr. Speaker, will further deploy the case for this important undertaking. I have been describing a series of operations which involve the taxpayer in heavy losses and which involve vested interests and private speculators in unjustified and uncovenanted capital gains. I have been describing manoeuvres of an extremely malodorous character, and the least the Government can do is to admit the facts honestly and refer them to an independent inquiry.
§ 4.41 p.m.
§ The Economic Secretary to the Treasury (Mr. Anthony Barber)
The term "malodorous" was particularly apposite to the remarks made by the right hon. Member for Huyton (Mr. H. Wilson), at the outset of his speech, about my right hon. and learned Friend the 609 Chancellor of the Exchequer's visit to Bonn. I do not think that the House would wish me to trouble further about this, except to say—and I am sure that the right hon. Gentleman knows this in his heart—that if it had been possible for my right hon. and learned Friend to be here today to deal with this matter then he would have been here. Anyone who suggests that no useful purpose is being served by his visit to Bonn is talking nonsense.
If ever there was a speech which urged the House to put the clock back, it was the one which the right hon. Gentleman has just delivered. He made it absolutely clear—and I am grateful to him for doing so—that this debate raises a broad basic issue. It is a simple issue. He and his right hon. and hon. Friends want a nationalised steel industry, but the British people do not. I will remind the House of the history of the matter.
In the General Election of 1951, the future of the steel industry was clearly put before the nation. I hope that the right hon. Gentleman will listen to this, as he has asked a number of questions and I am doing my best to deal with them. The Labour Government were defeated in 1951. Then again, in 1955 and in 1959, this was one of the major issues. On each occasion the Conservative Party was returned with an increased majority. It is little wonder that the right hon. Gentleman the Leader of the Opposition himself said, after the last General Election, that nationalisation is a vote loser. Yet his right hon. Friend the Member for Huyton, in defiance of the clearest expression by the British people, still clings to the strange—
§ Mr. William Ross (Kilmarnock)
What does the hon. Member mean by the "British people"? The Welsh and Scottish people voted against the Government.
§ Mr. Barber
In the clearest defiance of the British people as represented here in the House of Commons, the right hon. Member for Huyton and his hon. Friends still cling to the strange notion that nationalisation is a modern, up-to-date method of organising the British steel industry. To many people, that is an incredible view. But it is a fact that the Labour Party, and the right hon. Member for Huyton in particular, really 610 believe in a substantial increase in nationalisation. I am sure that he will not deny that.
I hope that the country will take note, also, of a significant change. It is interesting to note that, in the right hon. Gentleman's view, the test for nationalisation must be: which industries contribute most? My hon. Friends will remember that in the early 1950s the old cry was for the nationalisation of those industries which had failed the nation. Now, in the 1960s, the cry is for the nationalisation of those which serve the nation. We now know exactly where we stand, and so does the electorate.
§ Mr. H. Wilson
Is the hon. Member suggesting that Richard Thomas and Baldwins is not one of the most efficient firms in the world under State ownership? If he is suggesting that, will he explain how he is arguing the rest of his case?
§ Mr. Barber
Richard Thomas and Baldwins is an extraordinarily efficient firm which has been doing extremely well.
§ Mr. Barber
If the hon. Member for Fife, West (Mr. W. Hamilton) will allow me, I will come to the question of Richard Thomas and Baldwins, which was passed over by the right hon. Member for Huyton. The right hon. Gentleman referred to the importance of the iron and steel industry, and it is true that in any highly industrialised country the proper development of this industry is essential to the well-being of the economy. It does not follow, however, that it has to be nationalised.
We on this side of the House have repeatedly stated our views. I do not want to go over that ground again, but briefly it is that this large and very important, highly diversified industry will make the maximum progress and will best serve the interests of the nation if its ownership and management are left in private hands, subject to the general powers of independent supervision which now rest with the Iron and Steel Board.
As the right hon. Gentleman knows, that policy formed the basis of the 1952 611 White Paper on the Iron and Steel Industry, and the Iron and Steel Act, 1953, translated that policy into a statutory obligation. In particular, it laid on the Iron and Steel Holding and Realisation Agency the duty of ensuring that the securities and assets which it inherited were returned to private ownership at, as the right hon. Gentleman said, an adequate price. As for the pace of denationalisation, I reaffirm what my right hon. and learned Friend the Chancellor of the Exchequer said on 27th October last—that it is the firm intention of the Government that the work of the Agency should be substantially completed by the end of the present Parliament. Having listened to what the right hon. Gentleman had to say about recent sales by the Agency, I am bound to say that I thought he was, to put it mildly, casting aspersions on the Agency, in view of the terms of Section 18 of the 1953 Act.
§ Mr. H. A. Marquand (Middlesbrough, East)
My right hon. Friend referred to the Treasury, not to the Agency.
§ Mr. Barber
The right hon. Member for Huyton should read again Section 18 of the 1953 Act. That Section clearly lays down that the Agency has certain duties to perform, and that the Treasury has to consider the recommendations of the Agency. I understood him to say that there was something underhanded about these sales. In doing so, he was casting a reflection on the work of the Agency.
§ Mr. Douglas Jay (Battersea, North)
Are the Chancellor of the Exchequer and the Economic Secretary now saying that they do not take responsibility for the actions of the Agency?
§ Mr. Barber
No. I am here to answer for the actions of the Agency. If the right hon. Member for Huyton will look at the duties of the Agency, which are clearly laid down, he will see that those duties have been carried out and that these sales have to take place with the approval of the Treasury.
§ Mr. H. Wilson
The hon. Gentleman must not shelter behind public servants in this way. The present Government created the denationalisation Act and laid down the terms. They created the 612 Agency—which we opposed—and appointed its members. The Government have to approve all the Agency's transactions. No doubt they push it forward or hold it back in accordance with various political and other circumstances which they consider relevant. The Government must take full responsibility for their actions, and not shelter behind public servants.
§ Mr. Barber
I am not sheltering behind public servants. What I am saying—and if the right hon. Gentleman will listen for a moment I will tell him—is what the duties of the Agency are. Under this Section. among other things they are to secure… without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate …That is the duty laid upon the Agency, and I understood the right hon. Gentleman to be saying that the consideration received was not financially adequate. In the view of the Agency it was, and also in the view of the Treasury, which had to approve these sales.
§ Mr. Barber
If the Agency thought that the consideration was adequate and we in the Treasury took a different view and thought that it was not adequate and that the sale should not take place, obviously we would not give our approval.
§ Mr. Barber
Of course we gave approval. I would have thought that it was obvious, as the sale has gone forward, that the Treasury gave approval because it was satisfied that the advice of the Agency was correct.
§ Mr. Barber
If the right hon. Gentleman thinks, in view of the terms of that Section, that all this talk about the 613 Agency is irrelevant, all I can say is that he has no comprehension of the meaning of the Section
§ Mr. Marquand
Are not the facts that for seven years after the passing of the iron and steel denationalisation Act the Agency, proceeding slowly, had not disposed of more than one-third of the assets which it took over, but that in the last year or two, stimulated and ordered by the Government to get on with it, it has sold the taxpayers' assets at a loss?
§ Mr. Barber
It is nonsense, and the right hon. Gentleman knows it, to suggest that the Iron and Steel Holding and Realisation Agency takes orders from the Government. That is indeed a grave reflection on the Agency and I am sure that the right hon. Gentleman did not mean it.
§ Mr. J. J. Mendelson (Penistone)
Is the hon. Gentleman now saying that the Treasury is not encouraging or discouraging the Agency about the timing of its sales? In that case, what about the promises which Treasury spokesmen have given to the hon. Member for Kidderminster (Mr. Nabarro) that these sales will be hurried up?
§ Mr. Barber
I have not made any promises to my hon. Friend the Member for Kidderminster (Mr. Nabarro), other than to repeat what my right hon. and learned Friend the Chancellor of the Exchequer said. I must get on, because other hon. Members wish to speak and I want now to say something about the extent to which the denationalisation of the industry has already been achieved. There are several yardsticks which can be used for this purpose.
§ Mr. Barber
If the hon. Member for Kilmarnock (Mr. Ross) will look at HANSARD tomorrow, he will see that what I said was that I had made no promises other than to repeat the words of my right hon. and learned Friend, and those words were that it was the intention of the Government that the work on the Agency should be 614substantially completed during this Parliament."—[OFFICIAL REPORT, 21st February, 1961; Vol. 635, c. 283.]I cannot go any further than that.
§ Mr. Barber
I must get on.
I want now to say something about the extent to which denationalisation has already taken place. There are several ways in which one can measure this, none of them entirely satisfactory. But in terms of steel production, of employment and of sales of products, nearly 90 per cent. of the industry has been denationalised. In financial terms, the Agency has reduced by more than three-fifths the investments and obligations which it took over from the Iron and Steel Corporation in 1953—although those figures under-state the extent of the achievement of the Agency, because, as hon. Members know, it now holds a much smaller share in an industry which in both physical and money terms is much larger than it was at the beginning of the 1950s. Looking at it in another way, of the fifty-five firms for which the Agency became responsible in July, 1953, the Agency now retains the ownership of only Richard Thomas and Baldwins and seven other small companies, one of which is in voluntary liquidation, and fixed-interest securities of a nominal value of £50 million in companies whose control has already been returned to private hands. I would have thought that that was no mean achievement, but I should like to deal with the suggestion that the denationalisation of the industry should have gone forward with even greater speed.
The answer to the suggestion that denationalisation should have proceeded faster, which is certainly the view of some people, is twofold. First, those who criticised the Agency or the Government for the fact that some part of the industry, albeit a relatively small part, is still publicly owned should bear in mind the fact that the processes of nationalisation and denationalisation are entirely different.
To nationalise is simple and straightforward. Parliament legislates and the essence of the legislation is compulsion. An appointed day is named and the transfer of ownership is complete and 615 there remains, therefore, only the question of the payment of compensation, which of course is not a prerequisite of the transfer of ownership. Denationalisation, on the other hand, is a much more complex affair. Once again, Parliament legislates, but this time the effect of the new law cannot be instantaneous. It still remains for the Government and their agents to find purchasers who are willing to re-acquire the concerns which have been nationalised, and to do so on terms which are not in conflict with other vital considerations, including the proper interests of the Exchequer. To put it briefly, while it is relatively easy, and my hon. Friends may think all too easy, to compel people to sell the assets they hold, it is simply not possible to compel them to buy them back.
Those considerations lead on to the second factor which has hampered the process of denationalisation—that is, the attitude of the Opposition. I recognise that in different degrees the Labour Party is attached to the doctrine of State ownership of important sectors of the economy.
§ Mr. Barber
What hon. Members opposite believe in is their business, but it is useless to ignore the fact that some of the statements made over the years by Labour Party spokesmen—not only the threats of renationalisation, but also the irresponsible hints about the compensation terms on which renationalisation would be carried out—appear to have been deliberately designed to impede the implementation of the Iron and Steel Act, 1953. The effect of all that has been only too obvious.
I know that some time ago it was being said that, despite the difficult circumstances with which the Agency had had to contend, it ought already to have disposed of Richard Thomas and Baldwins.
§ Mr. Bruce Millan (Glasgow, Craigton)
The hon. Member is answering a speech which was never made. Why is he answering in anticipation questions which may come from his own side of the House and not answering the speech of my right hon. Friend the Member for Huyton (Mr. H. Wilson)?
§ Mr. Barber
I am sorry that the hon. Member for Glasgow, Craigton (Mr. Milan) has not been following what I have been saying. I shall deal later with the question of the adequacy of the prices, which the right hon. Gentleman mentioned. When we are debating the steel industry and particularly the duties of I.S.H.R.A., I should have thought that it was right to look at the matter as a whole, and that is what I am trying to do. Without disrespect to the hon. Gentleman, I am also directing my remarks, as I thought would be apparent to him, not only to his side of the House, but to hon. Members on this side who also take a particular interest in this subject.
The reasons which led to the deferment of the devesting of Richard Thomas and Baldwins are well known. It is engaged at present in a very large development programme, both in Newport and elsewhere, which is designed to meet the needs of British industry. Those developments will have the effect of substantially changing the nature of the company's business and also, of course, of increasing its size.
It follows that so long as those developments were in their early stages, any sale of the company would have had to have been based on estimates and prospects which were necessarily somewhat uncertain, and any sale price for that reason would have been less favourable. It was with considerations such as those in mind that, after taking the best possible advice, the Government came to the view last year, as my right hon. and learned Friend the Chancellor of the Exchequer announced, that the sale of the company should be deferred until these extensive developments were nearer to maturity.
The right hon. Gentleman referred to the case of Staveleys. I would only remind the House that, despite what he said, the facts are that the average profits of Staveleys before tax for the three years to 30th October, 1959, were £1.2 million and that the profits for the year to 30th October, 1959, were only £652,969. As the right hon. Gentleman, I think, knows and would perhaps admit, the company's works are old, and the alternative would have been to have provided considerable new investment for the company.
617 I should also like to tell the right hon. Gentleman—he asked the question and I wanted to confirm this—that the Board of Trade, and also, incidentally, the Iron and Steel Board were consulted about this sale to Stewarts and Lloyd.
§ Mr. H. Wilson
The only reason why I raised the question of the Board of Trade was because of this question of monopoly. Would the hon. Gentleman say whether he agrees that a monopoly has been created in the range of products which I have mentioned and whether the Government are satisfied that, that monopoly having been created, they approve the transaction?
§ Mr. Barber
I assure the right hon. Gentleman that this was one of the aspects taken into account at the time when the matter came to the Treasury for approval. This and other matters, such as the effect of employment, are relevant considerations, but I would remind the right hon. Gentleman that maximum steel prices are, of course, fixed by the Steel Board. The purpose of this is to prevent the abuse of rises in the case where a particular product is manufactured by only one, two or three steel companies. I should have thought that that is operating pretty satisfactorily. If the right hon. Gentleman has any information to the contrary I, and I am sure my right hon. Friend in particular, would be happy to look into it.
The right hon. Gentleman also mentioned Llanelly. Here I would make three points, because this also was a case which we considered with great care when the matter came to the Treasury for approval. The facts so far as Llanelly are concerned are that for the last seven years there have been profits in only three years, and the average profit was only £19,000 a year. Again, a large part of the plant was old and the undertaking was unable to compete economically with more modern steelworks. Finally, and I think that this is perhaps the most relevant consideration of all, during all those seven years the offer of the Duport Company was the only one seriously considered. If the Agency could have got a better offer I have no doubt that it would seriously have considered it, but none was forthcoming.
618 The right hon. Gentleman talked about the Government engineering a depression and about political gratitude, and so on. All I would say is that this is all good fun but that he knows perfectly well that what has been done by the Agency is perfectly proper and that what has been done by the Treasury is also perfectly proper, although I know that in all sincerity he takes a different view about the policy implemented in accordance with the 1953 Act.
§ Mr. Wilson
Of course I want to make it quite clear, and the hon. Gentleman is right about this, that no one is making reflections on the Agency. The Agency consists of public servants of high standing. The thought that they had been influenced in any way by political spending by particular companies would be intolerable. I do not think that they would know about that spending. I think that it was the duty of the Treasury and of the Ministers, when the Agency came along with propositions involving highly favourable terms in the case of a company which had been publicly identified with the election campaign, to inform the Agency of these political considerations which would not be its normal concern. On top of that, I think that it was the duty of the Treasury and of the Ministers to veto the transaction because of the fact that that particular firm had been so closely identified with the Conservative Party before and during the election.
§ Mr. Barber
I am grateful to the right hon. Gentleman for so fairly making that point, which I fully appreciate. So far as the Treasury and its Ministers are concerned, I would only say that if in the view of the Agency a particular sale is considered to be proper and it considers that the price is adequate, and if when the matter comes to the Treasury we take the same view, I should have thought, apart from other considerations, that it was right and proper to let the Agency go ahead, although I realise and accept the fact that we can have different views about this
Now I come to the recent sale of fixed-interest securities in companies whose equity shares had been sold back to the public. The right hon. Gentleman gave details of the sales. I think the House already knows that there were twelve 619 separate stocks in seven different companies and that the gross proceeds of sale will amount to about £85 million. The right hon. Gentleman asked what was the cost of the operation. He put it in rather more flamboyant terms, speaking about our friends in the City, as he called them. I can tell the right hon. Gentleman that the difference between the gross proceeds of £85.3 million and the net proceeds of £83.5 million, that is, £1.8 million, was the cost of the operation. The main item of expense is the underwriting commission of 1¾ per cent. of the gross proceeds and, of course, there are the other incidental expenses, advertising, printing, bankers' charges, and so on.
§ Mr. Barber
No, this is simply the cost of the operation. I do not think that the right hon. Gentleman would expect me to go further on this point, but I should like to say that when this matter was considered by the Treasury this was one aspect of the operation which we considered with great care. I think it is important that I should say that, and I do not say it lightly.
§ Mr. Millan
Could the hon. Gentleman make that clear? Is he saying that that 1¾ per cent. was the restricted commission in view of the anticipated profit? That is an extraordinary thing.
§ Mr. David Webster (Weston-super-Mare)
Can my hon. Friend tell me how long the underwriters had to hold the steel companies' ordinary stock if they failed to sell?
§ Mr. Barber
I cannot, I am afraid, but I can say that we were absolutely satisfied that the underwriters' commission was satisfactory. Certainly, if I can put it this way, this is the sort of matter for which my right hon. Friend the Chancellor takes responsibility, but it is not the sort of matter on which he makes up his mind without taking advice.
§ Mr. H. Wilson
I can see that the hon. Gentleman is genuinely trying to answer the question. I do not think it is either 620 his or my fault that he has not quite taken the point which I put to him, though my right hon. Friend has been trying to help. When I referred to this part of the transaction, which we agree was a very difficult and complex operation, I was referring not only to the commission but also to the fact that, as the operation had been a huge success and as it was possible to unload speedily stocks which in other circumstances might have proved less happy to hold, it was possible to unload them for quite a good appreciation. Is the hon. Gentleman in a position to tell us the total amount accruing to these finance houses as a result of both those factors, the guaranteed commission plus the second point? It may be a difficult point to answer right away, and if the hon. Gentleman cannot give the answer now perhaps he will do so before the debate ends. Perhaps we might be told how much these finance houses made from these transactions.
§ Mr. Barber
I will do my best to see what I can find out on that point.
I should like now to deal with one or two criticisms which have been made of this prior-charge operation. Some of those criticisms were repeated by the right hon. Gentleman today. First, it is suggested that these stocks should not have been sold. The right hon. Gentleman knows the answer to that. We may have differences of opinion on policy, but the fact is that this very large sale of fixed-interest securities was an essential part of the process of denationalisation. I have heard it said, and I have read it in the newspapers, that the sale of prior-charge stocks is not denationalisation in the same sense as the sale of equity shares.
That suggestion seems to me to be founded on a complete misunderstanding of the 1953 Act which clearly relates to securities of all kinds, whether equity, preference or debenture. It carefully defines "private ownership" as a state of affairs in which the securities of a particular company are not held to any substantial extent by or on behalf of the Crown. It follows from the terms of that Act, and also in terms of common sense, that this is part of the process of denationalisation.
It has also been suggested that we should not have mounted this large operation at this time, and that it would 621 have been better, if we were going to do it at all, to have waited until the market for prior-charge stocks was more favourable. The first thing I would say on this point is that there exists the statutory obligation to which I have already referred. In the light of the decision which was taken to defer the sale of Richard Thomas and Baldwins, it was clearly right that the Agency should press on with the sale of its other securities if, having regard to the considerations laid down in the Act, it could reasonably and properly do so.
As I said earlier, on the advice available to us we saw no reason to quarrel with the Agency's timing. Furthermore—and this is important—if this sale could be successfully mounted, as it has been, it was obviously desirable that it should take place quickly, because while it was known to be outstanding it was bound to have an unsettling effect on the market for fixed-interest securities.
Finally, there is the question of the price at which the stocks were sold and the assertions that they were sold at less than they cost, and that in consequence the whole operation has involved the Agency, the Exchequer and the taxpayer in a loss of about £20 million, which is the approximate amount of the difference between the nominal value of the securities and the gross sale price which they realised.
I think that anybody who has considered this matter must agree with me that it is very difficult to give any significant figure of what the securities cost to the Agency. I say that because, as the House knows, most of them were created in the Agency's favour as part of the financial arrangements when the equity capital of these companies was sold back to the public.
After all, in 1953 the Agency took over the entire steel undertakings from the Iron and Steel Corporation substantially at cast price, and the price of this take-over was about £244 million net. Since then the Agency has in effect sold these undertakings back to private enterprise in two parts, or in two stages: first, the equity, and then the prior-charge holdings with which we are now concerned. Any split of the cost price to the Agency between those two parts would be quite artificial, and it is fair to say that one can obtain a proper view of what has happened only by looking at the transactions as a whole.
622 The last accounts of the Agency show that sales of investments in companies where the entire capital has been sold have produced a surplus of nearly £8 million. As my right hon. Friend mentioned, I think at Question Time, the present sale of prior charges will improve that picture because, in respect of four companies in which the Agency will now retain no interest, the transaction will result in a further surplus of nearly £5 million. In the case of the other three of the seven companies with which this operation was concerned, the present indications are that the ultimate proceeds should be not less than the book value to the Agency.
§ Mr. Jay
Is the hon. Gentleman denying the universal statement in the financial Press that particular stocks which have been sold were new stocks issued to the Agency by the firms concerned; that is to say, the Agency lent £105 million of new money to the firms without any public ownership in return for these securities, and that those securities are now being sold for £85 million? Is not that a fact? Does the hon. Gentleman deny that?
§ Mr. Barber
I have never denied that there was a difference of £20 million between the nominal value of the securities and the gross sale price which they are realising under this operation but the House must face the fact that many, in fact I should have thought most—
§ Mr. Barber
—the right hon. Gentleman shakes his head. I have not said anything. Many of these prior charges, in fact I think most of them, were created in connection with a sale of the equity of the companies, and it would not have been possible in many of these cases to have sold the equity at the price at which it was sold without creating the prior charge.
§ Mr. Jay
I shook my head because that was not the question I asked. I asked whether it was not a fact that the Agency lent £100 million of new money in return for these securities as a separate and independent transaction, and that it is now unnecessarily selling these securities for only £85 million. Therefore, on the transaction of the prior stocks it has indubitably lost £20 million 623 of taxpayers' money. Does the hon. Gentleman deny that?
§ Mr. Barber
I do, because these were not independent transactions. They were part of the operation involving the sale of the equity. Perhaps I might give the House an example, because this is an important point.
Let us consider the case of Consett, one of the four companies in which the Agency holds no further interest since the prior charge in Consett was sold. The compensation paid an nationalisation was £8,300,000, in round figures. New money subsequently provided amounted to £5,100,000. The total investment was, therefore, £13½ million. The equity was sold for £12,750,000. The proceeds of the present sale are £3,200,000, so that the total proceeds of sales are nearly £16 million, compared with a total investment of £13½ million.
That means that in the case of Consett there is a surplus on the books. It is a favourable example for my argument, but I could also deal with Colvilles, Dorman Long and United Steel. It means that there is a surplus of nearly £2½ million.
§ Mr. Jay
Does not that mean that a profit was made on one transaction on the equities, that a loss was then made on a totally separate transaction on the prior stocks, and that the Government are now trying to combine the two to confuse the issue and prevent the public seeing what they have been doing?
§ Mr. Barber
That is not so. One cannot treat the sales in isolation. It would not be right to consider the original transaction in isolation. As my right hon. Friend said, these priorcharge stocks were issued in connection with the sale of the equity in most of the cases with which we are concerned.
§ Mr. Jay
Let us suppose that the Government had carried out the first transaction and had obtained this profit, and had decided not to sell these prior stocks at a loss. Would it not then have been possible to retain the profit in the hands of the taxpayer and not to have incurred the offsetting loss?
§ Mr. Barber
I am dealing with the suggestion that these prior charges should not have been sold, because they in- 624 volved a difference of about £20 million between the nominal price and the sale price.
§ Mr. Jack Jones (Rotherham)
This is vitally important. The Minister is now quoting figures regarding the value of these stocks when they were originally bought by the State and their value now when they are being sold to speculators. Will he tell the House their value today compared with their value when the State took over, and subsequently made improvements to the tune of £16 million or £18 million?
§ Mr. Barber
I was dealing with the suggestion that these sales have not resulted in a surplus. I do not want to take up too much time. I should have thought that if the right hon. Member was engaged in two transactions and, at the end of the day, found that he was in pocket, he would say that he had a surplus. That is the position in this case.
§ Mr. Barber
That would be right if they were entirely independent transactions, but they are not in this case. [HON. MEMBERS: "They are."] I am sorry, but I cannot pursue this point.
It has been suggested that the Exchequer has been involved in a loss of £20 million because these securities had been sold for less than their face value. There is no doubt that the price of these securities was in each case less than the nominal or maturity value, but this does not mean that on an overall view the Exchequer has suffered a loss. As the right hon. Gentleman knows, the Exchequer is a continuing borrower on longer-term, both to refinance maturing parts of the National Debt and also to meet the long-term requirements for new money by the nationalised industries, and so on. So long as the Government are long-term borrowers they must pay the prevailing rate for money, and it makes very little financial difference to 625 the Exchequer whether it does this by issuing new securities on appropriate terms or selling at their current market value other securities which are held on its behalf.
The right hon. Gentleman referred to the Spectator, which made some comments on the sale of prior charges. I think he would agree that all the major newspapers regarded the prices as fair and reasonable. As for the question of the prices, in view of the observation of the right hon. Gentleman I would say that I do not accept that the subsequent course of trading casts any doubt on the judgment of those who were concerned in arranging the details of this offer. As the right hon. Gentleman pointed out, when trading in these securities first began they went, with one exception, to a premium. Since then the prices have fluctuated, and some have been below the paid-up issue price.
Even at the middle price, at the close of business yesterday one of them—the Steel Company of Wales Debenture, which makes up 40 per cent. of the total packaged—was still at par. It is true that the remainder were at a premium, but looking at the matter in proper perspective and having regard to the full offer price and not merely to the amount which has so far been paid up, these premiums cannot be regarded as remarkable. This is a large operation. In fact, it is the largest offer for sale of industrial securities ever undertaken in this country. It has made an important contribution towards the implementation of the policy of denationalisation to which the Government are committed and which we expect to see substantially completed during the lifetime of this Parliament.
I know that the right hon. Gentleman is in the van of that movement in the Labour Party which wants to see a substantial increase in the area of nationalisation, but the Conservative Party believes that such a policy not only runs counter to the repeatedly expressed wishes of the electorate but would spell disaster for British industry and consequently for the prosperity of the British people. For these reasons we mean to continue with the process of returning the steel industry to private ownership.
§ 5.25 p.m.
§ Mr. W. E. Padley (Ogmore)
The Minister began by saying that this policy of legalised plunder of public assets could be justified because the British people had not woken up to the facts. He was challenged by my hon. Friend the Member for Kilmarnock (Mr. Ross) who pointed out that there were Welsh and Scottish people as well as English people, and I must point out that in the great coal and steel basin which my hon. Friend the Member for Aberavon (Mr. Morris) and I represent, equally with the great steel centre of Ebbw Vale, there is an acute awareness of what the Tory policy signifies.
In reply to questions put by my right hon. Friend the Member for Battersea, North (Mr. Jay), the Economic Secretary insisted that most of these offers concerned the resale of assets taken over at the time of nationalisation. Later on he admitted that the Steel Company of Wales debenture of £40 million was 40 per cent. of the total. To anyone who has followed the history of the Steel Company of Wales it must have become apparent that at least the £40 million represented by the Steel Company of Wales debenture was taxpayers' money, loaned by the State, which is now being sold at a loss of £5,200,000. Looking at the history of this company one finds that its major works were sited by State planning decisions. Margam, Trostre and Velindre were built, in all their phases, largely with public capital.
The companies which came together in 1947–48 brought £12 million of capital into the venture. Today, the fixed assets of the Steel Company of Wales approach £200 million. That company prospered under Labour and nationalisation, and under public ownership even though the Tories have been returned to power, as Richard Thomas and Baldwins is still prospering. In March, 1947, the £40 million of State capital was sold to private shareholders. This present £40 million debenture is the second £40 million of the taxpayers' money being sold to private persons. The £40 million sold in March, 1957, became ordinary share capital.
What has happened since then? In 1957 the dividend paid on that £40 million ordinary share capital was 8 per cent.; in 1958 it was 9 per cent.; in 1959 627 it was 10 per cent. and in 1960 it was 12½ per cent. If we contrast that 12½ per cent. dividend on the £40 million of ordinary share capital with the previous interest charges under nationalisation, we find that the additional financial burden on the company is equivalent to £1 for every one of the 3 million ingot tons of steel which the company is now producing. An additional financial burden of £1 per ton has been imposed as a direct consequence of denationalisation.
Expressed in another way, it is the equivalent of £3 per week per head of the 20,000 workers employed by the company. That £40 million of State capital sold to private shareholders in March, 1957, is today worth roughly £95 million, a tax-free capital gain in a period of four years of £55 million; the equivalent of £2,750 per head of the workers employed by the company.
Now, a second £40 million is to be sold, this time at a loss to the taxpayer of £5,200,000. So it is fair to say, with regard to the Steel Company of Wales alone, that the policy of the Tory Government has resulted already in a plundering of the public purse to the tune of just over £60 million. There will be £45 million of the taxpayers' money still remaining in the Steel Company of Wales even after this transaction is completed. With the repetition by the Economic Secretary of the pledge by his right hon. Friend that the remaining capital is to be sold before the end of the present Parliament, no doubt it means that another—what, £5 million or £6 million—will be lost to the taxpayer. Really, this is a most sordid story.
When one realises the magnificent achievements of the Welsh steel industry together with the rest of the British steel industry, the nationalised section represented by Richard Thomas and Baldwins equally with the so-called private enterprise of the Steel Company of Wales—public ownership and private control up to now; when one contrasts the magnificent efforts of management, technicians and workpeople of all kinds with this sordid financial story, it is a great indictment of the Government. I hope that the House realises that the story of the Steel Company of Wales— 628 far and away the biggest of the many scandals involved in steel denationalisation—will be repeated in the case of Richard Thomas and Baldwins. The Llanwern Steel Works were sited there, as were the Margam Steel Works, by a State planning decision. They are to be built at a cost of £119 million—the last figure coming from the Treasury Dispatch Box—of public money; up to £70 million by way of straight loan from the Treasury and the rest of the capital to be found from the internal resources of Richard Thomas and Baldwins and, if necessary, of the Iron and Steel Holding and Realisation Agency.
If the present Government continue on their merry way, and Richard Thomas and Baldwins is to be denationalised, no doubt we shall first get an issue of ordinary share capital of £30 million or £40 million—and some appreciable capital gain will be made on it—and at a later date the loan stock will be sold, and again one can be certain the story of the Steel Company of Wales will be repeated. It will be sold at what the City Editor of the Daily Mail called "bargain-basement prices" and even the Economist, which is more cautious, referred to this recent transaction as the "steel supermarket".
We can be sure that the great Llanwern Steel Works, built with £119 million of the taxpayers' money, will be the subject of legalised plunder to reward the vested interest standing behind the party opposite. This really is one of the great scandals of the century. I hope that we on this side of the House will recognise that the scandal of steel denationalisation and the plundering of the public purse is a first-class case to argue throughout the country. I hope, also, that we shall realise that when we are dealing with the issue of public ownership of steel, we are dealing not only with the public ownership of an important industry but also with the heart of British capitalism and the power of the party opposite. I hope that this challenge on the subject of steel today will be followed up in the months to come, because this is a great indictment of the Government who should be the custodians of the taxpayers' money.
§ 5.36 p.m.
§ Sir Henry d'Avigdor-Goldsmid (Walsall, South)
It is a pleasure to follow the hon. Member for Ogmore (Mr. Padley), 629 who, I think, has put his finger on what is the basic unreality of this debate. We have been discussing the sale of £105 million, nominally, of shares which really have nothing to do with the steel industry at all.
§ Sir H. d'Avigdor-Goldsmid
I am sure that the hon. Member for Rotherham (Mr. Jack Jones), with his great knowledge of the steel industry, will be able to follow me. Those shares represent no element of control whatever in the industry. So long as they earn their dividends, no element of control attaches to their owners.
§ Sir H. d'Avigdor-Goldsmid
With respect to the hon. Gentleman, he has not followed me. At the moment, I am addressing myself to the £105 million prior charges, the preference shares and the debenture stock. The hon. Member, with his knowledge of the steel industry, will know that the ownership of these shares has nothing whatever to do with the industry, or with its profitability. It is only if the steel industry were to meet a serious depression, as happened in the 1930s, that any element of ownership might attach to them at all.
§ Mr. Frederick Lee (Newton)
Will the hon. Gentleman say why it is necessary, in carrying out the Government's policy of denationalisation, to sell these at all?
Sir H. d'Avigdor-Goldsulid
I am grateful to the hon. Member. That is exactly the point I am coming to. In my opinion, this is a wholly unnecessary and irrelevant sale. I will give my reasons for saying that.
As I have told the Economic Secretary privately, this is an act of financial masochism by the Government. It is a self-inflicted wound. Why are the Government inflicting this wound on themselves? Why is the Treasury selling stocks which pay 7⅛ per cent or 6⅝ per cent.? It is to get some money in. What are they proposing to do with the money? It will be available to be lent, 630 probably to Richard Thomas and Baldwins, and it will be charged to Richard Thomas and Baldwins not at that rate, but at the current market rate of Government lending—probably 5½ per cent. or 5¼ per cent. What is the object of this manoeuvre? This is being done because as far back as 18th February, 1960, a year ago, we had a debate in this House on the Iron and Steel (Financial Provisions) Bill, which dealt with the advance of £70 million to Richard Thomas and Baldwins.
On that occasion, I thought that my right hon. Friend the Minister of Power received fairly rough handling. He is a man of the utmost physical and moral courage and I am sorry that he has not told the House today, "I want more money for Richard Thomas and Baldwins and, therefore, we will have a Bill to lend more money to Richard Thomas and Baldwins". Instead, the Iron and Steel Holding Realisation Agency is drawing about £85 million from the sale of these irrelevant prior charges in order to have the money available in the "kitty" to lend for the development of Richard Thomas and Baldwins, without going through the formality of a debate in this House, which would raise the same questions which the debate a year ago raised, as to what extent the House is committed to the financing of the nationalised industries.
On 27th October, the Chancellor of the Exchequer, in reply to a Question from my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster), said:The Government have decided that in all the circumstances it is best at the present stage to give priority to the sale of the fixed interest securities which the Agency holds in companies already denationalised."—[OFFICIAL REPORT, 27th October, 1960; Vol. 627, c. 2563.]That was more than four months ago. My hon. Friend the Economic Secretary has referred to the speed with which the operation was carried out, but, in fact, four months elapsed from 27th October, when the public announcement was made at that Dispatch Box of the impending sale of these securities, until 27th February, when the prospectuses were actually published.
What happened in the meantime? The right hon. Member for Huyton (Mr. H. Wilson) said that the gilt-edged market 631 fell by 4 per cent., and I was able to correct him on that point. There was a fall in the market for fixed-interest securities, for the obvious reason that institutions, insurance companies and pensions funds, which are the users of these securities, made room for them, but they had to sell their own securities to make room for them. I think that the Treasury ought to agree that four months is a longer time for a transaction of this kind than should be tolerated.
If the decision was announced on 27th October, I suggest that certain preparatory work could have gone on before that date, and that it would not have taxed the resources of the City to have dealt with that issue within six weeks of the announcement. If it had been dealt with within six weeks of the announcement, we should have been able to obtain a more satisfactory price for the securities.
Hon. Members opposite have agreed with me so far, but they will not agree with the rest of what I have to say, and I give them that fair warning.
§ Sir H. d'Avigdor-Goldsmid
Thank you. The special features of this sale are, first, that the payment for these securities is spread over a period ranging from now until October; in other words, allowing instalments to be paid on various securities in the Steel Company of Wales, for example, which will not be finally paid for by the insurance companies and pension funds, who will be the ultimate buyers, until October. This is a very convenient arrangement from the point of view of the buyers, because they are making the payments as they receive funds, which fits in with their cash flow and obviously suits them. At the same time, it seems to me that it also immobilises some element of their funds for this further transaction, for which, despite the speech of the hon. Member for Ogmore, the public has voted in no uncertain voice in three successive General Elections.
This is an old bogy, and I am very pleased to be able to argue it again now, because I am perfectly confident in my views. If the public have said 632 it three times, it is so, and in 1951, 1955, and 1959 the public said with an absolutely certain voice that it wished to denationalise steel. We want to denationalise steel, the public wants to denationalise steel, and this party will do it, and all these irrelevancies about prior charges in the steel companies have nothing to do with denationalisation.
We have still in the "kitty" the great firm of Richard Thomas and Baldwins. My mind goes back to the 'thirties when Sir William Firth tried to reorganise the company when that firm was hit very badly. I was a shareholder at the time and remember it very well. It was not a happy time for the shareholders. One must feel a bit romantic here, because of the immense strides which this great company has made. I have been looking at the figures of Richard Thomas and Baldwins, and, although we are promised by my hon. Friend the Economic Secretary that he cannot take any steps to denationalise it until we see how the developments are working out—perhaps I misquoted him, in which case I apologise—and although we stilt have to wait to see how the development works out, according to the chairman's report, which I have here, it will be a very long time indeed before we see the financial effects of this development.
Mr. Eley said:But the weather during the autumn and winter has been extremely unhelpful. Owing to this and some other circumstances beyond the control of your company, the plant will be later in coming to completion than had been planned. With reluctance we have been forced to recognise this, but every effort will be directed to reducing the delay.This is the first task—the plant for which the original credit of £70 million by the Ministry of Power was voted a year ago, and there have been further developments since then. In a Written Answer by the Minister of Power on 26th October, he indicated that Richard Thomas and Baldwins would look to I.S.H.R.A. for further financial help far beyond the £70 million which we talked about a year ago. I have no doubt that the sale of preference shares was one of the things out of which this sum was to be provided.
I want to ask my hon. Friend the Economic Secretary whether he thinks that he would be in a better position 633 this time next year, or this time two years hence, to say that Richard Thomas and Baldwins had then reached full development and its position can be properly evaluated. My guess is that he will still be dealing in uncertainties, though he will still have the great dynamism of that company which we all admire, and the management will still be dealing in uncertainties.
Looking at the figures of Richard Thomas and Baldwins' balance sheet—and I think the hon. Member for Rotherham will be interested in these—I find that the assets of R.T.B. are £114 million at the moment, and the net assets, after deducting liabilities, are £65 million. That is represented by about 10 million ordinary shares, so that we can say that the asset value there is about £6 per ordinary share. Now we are to spend £70 million on further developments, and after that there will be a further instalment. Until then, in my opinion, it will not be possible to judge whether any element of profitability is being added to the ordinary shares by this enormous development, but one thing we do know is that any assets that have been paid for already are in these days more valuable than those that are now being added at great cost.
Having said that, my guess is that in a year or two's time we may see a balance sheet of Richard Thomas and Baldwins very substantially inflated on each side, but with no greater net assets than £6 per ordinary share. Now let me look at the earnings. At present, the board of Richard Thomas and Baldwins is in the happy position of being able to look to the Iron and Steel Holding Realisation Agency for the capital funds which it wants, and to pay absolutely minimum dividend. It pays a dividend of 13½ per cent., which takes about £900,000 out of earnings, after tax, of £8 million.
§ Mr. Jack Jones
The hon. Gentleman is saying that the company pays so much taxation out of £8 million. I say that that is a good job done by those people and by their dynamism and that of the 634 workpeople. It is a good job for the State.
§ Sir H. d'Avigdor-Goldsmid
I am not questioning any of those things. What I am saying is that at present the dividend paid by Richard Thomas and Baldwins is literally a negligible contribution. It makes life very much too easy for the board. I know hon. Members opposite will not agree with me, but the fact is that in a competitive society—and we live in a competitive society—a board must be concerned not only with the profits it earns, but with the dividends it can pay. There must be correlation between the two.
It would seem on these figures that they could perfectly well justify a price of about £6 for the equity in Richard Thomas and Baldwins. If it were sold there would be a dividend of 13½ per cent., a net return of about 2 per cent., which would be covered nine times. I think that something on that basis could be done because in these days people take a long view. They are prepared to leave their investments in the company to fructify as it should, but no one would invest in steel shares today with the expectation of a high return. I have taken the figures from the Iron and Steel Review and I find that about 70 per cent. of the capital used is generated inside the industry. No one would buy for the sake of the yield, but he would buy for the sake of having a stake in a growing industry.
I wish that we would not always think in terms of speculation. This is a company whose capital has a value of £60 million and it is only the insurance companies, pension funds and those institutions which embrace almost the entire life of the people of the country which can place investments on that scale. Animadversion has been made to the fact that these steel preference stocks were sold at a discount. I suggest that when it tames to selling the equity of Richard Thomas and Baldwins it would appear from the Report of the Iron and Steel Corporation of Great Britain, Cmnd. 198, page 87, to stand in its books at £23 million. There would be a very healthy profit to the Iron and Steel Holding Realisation Agency if that great company were eventually resold to the public. It would seem to be conclusive that there 635 is no virtue in keeping one single company nationalised when the rest of the industry is denationalised and subject to the same competitive strains as the rest of the economy.
§ Mr. Millan
Assuming that there is one virtue, the very virtue the hon. Member has mentioned, there are very considerable prospects of the value of the company going up over the years. If it is not a question of a quick income yield, there is, of course, the capital appreciation, as he said.
§ Sir H. d'Avigdor-Goldsmid
The hon. Member is very knowledgeable in these matters and must be aware of the fact that in that company which is near his constituency, Colvilles, there is a continuous growth. That growth is not limited to a company in national ownership, but is common to all well run iron and steel companies. Therefore, I say there is no virtue in keeping one company nationalised. [HON. MEMBERS: "Oh."] Hon. Members opposite want to go on fighting the battle of 1951, 1955 and 1959. I wish them luck. Although I admire their heroism and lack of contact with reality, and salute them as brave men, I do not admire their political acumen on this point.
There was a debate in the House a great many years ago in which Charles James Fox, speaking on a commercial treaty between Britain and Ireland, said:I will not barter English commerce for Irish slavery. That is not the price I would pay, nor is this the thing I would purchase.I say to the Economic Secretary that he should not barter the principles on which we fought the General Elections of 1951, 1955 and 1959—and won them—for an indigestible mess of preference shares.
§ 5.56 p.m.
§ Mr. Jack Jones (Rotherham)
The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) is well versed in high finance. I happen to be a very humble chap well versed in making steel and all that goes therewith.
When history is written the story of the denationalisation now being conducted by the Government will prove to be one of the most sordid stories ever written about politics. Many of my colleagues are wondering why the Govern- 636 ment have gone on with this job. There is a very simple reason. The hon. Member for Walsall, South suggested that there is no virtue in keeping one company nationalised. I suggest, simply and sincerely, that there is a lot of virtue in it. If the nationalised companies can remain in being they will prove beyond peradventure and any shadow of doubt to everyone in the nation that they have been, are and will be an asset to the nation. That is what is worrying the Tory Party.
I remember having the great honour of following the right hon. Member for Woodford (Sir W. Churchill) in the first steel debate in this House. He at that time prognosticated and forecast that if we dared to touch this industry or to nationalise one part of it overnight it would become decadent, inefficient, effete and all the rest of it. Yet here we have, after many years of nationalisation, hon. Members soaked in blood as blue as bilberries talking of the dynamism and wonderful success of parts of the industry. This is in 1961 and it is quite a different story.
I go back further than the Socialist take-over of the iron and steel industry. The Tory Party assumed that we stole something, but we bought it. We bought for this nation what had been stolen From the nation. Fifty years next Wednesday I started work in the steel industry. I was then a simple lad singing in a church choir. I was a simple fellow and used to listen to the parson reading from the good old book. Every Sunday I used to hear the expression:The earth is the Lord's, and the fulness thereof; the world and for they …meaning all of us—that dwell therein".The Tory Party got it wrong when they thought that that meant the lords physical, but I as a choirboy knew that it meant the Lord spiritual. The Tories got possession of the earth which belonged to the people and the God-given iron ore. I suggest that we did not steal anything but bought what originally should have been ours.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
The hon. Member talks much about speculation, but would he not agree that the act of buying is itself one of speculation? It is not the act of selling but the act of buying these 637 shares in the first place which was speculation.
§ Mr. Jones
We had to bring in an Act to buy something which originally belonged to the people. We still have the conviction on this side of the House that we should nationalise steel. What is wrong with that? People are entitled to their political convictions.
I do not blame the Tories for wanting to denationalise steel and skim the cream off the milk. Some people might ask why the Tories do not go ahead and denationalise the railways and the coalmines at the same time. There is a simple answer to that. If the Tory Party is convinced that denationalisation will mean success for the steel industry, why does the State still own the railways and the coal? Most people know why. Those undertakings were left in such a shocking condition that it would take years and years and thousands of millions of pounds to put them right. That state of affairs resulted from the inefficient way they were run under private enterprise.
The steel industry is a very complex industry. Some people on the Tory benches would have us believe that there is some internal competition inside it. I ask them not to give us any more of that nonsense. One of the greatest achievements of the nationalised part of the industry has been to do as well as it has done in view of the fact that it has to depend completely for its raw material supplies on those who control the whole iron and steel industry—B.I.S.R.A. and B.I.S.C.O. Those undertakings buy iron ore, scrap, iron ore, fluorspar, limestone, etc., in bulk. The nationalised part of the industry, not because of the Government but in spite of the Government, has gone ahead and done extremely well.
The Tory Party is entitled with its majority to take back the ownership and control of the steel industry and the exploitation of this country's God-given ore. I know that people do not like to have it put to them this way, but these are the simple facts, as I see them. I shall not go into the ramifications of who bought what, this that and the other, and paid 2s. 6d. a week and 2s. on account. I know what they did. They bought out control of this industry. The hon. Member for Walsall, South 638 said that the rest of it does not matter. He asked why only one unit of the steel industry should remain nationalised. He talked about assets, liabilities, profits, etc. I do not want to hear any more of that type of argument. I am no financier, but I can reckon up what it costs to live every week and what is left at Christmas.
The Chancellor of the Exchequer is being encouraged to keep a kitty out of which those who have the shares and control can draw as and when they want to increase and maintain their efficiency. The price which is now being paid for the steel industry is nothing like as good as it should be, even with all the fiddling which is taking place, having regard to the terrific amount of money which has been put into the industry since it was nationalised. That is an indictment of the Tory Party.
When the war was over we found ourselves with a steel industry which could in no way supply the needs of full employment. I had the honour of being in the Ministry of Supply then. I know something about what we had to do to get steel from America, Belgium, Luxembourg and other countries. It is the old story of the azalea class of goods. To get steel from Belgium to keep men in employment, we had to take the azalea class of goods—shrubs, bulbs, lipstick, and a lot of other useless articles we could have done without. Unless we took those goods from Belgium and Luxembourg we could not have steel.
We bought 1 million tons of steel per annum from America. How did we pay for it? The Americans insisted that we should pay for it with out strategic copper reserves, the copper which we had left at the end of the war, which was a tremendously valuable asset to this country. We had to disgorge that copper and let it go to pay for steel, some of which is still in this country today. I can take hon. Members to it and show them that it is not even fit for scrap. It is lying about in my constituency and elsewhere. We paid for it with copper which was dug by the forefathers of the men in Rhodesia who today cannot have a vote.
Hon. Members can shake their heads at me, but these are facts. Copper mined in Rhodesia was used to pay America for steel which the industry at that time, 639 which the hon. Member for Sheffield, Heeley (Sir P. Roberts) knows something about, could not provide because of its inefficiency.
§ Mr. John Farr (Harborough)
On a point of order. Is it in order to talk about copper in an iron and steel debate.
§ Mr. Deputy-Speaker (Sir Gordon Touche)
The hon. Member for Rotherham (Mr. Jack Jones) has said nothing out of order.
§ Mr. Jones
The hon. Member for Harborough (Mr. Farr) wants to know if it is in order for facts which he does not like to be mentioned in the House of Commons. Without copper there is no brass, and without brass there is no steel. "Brass" is another commodity. I never got any "brass" unless I made some steel. I sometimes got damned few coppers when I was out of work.
I shall now return to the fiddle which is going on. I do not blame the Tory Party. I blame the people who gave them the power to do this. My hon. Friend the Member for Ogmore (Mr. Padley) put his finger on the pulse. When this story is told, as it should be told and will be told, and the electors learn exactly what is happening to the thing they should be proud of—one of their greatest assets, the steel industry—there will be a different story. The story was told at the last election in the steel constituencies—Swansea, Ogmore Vale, Ebbw Vale, Scunthorpe, Penistone, Rotherham, Motherwell and Llanelly. I ask hon. Members opposite to go to the steel constituencies, where the story was told, and I challenge them to return and tell me that the people there voted for denationalisation. I do not want to hear any more of that nonsense. There are hon. Members sitting on the benches opposite who are good personal friends of mine, but they dare not go with their story and fight an election in a steel constituency. They prefer to go to constituencies where people get the benefit of the work of those who sweat and toil. This story will be told.
The steel industry is an efficient industry, despite its defects. It has plenty of defects. I want to say this to the House with all the sincerity at my com- 640 mand. Since nationalisation and the threat of further nationalisation, there has been a tremendous improvement inside the industry in the conditions for employees. If nothing else has been done, that has been done. I give credit to the management for it. I work for a board of directors. I was there less than seven hours ago. I was working there this morning. I came to the debate by plane. I give the board of directors credit for having taken cognisance of the fact that much needs to be done to improve conditions within the industry. They are good businessmen and good Tories. If someone is a Conservative, he conserves and keeps—get hold and keep.
The Tories lost something, and now they are getting it back. Of course, the Tory Party intends to do it. I will not go into the figures. They have been stated quite plainly by other hon. Members. We have heard about the asset values. My point is that it all comes back to the simple God-given material which was put there for the benefit of the State. Why should not ore be turned into steel and steel be turned into goods to be exported to pay our way overseas?
The Chancellor of the Exchequer has gone to Germany. He will learn much there. The Germans are reducing their prices every week. They are running rings round us. Some hon. Members in the House, like myself, know of the technical advance going on in Iron Curtain countries. As a nation—not as a party, but in the common interest—we cannot afford to continue with the idea that our greatest assets should be used for profitability alone, particularly for the profit of people who contribute nothing to the actual making of steel. That is a simple proposition to state, but it is true.
I have friends who boast of the profits to be made on the Stock Exchange. They are good personal pals of mine. They play golf, fish and grow roses. They argue about all the things about which human beings argue. We part company on the question of ownership and control. They laugh and say to me, "Jack, if you had put £1,000 in this three months ago you would have had £1,400 today. If you had put £500 in that, you would have had £1,100 in a month's time". Can this country afford 641 to allow this tremendous profit making to go on? Can the country afford the Stock Exchange fiddle which is going on?
This morning I saw a thousand tons of ore going over the weighbridge—but what else did I see? I saw the cost of mining it, and of smelting it and of refining it. I saw the cost of the trade unionists' wages. Some may say the "greedy trade unionists", but who is to stop the trade unionists going for more money when they see men like Clore clawing in a million quid almost over-night? The trade unionists also see all the directorships and the other things that are going on. One day we shall find ourselves unable to compete with those nations that do not allow such things to happen.
I have a final word to say to the Tory Party. I have recently seen the grins and grimacing of people who think that from the Labour Party's present discomfiture some advantage will accrue to the Tories, but let no Tory think that the sort of action we see today, plus taking advantage of a weakened Labour Party, will be to the ultimate advantage of the Tories. There is a greater menace.
There is only one alternative to a decent, live, democratically elected Socialist Party—those who will not talk of compensation but of confiscation, and up against the wall if a man does not like it. I hate to use these words, but the sort of action we see today, especially if it is to continue, will encourage an attitude of "Why should we care?" in the hearts and minds of these men.
The Economic Secretary should get the Chancellor of the Exchequer to write a simple letter to all the steel workers in the following terms:From the Chancellor of the Exchequer to the steel worker.Dear Sir and Brother"—
that is the usual trade union term—Many thanks for the fact that you have not threatened to strike because of the fiddle taking place in the industry. I am delighted to learn that you agree with us that what we are doing is the right thing. Please do not write to tell me that your grandmother is worried about paying 2s. for a prescription that should only cost 1s.; please do not tell me that because of lack of employment in the motor industry your cousin is out of work at Liverpool or Coventry. I know. But, once again, many thanks for having put up with what the Tories are putting on you. Continue to sweat 642 and strain and work, and the fiddlers on the Stock Exchange will be greatly obliged.Yours, most faithfully and gratefully, the Chancellor of the Exchequer.
§ 6.13 p.m.
§ Mr. David Webster (Weston-super-Mare:)
It is always a great pleasure to follow the hon. Member for Rotherham (Mr. Jack Jones) with his vigorous and expressive turn of phrase. I was interested in his frequent use of the word "fiddle". A large number of steel workers took up the ordinary shares of the steel companies before the last General Election, and have kept them. I would not say that they were fiddlers. A lot of people of limited means have taken up the shares issued three weeks ago. I do not call them fiddlers.
I want to congratulate the Iron and Steel Holding and Realisation Agency for the very fine way in which the terms were set for the denationalisation of these fixed priority stocks. Until the actual issue took place and subscriptions were asked for, it was practically impossible to predict whether it would start at a premium or at a discount. In fact, eight started on a very small premium, and one on a very fractional discount. That shows that the terms were pitched very finely and equitably, and in the way that was fairest to the British shareholder and the British taxpayer. That is a very fine achievement and not half enough thanks have been given to the Agency for the way in which the operation has been carried out.
In terms of interest, the average yield on its stock is about £6 19s. per cent. That may seem rather high, but on Bowater 5½ per cent. the yield is £7 5s. 6d.; on Dunlop 5½ per cent., it is £7 4s. 3d., and on Imperial Tobacco 6 per cent., it is £7 3s. 3d. Those are higher yields on equally well-known stocks, and I think that the terms here have been pitched very adequately indeed.
It has not been a speculative issue, and despite what the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said, there has been very little capital gain on the issue. The right hon. Gentleman very subtly juggled with the figures to make it appear that on a 10 per cent. payment there is today a premium of 20 per cent., but he has, in 643 fact, inflated the figures tenfold. I respect his ability to do that, but I do not respect his figures.
What has been done has reduced the taxpayers' burden by £85 million, and has increased the savers' investment in the steel industry. Hon. Members opposite are always crying out for more investment in the country's basic industries, and it is very regrettable that they should attempt to deny to ordinary people the right to take up that investment. I look forward to the future when the will of the people is carried out—
§ Mr. Jack Jones
I should like to tell the hon. Gentleman that in the works in which I am employed the savings of the steel workers are the highest in the north-east of Great Britain. They already have every opportunity they wish to invest in a prosperous State, and are encouraged to do so.
§ Mr. Webster
I am very glad. I hope that they will invest in the companies for which they work, because I believe that to be one of the best ways of achieving adequate labour relations.
Today we are coming to one of the most exciting stages in the expansion of our steel industry. Production last year was 24.3 million tons of crude steel, and I gather that this will go up slightly to 24.5 million tons this year, of which 4.1 million tons will be for export. That is a very fine record. It is the highest ever achieved. It is 20 per cent. over the previous year, and 12 per cent. over the previous record in 1957. That shows the expansion that is taking place in the industry, and it is expansion that is continuing at a very high rate.
At the end of the year we shall have a capacity of 27 million ingot tons and in the mid-sixties a capacity of 34 million ingot tons. That shows the confidence the industry has in its own future, because present estimates are that in the mid-sixties the home demand for steel will be 25 million tons and that there will be exports of 5 million tons. That all shows a great deal of faith. There will be surplus capacity, which may require some scrapping in order to keep the industry completely up to date.
Just as our strip mills are the envy of the Continental firms in the Coal and Steel Community so we are anxious to 644 catch up on sheet steel capacity, and it is noteworthy that £200 million is being invested within the industry this year. I think it right that this should be by voluntary effort and not by State effort. We are having to compete with a rapid development in the Coal and Steel Community, where production has gone up from 40 million tons in 1950 to 70 million tons last year and is expected to reach 100 million tons by 1975. It is therefore obvious that we really have to invest very fast and keep our industry as modern as possible to compete, as we shall do. I have great faith that the industry will keep ahead of its competitors.
The problems facing the Coal and Steel Community are similar to our own, and there are many hon. Members who would like to see closer ties with the Common Market, or the Community as they call it. That is often difficult to do politically. It is frequently much easier to do it by economic methods, and I hope that something can be done to associate ourselves with the problems that the Coal and Steel Community now faces, which, as I say, are problems very similar to our own.
We have very little to fear on prices. We have a very fine record in the industry. Taking 1938 at 100, in 1958 the figure would be 93.7 in this country. In the Common Market it would be 106. In the United States it would be 118.3.
There is great danger today because costs, labour costs in particular, are rising. The wages bill went up by £22 million last year. The fuel bill went up by £19 million. This is a matter of considerable anxiety within the industry.
§ Mr. George Lawson (Motherwell)
The hon. Member is comparing prices with 1938. Will he compare prices with a much more recent year, perhaps, 1951 or 1954? Could he give us an idea how the British gap has been narrowing or widening in relation to Continental prices?
§ Mr. Webster
I am sorry not to be able to oblige the hon. Member. I have many documents here, but I feel sure that by the time I had scuttled through them all the House would long since have lost patience with me.
It is notable that so much of the expansion of the industry, two-thirds of 645 it, is self-financed. When we are told about speculators and about capitalists bleeding the industry white, it is well to remember that many of the dividends are covered twofold, threefold or sometimes even fourfold. This is a voluntary process, allowing profit to be reinvested in the industry. It is one of the best records in British industry, and I think it should be emphasised when there is so much talk about fiddling, jiggery-pokery and speculation.
For the ten largest companies last year there was a trading surplus of £115.3 million. Taking away normal depreciation of £29.8 million, a net profit of £85.5 million is reached. From that one takes taxation of £38.8 million, leaving £46.7 million. Exceptional credits are added. Then special depreciation and other reserves are taken away, with the final result that out of the original £115.3 million there is a dividend payment of £13.9 million. That is not skimming the industry.
Technically, the industry is probably going through its most exciting phase. The developments in steel of the last 100 years began in the period 1856–78 with the acid and basic Bessemer processes and the open hearth processes. These dominated the industry, it is fair to say, until the First World War when the electric arc process came in as well. In fact, the basic Bessemer process, which dominated so much of European production, was invented by Gilchrist Thomas, a Britisher. It is known as the Thomas process in Europe, quite rightly, and it certainly brought competition for our own industry.
After the 1914–18 war, we had our own troubles with the Bessemer process, and it was suspended for many specifications by the British Standards Institution. It came back into use in 1934 at Corby and in 1938 at Ebbw Vale, but still it had its limitations because it produced a steel with too much nitrogen which was too brittle. The limitations were very serious. However, the process had the advantage of lower capital and running costs compared with the open hearth process which is easier to control and produces for its type of ore the best quality steel.
On the Continent, people have been concerned because they have not been able to produce steel of adequate quality 646 at the right cost. The Austrians, in particular, by blowing hot air through the electric arc furnace have managed to produce a more efficient steel. They have now gone one stage further and, by blowing oxygen and steam through the furnace, they are able to produce a milder steel of better quality which is known as "better blown steel," as the hon. Member for Rotherham knows very well.
The exciting factor is that the Continental countries have set us a great challenge, and the British steel industry is today rising to that challenge. It is adopting the L.D. and Kaldo processes, using a supersonic oxygen jet on to the liquid pig iron, and this has a great advantage because of the low quality of British ores which produce almost the lowest quality pig iron in the world.
§ Mr. Jack Jones
The hon. Member will be aware that I myself at the Dispatch Box opposite years ago, and ever since, have talked about our need to use oxygen induction. I have advocated its use for fourteen years. Now we are beginning to think about it.
§ Mr. Webster
If I may say so, we have been thinking about it for a very long time. The pioneers experienced many frustrations in their development work. Its use by the Austrians has been perfected only recently, and the very rapid developments in both the L.D. and Kaldo processes have come in the last three years. I believe that the next ten years will see a complete revolution in the industry. Of course, I respect what the hon. Gentleman has said in his advocacy. He has been proved right in this case.
These new processes will give a higher quality steel for this country at a lower capital cost and a lower running cost, but tremendous expenditure will be needed to turn the industry over to this type of production. It is interesting to note that Colvilles and Richard Thomas & Baldwins at Newport have the L.D. process. Corby and Ebbw Vale and the Steel Company of Wales at the Abbey Works have Bessemer with oxygen blast. Oxygen lancing has been carried out to best effect at Brymbo.
It is exciting also that not only have the electric arc and Bessemer processes 647 been modernised and improved, but the steel producers have done what they never thought they could do, that is, use oxygen injection in the open hearth process, in this way reducing very much fuel costs in the industry. They have achieved one of the greatest successes in the industry yet by the injection of supersonic oxygen blast on to the surface of the liquid steel in the open hearth, which becomes so hot that it has to be covered with scrap lest the roof of the furnace should fall in.
Probably, the greatest opportunity yet faces the British steel industry, the opportunity to have steel of the highest quality at lower capital cost and lower running costs than ever before. It is very important that the people of this country should be encouraged to invest in the industry knowing that they will not have a quick return but knowing, as my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) has said, that they are investing their own savings in the growth of a great British industry.
I do not wish to join the battle which has been fought in the House and the country continuously during the last fifteen years, principally because I feel it is almost impossible to say something new and it is tedious to weary the House with repetition. My own belief is that the State has many things to do by way of welfare, and when there is investment by the State in industry it must be on the welfare basis and on that alone.
The decision to make loans to Richard Thomas and Baldwins and to Colvilles was taken for a social purpose. Anyone who served in Parliament during the winter of 1958 will recall the local unemployment there was in the regions affected and the need to stabilise industry there. For that reason, Parliament passed the money. I think it right that we as a nation should come to the help of an individual, an industry or a region in the time of their need so that, when the need is passed, the individual, the industry or the region may again play their full part in the activities of the country. I do not think it right that the State should take ordinary shares or, if necessary, preference shares. Much has been said about speculation in ordinary shares. This is certainly not the function of the State.
648 The industry today, under private enterprise, will face a great challenge from private enterprise steel both in the United States and in Europe. Under excellent management, with co-operation with the workers, more and more of whom, I hope, will own shares in the companies in which they work and know that they have a stake in their own industry, we shall forge ahead. I have great confidence in this great industry.
§ 6.30 p.m.
§ Mr. John Morris (Aberavon)
I had some difficulty in understanding some parts of the speech of the Economic Secretary. He said that the people had rejected nationalisation. Obviously, he had not heard what was said by one of my hon. Friends concerning the election results in the steel constituencies, particularly in South Wales and Scotland, where this issue was important.
I found difficulty in understanding the questioning that went on about the functions of I.S.H.R.A. I should like to know whether I.S.H.R.A. comes to an independent judgment or whether it is influenced by the Government. If it is highly independent, as the Government try to make out, what is the point of the Government giving the assurance that I.S.H.R.A. will be able to complete in substance its activities in the life of this Parliament? The Government cannot have it both ways.
I congratulate the Government on announcing the sale of fixed-interest bearing stocks while the House was sitting. That is not entirely an innovation, but it is a pleasant change from past practice. When large firms have been sold, the practice was that it should be done while the House was not sitting. We are, therefore, grateful to the Government for these small mercies.
In the debate on the sale of S. G. Brown Ltd., last year, my hon. Friend the Member for Newton (Mr. Lee) complained that the announcement of the sale was made while the House was in recess. He said:I think that we are entitled to believe that this was a deliberate attempt to prevent Parliament functioning at all, so that when we returned we would be faced with a fait accompli."—[OFFICIAL REPORT, 28th June, 1960; Vol. 625, c. 1150.]649 That has been the practice in the past—send the House away so that the mice can play. The maxim seems to be that not only should justice not be done, but it should also not be seen not to be done.
I will not go into detail concerning the latest outrage. I have been anxious to debate the steel industry for quite a long time, and I was supported in this by the hon. Member for Kidderminster (Mr. Nabarro), who was also anxious to debate this recent sale. Unfortunately, he is not present today, otherwise I should have said something more. The more the pleasure of the hon. Member for Kidderminster with the latest success of the sale of these assets the more suspicious and anxious are we on this side. To borrow an Americanism, what is good for General Motors, or, in this case, what is good for the City, is not always good for the country as a whole.
In this instance, there were 47,600 applications for £136 million worth of stock. There was only £105 million worth of nominal stock to be shared among all these applicants. All these offers were substantially over-subscribed except those for the Steel Company of Wales. The Financial Times, in stating the obvious just after the announcement of the subscription, was able to say that, with the success of steel, thespectre which had been haunting the funds market for a long time appeared to have been laid",and the result is that everyone is happy with the price.
I do not propose to go into detail about the price and the way it was arrived at. It is obvious to anyone who has looked into the matter that the Government, by their own actions in the past year or so, have created the conditions for what is now tantamount to a bargain basement. Their own high interest policy has depressed the gilt edged market and, further, the anticipation of the mammoth unloading of steel stocks has depressed the market. Therefore, the price obtained for these stocks is the obvious result of the Government's action in the past few years.
We are entitled to ask whether it was necessary now to sell these stocks. If the Government are so confident that they will retain the support of the elector- 650 ate at the next General Election, and subsequent elections, why did they not spread the sale of these stocks over ten years or so? Then the market would not have become depressed by the anticipation of massive unloading of steel stocks.
I wish now to refer to the sale of Llanelly Steel. That has been discussed by several hon. Members. It concerns the sale of £3¼ million worth of stock for £1¾ million—a loss to the nation of £1½ million. The words of the City Editor of the Daily Telegraph in August, just after the announcement of this sale, were:The deal is clearly attractive, for Duport are buying £3¼ million of capital for their £1¾ million outlay.That will go down in the financial columns of our newspapers as one of the most masterly understatements of all time. This is a double-your-money game in the steel markets. It is fortunate for the Government that the House was not sitting when this announcement was made.
The negotiations were completed on 6th July, a few days after the debate on S. G. Brown Ltd. in the House, but the announcement of the sale was not made until 2nd August. The Economic Secretary was able to say that the sale was not completed until 2nd August and that it was at the request of Duport that no mention was made of it until the purchase was settled. It was said that it was the new owners who had requested secrecy on technical grounds and requested that the announcement should be deferred until after the end of their financial year on 31st July. This is a case of the buyers of Llanelly Steel dictating to the Government when the announcement should be made.
The Economic Secretary cannot have it both ways. It was convenient to publish on 2nd August the fact that this company had been sold. But if the sale had not been completed and if the bargaining was still continuing, why was there a need for the new owners to ask for a deferment of the announcement until after 31st July? Either there was or was not a sale before 31st July. If there was no sale, there was no need to defer the announcement. If there was a sale, and if it was all over bar the shouting, 651 we can see a reason for asking for deferment.
How can the Economic Secretary say that the sale was not completed until 2nd August? What went on during that Bank Holiday weekend? Parliament went into recess on 29th July. The Bank Holiday weekend was 30th-31st July. The announcement was made on 2nd August. What was going on during that sweltering August weekend? Were negotiations still continuing? Had the purchase been completed, apart from the signing of the necessary documents, before Parliament went into recess? That is what we are entitled to know.
The picture which the Government are trying to paint by the announcement of the Economic Secretary is that the sale was not completed until 2nd August. Are we to believe that during the whole of the Bank Holiday weekend Duport officials and Treasury officials were still working on this issue and that it was not until the dawn of 2nd August that agreement was finally reached and that an announcement could be made about the matter? The picture painted by the Government is not credible. The whole of this transaction was buttoned up on 6th July, well before Parliament went into recess, and nothing further was done after 29th July until 2nd August, when the announcement was made. It was a deliberate act on the part of the Government not to publish these details until after the House had gone into recess.
When the Civil Lord of the Admiralty was giving the reasons for advancing the sale of S. G. Brown Ltd., he said that it was done in the interests of the employees. I should like to know the real reasons for deferring the announcement of the sale of Llanelly Steel from early July till 2nd August. Was anything new done over the Bank Holiday weekend? That is why I congratulate the Government, in this instance, on announcing these latest sales while the House was sitting. There is some speculation as to whether the proper price was paid for Llanelly Steel. I am certain that that point will be dealt with in some detail before the end of the debate. Was it necessary to sell this company at this time? Admittedly, it had made losses in the last two years, but the last year for which figures are available shows that it had pruned its losses to 652 one-third. What were the trading figures of this firm during the last year for which figures are available? I know that they would be figures for only part of the year, but we should like to know whether the losses have been pruned further, and, if so, whether this point was taken into consideration in the price paid for the company. The Staveley Iron transaction followed the same pattern and was put through in September, when the House was in recess. This company, with a nominal value of £8 million, was sold for £6 million to Stewarts and Lloyds, at least £2 million going down the drain. Stewarts and Lloyds is a company which has figured prominently in some of the transactions in which the steel companies have been indulging over the last few years.
Before the General Election, the steel companies tried to sell the party opposite, like a detergent, to the British people and in so doing spent a vast amount of money. The total amount spent by the industrial allies of the Government was £1,400,000. The Iron and Steel Federation alone spent £287,000. Stewarts and Lloyds, the same company as was able to buy Staveley Iron for £6 million, spent £269,000.
§ Mr. H. Wilson
I gave some figures in my speech this afternoon. It ought to be made clear that that was the direct expenditure by Stewarts and Lloyds. It did not include any contribution made by that or any other steel company to the £½ million expenses of the Colin Hurry campaign and it does not include any of the secret donations paid to the fighting funds of the party opposite by these steel companies. Therefore, these are strictly minimum and known published figures.
§ Mr. Morris
I am grateful to my right hon. Friend. The figure which we have quoted came from the Nuffield report. Some of us in South Wales who were at the receiving end know that the actual expenditure was far higher.
Two important facts are the sale of those two companies at a considerable loss to the public and, secondly, that some of the steel companies gave great material assistance to the party opposite before the last election. We would like to know whether there is any connection between these two facts. If there is not, 653 we would have been grateful had the Government said so earlier when the House resumed after the Recess. They should have issued a White Paper to say that they had considered the matter, which was of great concern to the public, and that to allay any anxiety they could say that neither Stewarts and Lloyds nor any other company was deriving advantage from the fact that they had put down a great deal of money to ensure that the party opposite was returned to power.
§ Sir Peter Roberts (Sheffield, Heeley)
Is the hon. Member suggesting that it is improper to spend money on political propaganda? If so, may I ask whether any money is spent by the trade unions or the Co-operative movement on political propaganda?
§ Mr. Morris
The hon. Member is going into a much wider sphere than this debate would allow. In this case, money was paid by a firm for a specific purpose. Shortly afterwards, other firms derived, or purchased profitably from the Government. I am not suggesting that there is any direct connection. What I am asking is whether the Government considered this matter and why they did not indicate earlier to the House that they were sure that there was no connection between these two facts.
As one of the sponsors of a Motion, together with sixty of my hon. Friends, I should like to congratulate Richard Thomas and Baldwins, a great publicly-owned firm, on its achievements to date. Last year, its trading profits went up by 25 per cent. and this year, they are up by 45 per cent. This year, the net profit before taxation is over £11 million. In the words of the company's chairman, these are "fine figures". We on this side—and, I think, the House as a whole—should be proud of the way that Richard Thomas and Baldwins has been able to trade and to expand. We on this side believe that the commanding heights of the economy should be in the nation's hands. I for one accept the view of the Spectator that those parts of the steel industry which are in the nation's hands should remain there, otherwise it would be difficult for the Minister "effectively to exercise" his obligations under the 1953 Act.
Up to 1959, since coming into the nation's hands Richard Thomas and 654 Baldwins has made huge profits, over £70 million, in addition to the further profit this year. It is obvious to everyone that this great company has not suffered in any way by being in the hands of the nation. The onus is on the Government to prove that this industry or the nation would benefit in any way if it were sold back to the public. The Government have not done this in the past and I am sure that they will not be able to do so today.
The chairman of Richard Thomas and Baldwins has made a statement which caused great anxiety to myself and to several other hon. Members. In his annual speech, he quoted the great developments in progress at Newport and elsewhere and the normal full-time activity of the company and he said that, additionally,much time and thought have had to be devoted to work, argument and discussion on possible schemes for devesting the company. … The strain on the management staff and workpeople at all levels has been great.This great company is fighting one of the greatest battles in its history, doing its normal work and expanding at a fantastic rate, yet, at the same time, it has to be troubled by working out schemes for devesting.
Have the Government ordered the company to do this? Has it been given a timetable? Has it been told that at the same time as carrying out its expansion programmes, it must carry the additional strain of preparing plans for devesting? This company is efficient. It has been entrusted with great development. According to the standards of hon. Members opposite, it is profit-making. What is the real reason for attempting to denationalise this firm? Is it that the City is desirous of coveting this particularly profitable Naboth's vineyard? Is that the only reason for denationalising it?
The Economic Secretary has given an assurance, although I could not follow exactly what it was, about when Richard Thomas and Baldwins will be denationalised. Before the end of this debate, we should have a clear assurance from the Government that until Richard Thomas and Baldwins has completed its present expansion plans, as well as continuing on full production, no work or anxiety should be thrust upon the company to prepare plans for devesting and that it should not for doctrinaire 655 reasons become the plaything of the other side of the House.
There has been some short-time working in my constituency and elsewhere in South Wales as a result of the recession in the motor car industry. In the economic debate, the Government were asked—but we did not get the answer—how long this would last. We do not know what will happen. The cloud in the sky is a small one and we would like to be assured by the Government that it will remain a small one and will not grow to be a storm.
We are living in a time of large developments and great new capacity in the steel industry. I, for one, fear that unless that expansion is accompanied by a rise in industrial production, there is danger of our steel capacity becoming underemployed. That is one of the fears that we must face. The president of the British Iron and Steel Federation, whose speech, I understand, the hon. Member for Weston-super-Mare (Mr. Webster) read a few days ago, has expressed the anxiety of the Federation. He said thatThe Government should explore new ways to break away from the frustrating pattern of recent years, in which official thinking has been dominated by short-term financial worries, and should seek to create an environment in which industry can unleash its full wealth-creating potential and can plan for growth in great assurance.That is the claim of the president of the Iron and Steel Federation. Neither the industry nor the nation can afford the Nero-like complacency and masterly inactivity of this Government, who have no plan whatsoever for the economy.
§ 6.50 p.m.
§ Sir Peter Roberts (Sheffield, Heeley)
I rise mainly to refer to four points mentioned by the hon. Member for Rotherham (Mr. Jack Jones). I felt that his first point was one which we should all clearly understand as the point of view of hon. Members on the Socialist benches. This was when he talked about raw materials belonging to the people. He enunciated the whole principle of State socialism which, from his point of view, goes for the whole of industry.
It is necessary that we should realise the way in which the Labour Party is thinking on this issue. A year or eighteen months ago we thought that 656 members of the Labour Party had discarded the idea of the nationalisation of the means of production, distribution and exchange, but we see again exactly what they have at the back of their minds. It is State socialism in all its forms, and it is interesting that today we should have seen this come out into the open.
In his second point the hon. Member for Rotherham seemed to criticise the steel industry for not being in a position, directly after the war, to forge ahead as quickly as industry would have liked it to have done.
§ Sir P. Roberts
The hon. Member was complaining that apparently there were not sufficient raw materials and sufficient steel after the war, but surely he must appreciate that during the war the steel industry did a magnificent job in producing the steel that we required. It does not become him or his party to criticise an industry or the people in it for not having sufficient steel when the war was over.
§ Mr. Jones
I took part in the production of that steel, though I want no credit for it, since the sons and daughters of those of us who were then in the steel industry are now doing a bigger job. What I said was that there was not enough capacity at that time to provide sufficient steel to meet the full-employment programme.
§ Sir. P. Roberts
That is what I thought the hon. Member said. The reason why it was not there was that manpower and capacity for production had been used in the previous four years to win the war.
The hon. Member says that nationalisation was popular in the steel-making areas. He mentioned various cities, but not Sheffield. I have raised this issue time and time again and I have never been challenged in the speeches I have made in Sheffield. It is only fair that the House should know that.
§ Sir P. Roberts
The hon. Member's fourth point showed muddled thinking, because he said that if we go on as we are we shall meet competition which 657 may defeat our own industry. What is the competition that we shall meet? It is coming from Germany, America, Belgium and other countries and that is primarily private enterprise competition; unless the hon. Member suggests that it is Communist and Russian competition that we have to face.
I do not think for a moment that there is any fear of that competition in this country in the foreseeable future. The competition that we have to face is that of private enterprise in the steel industry, and our great fear on this side of the House is that if the party opposite gets into power, and the steel industry is renationalised, it will not be able to compete against the vigour of private enterprise from overseas.
This brings me to the great difference between us in this debate. It is a difference of policy and of politics. We on this side of the House really believe that the steel industry should not be nationalised or part-nationalised. The hon. Member for Aberavon (Mr. J. Morris) asked why one particular company should not be allowed to continue under nationalisation. It may be that one company can ride on the sea of private enterprise, but the main principle is that we believe that the whole essence of nationalisation in a production industry is wrong. We therefore ask why one company should ride on that sea of progress.
§ Sir P. Roberts
I cannot agree with the opinion expressed by one of my hon. Friends about the ownership of the debenture and preference shares. There is obviously an essence of ownership in them and the Government were perfectly right and logical in taking the step which they have now taken. If they had not done so they would not have been living up to the undertakings that we as a party gave in previous election pledges.
Then we come to the question whether, if we sell, we should sell at a profit or at a loss. It should be made clear that some of the shares have already been sold at a profit. We are now dealing with some debenture and preference shares which are being sold at a loss. The criterion must be the market price at the time the sale takes place. To say that one should retain these fixed-interest 658 charges until some profit arises is the political argument, from the other side of the House, of merely trying to keep these assets in public ownership; because it may be a long time before these fixed interest rates come back to par. It is very likely that it will not be until the redemption rates appear. To say, therefore, that we should retain them till that time, is tantamount to saying that we should not sell them at all.
Credit is due to the Government for their timing of these last operations. I congratulate them on the timing and on the courage they have shown in tackling this big financial issue. As to the price paid by investors, there has been a great deal of talk about swindles, but I believe that the price paid by those who are buying these investments is very generous. To a large extent, I think that people felt that this was an issue which should be taken up, and although they might not have felt that it was a very good financial return they felt it was something that should be done in the national interest. I should like to pay tribute to the many people in all walks of life who have taken up this issue, to a large extent from a sense of public duty. Nearly 75 per cent. of the issue was underwritten firm.
The steel industry today is a vigorous and expanding one, as we all agree. We are looking with confidence to the future. I am disappointed that criticism and political strife is creeping back again into the industry. No doubt that cannot be avoided, but it is a handicap to any industry to have political strife, whether right or wrong, hanging over its head. We should be able to forge ahead into the future without the difficulties of political controversy. Nevertheless, the steel industry as a whole is spending, in 1961, £150 million and by the end of the year its capacity will be about 27 million tons crude steel. In 1962, that capacity will increase, we hope, to 30.3 million tons, and by 1965 capital expenditure will have amounted to about £450 million.
This is the basis of the discussions that we are having today. Accepting the fact that we believe in private enterprise, and that the industry must extend and expand, there must be the right economic climate in which this money can be raised and this enormous sum of £450 million can be put into the industry. It is an act of faith on the part of this country, and 659 investors and people in the industry who give their money or their work in the belief that this expansion would continue. This is an act of faith also by the Government, in taking this action to try to clear up the financial background. But the industry still has work to do. We are saying to the industry, "Go ahead, spend the money, produce to capacity, produce the steel", and I believe that the great majority of the people are behind the Government in their policy.
§ 7.1 p.m.
§ Mr. George Lawson (Motherwell)
Both the hon. Member for Sheffield, Heeley (Sir P. Roberts) and the hon. Member for Weston-super-Mare (Mr. Webster) spoke at considerable length on this question of free enterprise and private enterprise in which they believe. They spoke of the faith that the steel industry is showing in itself, now and in the future, as a faith based upon free enterprise.
The hon. Member for Heeley did a little gibing at our attitude to nationalisation and he regretted that this political view was coming back again. He seemed to think that we all accepted that nationalisation had failed and that private enterprise had succeeded. I have made this point on a number of occasions in steel debates, as the Minister of Power and others will remember. I dislike repeating points, but it seems to me that it is a very important point that we and the country appreciate that the issue is not whether the steel industry should be run on a nationalised basis Or on a private enterprise basis. Steel is not run on a private enterprise basis. There is no intention in the steel industry, and I can detect no intention in the Government, of returning the steel industry to a position where it is on a private enterprise basis, when we mean by private enterprise the characteristics which private enterprise claims for itself.
Competition is supposed to be cardinal to private enterprise. It has the great virtue of private enterprise that separate units privately owned and controlled are able to compete with one another, and the best man wins. That is not the case in the steel industry. Prices are controlled by the Iron and Steel Board. I know that the prices will be subject to wrangling and pressures be- 660 hind the scenes, but those prices are controlled and the steel industry is not competing on prices in this country.
Moreover, as hon. Members know, the steel industry does not compete in the purchase of its raw material. The steel industry is buying its raw materials centrally. It largely owns the ships which bring the ore to this country, so it is buying its raw materials in a collective way and selling them at controlled prices. Means are still often utilised for finding out the disparities that may exist between the prices for different types of ore bought from different sources, so that no one of the steel companies suffers a disadvantage by having to pay more than another.
A similar position occurs with scrap. The hon. Member should know that the Government wished to introduce compeition in scrap prices. When the Government controlled the prices of scrap in this country for export they insisted that there should be a free market, but no sooner had the Government insisted on the statutory control of scrap prices being removed than the industry itself imposed its control on the prices of scrap. In iron-ore and scrap prices there is no competition. Nor, in many ways, can we say that there is competition in terms of development, because the plans of the various steel companies, which in some cases come from the companies and in other cases from outside the companies, that is to say, induced by the Iron and Steel Board, as witness the strip steel mill in Scotland, are submitted to the Federation, which is very careful to see that there is no investment development which would bring back the competition from which the industry suffered in the inter-war years.
The industry learned its lesson. It was on its hands and knees in the prewar years, and it was the Government which rescued the industry from competition. The industry is very concerned to see that this shall not return, and its plans for development are co-ordinated.
The hon. Member for Weston-Super-Mare seemed to believe that the industry functioned by competition. He ought to know more than that. It is, of course, often the case that we never learn those things which we do not want 661 to learn. To talk of the steel industry as an industry based on competition or private enterprise gives a meaning to the term "private enterprise" which I fail to understand.
I wish to put a point to the Minister of Power, for whose integrity and honesty I have great respect. This is not a political point. The prices of steel in this country are controlled. A few years ago there was a considerable gap between British steel prices and the prices of steel in most other Continental countries. As the right hon. Gentleman knows, this gap in prices was constantly used for, I will not say bragging, but as a means of claiming credit for the steel industry. But very little is said about it now. Until a year or two ago, the Iron and Steel Board in its Annual Report published a chart showing how great was the difference between British steel prices, on the one hand, and Continental and American steel prices on the other hand.
I am here dealing not with American but with Continental prices. The Board no longer publishes this chart. It is true that it publishes tables of figures which it is almost impossible for the layman to understand, which he cannot use to make genuine comparisons. It may be argued, of course, that the products of the steel industry are so diverse and of so many different types of steel that it is impossible to make an accurate estimate in order to compare our prices with Continental prices, but the point is that this comparison was made until two or three years ago and that if it has been abandoned it is for the very good reason that the comparison is no longer in our favour.
In the last debate I said that we were still claiming that our steel prices were a little below Continental prices although on the Continent they claimed that their prices for comparable steels were lower than ours. It was sufficient for my purpose then to draw attention to the fact that whereas formerly there was a huge gap between our prices and Continental prices, that gap had disappeared. I am not in a position to say whether our prices are slightly above or slightly below Continental prices, but it seeems clear that there is very little in it. I suggest that this is a very important point because British steel prices are controlled—a control which has the effect of a Statutory Instrument.
662 The steel industry in Britain is making huge profits. Hon. Members opposite and even my hon. Friends take pride in these huge profits. Why is it making huge profits? I suggest that it is because the steel industry is being enabled to charge prices substantially higher than is necessary—and these are controlled prices set by a Government agency. The steel industry cannot function other than under Government guidance, protection and control, but this control is operating in such a way that the gap between our prices and Continental prices has been closed and that huge profits are being made by the industry.
This is a serious, and not a party, point which the Government, who are responsible for the Iron and Steel Board, should consider, because if these prices are higher than they need be, then the rest of our industry is carrying a heavier burden than it ought to be carrying at present.
§ Mr. Jack Jones
My hon. Friend knows that prices are fixed in a way which allows the least efficient and the most decadent in the steel industry to make a profit. This enables the most modern and highly efficient to make large profits.
§ Mr. Lawson
I thank my hon. Friend for his intervention. I did not want to go into the calculations which are used in setting these prices. They are set through a Government agency, and I do not suggest that there is any wangling or dishonesty, but over the years they have been set in such a way as to abolish the gap between our prices and Continental prices and to result in huge profits being made. If those profits are larger than they ought to be, it means that the prices charged are higher than they ought to be, that the steel-consuming industry is carrying a heavier burden than it ought to carry and that its task of exporting is made very difficult.
Let me give some substance to what has been a general argument. Colvilles, which consists of a group of firms, is largely in my constituency. The great steel strip mill development at Ravenscraig is in Motherwell. When we consider finance, we are apt to talk in terms of high finance. Most people, who have no knowledge of high finance, cannot understand it. I am not a financier, but I wish to put an argument 663 which will appeal to the hon. Member for Weston-super-Mare, who is a stockbroker and the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). Perhaps the hon. Member for Walsall, South will object to what I say, but I will put it as simply as I can to him.
Colvilles was denationalised in January, 1955, and the 10 million ordinary £1 shares were sold for 26s. each. In other words, the ordinary capital of Colvilles brought to I.S.H.R.A. and eventually to the Treasury about £13 million at the beginning of 1955. The Treasury was not too hard on Colvilles on denationalisation and left in the firm the equivalent of £2 million. In other words, the value which was placed on Colvilles in 1955 by I.S.H.R.A. and the experts who judged these things was £13 million, plus £2 million still left in the firm in the form of capital. In other words, a valuation of £15 million was placed on Colvilles.
Since then Colvilles has raised in the market £6 million towards the second stage of the big Ravenscraig scheme. This makes £15 million Government valuation plus £6 million raised in the form of stock which gave a right to the stockholder to turn it into ordinary shares as he thought fit. From 1955 to the last annual statement, Colvilles had paid out in dividends £9,471,000. But that is only a small part of the story. It is true that this is subject to tax, but so are anybody's wages. We know what putting to reserve means; it means largely reinvestment in the industry and building up the capital equipment. I am blaming no one for putting money to reserve or saying that it is a bad thing. We must recognise, however, that this building up of the capacity of the industry over these years is reckoned by the firm at £27,333,000.
In other words, speaking roughly, there were £9½ million in dividends and over £27 million put to reserves—and that belongs to the ordinary shareholders. The shareholders are the people who bought £13 million worth of shares. If my calculation is correct, the total of dividends paid out and money put to reserve between 1955 and 1960 is £36,804,000, which we may call, for our purposes, £37 million. That is for an enterprise which cost the ordinary 664 shareholders £13 million, with an addition of £2 million left in the kitty, and at best £6 million raised subsequently, and that was raised for the second stage of the Ravenscraig scheme which is not yet earning anything at all.
Thus, people put this small sum of money into the firm to get this huge sum of money. This is the kind of thing which the ordinary man understands. I have not looked at today's quotations, but the ordinary shares of Colvilles which were sold in 1955 for 26s. each were quoted yesterday at 80s. 6d., which is a substantial rise, apart from all the dividends which have accrued over that period.
I suggest that this cannot but imply either that the people who valued Colvilles were hopelessly out in their valuation, and that in that sense the nation has been defrauded, or that Colvilles was reasonably well valued at the time but that the policy of enabling these high prices to be charged and huge profits to be made has led to the industry of the nation carrying an unnecessarily heavy burden and is detrimental to the nation. I do not blame the experts the I.S.H.R.A. for the valuation. That is the Minister's responsibility.
Hon. Members opposite speak in terms of profits as though they were a measure of success. They are not. One might as well suggest on that basis that making a huge profit by running a group of prostitutes is being successful, but it would not be taken as a measure of success of worth to the nation. We must look beyond that measure. The serious point is that either I.S.H.R.A. valued incorrectly or else the prices which have enabled these huge profits to be made have been much too high.
There is also the prior charges stock which has now been sold. The Economic Secretary suggested that this stock arose out of the process of revaluation under denationalisation. When Colvilles was denationalised and revalued prior to that, £2 million was left in the kitty, and there was also £14 million in terms of such stock. The Government paid cash amounting to £12 million. Thus the development which I have described was largely paid for out of public money. It seems that the Government will perhaps get back about three-quarters of their money.
665 The steel industry has been denationalised not in order to give it back to free enterprise—the Government dare not do that—but to make it more profitable, not in the sense of success for the nation but in the sense of lining the pockets of private persons. Partly because of the doctrines of the party opposite, partly because of the desire, as the financial editor of the Spectator said, to rub Socialist noses in the denationalisation process, and partly, perhaps, because of the Government's wish to reward faithful and generous supporters, the nation is suffering in a way in which it need not suffer. The Government have been and are engaged in a reprehensible process which, I hope, will be adequately understood by the people.
§ 7.23 p.m.
§ Mr. John H. Osborn (Sheffield, Hallam)
I should declare my interest in the steel industry. Like the hon. Member for Rotherham (Mr. Jack Jones), I have been connected with it for a number of years, though not for the fifty years for which he has served in it. My association is with a steel company which was founded by my great grandfather. It was the interest of Members opposite in my industry, and their potential interest in small steel works in Sheffield, including my own company, which whetted my appetite for politics and, therefore, gave me the opportunity to speak in this debate; and may I say that I am in complete disagreement with the views of hon. Members opposite about nationalisation.
I want to dwell on some of the political aspects of the debate so far. I think I speak for the steel industry as a whole—certainly for many managements—in saying that we regret that the industry is still the subject of political controversy. As a member of the industry, I regret having to speak about it in the House in a political sense, and in saying that I think that I speak for the majority of honest, hard working craftsmen, such as the hon. Member for Rotherham, who wish, regardless of politics, that their livelihood was out of the storm of being dealt with from time to time in the House of Commons.
There is some embarrassment among hon. Members opposite about whether Clause 4 of the Labour Party's constitu- 666 tion should apply or not. I am certain that they would renationalise the industry, and that that would affect some 40,000 people in a city such as my own. We should realise that the threat is there until such time as Members opposite listen to some of their colleagues on the Continent, who do not regard nationalisation as a normal part of Socialism.
I congratulate Richard Thomas and Baldwins on having done a very good job, but we congratulate it as a nationalised firm working in competition with private industry at the present time. I have seen some records of the capital employed by this company compared with two other companies. The capital employed in the case of Richard Thomas and Baldwins gives a gross profit, after deduction of tax, of 12.8 per cent., as against 12.2 per cent. for the Steel Company of Wales and 14.5 per cent. for Summers. We can deduce from that that it is competing effectively with other steel companies in this country.
Last June, I listened to the debate which we had on the steel industry, particularly the sheet industry, and heard the hon. Member for Newton (Mr. Lee) refer to the shortage of capacity. Since then there has been short-time working, which many of us regret, due to other circumstances. Responsibility for the rate of expansion of the steel industry, or of one company, must rest with someone. That is the whole crux of the difference between us and Members opposite.
I believe that the final decision should rest with the boards of directors and managements, because no board of directors likes to see vast capacity unused. I have personally been in the position of facing the dangers of having unused capacity. That leads to losses, and I can assure Members opposite that a manager who has to face losses fully values the worth of operating profitably.
I therefore insist in my view that, as a necessity for good management, the decision must be left to individual boards which have complete authority for governing their companies. If the shareholders are dissatisfied then, at the annual meeting and otherwise, they have means of expressing their dissatisfaction. In the steel industry each individual firm operates in conjunction with the 667 Iron and Steel Federation and the Iron and Steel Board.
Recently, Mr. C. R. Wheeler, president of the Iron and Steel Federation, made some appropriate remarks. He said:The arrangements for forward planning in the steel industry are often misunderstood. It is therefore worth repeating that the primary responsibility rests squarely on the individual companies, reacting as they see fit to their assessments of market trends and taking full financial responsibility for the success or failure of their judgments. It is the companies who are the prime movers in the development field.That position, however, does not preclude other influences from coming to bear, of which two deserve special attention. Firstly. companies' plans are influenced by their joint review of the longer-term position, made through the Federation.Then Mr. Wheeler referred to the influence of the Iron and Steel Board. That is the position in the industry, and it is very satisfactory. On the one hand, it meets a national need, the deployment of resources, and, on the other hand, it achieves an element of competition.
The hon. Member for Motherwell (Mr. Lawson) spoke of competition. Competition is not confined to price. It depends on selling, quality and inspection as well as price, and particularly on services and delivery. There are many factors in competition, but I will deal with prices later.
Many people in Sheffield and elsewhere have been sympathetic with the attitude taken by my hon. Friend the Member for Kidderminster (Mr. Nabarro), and I regret that he is not with us on this occasion, because he has often pressed for the denationalisation of the steel industry. I want to refer to the final sale of £85 million of debenture and fixed-interest stock. My hon. Friend the Member for Weston-super-Mare is a stockbroker and I have discussed this issue with stockbrokers who told me that the stock would probably be held by the underwriters and given to discount. There is a potential danger in that. I am not a stockbroker and I have nothing to do with deciding the price or the interest at which an issue shall be made, but it was feared in the case of the Steel Company of Wales the underwriters would hold the shares. That is a factor which should be appreciated.
Last June, the hon. Member for Newton asked:Do the Government intend to follow the present pattern of selling equities while 668 I.S.H.R.A. holds large amounts of fixed-interest loans?"—[OFFICIAL REPORT, 27th June, 1960; Vol. 625, c. 969.]That, in practice, is what is now happening. The total amount of money involved in the devesting operation has been £400 million, including a subscription of £150 million by I.S.H.R.A., of which only £72 million has yet to be devested, £29 million in equities, of which the Richard Thomas and Baldwins holding amounts to £21 million, and £42 million in debenture stock.
What has been the pattern of this devesting within I.S.H.R.A.? In 1951, public holdings were 96 per cent. and private holdings 4 per cent. The holdings are now 10 per cent. in the public and 90 per cent. in the private sector. As an observer, I suggest that the Agency is getting on with its task reasonably rapidly. Some of the sales have been private and some public. The latest firm to be taken over in my area is J. B. Habershon's, which was taken over by Firth Cleveland. The Park Gate Iron and Steel works, in Rotherham, was taken over by the Tube Investment group in 1956. In these sales, net revenue after tax and costs has been £24½ million over the period, and there has been an appreciation on disposal of the assets of £12 million. Those figures appear in the Report of I.S.H.R.A.
My hon. Friend the Member for Weston-super-Mare outlined the capacity and growth of the steel industry. That is something of which we should be proud. Demand for 1965 is estimated at 30 million tons and capacity is likely to be 34 million tons and it is aimed to export 5 million tons. My contacts with the steel industry of Europe have shown that, technically, and in many other ways, through the Iron and Steel Federation and the British Iron and Steel Research Association, our steel industry is keeping in close touch with European firms, and vice versa, on technical matters.
When considering the problem of raw materials we should not neglect the fact that we are now extracting our own ores to a much greater extent. However much the increase in demand, a substantial contribution can be made from our own natural resources and last year production increased by 2 million tons to 17 million tons.
669 One of the problems of the steel industry is that it relies on other industries, especially nationalised industries, for its fuel. In the Guardian, on 15th February, there was an article by Mr. Tugendhat dealing with prices of fuels to the steel industry. This country is at a severe disadvantage compared with its European competitors. One of the suggested figures is a 20 per cent. disadvantage. The steel industry is seriously concerned with increases in coal prices which result in increases in electricity and gas costs and, for that matter, transport costs.
§ Mr. H. Wilson
The hon. Member will be aware that the last increase in coal prices—I am sure that the Minister of Power will confirm this—was more than explained by the increased cost of stocking on the ground which, however much we may disagree about the policy, has resulted from the Government's fuel policy and the high rate of interest which the Coal Board has had to pay to maintain that stocking.
§ Mr. Osborn
No doubt the Minister will deal with the question of high interest rates, which is vital, but which does not arise in this context. The steel industry has to increase its prices by between 25s. and 35s. a ton for every £1 a ton increase in the price of coal. There are compensating factors to be set against the increased cost of fuel. The industry is improving its efficiency and the figure of 16.8 cwt. of coal in the blast furnace has been reduced to 16.5 cwt.
On a recent visit to Europe, I made exhaustive inquiries about how our prices related to those of other countries. The statement in the annual Report of the Iron and Steel Federation says that British home trade prices for iron and steel generally remain below American prices and fully competitive with Continental prices. We are given various examples. For instance, billet prices in the United Kingdom are about £32 a ton compared with nearly £39 in the United States of America and £37 in Germany.
For my own interest I have also studied how prices are arranged in Europe. They are not fixed prices. Prices are recorded in Luxembourg and there is a variable feature in Europe, a practice of which our industry is 670 aware. Our prices depend on profit margins. If the steel industry does not get satisfactory profit margins, it does not have the surplus to reinvest its own capital investment. As our need to export increases we must bear in mind the need to be competitive with Europe.
§ Mr. Jack Jones
We have listened with great care to the argument that prices prove the efficiency of the industry. Is not the hon. Member telling the House that, despite the stories of what would happen under nationalisation, after a period of nationalisation the prices, and therefore the efficiency, were as good as, or better than, ever?
§ Mr. Osborn
Yes, at present the steel industry is highly competitive compared with European prices, but if prices had to go up the picture might be different, and I have given reasons why they might go down.
§ Mr. Lawson
The hon. Member is making my point. A short time ago our prices were very much better than Continental prices. The best that the Iron and Steel Board can say now is that our prices are competitive with them.
§ Mr. Osborn
There are other factors which may come into the question. I could go on to deal with capital investment, which has already been referred to. My hon. Friend the Member for Sheffield, Heeley (Sir P. Roberts) mentioned that we had spent £140 million this year and would spend £200 million next year in the industry, of which a considerable amount would be devoted to the new processes mentioned by my hon. Friend the Member for Weston-super-Mare—the Waldo process and the Ajax process, for example.
We have a prosperous industry, of which we are proud. We have carried out research, and have continued to expand. New processes are being developed, including methods of forming and pressing, and there are new techniques of extrusion. From what I have seen of the industry in this country and abroad, I can say that we have nothing to be ashamed of, despite what we hear about developments in Europe.
I have merely mentioned bulk steel. Sheffield is renowned for its special steels, including stainless steels. My right hon. Friend the Minister of State visited 671 the stainless steel exhibition in London only last week. The export potential of these steels is tremendous, and at the moment Sheffield has full order books. I re-emphasise that the industry is a strong one. It would like to be freed from politics and from the fear of being renationalised if there were a political change. I therefore urge my right hon. Friend to complete denationalisation as quickly as possible. That would give great pleasure to my hon. Friend the Member for Kidderminster and also to those in the industry.
§ 7.43 p.m.
§ Mr. Michael Foot (Ebbw Vale)
The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) began and closed his speech with an appeal that the industry should not be affected by politics. I know that it is a familiar claim by people speaking from platforms—on both sides of the House, but chiefly on the other side—that political discussion has somehow interfered with the expansion of the industry. That is not so. The industry has expanded more quickly when there has been controversy about steel than at any other time.
I do not think that any spokesman for the steel industry—and there are a few sitting opposite—would be very proud of what happened in the industry before the war. It was certainly not serving the nation very well in the 1920s and 1930s. Starting just before the war, however, especially in Ebbw Vale—thanks to the work, not of the industry generally, but of Sir William Firth in particular—and continuing after the war, the industry expanded much more swiftly. This expansion continued while the industry was in private hands under the Labour Government. The threat of nationalisation then did it a lot of good.
Expansion continued in the period when the party opposite was devesting some sections of the industry, when the fact that it might be renationalised did it a lot of good, and it went ahead with a big expansion programme. Nobody should be deceived by the familiar argument, which may sound credible on the face of it, that political controversy about the industry injures it.
§ Mr. J. H. Osborn
The steel industry is expanding throughout the world 672 Production has gone up by 350 million tons. It is going up in Europe.
§ Mr. Foot
I am not saying that political controversy is the sole cause of the expansion of the industry, but I am denying the argument put by the hon. Member that it gravely interferes with the industry. All the facts seem to prove that it does the opposite.
It is also significant that among all the Members opposite who have spoken, many of whom have re-emphasised their opposition to steel nationalisation, not one has dared to criticise the record of the steel industry as a whole when it was in public ownership, and the record of Richard Thomas and Baldwins in particular. As for the references made by the hon. Member to the price of coal and the imposition it has been to the steel industry, I do not think that the steel industry would be wise to have an inquiry covering the past ten years, making known the prices it has had to pay for coal compared with the prices paid by its Continental competitors. I do not think that the industry would find such an investigation very gratifying to them, or a matter for pride on their part. Indeed, if they carried out such an inquiry it would be discovered that the coal industry—comparing prices here with those in Europe—has been subsidising the steel industry. The hon. Member should not press that part of his argument too far.
All those hon. Members opposite who have spoken so far—especially the Economic Secretary—and the Minister of Power who will reply, should take notice of the remarkable speech made by the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). He spoke as a financial expert, and he had nothing good to say about the main transaction, which involved a loss of £20 million. It was £20 million down the drain, and not a word in defence of it came from the hon. Member. He said that it was an unnecessary and irrelevant operation. I should think that £20 million would be a lot to lose in carrying through an irrelevant and unnecessary operation.
The hon. Member also said that a more satisfactory price could have been secured. At the beginning of the debate the Economic Secretary said that the price was fair and reasonable, but that is not what his financial adviser and expert said. 673 The hon. Member said that a more satisfactory price could have been secured. Indeed, the Stock Exchange prices quoted by the hon. Member prove that the estimate of the price asked was not that which the City made up its mind would be a reasonable one to pay.
§ Sir H. d'Avigdor-Goldsmid
My point was that if the operation had been carried out more quickly the price realised would have been more satisfactory.
§ Mr. Foot
That is quite true. The hon. Member said that the operation was clumsy and badly carried out, but he also said that it was unnecessary and irrelevant. If that operation cost us £20 million, it is quite an indictment of Government policy to say that it need not have been undertaken. The hon. Member, who obviously speaks as an expert in these matters, has accused the Government of political masochism. I should have thought it was more like fiscal sadism. It is not the Government who are having to pay; it is everybody else. We are all having to pay £20 million for an operation which, according to the chief financial expert on the Tory benches, was not necessary at all. Neither the Economic Secretary nor the Minister is likely to go back over the argument whether there was a £20 million loss. It was admitted. The Economic Secretary said that there had been a profit on a previous amalgamation, and that if we took the two operations together we could say that there had been no loss. But if we had stopped after carrying out the first operation, and had not carried through the one which the hon. Member for Walsall described as unnecessary, we would not have lost £20 million.
Therefore, it is £20 million down the drain; £20 million which would have been in the keeping of the Government and in the possession of the taxpayers if this operation had not been put through. I think that it would have been much better if the Economic Secretary had not, at the beginning of his speech, sought to hide behind the Agency at all, but had come out straightforwardly and said, as he admitted at the end of his speech, that this was in fact an operation which the Government were putting through because it was an important contribution to their policy of denationalisation. I think that a perfectly true claim. That is the only thing which can be said for 674 it, that it is a contribution to the policy of denationalisation, although the hon. Member for Walsall, South disputes even that.
It is a very expensive piece of doctrinaire activity to put through an action which serves no benefit whatever, but which is solely an important contribution to the policy of nationalisation. It does not achieve anything for the country; it just loses £20 million. In view of what were the subscriptions to the Conservative Party funds in one way or another during the election, if the Government lose £20 million of the taxpayers' money at the behest and because of pressure from some of the Minister's hon. Friends, I do not think that it is going too far to call it corrupt. I think that it is corrupt that the Government should have such scanty regard for the protection of public money that they should dish it out in this way, very largely to firms which contributed a great deal to getting this Government back to the Treasury Bench. I think that it is a corrupt practice. I do not think there has been any attempt by the Government—
§ Sir P. Roberts
The people who got anything out of this are not the steel companies but the investors in the City of London.
§ Mr. Foot
I do not think that those companies have done so badly out of it. I am sure that Stewarts and Lloyds have made something out of it. I do not think the hon. Member will find that the steel companies have not made anything out of it. I think that a bizarre view for the hon. Gentleman to express and it does not stand up—
§ Sir H. d'Avigdor-Goldsmid
The hon. Gentleman is being perverse. He must realise that a company is not allowed to purchase its own shares.
§ Mr. Foot
If the hon. Member looks at what happened over Staveleys, for instance, he will find that what I have said is not an exaggeration. The hon. Gentleman referred to these matters in rather a blithe fashion. He talked about Richard Thomas and Baldwins being "in the kitty" still. I do not think that an elegant phrase to use about a great steel 675 company which the Government are proposing to sell off, if they can, in the same style as they have sold off some other firms, and I think that the hon. Gentleman should use more elegant language about the matter.
The Minister said that they were going ahead with the project of selling off Richard Thomas and Baldwins when the scheme going through at Llanwern now is nearer maturity. At that time they will put through the operation of selling off Richard Thomas and Baldwins. Well, no one has attempted, either in this debate or at any other time, to deny the success of Richard Thomas and Baldwins. By any test which may be taken, everyone is agreed that it has been a great success.
I should like to quote a statement made in the Financial Times of 13th January this year. It has another interesting aspect to which I will draw attention in a moment. When the accounts of Richard Thomas and Baldwins were published, the Financial Times said:With denationalisation nowhere in sight the results from Richard Thomas and Baldwins can be for the time being of only academic interest.That, by the way, is a very interesting comment on the City's view of the practices of one of the greatest if not the greatest steel firm in the country. It is only of academic interest to the City and to the Financial Times if there is no loot to be got out of it. This is how the statement goes on:They are however extremely good,"—that is, the figures of Richard Thomas and Baldwins—and only Stewarts and Lloyds among the major steel companies has exceeded the 45 per cent. increase recorded in trading profits. By the end of the previous year most of the more difficult additions and modernisations at Ebbw Vale had been carried out, so that R.T.B. has obviously been able to enjoy a full year of peak demand for its major products, sheet, plate and tinplate, unhindered by the kind of development troubles that made the John Summers results relatively so disappointing.That is a tribute from a quarter which obviously does not like public ownership, and no one has disputed the fact that this is a highly successful firm on any test one cares to make.
Moreover, much more than that can be said. Everyone knows that the whole 676 of the major development going ahead at Llanwern had to be undertaken by Richard Thomas and Baldwins when many other influences in the industry were trying to prevent it from going ahead at all. Many of the same kind of influences which prevented the expansion of the steel industry in this country before the war were brought to bear after the war to prevent Richard Thomas and Baldwins going ahead with this great expansion scheme. It showed a great spirit of adventure to do so, a greater spirit of adventure and expansion than was being shown in any other section of the industry. Now everyone agrees that this was necessary and will prove a tremendous asset to the nation. I should have thought that hon. Members opposite, who are passionate believers in private enterprise, would at least agree that if we are to take a great firm like this, which has been so successful on every count, and denationalise it, we should explain to the public why that is being done.
During the by-election which I fought in Ebbw Vale I asked the Minister of Power to come to Ebbw Vale and explain to the people there why he wanted the industry denationalised. I do not know whether the right hon. Gentleman got the message, but we sent it. We asked for any member of the Government to explain to the people of Ebbw Vale why this was to be carried through. Of course, they did not do so. Time and again the question has been asked in this House: it was put by my hon. Friends in the debate which took place in the middle of last year. They asked for an explanation why the process of denationalisation was to be applied to this great firm.
On every occasion we get the same parrot-like answer from the Economic Secretary or the Chancellor of the Exchequer, and I dare say that we shall get the same reply from the Minister of Power tonight. They say that the country voted for it and, therefore, as the people voted for denationalisation, the Government will sweep the board. In fact, of course, not only is it the case that in most steel constituencies, and certainly those in Wales, people voted against denationalisation—I suppose hon. Members opposite do not care about the views of the workers in the industry; apparently 677 that is not a matter of consequence to them—but the whole case put to the public about steel at the last General Election was based on fraudulent figures.
Yesterday I went to the Library and read the campaign guide of the Conservative Party. The Conservative Party lumped together all the figures of steel production from 1951–52 onwards and compared them with, say, 1958 and 1959. They did not trouble to distinguish between the sections of the industry which were privately-owned and those which were publicly-owned.
Consider the advertisements which the party opposite were so happy to have placed in the newspapers by the steel companies and by the Steel Federation. Time and again those advertisements contained figures of steel exports, and figures for steel expansion, and what had happened in different sections of the industry. But they never distinguished between the publicly-owned and the privately-owned sections. All these advertisements were fraudulent. They were telling the people a lie, saying that this was the great achievement of private enterprise, when included in the figures were not only Richard Thomas and Baldwins but some other parts of the industry which were still publicly owned. So that claim, too, is not valid.
Surely, we have a right to have a much fuller explanation from the Minister why the Government are to compel this great firm to divest itself of State ownership and become denationalised. Surely, if, as they say, the case is so strong that they converted the nation, why cannot they come down to Ebbw Vale to tell us what it is? If it is so powerful that the nation was swept off its feet by its logic and certainty, cannot they come and tell us? Will the Minister explain tonight why this great industry is to be handed back to private hands?
§ Mr. Foot
Yes, let them come to Aberavon and tell them. I think that the Minister should go to Ebbw Vale and some other places and hold a public meeting. Let the people who work in the industry hear what is this powerful case for restoring this industry to private hands. No—the truth of the matter is 678 that the Government are in a very considerable dilemma on the future of Richard Thomas and Baldwins, because if the industry stays nationalised and continues to be so successful as to show up many other steel firms, in fact, it will be a standing proof of the success of nationalisation. That is one side of the dilemma.
§ Mr. Foot
Yes, that is what they want to stop.
On the other hand, they are in difficulty if they try to put Richard Thomas and Baldwins on the market, because it will create such a big stink that even this Government are put off by it, because they will not be able to get the money with which to have the firm bought, unless they almost give it away.
Therefore, I hope that the Government will reconsider the whole question of the denationalisation of Richard Thomas and Baldwins. It is an insult to the workers of the industry that they should push this through without giving any coherent explanation why they want to do it. It is an insult to the management, which has been so successful, that it does not get any coherent account of what the Government want to do, and why they want to do it. The fundamental reason why the Government want to do it is that they know, as I hope we on this side know, that steel is one of the central issues in our politics, and is bound to remain so for years to come.
I remember very well many of the debates we had in this House when the Labour Government were first nationalising the steel industry. They were fuller debates than the one we are having today, though, today, no doubt, hon. Gentlemen opposite think that they and their friends in the steel industry have done well enough. They have certainly got a great deal of loot out of it. They say it is better to let things sleep now, and they go round pretending that this is always in the interests of the nation; they do not want the great matter of the steel industry debated in this country.
This debate is certain to go on, because I hope that one of the very first measures to be introduced by a new 679 Labour Government, when we get one, will be to ensure that this great industry, on which the whole planning of the nation's affairs depends, is brought back into public hands and put into public ownership, so that all the benefits and the profits should go into the public coffers, instead of into the private pockets of the friends of hon. and right hon. Gentlemen opposite.
§ 8.4 p.m.
§ Mr. John Farr (Harborough)
I am very glad to see that the hon. Member for Rotherham (Mr. Jack Jones) has returned to the Chamber, because I was present when he made his very interesting speech. I listened very carefully to what he had to say, but it seemed to me the whole time he was speaking that I could not help being reminded of the old Socialist marching doggerel:Share up, and when my share is spent, Share up again.He referred to the period long before I arrived in this House—about ten or fifteen years ago—when my right hon. Friend the Member for Woodford (Sir W. Churchill) was speaking, and the hon. Gentleman got up—
§ Mr. Jack Jones
The hon. Gentleman has charged me with using words that I did not use at all. I never said "Share up." What I suggested was that the God-given ore should be used for the benefit of the people to whom He gave it.
§ Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)
Order. I hope the hon. Member will remember that he is addressing the Chair.
§ Mr. Farr
I am sorry, Mr. Deputy-Speaker. I was saying that the hon. Member for Rotherham did say that some years ago he remembered speaking in a debate on iron and steel when my right hon. Friend the Member for Woodford took part. I should like to say to him, as a fairly new Member, who came into the House only at the last election, that things have changed a bit since then in this country. There is 680 quite a fresh idea going about, and it is that the sooner nationalisation of steel is finished for good and all, the better.
My real purpose in rising tonight is to make three particular points. The first is that the sooner the remaining holdings held by I.S.H.R.A. are disposed of, the better. Secondly, the sooner the remainder of the iron and steel industry which is still in the hands of the State is returned to its rightful owners—the private and public investors—the better. Finally, the sooner that I.S.H.R.A. is wound up, the better, too.
My reasons for these three statements are, very briefly, a summary of the attitude which has been impressed upon me in my own constituency and in other parts of the country. After all, we on this side of the House made one of our main planks in our platform at each General Election on the past four occasions that we would denationalise steel. We said it in 1950, in 1951, in 1955 and in 1959, and on each occasion the nation gave a larger and larger proportion of its support, by many thousands of votes each time, to the Conservatives.
§ Mr. Farr
I did so myself in 1955 and 1959, and now, when I return to my constituency, I am asked by many people, "What are the Government doing about it? Why have they not denationalised the steel industry and wound up I.S.H.R.A. years ago?" I must pass on those same questions to my hon. Friend the Economic Secretary to the Treasury, and ask him why it has not been wound up long ago.
The party opposite, from 1945 to 1951, went a very long way to fulfilling Clause 4 of its constitution which commits it to public ownership—let us call it properly and say State control—of the means of production, distribution and exchange, and, in doing so, apart from setting an example which was followed by many countries abroad, also created in this country some of the biggest monopolistic and unprofitable enterprises that this world has ever known. It nationalised no fewer than seven of our basic industries in six years, plus the Bank of England and the Raw Cotton Buying Exchange, in Manchester, and of all those seven industries, only one—the Raw Cotton Buying Exchange 681 —has been fully returned to private hands.
§ Mr. Morris
Does the hon. Member advocate that the remaining industries such as coal and the railways should be returned to private enterprise?
§ Mr. Thornton
Do I understand the hon. Member to suggest that the return to private enterprise of the Raw Cotton Buying Exchange has been a success? If he thinks so, I advise him to visit Lancashire and to seek the advice of the spinners.
§ Mr. Farr
I should be happy to accept that invitation at any time. Of the seven basic industries, the Bank and the Raw Cotton Buying Exchange which were nationalised, the Raw Cotton Buying Exchange is the only one which has been returned to private enterprise. The Bank of England is still nationalised and the seven basic industries, which the party opposite in the heyday of its power nationalised, are still publicly owned. No one has been freed from State control.
I want to know whether it is the intention of the Government to leave a sort of pilot scheme in each industry which is State-owned. For the life of me I cannot understand why, having promised that we would denationalise road transport, we never made a complete job of it, and have left 5,000 or 7,000 road haulage vehicles still running under the British Road Services flag.
§ Mr. Lawson
The agricultural industry has not been nationalised, but it is paid a subsidy of £260 million each year. Does the hon. Member think that is sound?
§ Mr. Morris
Would the hon. Member be willing to withdraw the whole subsidy and allow a free market for prices of agricultural products?
§ Mr. Farr
No, I would not. I do not think that that would be fair to agricultural workers or the industry generally, bearing in mind the highly subsidised low-priced foreign food which would come in as a result.
To continue with what I was saying, as I see it, it has been the intention of the Government to leave a sort of pilot scheme in these industries, not only in British Road Services. We have this uncertainty about whether we should complete the denationalisation of the iron and steel industry and there are one or two other examples. I shall not go into the details of them now, but there is a certain amount of hesitancy. The idea may be a good one, but I do not think it is a good one, to leave a certain part of each basic industry State-owned. I am thinking now of the Carlisle brewery scheme. Many of us on this side of the House would like to see that go, but that is a different kettle of fish.
I should like to see I.S.H.R.A. wound up as soon as possible. I should like the ordinary steel shares held by I.S.H.R.A. to be realised and sold off at fair prices to both private and public investors in Britain so that they may own a bit of Britain directly. On the public side, or the semi-public side, of course, I regard the Church Commissioners, the Benevolent Fund of the National Union of Mineworkers and the Co-operative Insurance Fund as three of the biggest shareholders in free steel. I ask my hon. Friend the Economic Secretary to remember what Milton said:Hence, with denial vain, and coy excuseand to proceed accordingly.
§ 8.14 p.m.
§ Mr. Frederick Lee (Newton)
The dismal record of this Government in many domestic fields covers such subjects as health, rents, land values and industrial production, in each of which there is a very sorry story to be told. I should have thought that any impartial observer of this scene, listening 683 to the arguments today, would agree that even in those subjects one cannot find any worse than the sorry story of the haggling we have had from this Government over the steel industry.
It has been said that no matter how often we debate questions of steel and why it should be denationalised we never receive any other reason than that hon. Members opposite won three elections with it in their programme. The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), in a quite remarkable speech, pointed out that the question of the sale of debentures which we are discussing had nothing whatever to do with denationalisation of the steel industry. It is remarkable that we should find that the only pretext which we have had from the Economic Secretary today is that they have won elections on denationalising steel and that that is immediately countered by an hon. Member on his own side pointing out that this has nothing whatever to do with the denationalising of the steel industry.
There are reasons which can be given why this action is being taken. The hon. Member for Walsall, South pointed out that in a steel debate in this House a year or so ago the Minister of Power had a rough time. He did not point out that the rough time came from hon. Members behind the Minister. A great number of hon. Members opposite, the hon. Member for Kidderminster (Mr. Nabarro) in particular, were quoting that in the year 1960, seven years after the Tories' denationalisation Measure, more public money was left in the denationalised steel industry than when the Tories began denationalising. That was utterly and completely true.
In our own humble way, we on this side of the House tried to put the same point. The hon. Member for Harborough (Mr. Farr) has reinforced the same argument. Tory Governments have been in power for nine years and have pledged, election after election, to denationalise steel, but the tendency has been in the other direction. There is more and more public money in the industry and, of course, it is a grotesque situation. Now we are being asked to accept the sale of these debentures, not because that 684 makes sense—the hon. Member for Walsall, South talked about it as a self-inflicted wound, as of course it is—but in order that the Tories may say that they are now getting rid of parts of the steel industry still in public hands.
Let us argue either way, for public ownership or private enterprise in the steel industry, but let us argue it in the sense of whether it is an advantage to the country that the industry should be in public or private ownership. We should not try to argue it merely in order that the Tories can say that there is not now as much public money in the industry as there was before they got rid of the debentures. Hon. Members opposite, in their usual impartial way, have suggested that when we nationalise an industry that introduces politics, but that when they denationalise an industry that takes it out of politics. That seems a beautiful approach to the problem. The Government are not defending the position or saying that the sale of the debentures would improve the position of the industry by one iota. The hon. Member for Sheffield, Heeley (Sir P. Roberts), who is interested in the steel industry, would not say that this sale, especially of the debentures, will make any difference to the efficiency of the industry or that the ownership of debentures by the State has the effect of holding back production. Such arguments would be perfectly futile.
It is part of the squalid operation which the Tories have been conducting in trying to secure the denationalisation of an industry which has been an outstanding success, as my hon. Friend the Member for Rotherham (Mr. Jack Jones) pointed out, both from the point of view of the men who work in it and from the angle of the more progressive managements operating in it. It is a completely anti-social act and a waste of the time of the House to engage in this kind of Stock Exchange gamble, which does not affect the fortunes of a great nationalised industry in the way of improving production or anything like that.
My hon. Friend the Member for Aberavon (Mr. Morris) pointed out that there is one vital difference between this operation and the sale of the Staveley Iron and Chemical Co. Ltd. and the Llanelly Steel Company (1907), Ltd., 685 namely, that by some fortunate coincidence the announcement has been made while the House of Commons is sitting. We are told that variety is the spice of life. In the case of Staveley and Llanelly—and in the case of S. G. Brown Ltd., which is not in the steel industry but is in the engineering industry—it almost looked as though the Government waited for the House to go into recess and then deliberately made the announcement.
My right hon. Friend the Member for Huyton (Mr. H. Wilson) gave us the facts and figures about the sale of Staveley and Llanelly and the financial effects of the sale of these debentures. I do not propose to repeat the figures. It is the same pattern all over again. Llanelly was sold at a public loss. Staveley was sold at an even greater public loss. The debentures are now to be sold to the public at a loss of £20 million.
The Tories claim that they put into their election programmes the fact that they would denationalise the steel industry. They are entitled to say that they got a majority in the country on that, except in 1951, when we got a majority of votes but not a majority of seats. However, the Tories did not say in their propaganda that they would denationalise the steel industry irrespective of the amount of money it cost the public and even if it meant colossal losses to the public purse.
I challenge any hon. Member opposite to say now that in his election manifesto or in his speeches in any of the elections which the Tories won he said that the Tories would go ahead with the denationalisation of steel even if it meant the loss of colossal sums to the public. I challenge any hon. Member opposite to deny now that the only way the Tories are managing to get rid of the steel industry is at a great loss to the public purse.
In the case of Staveley and Llanelly the loss was about £4 million to the public. My right hon. Friend asked if the Government had looked at the effect on monopoly that the sale of Staveley to Stewarts and Lloyds, Limited, would have. The transaction gives Stewarts and Lloyds, Limited, practically a monopoly in iron pipes, and so on. The Economic Secretary replied that the Iron and Steel Board decides the prices. This 686 is a new doctrine. Does it mean that if a monopoly is established in an industry in which there is a central price-fixing arrangement the Monopolies Commission cannot function? If so, this difficulty should be hammered out.
I do not say this because I am trying to denigrate the work of the Iron and Steel Board, but the great success of Richard Thomas and Baldwins in profits and every other aspect rather suggests that in some respects steel prices are too high. The profits being returned by the Steel Company of Wales, Limited, and others seem to indicate that prices in the steel industry could be reduced.
I have never understood why the party which always parades the Union Jack and bases itself on patriotism by the bucketful will agree that foreign enterprise can take over British industry but will not allow the British public to continue to own it. S. G. Brown, Limited, was a very successful small instrument-making firm, producing goods of the most terrific value. It did not matter to the Tories that the firm was a great success, that there was a strong team spirit in the firm and that its British workmen were competing successfully with all other instrument-making firms in the world. It was sold. The attitude of the Tories was, "Get rid of the principle of public ownership, even if 49 per cent. of this firm goes to American private enterprise". How the Tories can in one breath argue about patriotism and behave in that nonsensical fashion is more than we on this side of the House can understand.
It is admitted to everyone except the Economic Secretary that the sale of these debentures will mean a loss of £20 million to the public. One remarkable thing was that some weeks ago all the great newspapers contained four-page advertisements advertising the conditions of sale. I took the trouble to table a Question asking how much it cost. The answer was that it cost us £53,000 in advertisements, the biggest single part of which went to the Daily Telegraph, which, of course, has no connection with Toryism in this country. The sum of £53,000 was spent to advertise the sale of assets which will result in the loss of £20 million to the public. This is another case of this Government of businessmen doing their best for the British nation.
687 The Economic Secretary told us that we were putting the clock back and trying to create a nationalised industry again. We are quite prepared to stand on the record of the steel industry when it was in public hands. We have made it utterly clear that, because of the great success of the publicly-owned steel industry, when we are returned to power we shall renationalise it. As I said last June, the one great firm left in this sector, namely, Richard Thomas and Baldwins, had then contributed over £70 million profit to the public purse. My hon. Friend the Member for Ebbw Vale (Mr. M. Foot) pointed out this evening that in 1960 it increased that sum by another £11 million or £12 million, making a total of £82 million contributed to the public purse. We are proud to declare that when we go to the country again we shall be advocating the public ownership of the British steel industry. It is part of our programme, and we would certainly carry it out.
My right hon. Friend quoted Section 18 (1) of the 1953 Act, which gives. the Treasury the power to put off the point at which assets are sold until one can be sure that they can be sold at an adequate price. That is the purpose of the operation. The Economic Secretary today has quoted again the words of the Chancellor of the Exchequer who said that the operation of denationalising steel will be… substantially completed during this Parliament."—[OFFICIAL REPORT, 21st February, 1961; Vol. 635, c. 283.]As we have seen in the past, that means that it will be done even if it means selling at a price that is not adequate. In other words, what we are being told by the Chancellor is that whether we sell it in defiance of the conditions of the 1953 Act or not, we shall certainly sell it in the lifetime of this Parliament.
Will the Minister of Power tell me how the Government know that the conditions under which they can ensure an adequate return will be present in the lifetime of this present Parliament? How do they know? Did the Chancellor, when he made that unconditional statement, know the conditions of the Act under which he was supposed to be operating, or is it not the case that even in defiance of the legislation that the Tories themselves enacted, such is their bigotry and such their deter- 688 mination to hand back this prize plum to private enterprise that they will do it even in defiance of an Act of Parliament? As I have said before, I should like to see the case tested in the courts.
I believe that there is a complete contravention of Section 18 (1) of the 1953 Act. How can it be otherwise when the Financial Times and the wizards of finance in the City all agree that this transaction alone will cost the nation £20 million? We know that Staveley and Llanelly resulted in a £4 million loss. Unless English has ceased to mean what it used to mean, how can it be argued that in this way we are getting a price that is financially adequate? I believe that in doing what they are now doing the Government are acting in complete contravention of that Act of Parliament.
The hon. Gentleman repeated the argument that the Chancellor of the Exchequer has used at Question Time. He said that we are entitled to offset the profit that was made in the sale of equities against the losses incurred in the sale of debentures. That leads us to look at what happened to those equities after they had been sold back to private enterprise. When we take the gross proceeds from denationalisation and contrast them with the market value at 10th March of this year, we find that whereas some £130 million was paid at nationalisation, £394 million is now the market value of the same assets; in other words, the people who bought the equities were thereby able to clear a cool £300 million.
It really is not good enough for the hon. Gentleman to say that because we sold the equities at a profit we are now bound to sell the debentures—and we know that they are to be sold—at a loss. Who is making him sell the debentures, anyway? Why does he not keep them? I can find nothing in the 1953 Act that stops him keeping the debentures. Indeed, the provisions of the Act enable him to do so. Of course, as long as we have these Government policies which force the gilt-edged market as low as it is now, one can never see the time when assets of this kind will be saleable at an adequate return.
Replying to my right hon. Friend the Member for Battersea, North (Mr. Jay) the other day, the Chancellor of the Exchequer admitted that as a result of the way in which gilt-edged prices have 689 been pushed down, the National Insurance Fund itself has dropped some £338 million. We remember what the party opposite said about groundnuts, but the cost of that scheme was not one-tenth of what has been lost to the National Insurance Fund alone. It really is fantastic for the Government to tell us that, whether they like it or not, they are compelled to sell debentures.
Some reference has been made to the gentle persuasion of some steel firms prior to the General Election in conditioning the people's minds to the idea that the denationalisation of steel was good for the British people. I see that in the twelve months prior to the last General Election, the Colin Hurry Survey, which covered nationalisation in general but was paid for mainly by the steel companies, cost £475,000. The Iron and Steel Federation, in its advertising, laid out £287,000, and Stewarts and Lloyds spent £269,000.
When that kind of advertising is used to condition the minds of the people, not merely to deploy an argument that shows the sort of assets either way but merely to denigrate the whole conception of public ownership, when that kind of money—about £1 million—is spent on that kind of project and we then find that those who spent most then cash in on Staveley and other publicly-owned parts of the industry, we are entitled to describe it as chincanery of the very worst type. It is really going back to the days when Lord Holland could play ducks and drakes with the national finance. Those who can believe that we can keep cleanliness and decency in public life with that going on are, indeed, superb optimists.
It has been asked whether R.T.B. will be sold. The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) made a very pertinent and legitimate point. How will the Government, or I.S.H.R.A., assess the value of R.T.B. in, say, two years from now? The great project at Newport is going ahead—there is vast expansion. I would have thought it utterly impossible to be able to make a correct assessment of what that huge company is really worth.
How, again, do the Government know if they sell under those conditions that they are complying with the 1953 Act, which asks for a financially adequate return for the sale? I thought that the 690 hon. Member himself made a most valuable contribution when he said that nationalisation in R.T.B. is a great asset to the nation and ought to be allowed to maintain itself.
Of course, on the general argument, my hon. Friend the Member for Ogmore (Mr. Padley) was perfectly right. I should like to hear the Minister refute tonight the argument of my hon. Friend that by denationalising the Steel Company of Wales the Government have placed an extra £1 per ton on the price of steel. If any hon. Member opposite wishes to deny that, I will give way now. Does anyone deny that? [Laughter.] It is accepted. So we have the situation that the Tory Party assembled in power accepts that denationalisation puts an extra £1 per ton at least on every ton of steel produced.
§ Mr. Padley
In view of the chuckles from the other side of the House, I ought to say that my hon. Friend the Member for Aberavon (Mr. Morris) and I have fought a General Election on that proposition without a single challenge from Mr. Harald Peake or from the Conservative candidates in either Aberavon or Ogmore. So the arithmetic is correct.
§ Mr. Jack Jones
I make the further statement that in one of the most modern works in this country the interest charge placed on money borrowed is higher per ton of steel produced than it is in the most decadent works in Britain.
§ Mr. Lee
It is no use dismissing this as a frivolous point. A direct charge is made. I make the charge now that the only effect of denationalisation has been to increase the price of British steel. My hon. Friend the Member for Motherwell 691 (Mr. Lawson), not for the first time, pointed out today that the gap which was to our advantage in the price of steel we produced as compared with steel produced on the Continent is now narrowing fairly rapidly. The factor I have mentioned, of course, is one of the reasons for it. It is crass irresponsibility for any Government to go ahead with a programme of this type when they know perfectly well that the only effect is, first, to increase the price of steel and, second, to divert the profits of the steel industry away from the public purse into the private purse. Those are the objects of the exercise.
The hon. Member for Harborough (Mr. Farr), like others, said that the Tories have campaigned on the issue of the denationalisation of steel in four elections. He complained—I see his point—that this Government, after nine years in office, have done nothing to denationalise any other industry. He was wrong. They tried to denationalise road transport, but they had to pass another Bill to enable themselves not to denationalise it. Apart from that, this is the only industry which they have attempted to denationalise.
I put the straight question to the Minister. Are we now to take it that Toryism accepts the principle of nationalisation? I think that the hon. Member for Harborough said that seven great industries in Britain are still publicly owned after nine years of Tory Government. Are we to take it now that the Tories accept the principle of public ownership? We cannot stop them denationalising, although we have tried hard.
§ Sir P. Roberts
We really cannot debate these matters now, but, since I am asked, I should like to reply. There is no doubt in our minds that the supply of raw materials, of electricity, of gas, or of the cheap and abundant quantities of coal about which we heard so much 692 at the time of the nationalisation of the coal industry, are more expensive because of nationalisation than they would otherwise have been.
§ Mr. Lee
The hon. Gentleman cannot tell me of any large industry in Britain which has had fewer price advances than the British electricity industry. Is the nationalised aviation industry a scar on Britain? Is the gas industry a scar? It is all very well for people to make speeches in the country about the failures of nationalisation. If time permitted, I could argue that the outstanding success of the British coal industry has made it one of the greatest coal industries which the world now has. If other privately-owned industries had had the same production increases over the years as the nationalised coal industry has had, our export prospects now would be rosy instead of being almost tragic.
The country, of course, has voted that we should abolish certain types of nationalisation. We remember very well the brain-washing which went on in those election campaigns. [Laughter.] Yes, the employers can spend £1½ million on putting across a certain type of propaganda, but we cannot match that kind of thing.
§ Mr. Lee
My hon. Friend corrects me. Those parts of the industry which are still in public ownership are a great success, and this is one reason why they will not be allowed to remain publicly owned. I would argue, if I had time, and I think I could prove, that any industry now nationalised, had it not been nationalised when it was, would have been in such a state that the British economy today would be sagging hopelessly and unable to compete in the world.
I wonder why the accent is all the time on the denationalisation of steel. Why do not hon. Members opposite argue 693 for the denationalisation of other industries?
§ Mr. Lee
It is not because they do not accept the principle of nationalisation. They have to accept it. It is simply because they believe that the profits of an industry capable of producing huge profits should go to private people and not to the State. That is the only difference between us. As they are forced to admit after nine years of office that they dare not, or will not, denationalise other industries, it is rather contemptible to go around the country trying to frighten people about the so-called failures of public ownership which is sustaining them to a very great degree.
We have that growing sector of the economy which is neither private nor public—a sector which is ostensibly private but which is kept by State doles. What do the Government propose to do about that? Give it another £15 million loan and a £3 million gift for the new Cunarder? The cotton industry has been mentioned, in which there is £30 million or £40 million of public money. One hon. Member referred to agriculture, which we all accept has a need for subsidies but which no one can argue is a typical competitive private enterprise industry. We therefore go on increasing the range of this sector while the Tories speak about the glories of competitive private enterprise. We have almost reached the point in the big industries at which competitive private enterprise is merely one of those pleasant dreams which hon. Members have when they are allowed to go home late at night.
Another reason why we should not contemplate the denationalisation of Richard Thomas and Baldwins—I deployed this argument last June—is that once it goes out of public enterprise the Government will be quite incapable of working the provisions of the 1953 Act, in which it is stated that, if and when there is trouble between the private owners and the Board, the Government will take over the production of steel. When the Minister has got rid of Richard Thomas and Baldwins, when does he propose to carry out the threat of the 1953 Act for himself to produce steel? He cannot possibly do it. The Government's fears about the success of Richard 694 Thomas and Baldwins, that which is left of the public sector in the steel industry, is the only reason why they intend to carry out the action of denationalisation.
I have suggested that the atmosphere which has been brought into a great, in many ways the greatest, British industry, is one of sheer flippancy and sheer irresponsibility. I come from an industry which depends on the production of the steel industry. If we think in terms of the products and exports of the great British engineering industry—40 per cent. of all the exports which this country is sending abroad—almost all of it basing itself on a good supply of high quality steel from our own industry—
§ Mr. Lee
—it is not coincidence that most of the speeches from the benches opposite have been based on the financial aspect of the steel industry. Most of the arguments have been based on the well-being of the nation and on the need for the nation to be able to own and control an industry on which much of its economic prosperity depends. If instead of the brain-washing tactics which modern techniques permit of those who hold the money bags this debate could be the criterion on which the British people decided, steel would be re-nationalised in a very short time from now.
§ 8.49 p.m.
§ The Minister of Power (Mr. Richard Wood)
When there was a recent re-shuffle in the Shadow Cabinet, I was rather worried that I should never have the pleasure again to follow one of those enjoyable speeches of the hon. Member for Newton (Mr. Lee). I have, however, caught him up again. I should like to express my regret about the circumstances in which he is winding up for the Opposition. We all hope that the anxieties of the hon. Member for Southwark (Mr. Gunter) will soon be completely relieved.
§ Mr. Wood
The timing of our discussions on iron and steel seems to follow a regular and fairly well-defined pattern. It seems to us on this side that whenever the Labour Party needs a pick-me-up—perhaps I should say, a pick-it-up 695 —this great industry comes under review. I remember that last June we had a debate when a spell of Socialist unity seemed to appear more than usually desirable.
The debate on that occasion apparently deplored the decision of the Government to proceed with the sale of Richard Thomas and Baldwins to private interests. I had to make quite sure before I began my speech by looking up the terms of the Motion, because on that occasion we had the presence of the right hon. Member for Belper (Mr. G. Brown), who has been absent from our discussion this afternoon and whose sense of direction on that occasion seemed to be a little uncertain. When I announced that the sale of Richard Thomas and Baldwins was not imminent but was likely to be delayed, the right hon. Gentleman from his sedentary position seemed to complain even more bitterly.
Although at some points during the afternoon the Opposition benches have not been quite so crowded as they are now, I think it safe to assume that the reason this topic has been chosen for debate is the need on the benches opposite for a long, clear battle call. The call to battle on the Health Service is beginning to grow a little faint and on Monday, 6th March, something peculiar seemed to happen to the wave of indignation of the right hon. Member for Belper. It was sustained, as far as I remember, by ten Labour Members. Here we are, just before Easter. The Budget offensive cannot be mounted until we come back after the Recess, but today there is the opportunity, which has been seized with both hands, for the guerillas of the Left flank to be attracted by the excitement of a regular engagement.
Perhaps it would be inappropriate for me, and it might be lacking in taste, to inquire into the motives that have led the Opposition to debate this subject today. Whatever the motives, however, extremely little has been said about the future of the industry, apart from the question of nationalisation or denationalisation, which has been bandied about a good deal. There has been a lot of discussion about steel finance, but apart from the speeches of my hon. 696 Friend the Member for Weston-superMare (Mr. Webster) and my hon. Friends the Members for Sheffield, Heeley (Sir P. Roberts) and Sheffield, Hallam (Mr. J. H. Osborn), there has not been much talk about the prospects of the industry.
I welcome this debate because it gives me the opportunity to look at the present state of the industry and to say a little about its future prospects. As I do so, I should like to try to pick up one or two points which have been raised. I begin by picking up one or two special points which seem to come better at this stage than later. The hon. Member for Aberavon (Mr. Morris) and the hon. Member for Newton complained about the announcement of the Llanelly sale just after Parliament had risen for the Summer Recess last year. That sale was completed only on 31st July, the reason being that the accountancy year of the firm—Duport—ended on that date. The firm was, therefore, not anxious beforehand to complete the sale, which would have made it necessary to consolidate the Llanelly accounts with its own. This was a decision of the firm. It was, therefore, announced by the Government as soon as the decision had been taken.
§ Mr. H. Wilson
This implies, then, that the negotiations were complete before Parliament adjourned but, for the financial convenience of this company, it was deliberately delayed so far as an announcement in the House was concerned. Even if that were not so, is the right hon. Gentleman seriously suggesting that the financial convenience of a private company must take precedence over the traditions and financial procedures of the House?
§ Mr. Wood
May I continue? This has to do with the point that the hon. Member raised. The second sale was not completed until 12th September, and if it is complained that it was also intolerable to announce the Staveley sale while Parliament was in recess it would seem ridiculous to wait until Parliament 697 returned at the end of October before announcing the details.
§ Mr. Morris
What does the right hon. Gentleman mean by "completed"? He says that the Llanelly sale was completed on 31st July, but that was a Sunday. Is he suggesting that it was completed that day or was it completed much earlier and not signed until that Sunday?
§ Mr. Wood
No. The accountancy year ended on 31st July and therefore the sale was not brought to completion, or not finished, before that date. It may have been 1st August and therefore it could not have been announced to Parliament because the sale had not taken place. The other sale we tried to announce as soon as possible, on 12th September, rather than wait until the end of October.
§ Mr. Wood
I have a great deal to say and I now want to answer another point made by the hon. Member. He asked about the losses made by the company in the period up to the date of sale. The period was a little over forty weeks, but the loss was running at an annual rate of £110,000. This compares with an annual rate of loss in the two previous years which the hon. Member mentioned as £172,000 two years before and £53,000 in that year.
I should like to answer a specific point which the right hon. Member for Huyton (Mr. H. Wilson) asked my hon. Friend the Economic Secretary and which my hon. Friend said I would try to answer. I am afraid that it is impossible to say how far the underwriters have sold the securities that they applied for and so have benefited by the premiums at which some of them now stand. I asked for the information but it was not available, but it is safe to say that the present premiums would not have arisen if there had been extensive selling by the underwriters. Therefore, it is no good the right hon. Gentleman trying to make too much of that point, because if the underwriters had sold a large proportion of the securities, then clearly the market would have collapsed. I should like to turn now to two points mentioned by the hon. Member for Ebbw Vale (Mr. M. Foot). I am sorry that he is not here.
§ Mr. H. Wilson
I should like to apologise on behalf of my hon. Friend the Member for Ebbw Vale (Mr. M. Foot). He asked me to say to the right hon. Gentleman that he particularly wanted to be here to hear the reply, but he is in a television programme in the most respectable possible company and he apologises for his absence.
§ Mr. Wood
I am sorry that I cannot be looking at the hon. Member. It is my loss, because I wanted to tell him that the message that he said he sent to me during his election campaign never reached me. I would have been the wrong Minister to have been invited to talk about nationalisation or denationalisation. The hon. Member ought to have addressed the message to the Chancellor of the Exchequer. I never received his message. I thought it highly suspicious that it was after his election, with a very good majority, that he mentioned this to me and I heard about it for the first time. If he had invited me I naturally would have been only too ready to go. I shall mention to the hon. Member some time the disastrous effect that that would have had on his majority.
The other point raised was the question of the so-called loss of £20 million, the difference between the £105 million nominal value and the sale price of the securities. There can be absolutely no doubt from the figures that I and my hon. Friend have given that the sale price of the securities was less than the nominal value. I think that both hon. Members who raised the point must have omitted to have listened as carefully as they normally do to my hon. Friend when he was giving the explanation of this discrepancy between £105 million and £80 million.
The Exchequer is continually borrowing on long term in order to meet the long-term requirements for new money, and I think that my hon. Friend mentioned as an example the nationalised industries and said that the Exchequer could get it at the prevailing rate only. This money can be raised by the Exchequer either by its issuing its own securities on appropriate terms or by selling at their current market value other securities such as, in this case, those held by the Iron and Steel Holding and Realisation Agency. 699 I share the belief of the hon. Member for Newton and the hon. Member for Ebbw Vale that in fact it makes very little difference to the Exchequer which method it chooses.
I should like to say something about the current iron and steel position. The principal feature in the home market is the present strength of demand for steel. This demand has been growing steadily throughout 1960, and a survey recently made by the Board of Trade shows that it is likely to go on strengthening. The production of commercial vehicles and tractors continues high, and the output of motor cars, as we all know, has shown a considerable recovery from the low rates of December and January.
Exports have started the year well and are likely to be more in 1961 than they were in 1960. It has been said by several of my hon. Friends that the total steel requirements this year are likely to be well within the capacity of the steel industry, and that suggests that there will be no significant supply difficulties during this year.
I should like to say something about the progress of the schemes at Richard Thomas and Baldwins and at Colvilles. The large works at Newport, the Spencer works, are expected to come into operation in the spring of next year, 1962. Hon Members will remember that this project, which was originally designed to produce about 1 million tons of steel a year, was extended in December, 1959, by about half as much again.
Colvilles are expected to come into operation next year also, a little later in July. There was recently I understand, an accident when a ship which contained two of the housings for the slabbing mill at Colvilles sank in the River Mersey. I think that these are being recovered and the chairman does not think that it will delay the starting date.
Colvilles' scheme of expansion which the Iron and Steel Board approved in January, 1960, is now to have a capacity of about ½ million tons of sheet per annum instead, as originally planned, of about 230,000 tons. Colvilles, in whom I know the hon. Member for Motherwell (Mr. Lawson) is particularly interested, is giving me information from time to time about the progress of its project and 700 the rate of expansion. In the light of the reports it has made and in view of the probable starting date of the mill being July, 1962, I have agreed with the company that the review of the total amount of the Government loan of £50 million, which under the terms of the agreement was due to take place after 1st October, 1962, should now take place in the first quarter of next year. Otherwise, it would obviously be a dead letter.
The House has taken a great interest in the past about the position of sheet. For the first time since the war, there is a prospect now of really adequate capacity for the production of sheet, and the margins anticipated in 1964ߝ65 may in fact give rise to the opposite suggestion that there has been over-investment. But I am convinced that that is not so, because the production estimates include no allowance for losses. There must be great uncertainties attached to any figures of expected demand in the future when all those who know about the industry know what fluctuations can be caused by all kinds of events. The growth of demand to the extent at present suggested is likely to be only a matter of time, and if, as we have seen examples, sheet steel is in ample supply, that of itself may increase the demand.
I pay tribute to the Iron and Steel Board, which has taken a forward look in many respects, particularly in respect of the provision of steel sheet in this country. I think that it can claim a considerable achievement in its general planning and also in its planning for additional strip mill capacity. The industry believed that, although the greater capacity might ultimately be required, the need itself was unlikely to arise as soon as the Board thought. The Board has continually pressed for an early start to new capacity and has achieved this objective within the powers open to it under the Iron and Steel Act.
Particularly noteworthy is the Board's initiation of discussions which led to the arrangement between the Steel Company of Wales and Richard Thomas and Baldwins whereby slabs from the Steel Company of Wales, at Port Talbot, were to be processed at the Spencer Works and hot coil was later to be returned to the Steel Company of Wales for further processing into sheet and tinplate.
The Board's achievements in the field of development have not been confined 701 to sheet. It has also recognised the serious deficit likely in plate supplies and, through discussions with the principal plate producers, it has secure plans for adequate expansion of plate capacity.
As well as having paid this tribute to the Iron and Steel Board, I should like to join my hon. Friend the Member for Weston-super-Mare in the tribute which he has paid to the Iron and Steel Holding and Realisation Agency, whose activities have been discussed at considerable length this afternoon.
I have spoken about the Iron and Steel Board because it seems to me to be a factor in this great debate. I am referring not only to the debate this afternoon but to the whole controversy between political parties about nationalisation and denationalisation, to which I feel, frankly, that the Labour Party has always been unwilling to give full weight, because the controversy has always, or very nearly always, been presented in very crude political terms—on the one side, State ownership; on the other side, unfettered private enterprise.
§ Mr. Wood
The hon. Gentleman must have anticipated my thoughts. I was about to say that he spoke about the modification of competition which has taken place in the steel industry. While on this point in relation to prices, in which the hon. Gentleman expressed some interest, I should like to draw his attention to the appendix to the Iron and Steel Board's Annual Report of 1959. The hon. Gentleman said that no comparison was made between home prices and prices on the Continent.
§ Mr. Lawson
I did not say that. I said that the comparison was continuing, but it was now given in a form which did not enable the ordinary layman to draw any conclusion, whereas formerly the Iron and Steel Board boasted about the situation by giving a chart to show the great gap between the two sets of prices.
§ Mr. Wood
I do not know who the hon. Gentleman has in mind as an ordinary layman, but as long as the ordinary layman can read he will find that the appendix is set out in a reasonably comprehensible form. I think that the ordinary layman would get a pretty good idea of the comparison from looking at it.
§ Mr. Lawson
Is it not the case that until two or three years ago, perhaps two years ago, the British steel industry regularly boasted that steel prices in this country were very much cheaper than Continental prices and is it not the case now that the European Coal and Steel Community is telling us that its prices are lower than British prices? Is not that a challenge?
§ Mr. Wood
That is obviously a most important point, but the hon. Gentleman or the ordinary layman on reading the tables would get the impression of British prices being on the whole lower than Continental prices substantially confirmed. The prices in this country, as the hon. Member for Motherwell knows, are based on a foundation of reasonable profit with proper depreciation at a new and efficient works. Clearly, those are maximum prices and would, even if they were not fixed as maximum prices, be subject to any decision of the Restrictive Practices Court.
I was saying that, with the exception of the hon. Member, the controversy in this matter is generally presented as being State ownership on one side and unfettered private enterprise on the other. The Opposition have continually used grandiose terms about this great industry serving the nation, implying that only through nationalisation can the public interest be secured.
I was interested to hear the hon. Member for Rotherham (Mr. Jack Jones), who has the reputation for robust commonsense. He suggested a basis of nationalisation which would certainly cover the land and almost certainly nearly all production, distribution and exchange. He chose that basis as his criterion for the nationalisation of the steel industry.
§ Mr. Jack Jones
My argument was based on what comes out of the land—iron ore. I said nothing about farmers. They can well speak for themselves.
§ Mr. Wood
If the hon. Member's argument was based on iron ore coming out of the land, then it could just as well apply to corn and everything else from the land. The concept of the steel industry acting in the national interest in private hands seems to be incomprehensively subtle and doctrinally unattractive to the Opposition, but we are 703 encouraged, by the success of such a policy, to press ahead to the completion of denationalisation.
My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) referred to prior charges. I regard the sale of the prior charges as being both legally and in commonsense, essential to denationalisation. He referred to me and my hon. Friend the Economic Secretary as financial masochists, and the hon. Member for Ebbw Vale said that we were fiscal sadists. Neither my hon. Friend nor I is a masochist or a sadist, but it cannot be held that the industry is denationalised if the State continues to hold a certain proportion of prior charges. We are encouraged in our view of denationalisation by the approval of the electors at three successive General Elections.
§ Mr. Wood
That is an interesting argument. It rather suggests that the Government's defence policy should be decided by the electors of Portsmouth and Aldershot. If pressed to its ultimate conclusion, it would make my hon. Friend the Member for Kidderminster (Mr. Nabarro) the arbiter of the Government's policy for carpets. [HON. MEMBERS: "IS not he?"] No, he is not.
Each election since 1951 has seen the return of more Conservatives who are pledged to denationalise steel, and fewer Socialists who are wedded to the idea of State ownership. Although it might be impudent for me to say so, I offer the opinion that, while they remain wedded to it, their numbers here look like becoming smaller and smaller. My answer to the question of how we justify denationalisation is to compare the mandate with which were elected in 1951, and renewed twice since then, with the unjustified folly of the Socialist Party in forcing through nationalisation of this industry just before the General Election of 1950, when the electors were about to show their enthusiasm for more nationalisation by reducing the Socialist majority from 200 to six.
We are convinced that the country wants denationalisation. We do not consider—and I put this in mild terms—that 704 the results, broadly, of nationalisation are so impressive as to sustain any coherent argument in favour of such an organisation for an industry such as the steel industry. We believe than an industry of this range and importance must be subject to some supervision, but that public supervision can well be secured without State ownership. Therefore, we intend to press on towards a solution which not only commends itself to good sense, but has been three times endorsed by public approval.
§ Mr. H. Wilson
The whole House has enjoyed the right hon. Gentleman's very agreeable and at times very witty speech, however much we have disagreed with its basic content. We are grateful to him and to the Economic Secretary for their courtesy in giving way and trying to answer some of our questions. However, there was one very important question which my hon. Friend the Member for Newton (Mr. Lee) and I put to which we have not had an answer. In view of the figures which have been given of Staveley and Llanelly and the very strong feeling that these companies were sold at a loss to the taxpayer, so that there was not an adequate return, and in view of the terms of Section 18 (1) of the 1953 Act, will the right hon. Gentleman say whether the Government will now agree to an independent inquiry into the adequacy of the return and, if not an independent outside inquiry, an inquiry by a Select Committee?
§ Mr. Wood
No, Sir. The adequacy of the return which is required under Section 18 must take account of all the factors, which include the losses which are made in the company and the need for new investment, all of which my hon. Friend the Economic Secretary mentioned. Because there has been a book loss on the transaction does not prove that there has been an inadequate return. For the reasons I mentioned, in the case of the last sales, although there was a book loss, it was as convenient for the Exchequer and for the British public to raise the money for longer-term borrowing in that way as it would have been for the issue of securities. I cannot agree with the right hon. Gentleman's suggestion.