PRIVATE MONOPOLIES

HC Deb 14 February 1962 vol 653 cc1323-452

3.57 p.m.

Mr. Douglas Jay (Battersea, North)

I beg to move, That this House deplores the timid and complacent attitude of Her Majesty's Government towards the growth of private monopoly in Great Britain and their refusal to safeguard the public interest by instituting a public inquiry into the proposed merger of Imperial Chemical Industries and Courtaulds. It is high time that the House debated the alarming new growth in recent months of private monopoly and monopoly practices in British industry, and the total failure of the President of the Board of Trade to do anything to stop it.

The issue before us today is not simply the right hon. Gentleman's policy of unconditional surrender when faced with either I.C.I. or Imperial Tobacco. It is the new and accelerated rush towards monopoly by mergers and takeover bids over a very wide area of British industry. Mr. Clore's original take-over bids, or some of them, anyway, were originally defended as likely to stimulate sleepy managements to make better use of idle assets. But almost all the take-over bids during the past twelve months, from the Daily Mirror—Odhams one onwards, have been openly designed to limit competition and have been defended as such.

The Financial Times tells us that in 1961 there were 534 successful take-over bids or mergers, involving a total capital of £800 million, or, if we leave out the Ford deal, over £600 million. The I.C.I.-Courtaulds battle and Mr. Clore's bid for Saxone-Lilley and Skinner, although they have, naturally, caught the public eye, should not blind us to the fact that there is a general rush towards monopoly which has gathered strength in the last two years; nor should we ignore, incidentally, the Report of the Registrar of Restrictive Practices about what are called price information agreements, which suggests that some trades may be getting round the Restrictive Practices Act by this legal device and, in fact, introducing price rings by the back door.

In face of all this, the Government are doing nothing at all. What a contrast this is with all the brave words so often heard at election times about competitive private enterprise. The Prime Minister signed a manifesto before the last election called "Onward in Freedom", which has a rather bedraggled lion on the cover, and which promised that the fresh winds of freedom and opportunity would blow through the economy under a Tory Government.

The attitude of the present President of the Board of Trade is in glaring contrast even with that of his predecessor, the present Minister of Aviation, whom we have with us today, when he introduced the Restrictive Trade Practices Act six years ago. In moving the Second Reading of the Bill, the right hon. Gentleman then said that it would become a powerful reinforcement to the system of free and flexible competitive enterprise which we on this side seek to foster and sustain."—[OFFICIAL REPORT, 6th March, 1956; Vol. 549, c. 1943.]

Hon. Members

Hear, hear.

Mr. Jay

I am glad that hon. Members agree, because now we are told a quite different story, that ever greater private monopolies are necessary to compete abroad, and the President of the Board of Trade tries to justify his inaction over I.C.I. by suddenly invoking this new argument. I shall come presently to the question whether it be a good or a bad argument, but it is at least a very different tale from the one about "free and flexible competitive enterprise".

Indeed, the right hon. Gentleman is not merely much more inert and reactionary than his right hon. Friend the Minister of Aviation; he is actually more timid even than Lord Swinton, who spoke in another place, on 1st February, much more positively about this matter and who was President of the Board of Trade in a Tory Government nearly forty years ago. This is the progress we have under the party opposite.

Let us look for a moment at the three main monopoly dangers which have arisen even in the short time since Parliament went into recess before Christmas. These are the Imperial Tobacco, the British Shoe Corporation and the I.C.I.-Courtauld battle.

In giving his decision about Imperial Tobacco, the President of the Board of Trade treated the House deplorably. The main recommendation of the Monopolies Commission about Imperial Tobacco was that it should sell its shares in Gallaher. The Commission's Report was presented to Parliament in July. It is, in fact, dated 6th January, 1961; so perhaps the President of the Board of Trade will tell us whether it was in his hands last January. At any rate, from July onwards he repeatedly refused to announce any decision, and even when pressed at Question Time on Thursday morning, 21st December, he said that he could not add to his previous evasive replies. Then, on 28th December, when Parliament was not sitting, he announced to the Press that he was turning down flat the main recommendation of the Commission.

I can well understand the right hon. Gentleman being so ashamed of this cowardly decision that he dared not openly admit it to the House. But does he expect us to believe that a Cabinet meeting was held on 27th December, the day after Boxing Day, to decide this matter or, perhaps, that he himself came into his office that day and experienced a guiding light which had eluded him ever since the previous July, or even, perhaps, since the previous January? Of course, everyone will conclude that the President of the Board of Trade reached his decision before Christmas, but dared not announce it until, as he hoped, as few people as possible would notice what he had done. His difficulty is that he is nearly as frightened of the House of Commons as he is of Imperial Tobacco. I wish that he would remember that he is responsible not to Imperial Tobacco, but to the House of Commons.

The decision itself is as deplorable as the right hon. Gentleman's method of announcing it. The Monopolies Commission spent over four years investigating the tobacco industry. It found that the Imperial Tobacco Company, which sells about 60 per cent. of the tobacco and cigarettes bought in this country and which has, of course, close links with the British-American Tobacco Company and a number of others in the industry, held also a hitherto secret 42½ per cent. share interest in its main rival, Gallaher. The Commission recommended that that holding should be sold on the ground that it was calculated to curtail competition.

The President of the Board of Trade, after another five months' thought, or perhaps after twelve months' thought—I hope he will tell us—decided, although he accepted some minor recommendations of the Commission, that, contrary to its major recommendation, the shares should not be sold. The reason he gave in a Written Answer to me last week is that Imperial Tobacco have given him an undertaking not to interfere with the management of Gallaher. But, of course, Imperial Tobacco gave that undertaking to the Commission, and the Commission explicitly stated that it was no justification for Imperial continuing to hold the Gallaher shares.

After all, if Imperial Tobacco—I accept the assurance—really does not intend to interfere in the Gallaher management, why has it fought so desperately hard all these months to hang on to the Gallaher shares? Presumably, because Imperial regards its shareholding as an investment hedge against possible further loss of markets to Gallaher.

On this point, the Commission, in paragraph 547 of its Report, said: We consider that the stimulus to efficiency which Gallaher's competition provides might have been even greater if Imperial were not through its investment in Gallaher insured to some extent against the potential loss of profit and, accordingly, the Commission came to the view that the shareholding operated against the public interest.

All the President of the Board of Trade can find to say in reply to this recommendation of the Commission is that Imperial Tobacco could have no assurance that trade lost by them would be gained by Gallaher".—[OFFICIAL REPORT, 6th February, 1962: Vol. 653, c. 34.] But everyone knows that as Gallaher is Imperial Tobacco's main rival, this is the overwhelming probability. I put the question to the President of the Board of Trade: if Imperial Tobacco did not think that this was so, why did it fight such a hard battle to retain the shares?

What the President has done is to turn down flat the main recommendation of the Monopolies Commission, and in so doing he has damaged the future authority of the Commission, which the Government have considerably weakened already throughout the last five years.

Even the Investor's Chronicle comment was that industry in future would, as a result, regard the Commission as a sheep in wolf's clothing. The Government's failure to protect the public here has been condemned by practically every newspaper, including the Investor's Chronicle, the Financial Times and The Times. The right hon. Gentleman now holds an extreme position, even among Conservative opinion, in defence of private monopoly. What a contrast this all is with the propaganda about "free and flexible competitive enterprise".

Meanwhile, Mr. Clore is busy strengthening his grip on the boot and shoe trade, encouraged, I should imagine, by the right hon. Gentleman's feeble attitude towards more established monopolies. Sears Holdings, Mr. Clore's holding company, now controls not merely vast property interests which we all know about, but interests in footwear, shipbuilding, hosiery, mining machinery, jewellery, electronics, structural steel, silverware, theatres and car distribution, to name only a few. It is not very clear how greater economy and efficiency are gained by integration of this sort.

But it is to this empire that Mr. Clore's satellite, the British Shoe Corporation, is now seeking to add again its main rival, Saxone-Lilley and Skinner. Already, the British Shoe Corporation is easily our largest shoe manufacturer and retailer, and Saxone comes second.

Sir Cyril Osborne (Louth)

Not manufacturer.

Mr. Jay

These two combined would own 2,000 shoe shops and over 30 factories and would control over 20 per cent. of our shoe supplies.

Sir C. Osborne

I am sure that the right hon. Gentleman has no wish to mislead the House. The Clore group is by far the biggest distributor of shoes, but not the biggest manufacturer.

Mr. Jay

I do not wish to mislead the House, but it is a very big manufacturer. The Financial Times said that it is the largest manufacturer. However, we need not argue too much about that. If this combine went ahead, it would control over 20 per cent. of our shoe supplies and about half of the supplies sold through multiple shops.

Will this bring a fresh wind of freedom and opportunity into the shoe trade? Obviously, it will limit the choice of the consumer, because I think that the hon. Member for Louth (Sir C. Osborne) will agree that the housewife may imagine that she is choosing between Freeman, Hardy and Willis, Dolcis, Saxone, and Lilley and Skinner, but really it is Mr. Clore all the time. This puts enormous power into the hands of one group, controlled in this case very largely by one man. Yet, in answer to a Question which I put to him, the President of the Board of Trade said that he did not propose to do anything about it.

Since the Chancellor of the Exchequer—and presumably the Chief Secreary to the Treasury who is, for some reason, to reply to the debate tonight—is worried about wages and salaries rising so quickly, it is worth pointing out that another by-product of all these mergers and take-over bids is the building up of vast personal fortunes by capital gains. During the last ten years of Tory freedom, ending with the year of the pay pause, according to the financial Press, Mr. Clore's personal fortune has risen from about £3 million to about £50 million. I wonder whether the Chancellor of the Exchequer can assure us that it will not rise further by more than 2½ per cent. in 1962.

The House will thus realise that I.C.I. is very far from being the only empire-building monopoly threatening the public. Nevertheless, of course, this proposed I.C.I.-Courtaulds merger would certainly confront us with a concentration of industrial power and wealth on a scale never known before in this country. Both firms, I need hardly say, are already amalgamations of a great many companies. Courtaulds has recently taken over British Celanese, British Enka and Pinchin Johnson, the paint firm.

If the combined merger took place it would have a capital of nearly £1,000 million and its labour force would be nearly 170,000 people, none of whom, incidentally, has apparently been consulted or even much considered in the whole operation. That figure of 170,000 is over 50 per cent. larger than the British Navy and is larger than the labour force of the electricity and gas industries put together.

If it goes through, this combine will also hold a near monopoly, not just in nylon, rayon, Terylene and the other man-made fibres, but will control a large part of our supplies of a number of fertilisers and chemicals, such as sulphuric acid, and of paint, dyestuffs and plastics. In addition, I would remind the President of the Board of Trade that there is a system of patents and licences which seriously limits competition in these products overseas as well as at home. Such a combine would have the power, if it wished, to close factories which dominate employment in a number of important areas, such as Tees-side, Pontypool and Flintshire.

In our opinion, quite apart from any economic or technical arguments, all this represents too great an agglomeration of industrial power and wealth to be safely placed in the hands of a few men who are not limited by any effective system of public accountability. At the very least—hon. Members opposite would probably agree with this—the onus of proof is firmly on those who advocate the creation of private monopoly on this unprecedented scale.

Let me therefore examine I.C.I.'s case, which is not even accepted by Courtaulds. In so doing, I take no sides as between I.C.I. and Courtaulds. I do not think that any of us has enough information at present to do so. I start with no personal hostility against I.C.I., because during the war years and afterwards, when I worked in contact with that firm, I always thought that it showed considerable public spirit in quite a number of respects.

But we must ask: has Mr. Chambers made out his case by the test of public interest? In his latest manifesto, last Friday, Mr. Chambers argues that integration, which is greater size in effect, would yield economies in research, development, production and marketing. But greater size does not always make for greater efficiency. Neither A.E.I. nor G.E.C. are very good advertisements of that theory.

Sir C. Osborne

Nor is the coal trade, either.

Mr. Jay

I was coming to that.

The Government, with the help of Dr. Beeching, fresh from I.C.I., are engaged in breaking up both the British Transport Commission and the London County Council on the ground that this will improve efficiency. Are we to believe that a combine with a capital of about £200 million like Courtaulds or £800 million like I.C.I. is too small to be efficient even at present?

The House should note that there is no suggestion that the supposed economies can be achieved by larger scale production of fibres, by still larger plants. When I.C.I. and Courtaulds launched British Nylon Spinners, in 1945, they did not attempt to put the nylon spinning plants alongside the plant at Wilton, or any existing Courtaulds plants. They proposed a new plant at Banbury, and in the end settled for Pontypool. When they wanted to expand spinning capacity four or five years ago, they proposed expansion, not at Pontypool, but at Portsmouth. In the end, they agreed on Gloucester. More recently, when they wanted to expand Terylene production, they did not propose putting the plant at Wilton alongside existing plants, but proposed to go elsewhere.

Mr. Chambers will, I am sure agree, that the economies are supposed to be achieved by centralising organisation, research and marketing. But would not a little competition in research be desirable, also? Here, experience is rather against Mr. Chambers' arguments. After all, Terylene was discovered, not by I.C.I. but by the despised textile industry, by Calico Printers——

Mr. H. Hynd (Accrington)

In Accrington.

Mr. Jay

Yes, in Accrington—in much smaller-scale competitive research.

Courtelle and Tricel, now admittedly by far the most successful fibres, were discovered and developed largely by Courtaulds in smaller scale research competing with I.C.I.'s main discovery, Ardil, was a complete commercial failure by its own admission. I.C.I. prefers to call it a commercial rather than a technical failure, but, at any rate, it came to an end.

The serious charge is made by Courtauld's, and, of course, denied by I.C.I., that I.C.I.'s real motive in the whole campaign is to ensure that the fibres produced in this country are not those which the consumer wants most, but rather those in which I.C.I. has invested the largest sums of money in producing the basic materials.

If I.C.I. is in this sense seeking to turn man-made fibres into a tied market, this whole merger would not merely be not in the public interest, but would be wholly against the public interest. It would be bad for our standard of living and for our exports, because other people in other countries would produce the fibres which the consumer wants.

I.C.I. does not seem to me in its many statements to have effectively answered that charge. I suspect that this remains the real point at issue in the furious battle now going on between the two firms. I.C.I. admits, incidentally, that a new American process for producing Acrilonitrile has heavily reduced the price of the vital material for Courtelle. I.C.I. is now having to buy this from the United States at a lower price on Courtauld's behalf.

Is it true, as Courtauld's allege, that other materials monopolised by I.C.I. have risen by 50 or 60 per cent. in price over the last ten years of Tory freedom, while those in which competition appeared have suddenly come down? Is it true, as a noble Lord alleged in the debate in another place, that the price of caustic soda, for instance, was reduced by I.C.I. only when Courtaulds threatened to buy from abroad, and that the prices charged by I.C.I. for various other chemicals are much higher than those charged abroad, and have come down only after the threat of competition? A public inquiry would give Mr. Chambers an opportunity, which, he says, he would welcome, to answer these various questions.

As I have said before, however, Mr. Chambers and, indeed, Mr. Clore have introduced a new argument into this controversy. We are told that huge integrated concerns dominating the United Kingdom market are necessary to compete efficiently abroad. The Common Market is dragged in at this point to lend plausibility to the picture. Indeed, the President of the Board of Trade, in his statement on 30th January, rather incautiously lent himself to this doctrine, and so did the Prime Minister in some supplementary answers last week. Incidentally, neither of them mentioned the international patent agreements which considerably limit international as well as internal competition.

Have the President of the Board of Trade and the Prime Minister considered where this new argument leads? It certainly does not lead to free and flexible competitive enterprise. It would justify the formation of any private monopoly, however great and however much it dominated the British market. It would justify the amalgamation of all our great steel companies into one firm. Indeed, in the words of Courtaulds themselves, The logical end to this process is a single group controlling half British industry. Those are Courtauld's words, not mine. Is that what the Tory Party and the Government want?

I wonder whether Mr. Chambers has stopped to think where this argument leads. I.C.I. is about to build an oil refinery on the Tees in competition with Shell and B.P. Shell is producing petrochemicals and plastic materials at Merseyside, and B.P. is doing the same at Grangemouth and Llandarcy, in competition with I.C.I. Nearly 10 per cent. of Shell's profits now come from chemicals and not from oil.

Suppose that Shell came along one day and argued that all this wasteful competition and duplication should stop, and that a completely integrated combine should be established in the interests of efficient competition all over the world. Shell could use all the arguments used by Mr. Chambers in the last three weeks, including, in particular, his statement in last Friday's manifesto that the United Kingdom industry would be much stronger if it were united and able to present a full range of products and use common sites, services, management, and so on. What would Mr. Chambers do if Shell made a proposition of that kind? What, indeed, would the Government do? I presume that they would do nothing at all.

The Royal Dutch Shell Group would have little difficulty in making an overwhelming take-over bid for I.C.I. Mr. Chambers has just announced profits for 1961 of £62 million; but the Royal Dutch Shell Group's annual profit on a similar basis is over £300 million. There are plenty of clever people at Shell headquarters who could think up a convertible loan stock offer which would be quite irresistible to I.C.I. shareholders. Mr. Chambers should reflect on this as he looks out of the windows in Millbank, and sees the Shell tankers going up and down the river, and, indeed, even the Shell building further down, which is more than twice as high as his own. Cannibalism is emphatically not a game at which only one, or even only two, can play.

Therefore, it seems to us that the case is overwhelming, first, for a public inquiry into these mergers and, secondly, for a regular system of investigation in future before the rush towards private monopoly over so much of British industry goes any further. I am not saying that I.C.I. has no technical case to examine—we do not have the information to make final judgment—but I do say, first, that the onus of proof is firmly on those who propose a private non-accountable concentration of power on this scale. Let us remember that in his Restrictive Practices Act the Minister of Aviation, whom I am glad to quote again, placed the onus of proof firmly on those seeking to make monopoly arrangements.

Secondly, the I.C.I. case has emphatically not been made out on the evidence as yet available to Parliament or the public. Even The Times today sums it up by saying that the risk of monopoly is substantial. Thirdly, the public interest is heavily involved at almost every point in the controversy. The Government tell up repeatedly that the public interest should be represented in wage negotiations. Is it the Government's doctrine that the public interest is involved if a small group of I.C.I. employees ask for another 2d. an hour, but that it is not involved if the Board of I.C.I. seeks to create the greatest private monopoly in our history?

Fourthly, in deciding this issue the interested parties should not be judges in their own cause. It is for this House and not for Mr. Chambers to say where the public interest lies. The Minister of Aviation, again quite rightly, on the Second Reading of his Bill in 1956, in referring to restrictive agreements said that the parties to an agreement … are not the right people to judge whether the practice is or is not against the public interest."—[OFFICIAL REPORT, 6th March, 1956; Vol. 549, c. 1928.] It was for that reason, at the right hon. Gentleman's request, that Parliament set up a court of law to give judgments on that point.

I cannot imagine a worse way for a great issue like this to be decided than by the Dutch auction of a take-over bid, which, in this case, is causing a lot of ill-feeling between the two companies, who are then to be expected to work together. Do hon. Members opposite really consider that the right decision is likely to emerge from a financial battle accompanied by leaks, rumours and investigations, soaring and dropping share values, charges and counter-charges, in which these two great companies accuse one another of incompetence and misrepresentation, in which the 170,000 employees are barely consulted or considered, and the final decison, if things are left as they are, will be taken by one or two large shareholders of one company mainly on the basis of share values and medium-term capital gains? For that is what they are thinking about.

If the Government do nothing, neither the national interest, the efficiency of the industry, the future of exports nor the welfare of the staff will be a deciding factor. Therefore, it seems to us that the only way of reaching a rational decision in the public interest is through some form of public inquiry set up by the Government. And the only reason why the Government did not set it up, as everybody knows, is because Tory Ministers no more have the courage today than they ever had to oppose industrial interests of this scale and wealth.

One might have thought that the present Cabinet would have been particularly scrupulous where I.C.I. is concerned, because both Lord Chandos and Lord Amory joined the board of I.C.I. almost as soon as they left office. To his credit, the President of the Board of Trade wobbled in this direction for a week. Having told us, first before Christmas, that he did not agree that there was any public issue to be investigated, he proposed a week or two later to the Cabinet that there should be an inquiry, thus admitting our case. But when the Cabinet took fright and turned his proposal down, he capitulated; and after four or five days of further thought he made one of the most pathetic ministerial statements I have ever heard made in the House.

The right hon. Gentleman told us, as his excuse for doing nothing, that the effects of the merger could only be "judged by results". He went on to say that if the merger occurred, and if it operated against the public interest he would refer it to the Monopolies Commission, and if, after its report, new powers seemed necessary, he would ask Parliament for them. I assure the right hon. Gentleman that after his performance over the Imperial Tobacco Company, this assurance does not impress us or anybody else in the least.

Finally, the right hon. Gentleman told us in his statement ten days ago that nobody, however expert, can possibly peer into the future and investigate hypothetical circumstances. Therefore, what the Government propose is to let the merger go through, whether it is nationally desirable or not, and then, if necessary, unscramble the omelette after it has been cooked. Of all the possible policies that a Government could follow, that seems to me the most farcical, the most irresponsible and the most harmful. It is not even fair to I.C.I. or Courtaulds. Let the House imagine the consequences, human, industrial and economic, of integrating the vast organisations of Courtaulds and I.C.I. into a single body and disintegrating them again three or four years later.

If the right hon. Gentleman cannot see the sheer absurdity of this for himself, would he not consider the array of opinion against him on this issue? Not only do many hon, Members opposite, to judge from Question Time the other day, support the demand for an inquiry, but a very large selection of the Conservative and financial Press does the same. Even Mr. Harold Wincott of the Investor's Chronicle, an enthusiastic and almost passionate believer in private enterprise, argued most forcibly for an inquiry in that paper on 26th January. The Financial Times said that the right hon. Gentleman's excuses for inaction were unconvincing, and The Times today comes out heavily against him. Ministers know quite well that whatever the legal powers—and this point was made by Lord Swinton in another place—I.C.I. would be ready to hold its hand for a time, if the Government asked it to do so.

As to the argument of the President of the Board of Trade that nobody can look into the future and estimate the effect of a merger before it happens, what does he think the boards of I.C.I. and Courtaulds have been doing during the last few months? If the Government do nothing, the issue will not be undecided. It will be decided by investment experts taking views about the future, and taking them for the wrong reasons. As to the right hon. Gentleman's belief that nobody outside the firms concerned is expert enough to give judgment, what does he think the Restrictive Practices Court and the Monopolies Commission have been doing all these years? The Monopolies Commission conducted an inquiry into the fertiliser business of I.C.I., and it is perfectly possible for impartial and experienced people, whether in the case of a monopoly or a price agreement or a merger, to hear expert evidence and give a verdict in the public interest.

Incidentally, does the right hon. Gentleman not know that this is substantially the system in the United States where, under Section 7 of the Clayton Act, the Federal Trade Commission has exactly this power to intervene and stop a merger before it goes through? The interesting thing is that this very amendment was made to the original Sherman Act precisely because Congress thought it absurd that mergers should be allowed to go through and then be broken up afterwards.

We therefore believe not merely that the case for an inquiry into this merger is unanswerable, but that the time has come to give a standing public authority, possibly a reinforced Monopolies Commission, the job of looking into major mergers and doing it quickly before they go through. It is not good sense to have a Restrictive Practices Court, which the right hon. Gentleman set up, judging restrictive agreements, and the Monopolies Commission judging monopolies, and then having mergers Which may create monopolies going through completely un investigated—particularly as some mergers, such as the merger of Courtaulds and British Celanese, have as one of their main objects, quite naturally, to get round the restrictive practices legislation.

In our view one essential justification of private enterprise, if we are to have it, is competition; and if competition is to be suppressed, some other sanction for public accountability must be put in its place. I say frankly that if this merger goes through, or a proper inquiry is held and unification is judged to be technically necessary—as happened with coal, gas and electricity—then effective public control, if necessary by public ownership, would have to be established over the giant monopoly thus created.

The Prime Minister himself made a striking contribution to this controversy last week, when he said at Question Time that on this issue he did not retreat from what he wrote before the war. I have therefore looked up what he wrote about this. What he said in "The Middle Way" was: Certain industries and services which are of key importance to the vigorous life of the community, and which have reached a stage of development, where their conduct requires to be governed by wider social considerations than the profit-making incentive alone, should be brought under either some suitable form of public ownership and management; or in certain cases a form of statutory control or supervision which may not involve public ownership. These were wise words, if rather long ones. How much more progressive the Prime Minister was twenty-five years ago than he is in 1962. How glaringly these wise and brave words contrast with the total cowardice and inaction of the Government today which I ask the House to condemn this afternoon.

4.40 p.m.

The President of the Board of Trade (Mr. F. J. Erroll)

The right hon. Member for Battersea, North (Mr. Jay) said that he had never heard such a timid or futile statement as the one I made to the House a short while ago. I would like to return the compliment by saying that I have been waiting for sixteen years for him to make a good speech and that I am glad to say that I heard it this afternoon. I listened with great interest to the way in which he deployed his arguments. I will do my best to answer them and, at the same time, to put forward the Government's point of view, because there is nothing complacent or timid about the policy of Her Majesty's Government towards mergers or monopolies.

I want to spend a minute or two in explaining this policy, because the House will then be better able to see why we reached the decision which I announced to the House on 30th January concerning the I.C.I. and Courtaulds merger proposal.

On this side of the House, we believe that it is in the public interest to have a free enterprise economy for this country. If our economy is to be as efficient as possible, and thus render the best possible service to the public, the units, whether large or small, must be free to grow or to contract, to merge or to separate, as changing circumstances may dictate.

For many years now, indeed going back to before the beginning of this century, mergers between equals have taken place and small companies have been taken over by bigger ones. This natural evolution has been for the good of the public and for the good of the industrial and commercial development of Britain. We all take for granted, for instance, the joint stock banks—the Big Five—but they came about as a result of mergers and the taking over of small banks, many of them one branch banks in small towns. No one would want to go back to the old system now.

Mr. Jay

The right hon. Gentleman should also remember that, in the 1920s, there were proposals for further mergers of banks, and that it was only because the Government of the day stepped in and asked the banks not to proceed that the process did not go further.

Mr. Erroll

I am coming to the question of further amalgamations later in my speech.

During the inter-war period we took for granted the four main line railway companies which were themselves the result of mergers and amalgamations between privately owned railway companies, a process which had been going on for many years. There have been similar striking examples of growth in industries. Unilever's grew from a single grocer's shop in Bolton and the two companies which are partly the subject of to-day's debate, I.C.I. and Courtaulds, have each reached their present size as the result of take-overs or association with other companies.

Just two years ago, the Government made an announcement about mergers in the aircraft industry, and I remind right hon. and hon. Gentlemen opposite that the Opposition spokesman on that occasion welcomed those mergers. At the same time—and this is an important part of my general theme—such is the virility and variety of our present system that there are always new companies being formed and new factories starting up to enrich and enliven the economy. Some of these may grow on their own, others may merge with their competitors, and so the process continues.

For those of us who believe in private enterprise, this is how the system should work, and we believe that this is the best way of enriching the nation and raising the standard of living. I know that convinced Socialists may have other views, but I am glad to be supported by the right hon. Member for Battersea, North in this important matter, because in the new book which he has just published, "Socialism in the New Society"—the author, one Douglas Jay, who is, I presume, the right hon. Member—says, on page 340: Some are even devoted to the idea of starting a small business of their own, running a shop, a garage, a farm or a one-man lorry enterprise. And of these some end up like Lord Marks, Lord Nuffield, or Mr. Isaac Wolfson with a creative lifetime behind them. It would certainly be a foolish doctrinaire constriction of human freedom to deny such individuals … the right to exercise their talents and inclinations. … In a free society let us value freedom in all its creative or harmless forms. In the world in which we live—and this is what we must remember in considering the words which the right hon. Gentleman has written so eloquently in his book—there is a trend, common to all industrially developed countries, towards an increase in the size of companies. There are a number of reasons for this. It may stem from the development of new productive techniques, which broadly result in better and cheaper goods to the consumer, but which cannot, in the main, be carried on without the expenditure of large sums of money on buildings, plant and machinery. In addition, the intensive research which is nowadays required in nearly all branches of industry in order to keep abreast of competition, and to forge ahead with new products, often simply cannot be paid for except by companies with substantial capital resources.

This world-wide trend towards larger companies—which is probably one of the reasons underlying the present merger proposals—is one of the facts of life in this century and is not necessarily a bad thing.

Mr. Walter Monslow (Barrow-in-Furness)

Is not the right hon. Gentleman revealing a strange paradox, in that the Government are pursuing a policy of decentralisation in the transport industry?

Mr. Erroll

I did make the point that, in certain circumstances, it would be better to break up rather than to concentrate further.

The process of growth to which I referred can lead to a possible danger. A company can become so strong that it exercises a dominant position in the market, or has become, for all practical purposes, a complete monopoly. So placed, a company could operate against the public interest, but it would not necessarily do so. This was clearly brought out in the Coalition Government's 1944 White Paper on Employment Policy, paragraph 54 of which stated that Restrictive agreements or combines do not necessarily operate against the public interest, but the power to do so is there. That was what the Government White Paper said. There is also this view: It has been agreed between all schools of thought and political parties since 1945 that neither monopolies nor restrictive practices can be judged as good or bad as such; but that the advantages and disadvantages must be weighed on certain criteria in each instance.

Hon. Members

The right hon. Gentleman is reading.

Mr. Erroll

Yes, I am reading. I am quoting what the right hon. Member for Battersea, North said in an article on monopolies in this month's issue of The Times Review of Industry. He himself accepted the approach which hitherto has been common ground between the Government and the Opposition of the day since the war ended. If he stands by the article, as I am sure he does, he will agree that the proposition still holds good, and that, basically, all post-war Government policy on monopolies has derived from this simple proposition.

The policy has been, and remains, that a sensible judgment cannot be reached in a particular case without a full examination of what I might call "the surrounding circumstances". I shall mention some of these. They are many and varied. For instance, one would have to examine how the monopoly came about—whether it had been achieved simply by beating a competitor on price, by making a markedly superior product, or by being first and alone in the field with an entirely new product.

Then one would need to examine whether the monopoly had been brought about by merger or combination with competitors, or by using market or financial power to drive out competitors. One must also look at a factor which is most important. This is the economic and technological context in which the monopoly operates—the state of international competition, whether the industry is expanding or declining, how it operates on matters of research and developments, and the way it handles new ideas, including patents.

Mr. Austen Albu (Edmonton)

Has the right hon. Gentleman made such an inquiry in the case of the current negotiations?

Mr. Erroll

I am coming to that a little later.[HON. MEMBERS: "Tell us now."] I am glad that hon. Members are showing a slight degree of impatience, because it shows that at least I am holding their attention.

All these matters, and a number of others besides, need to be fully examined, because it would be harmful to the future development of the economy to condemn a monopoly unless one had a clear knowledge of its defects and what structure ought to be developed instead. This was the philosophy behind the 1948 Monopolies Act which the Labour Government introduced and which was supported by the Conservative Opposition of the day. Sometimes the Commission set up under that Act has given entirely favourable recommendations regarding monopolies reported to it. But when the investigations of the Monopolies Commission have revealed to the satisfaction of the Government the need for remedial action then we have taken the necessary action.

The Act has, in fact, worked well. The Act, however did not confer on the Government broad powers to implement every single recommendation whatsoever it might be, because it was clear that action to be taken would depend inevitably on the circumstances of the case. Many of the recommendations have been implemented by discussion with the firm or firms concerned, and had we been unable to get satisfaction in this way we should not have hesitated to ask Parliament for any additional powers which might be needed. While, in general, we have accepted a large proportion of the recommendations of the Monopolies Commission, it would be wrong to suggest that the Government are bound to accept all the recommendations and to implement them.

I will deal with Imperial Tobacco and Gallaher's in a moment. It was said by some people that my action there was creating a precedent, but that is not the case. We did not implement all the recommendations in the case of British Oxygen, and there were several earlier cases in which the recommendations were not implemented in full. I should like to say this: It does not follow … that the Government should make an order in every case, or even that they must accept the Commission's recommendations in every case. The Government must have the final responsibility. They have to consider the recommendations, discuss them with the interests concerned—including the consumers of the product in question—and weigh the recommendations against the general test of public interest."—[OFFICIAL REPORT, 24th February, 1955, Vol. 537, c. 1475.] I am reading again, this time from the OFFICIAL REPORT Of the speech of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) in the debate on 24th February, 1955, when monopolies were being discussed. So it is interesting to see that even on this matter there is common ground between us as well.

I now want to turn to the Imperial Tobacco-Gallaher issue, because the right hon. Gentleman raised it specifically, and I should like to deal, first, with the charges he made of cowardice on my part. I do not think that anybody seriously accuses me of being afraid of the House of Commons, or of being cowardly. I think the right hon. Gentleman was using those words in their rhetorical sense.

The right hon. Gentleman asked me about the timetable. Of course, the timetable may be a long one. It usually is in the case of a Monopolies Commission Report. The Report was signed in January, 1961, and then time was spent in considering whether or not to make any excisions under the terms of the Act, and in proof reading and printing. It was finally published in July, 1961, and then it took a long time, partly because of summer holidays, for us to approach the retailers and others who necessarily had to be invited to submit comments. Those comments came in by October, 1961.

Mr. Jay

Can the right hon. Gentleman say at what date it was in his hands?

Mr. Erroll

I have given the date. It was 6th January that it was signed, and then the discussions took place with the bodies concerned about any possible excisions which they had a right to request under the terms of the Act.

Mr. Jay

The right hon. Gentleman had it in January?

Mr. Erroll

Yes, certainly, but we could not have discussions with the retailers until the Report had been published, and the retailers were entitled to have their say, and for all practical purposes there was very little that we could do about studying the recommendations in the Report until after publication and until after we had received the comments of the retailers. We received those in October, 1961, and on 28th December the Press notice gave details of my decision.

I should like to explain to the House that I would have preferred to have followed the usual procedure which is, of course, to give the decision in a Written Answer in HANSARD. The practice has not been to give an Answer by means of an oral Question and Answer. By publishing it as a Written Answer Members of Parliament and the Press get the Answer and have some time to digest it and hon. Members are in a better position to put oral Questions subsequently. I did my very best to get all the details through before the House rose, but this was an important matter and I had to get the wording of Imperial Tobacco's undertaking agreed precisely with them, and it simply was not physically possible to get it ready just before the House rose on 21st December. Then there arose the question of whether to keep it on ice for a further four and a half weeks when I had already been criticised for having sat on it for so long. I knew that if I published it by way of a Press announcement I should be criticised. I took that into account, but it was more important to get it published quickly. It was not a question of cowardice. It was simply a question of not being able to get all the details finally until just before the House rose and I thought, having regard to what had been said to me on 21st December, that I should publish it as soon as I could and that that was the best course.

Mr. James Callaghan (Cardiff, South-East)

Does not the right hon. Gentleman think that, having had the Report in his hands since 6th January, this shows singularly bad management in his Department and by him—that there could not be a final conclusion by one week sooner in a total period of consideration of eleven months?

Mr. Erroll

That, of course, is an easy criticism to make. I do not want to go on into the detail of the timetable. The answer is that the first months are spent not in detailed consideration by the Department but on the other things I have outlined and the essential part of the consideration cannot take place until we have received the comments of the retailers.

The Report had to be printed. If we could get the printing industry to act a little quicker, then we should get these reports a bit quicker. Hon. and right hon. Gentlemen opposite may help us in that regard. However, six months were spent in getting the document ready for publication.

As regards the decisions, the Commission found that Imperial Tobacco's monopoly position does not operate against the public interest; nor may it be expected to do so.

The Commission made two recommendations, one of which I accepted—the one, namely, about display bonuses; and the company agreed to abandon them. The second recommendation was the one that the Commission found that retention by Imperial Tobacco of its Gallaher's shareholding was, to quote the Commission's phraseology, "a thing done" by Imperial Tobacco for the purpose of preserving its monopoly position. The Commission considered that this operates and might be expected to operate against the public interest, but it admitted that Imperial Tobacco had not so misused its shareholdings. It made the recommendation in order, to quote the Commission, to eliminate the risk that competition between Imperial and Gallaher might be inhibited by the existence of a financial link between them. In all this I rather think the Commission was looking at what might happen rather than at what may be expected to happen. There is no inhibition of competition, which is an important matter in this field. By all accounts competition has become more severe. Certainly the sales of Imperial Tobacco's principal competitors, including Gallaher, 'have been increasing; not only Gallaher's, but others have been increasing as well.

The extent of the Imperial Tobacco's shareholding in Gallaher was not publicly known until the Commission reported. The Commission acknowledged that Imperial Tobacco had not used its shareholding to intervene in any way in the management of Gallaher. Imperial has now publicly reaffirmed this assurance as regards the future and given a formal undertaking to the Government. The effective power of this shareholding has thus been effectively neutralised and there is no need to insist on Imperial Tobacco divesting itself of this shareholding which is a dormant one now, as indeed it has been all along, as the Commission itself recognised, and should Imperial Tobacco renounce its assurance and start intervening in the management of Gallaher the Government, of course, can take any further steps which they may consider necessary. In this way I have been able to achieve the object of the recommendation without insisting upon the disruption which would have been caused by the sale or disposal of Imperial's shareholding in Gallaher. There is nothing cowardly in that.

Mr. John Diamond (Gloucester)

How does the right hon. Gentleman know at a distance that such interference in the management is not already taking place?

Mr. Erroll

It has certainly not been taking place in the past because the Commission said it had not been. Imperial has always said it would not use its shareholding in this way, and, in fact, if this were to take place it is perfectly open to the board of Gallaher's to take the necessary steps.

Mr. Jay

What in this case does the right hon. Gentleman think desirable about Imperial Tobacco continuing to retain its shareholding?

Mr. Erroll

That is for it to decide. It is quite clear, and everybody knows, why it originally acquired it. It was in the 1930s, in order to prevent the acquisition of Gallaher by an American company. Imperial has gone on holding those shares and would probably now say that while the original purpose of acquiring them was no longer appropriate, to try to sell off a large shareholding could result in substantial losses and not be a very convenient market operation. However, it is for Imperial Tobacco to decide how to handle its investments. It is for us to make sure that its having this investment does not result in a diminution of competition, and I have managed to secure that end without harming the company.

The policy of the Government on monopolies, which has hitherto been broadly accepted by political and public opinion generally, is that one cannot reach conclusions about the effects on the public interest of a particular monopoly, still less of a proposed merger which would lead to monopoly, on abstract theoretical grounds. We must first make a full examination of all the surrounding circumstances, including the observed effects, before deciding whether some form of intervention is required.

In effect, that means that the Government's attitude towards a monopoly is mainly conditioned by its performance in practice. Hon. Members may argue that that is too late, but that view is tenable only if one assumes that all monopolies are, merely by reason of their existence, dangerous and harmful, and we on this side of the House do not take that view.

Nevertheless, where we have found general practices of a nature contrary to the public interest, we have not hesitated to take the necessary steps, as was shown by our passing the Restrictive Practices Act, 1956, which authorised the setting up of the Restrictive Practices Court. This action was taken as a result of the Commission's own Report on Collective Discrimination. Although, as I well remember, the Opposition at the time did not think very much of this proposal, I think that today everyone would agree that the Restrictive Practices Court has been most effective.

It is against this background, a largely agreed background, that I want to discuss the I.C.I.-Courtaulds merger proposals. I should like to explain to the House that for a considerable time I.C.I. and Courtaulds had been discussing possible arrangements for a closer association. Courtaulds itself said in its notes to the Press on 17th January that there are structural weaknesses in the industry which must be eliminated one way or another. I am not here concerned with the nature of these earlier discussions. The public became aware of what was going on only on 18th December, when I.C.I. announced that it had proposed a merger to the directors of Courtaulds. The directors of the latter company announced that they were consulting their financial advisers, but by 5th January they announced that they were unable to recommend their shareholders to accept the offer. I must give this timetable because it is important to the purpose of my argument.

Further proposals were then discussed, but by 17th January Courtaulds announced that discussions had been concluded without finding proposals acceptable to both parties. I mention these dates and happenings to show to those who would have had the Government intervene earlier—and the right hon. Member for Battersea, North is one—that it would have been completely wrong for the Government to have taken any steps at that stage. Here were proposals which were being passed between the boards of the two companies and they finally called everything off on 17th January. They might then have left things as they were—in other words, no change. That is how the situation might have remained.

Instead, however, I.C.I. announced that it was going to improve its offer and on 18th January Courtaulds said that it was advising its shareholders to reject the revised offer. This meant that the Board of I.C.I. was going to appeal to the shareholders over the heads of the directors of Courtaulds and against the latters' judgment.

This development created a new situation and with the announcement of the news on 18th January there emerged a demand for a public inquiry. Here was the largest take-over bid ever, and the public, or certain sections of it at any rate, felt that something should be done. The question for the Government was really whether the circumstances of this take-over were so exceptional as to justify a change in the well-established and fully understood policy. In particular, did the sheer size of the operation call for some special intervention by Her Majesty's Government?

When I announced the Government's decision twelve days later, I was accused by the right hon. Member for Battersea, North of repeated changes of mind which revealed confusion, vacillation and cowardice. I hope that he will have some new adjectives for me when we next have a debate. Only a few questions later, the same afternoon, the right hon. Gentleman the Leader of the Opposition nevertheless asked me: Cannot the right hon. Gentleman reconsider this matter …?" [OFFICIAL REPORT, 30th January, 1962; Vol. 652, c. 902.] So, if I had gone an considering the matter, as the Leader of the Opposition requested, I should have seemed to the right hon. Member for Battersea, North to be still more vacillating and cowardly. Perhaps he will consult his right hon. Friend the Leader of the Opposition about deciding what I ought to be doing.

The fact is that the size of this operation and the understandable, though generally vague, feeling of public unease in the matter fully justified the Government in considering urgently but carefully the issues involved. As the House will know, I asked the chairmen of the two companies to come to see me separately on two occasions, and I received a full explanation of their views. Both companies also published a good deal of additional information.[Interruption.] Information looked at from their respective points of view, perhaps.

After this examination of the issues, the Government made a positive decision—and I want to underline this—to reaffirm their existing policy concerning mergers and monopolies. I announced this decision, rejecting the proposed public inquiry, only twelve days after the announcement of the take-over bid proper. I cannot see how this can in any way be represented as weakness or vacillation. It was surely right for the Government to take into account the views of the Opposition and of certain sections of public opinoin and to announce their decision unequivocally and as soon as possible, and this is what we did.

Mr. Callaghan

Did the right hon. Gentleman himself put a proposition to the Cabinet that there should be an inquiry?

Mr. Erroll

The Opposition Front Bench know perfectly well that Ministers never indicate what they may or may not have said in the Cabinet.

The right hon. Member for Battersea, North referred to shareholders and queried whether they should decide this great issue. He made the point that in a matter of this importance it was wrong that the issues should be settled in effect by the selfish decisions of individual shareholders, whether large or small.

To put the matter in that light is to distort what is really happening, but even if that is true I cannot accept that collective decisions of many thousands of shareholders, who between them represent a cross-section of the community, will be necessarily less reliable than the views about the probable future course of events which a collection of experts, or the Government for that matter, might reach. The shareholders at least have as much interest as anyone else in the long-term prosperity and success of the industry in which they have a stake. I cannot believe that they will judge this matter entirely on the basis of short-term calculations of the immediate financial return to them of a decision one way or the other.

Mr. Jay

I have no objection to Courtaulds shareholders being consulted, but is the right hon. Gentleman aware that none of the employees of either company has been consulted, and that, in effect, I.C.I.'s quarter of a million shareholders have not been consulted.

Mr. Erroll

Shareholders, whether employee shareholders or others, will have their opportunities. As regards employees as a whole, both companies have very good records as employers.

Mr. Philip Noel-Baker (Derby, South)

Many thousands of my constituents are involved in this question. The right hon. Gentleman justifies not having an inquiry on the ground that the companies are good employers. Has he consulted the staffs concerned about what they think of this matter, which is vital to their future?

Mr. Erroll

I am coming to the detailed grounds for rejecting the idea of a public inquiry, but I do not intend before doing so to get involved in what I might call the technical and scientific pros and cons of this argument, which the right hon. Gentleman touched on and which may well be referred to later in the debate. To put it colloquially, I certainly do not intend to be led up the garden path of the acrylo-nitriles.

I can sympathise with those who feel that there was something to be said for a public inquiry. If one is uncertain about a situation, or uncertain about how it might develop, the natural thing to do is to ask for an inquiry. I, therefore, feel that I owe it to the House to show why such an inquiry would have been inappropriate.

First, there was no difference in nature between this take-over proposal and many others, although there was a difference in size. If we were to have a public inquiry on this occasion, would that mean that we should have to have other public inquiries on other occasions in the future? And if so, on which occasions?

Hon. Members may have noticed—and I think that the right hon. Gentleman referred to it—that a number of other merger proposals were being announced at about the same time. These included the merger of privately-owned airlines, the merger of two already large brewery groups, the take-over of a bottle manufacturing plant by United Glass Ltd., the merger of Consolidated Zinc with Rio Tinto, and the take-over of Measham Motor Sales by Southern Counties Motor Auctions. This last merger, although small, results in the creation of a virtual monopoly in the public auctioning of second-hand motor vehicles.

I mention that list to show that this is a process which is going on all the time, but all these passed without general public comment, and without comment from hon. Gentlemen opposite. The one which did attract their attention—apart from this case—namely, Mr. Clore's British Shoe Corporation, will not be a monopoly even after it has taken place. It attracted the attention of hon. Gentlemen because of the name of Mr. Clore. They did not bother to get the facts.

Mr. A. E. Cooper (Ilford, South)

At the same time as these negotiations were going on, the London Co-operative Society was negotiating to take over Bearmans, Ltd., of Leytonstone.

Mr. Erroll

When it comes to monopolistic concerns, the Co-operative Society takes a lot of beating. I did not hear the right hon. Gentleman refer to this organisation.

To deal with the British Shoe Corporation, the new group is likely to control less than 8 per cent. of all production of footwear in the United Kingdom, 12 per cent. of retail outlets, and perhaps 22 per cent. of retail sales, so it will not qualify under any heading of the Monopolies Act. The right hon. Gentleman referred to what I might call the Clore empire. Size in itself is not harmful, and certainly the Clore empire is not as big as the Co-operative Wholesale Society.

I should like to remind the House of the merges proposals I mentioned, because is it to be suggested that all these should be the subject of public inquiries? I suspect that there are those who say they should, but if we are to have public inquiries into merger proposals, it must be clearly laid down in advance what type of proposal will attract a public inquiry, and what will not. Without proper criteria the business and industrial world will not know whether it is likely to be subjected to a public inquiry in the event of making a merger proposal or not.

Mr. Callaghan

Would the right hon. Gentleman accept that?

Mr. Erroll

I am coming to that.

That leads me to the second important objection to a public inquiry in the case of I.C.I.-Courtaulds, and that is the delay which such an inquiry would cause. A hurried inquiry, taking only two or three weeks, could only be superficial and probably unfair to all the interests concerned, including the public interest. A detailed inquiry which sets out to analyse the technical and economic considerations involved would occupy a number of months, as the Monopolies Commission has always found and been unable to speed up. Further time would be spent before a view could be formed, and this would still be no more than a view about probabilities. Such a procedure would lead to a great deal of uncertainty, which would encourage speculation and damage the interests of the two companies and their respective shareholders.

I should like to deal now with what I call the mechanics of such an inquiry. The right hon. Gentleman referred to a public inquiry, but I suggest that what he meant was an independent inquiry rather than an inquiry held in public. This point was never made clear, but it is important. There would, nevertheless, be difficulties about an independent inquiry even if held in private, but the difficulties would be greater still if the inquiry was held in public. These are practical matters which I should like the House to consider before opting too readily for the concept of public inquiries before mergers take place. It would be unreasonable to expect companies to disclose confidential information, and even if they did one could not be certain that they were disclosing the full confidential position and not just the part which they thought would favour their own points of view.

The inquirers would obtain certain information relating to the past and present, but it would not be evidence; nor would it necessarily be the whole story. It may be suggested that the inquiry be given powers under the Tribunals of Inquiry (Evidence) Act, 1921, which enables tribunals to take evidence on oath and to require the production of documents, but judicial inquiries of this kind are designed to establish the facts, for example, in cases where there are allegations of improper disclosure of confidential information. Such an inquiry would be quite unsuitable on a matter which involves not only facts about past events, but guesses or forecasts about developments which may, or may not, take place in the future. This is a very real reason why a public inquiry would be useless in the present circumstances.

The question is whether a merged I.C.I. and Courtaulds would produce and develop man-made fibres more efficiently and sell them more competitively than the two separate firms, or not. The answer to this question depends on technical, commercial, and management considerations which cannot be foretold or evaluated in advance of their happening.

Clearly, therefore, there is no body of experts who could do more than express an opinion—and it might be several conflicting opinions—on what is, after all, the real heart of the matter. I do not wish to appear flippant, as I mean it quite seriously. The experts would have to have a clairvoyant sense if a public inquiry of the character suggested was to be of true value.

I understand that there may be anxieties about the possible dangers of this merger, but surely it is right to remember that there may be equal or even greater advantages, and both disadvantages and advantages are matters for speculation.

For all those reasons, I believe that the Government are right to adhere to the established policy regarding mergers and not to make a change which might create awkward and undesirable precedents simply because this take-over bid is larger than any other so far.

Mrs. Eirene White (Flint, East)

Will the right hon. Gentleman say a word about Shell? Is he considering this purely as a matter of kind or also of degree? If Shell proposed to take over I.C.I. would his argument apply equally to that?

Mr. Erroll

I am not going to pronounce on the details of this proposed merger, which we know is in the offing, so I will not comment on a merger which has not even been proposed.

I realise that the I.C.I.-Courtaulds merger proposal has brought into prominence a more general issue to which the Government are already paying attention. Perhaps I might put it this way. Mergers and re-grouping have been tolerable so far in our industrial development, but are they now not perhaps going too far? It is right, let us say, to have the Big Five joint stock banks, but would it be right if they were all to merge into one? It may be right to have brewery mergers, but do we want to see the process going so far that we end with one brewery monopoly, even though that monopoly would have to compete with imported beers and the wine and spirit trade?

This is a matter which the Government were already studying before the I.C.I.-Courtaulds merger proposal was made public on 18th December. I had already decided last year that as five years had passed since the 1956 Act the time had come to put in hand in my Department a comprehensive review of our monopolies and restrictive practices policy. This review will cover all aspects of the matter and will provide a basis on which the Government can reach conclusions about the need for, and the scope of, any amending legislation on the subject.

The review is making good progress, but the subject is complex, and I doubt whether the results will be ready before the end of the year. It has reached the stage when it would be helpful to have from industry and from other interests concerned statements of their view on any subjects covered by it. I therefore intend to publish very shortly an invitation to interested parties to submit written statements of their views to the Board of Trade. I hope very much that bodies representing trade, both sides of industry, consumers and other interests, will take advantage of this invitation.

From what I have said, I am sure that the House will see that there is nothing timid or complacent about the policy of the Government in this important field of our economic development. Furthermore, we are being consistent in the application of a policy which up till now has been largely agreed between the two sides of the House. We are being consistent, we are being firm and we are being forward-looking. I, therefore, ask the House to reject the Motion.

5.20 p.m.

Mrs. Eirene White (Flint, East)

I have to declare an interest in this matter, namely, a very strong constituency interest in anything which may affect the future of Courtaulds. I have no fewer than four of its factories in my constituency, employing some thousands of workers whose future may be very considerably affected by this proposed take-over by I.C.I. I have no personal financial interest in either company. I had a very modest holding in I.C.I.—a handful of shares—which were sold last March on the advice of the gentleman who looks after my modest savings because he did not think that there was any prospect of growth in the next few years. My shareholding was really so minute that I do not think it would have affected my interest one way or the other.

I will deal briefly with the constituency aspect before turning to the much wider matters involved. I must say that I am most deeply concerned at the future prospects for employment in my area after having read the account by I.C.I. of its view of the manufacture of rayon. If one looks at the documents circulated by I.C.I., it appears that all it is interested in concerning man-made fibres are the more expensive ones and that it really brushes on one side, as something of no consequence at all, the rayon industry.

The company says that Du Ponts, in America, has abandoned rayon production as unremunerative, and its whole reference to rayon is extremely slighting. But as the The Times leading article pointed out this morning, cheapness and large quantity are not in themselves a vice in manufacture. If one really carried out the suggestion of I.C.I., that one needs integrated high-cost production, then one should really start a "Keep your own silkworm" campaign. I should have thought that the company might have thought about going into that.

It seems to me to be of great importance that we should not simply put on one side the whole of the rayon production of his country, which is a cheap and simple fibre to produce and which has many uses—not the same uses as the more expensive synthetic fibres—for cheap clothing, linings, and so forth. I can only say, having read the I.C.I. report, that I am alarmed for the future prospect of employment in my constituency. I cannot see any one of our four factories having a long life if this proposed merger goes through, and this is in an area in which there is virtually no alternative employment for the people concerned.

Of course, although I take this very keen interest in what may possibly happen to my constituents, as is natural enough, my interest in this whole problem of mergers goes very much wider than that, more particularly when the merger is not merely a coming together of two interests but one which will result in a monopoly. It is not merely a matter of size; there is an element of monopoly in this which has caused much public concern.

The President of the Board of Trade mentioned various other recent, or proposed, mergers and said that there had not been so much public concern about them. But in most instances they did not involve both the vast number of work people as in this case and, also, a monopoly in products which are in common use. A monopoly may not be misused, but, of course, it is a standing temptation to those in a monopoly position to take advantage of it. Therefore, from the point of view of the consumers as well as of the workers—I will speak about the workers in a moment—what guarantee have we in a monopoly situation that such a large enterprise will not abuse its position?

It may not, perhaps, abuse it very markedly so as to draw the attention of the Monopolies Commission, but it could all the time, in small ways here and there, very well be charging higher prices than would be the case if there were genuine competition. All I can say is that my confidence in what may happen is not strengthened from what has already been the experience of I.C.I. Whatever may have been the state of affairs during the war, I would draw attention to the fact that twice within the last three years I.C.I. has been the subject of a note by the Comptroller and Auditor General concerning prices charged for goods supplied to the public services. That is something of which the company has no reason to be proud.

I have here the two notes by the Comptroller and Auditor General in the two instances which I have happened to find. There may have been others of which I am not aware. I am not a member of the Public Accounts Committee and I do not pretend that there may not be other instances in addition. But here are the two. The Atomic Energy Authority was placed in a position of having to buy from I.C.I. a particular chemical of which the company was the sole supplier. The Comptroller and Auditor General found that the financial terms for this were such that the Atomic Energy Authority had to amortise the whole cost of the plant and buildings required for the manufacture of the chemical for five years and, in addition, pay 12½ per cent. profit to I.C.I. for the whole transaction. In other words, as the Comptroller and Auditor General pointed out, in the first year the percentage was 17 per cent. on the capital employed increasing to 45 per cent. in the fifth year.

Today, I have had a Written Answer from the Minister of Health to a Question which I asked him about the supply of an anæsthetic. Again, I.C.I. is the sole supplier to the hospital service. The Comptroller and Auditor General had noted that the cost of this anesthetic seemed to be unduly high. A regional hospital board had tried to obtain better terms and failed. The reply which I received today says that after, but not before, public attention had been drawn to this matter by the Comptroller and Auditor General the price is to be reduced by 10 per cent. as from 1st February, 1962.

All I am suggesting is that where there is a monopoly there is a constant temptation and that, therefore, we are right to say that where we have a monopoly situation the public interest is concerned. This is a real monopoly, not just 30 per cent.; in man-made fibres it will be 90 per cent. At present, we are protected by tariffs against foreign competition. I will come to the Common Market shortly, but the basis of the decision taken by the right hon. Gentleman is that we are not yet in the Common Market. This tariff protection means that in commodities of general public consumption we have nearly a 100 per cent. monopoly.

The right hon. Gentleman said that we had welcomed the aircraft consortia, but at least there are two competing consortia, and, as the chief buyer, the Government have a considerable influence upon what happens in such circumstances. That was a particularly inept analogy. The right hon. Gentleman said, "Of course, we should not prevent the growth of new companies." I should like to know what new companies will have much chance of entering this field, or the newspaper and magazine field. We are absolutely right to raise this matter.

I now want to say a word about the prospects of the people employed in these organisations. One of the great arguments against monopoly is that it provides a single employer. This does not matter, except from the local point of view, to the operatives, but it matters intensely to the research workers. One of the great arguments about broadcasting was that we should have another service for people whose creative talents were not being fully used, possibly fox personal or temperamental reasons, by the B.B.C.

Similarly, if our research workers in certain industries have to depend upon single employers I cannot believe that it will be in the public interest. It may be said, "If we go into the Common Market those people can shop around and find other employment." That means moving their families, and involves questions of education, and so forth, and I do not think that we are yet such good Europeans, or are likely to be so, for a generation or two to come.

This is a serious objection to monopoly in an industry of this kind, where research in the manufacture of manmade fibres has such a great effect in changing and developing the industry. Unless we have good outlets for our research workers, and give them a feeling that if they do not fit into one enterprise they have at least some opportunity of changing their employment, we shall discourage them. Very often the desire to change employment is a purely personal matter. The person concerned may not happen to get on very well with the man in charge of his department. There may be some personal antipathy which destroys his feeling of freedom to carry on his work.

Mr. Philip N. Hocking (Coventry, South)

I have followed the hon. Lady's argument every closely and I am not entirely out of sympathy with what she has said, inasmuch as there are many Courtaulds research laboratories in my constituency. Her right hon. Friend the Member for Battersea, North (Mr. Jay) said that I.C.I. had not invented Terylene, but that it had been invented by a much smaller company. In those circumstances, would it not still be possible, after the merger, for many people who are at present producing new fibres—and there are many—to be able to continue to produce them, in smaller units?

Mrs. White

We do not need to use that as an argument for the integration of the present two companies. As a matter of fact, it was Calico Printers, and not a small firm, who discovered the Terylene secret. Some companies have been dependent upon certain foreign research—especially Italian research—but that is neither here nor there when we are discussing whether we should put our main research facilities into the hands of one organisation.

There are many other reasons why we should look with considerable caution at the agglomeration of financial power and quasi-political power which may result if this tendency towards very large concentrations develops in our economy. The state of affairs existing in this country is not entirely comparable with that which exists in the United States. I am quite aware that in the United States the level of imports in most manufactures is so low that if a monopoly is created there it is a genuine monopoly, without competition from outside. That is one reason why the United States has taken such determined action, over many years, by way of its anti-trust laws, and so on.

But, granting that the conditions in the two countries are not the same, surely we may learn something from studying the American experience. When the right hon. Gentleman was dealing with the details of the way in which the matter could be handled be did not do what I have done quite recently, which was to go to the American Embassy and read up some of the Congressional papers there. For instance, I read Senator Kefauver's evidence and also that of the Assistant Attorney-General in the Department of Justice, who deals with anti-merger legislation.

Mr. Erroll

I would have dealt with the American question if there had been time. I did not want to take up more time than I did. My right hon. Friend will deal with the American practice in his winding-up speech.

Mrs. White

I am delighted to hear that we shall have a treatise from the Chief Secretary on the American practice. I am sure that it will be most illuminating.

The suggestion was made that there would be undue delay. Many of the arguments put forward by the President of the Board of Trade were directed to the suggestion that it is not practical to try to stop something before it happens. He suggested that we should wait until after it had happened, and then see whether the people concerned behaved properly. The whole trend in the American practice—and they have much more experience than we have in these matters—is quite to the contrary. The trend there is to say, "It is foolish and wasteful to wait until something has happened; we should, in appropriate circumstances, stop it from happening."

Some very good arguments have been put forward on that point, since the Amendment of the Clayton Act in 1950. Unfortunately, the Act was not amended sufficiently. The Americans failed to incorporate a provision requiring prior notice to be given of proposed mergers beyond a certain size. It would appear quite obvious—and Senator Kefauver is trying to catch up on this—that if the Government wait until there has been a merger it is very much more difficult to deal with it than it is to deal with a proposed merger.

Some of the recent discussions in Congress have shown that cases which have occurred in the United States involving vast corporations, have taken years and years to complete. The effort to try to find ways of unscrambling something once it has been scrambled is not only intensely difficult and disrupting in itself, but, over a period of many years—not weeks or months—dissipates the energies of some of the ablest people in the enterprises and also takes up an undue amount of the time of the Government Department which has to study the matter. In other words, it is quite clear from the experience of the Americans that the effort to study a merger before it takes place is a very much more sensible practice than to wait until the amalgamation has taken place and then to try to unscramble it.

There is much to be said for the Government's taking this attitude in respect of the present merger of I.C.I. It is true that we do not yet have precise standards of reference. On the other hand, we have an instance, here, in which public concern has been very much aroused. People want to know why it is that I.C.I. wants to take over a firm like Courtaulds. I confess that Courtaulds, in its financial management, has asked for this. If Courtaulds had been as alive financially as it has been in research in the last few years since the war I do not think that this situation would have developed.

It has been suggested that one of the things that I.C.I. is looking at is the £20 million or so in cash and stock which Courtaulds has salted away. This would be very useful to I.C.I. That has nothing to do with any improvement in the industry. I.C.I. very much needs a little bolstering up, and sees this as a way of achieving it. Unfortunately, Courtaulds' top financial management, and also its public relations—until very recently—have not been all that they might have been. I had better not say more, except that there is now a vigorous change for the better, and it is to be hoped that that change has come about in time to prevent this proposed takeover.

I know that there are many other hon. Members who have a close interest in this matter, and, therefore, I do not wish to take up the time of the House further, beyond saying that I am sure that one of the reasons why the President of the Board of Trade has taken such a completely negative attitude over this matter is that, with Conservative philosophy, it is difficult for him to see what he could do next. If the right hon. Gentleman had an inquiry, what would he do? He and his right hon. and hon. Friends have spoken about competition. But it is clear that their allegiance to competion is very half-hearted and they have no real alternative.

There may well be cases—this may be one of them, but we cannot tell because we have not enough knowledge of it—where a large-sized integration, even monopoly, is desirable. Yet, were one to have no kind of direct link with public interest, what sort of protection are people to have against the temptations which a monopoly always brings? I repeat that, with a Conservative philosophy, there is no solution to this, and, therefore, it is no surprise that the party opposite does not wish to touch the matter at all.

On the other hand, we have stated clearly in our document, "Signposts for the Sixties," that we recognise that mergers of this kind may, in certain circumstances, be inevitable and even desirable. But we say that if they are so, they should, nevertheless, not be allowed to go ahead without a guarantee that the public interest is secured, whether or not by some degree of public ownership would be a matter to be decided in each case.

I think it fair to say that we on this side of the House have a solution to this problem which certainly is not shared by the party opposite. By our suggestion that there should be a full inquiry we are suggesting something which might lead to action in the public interest, in the interest of consumers and workers, and not merely shareholders. I think it completely false to suggest that there is nothing wrong in a matter of this magnitude being decided entirely by shareholders who have been offered terms which will bring them possible short-term advantage, quite irrespective of what the long-term outcome may be.

5.43 p.m.

Sir John Vaughan-Morgan (Reigate)

If, in her concluding words, the hon. Lady the Member for Flint, East (Mrs. White) thinks that she has propounded an alternative policy, it was not clear to any hon. Member on this side of the House. She referred to an inquiry, but she became studiously vague about what action would follow an inquiry. I must say at once that I have no constituency interest in this matter, and no financial interest either. I think that is helpful, because I do not have to spend time explaining the virtues of rayon, nylon or any other fabric which might happen to be made in my constituency.

I welcomed my right hon. Friend's recent announcement that he was initiating a review of Government policy. When I first heard that mellifluous phrase I thought of the immortal Mrs. Beeton's recipe, "First catch your hare", I hoped that it would be made crystal clear to me before we came to this debate what was the existing policy. I think that my right hon. Friend gave us some idea of the goal towards which he was steering. He was asking for the views of industry and I am sure that he will welcome also the views of hon. Members on the back benches. It is no secret to him, I am sure, that there are many of us who have considerable misgivings about the situation in which we find ourselves today.

There are two decisions which we are discussing, one of which, in my view, is, so far, right up to a point, so far as it goes, and the other is wrong. I am talking, in the first case, about the decision with regard to the I.C.I.-Courtauld merger. I see that my right hon. Friend is in a dilemma, that we cannot at this stage have an inquiry which might not possibly have the effect of offsetting or preventing a merger which may well be ultimately in the public interest. But I shall come on later to what I think he ought to be doing now. It is certainly wrong to mistrust mergers as such. I am sorry that the right hon. Member for Battersea, North (Mr. Jay) is not in the Chamber, because the firm in his constituency with which I am most closely associated is itself a merger, going back over many years, of, I think, something like 30 to 35 companies. I should have pleaded with the right hon. Gentleman at least to give us a good reference as employers.

I believe that "monopoly" has become a misused word, that the very existence of a monopoly does not in every case involve, necessarily, any danger to the public interest, particularly where, as in so many cases, the extent of the competition is not always realised. I speak of one industry with which I am closely associated and in which the firm controls 90 per cent. of the output in this country. But it is facing constant competition from alternative methods which keeps the firm on its toes. This inter-commodity competition, as it is called in the jargon of the economists, is a far more realistic fact and check than many people realise.

I am strongly in favour of any action which we could take to throw off restrictive practices. Not necessarily a merger or monopoly, but the old restrictive practices should be done away with. We must recall that the Restrictive Trade Practices Act was one of the factors which led to more mergers than anything else. We may get rid of price agreements, and we should. But if a few inefficient firms, which were propped up by price agreements, are driven to the wall, in my view that is so much the better. But do not let us complain that there are too many mergers. I am glad to say that we are moving, at last, into an era of freer trade and, I hope, the sooner the better, particularly as regards getting into Europe. Nevertheless, for social, economic and industrial reasons, I believe that Her Majesty's Government have to keep a rather more watchful eye on the scale of business than they have done so far.

I come to the I.C.I.-Courtauld merger. I think that, so far, my right hon. Friend is right. We cannot count, let alone kill, our chickens until they are hatched, and an inquiry at this stage could do much more harm than good. I should like to know whether my right hon. Friend has warned the Chairman of I.C.I. that already there is a prima facie case for referring Courtaulds to the Monopolies Commission and that if this merger goes through he will at once refer it to the Commission. That will in no way—if it goes through—inhibit the change. But it will mean that an inquiry could proceed concurrently and that the directors of the mammoth that takes its place will know and will be able to give the information to the inquiry that will be needed in order to make recommendations. If necessary—I think my right hon. Friend gave this assurance—the Government might have to take powers to unscramble the omelette or, at any rate, divide it up afterwards. That is not impossible. It has been done in America and it could be done here.

Mr. Arthur Holt (Bolton, West)

Surely what the hon. Member has just said is a clear threat to I.C.I. and he intends that the Chairman of I.C.I. should understand it as such, but just before that he said that an inquiry now might do more harm than good. Those two statements do not seem to tie up.

Sir J. Vaughan-Morgan

Certainly they do, because I think that at this stage an inquiry might lead to considerable uncertainty, but once the merger has taken place an entirely new situation would be created.

Mr. Cooper

The whole argument in the last few weeks has revolved round the man-made fibre situation. I assume that it is in that connection that my hon. Friend would like this inquiry to take place, but is he aware that if this merger takes place as a side-wind the two companies will control 40 per cent. of the paint industry of the country? Is that not a monopoly situation?

Sir J. Vaughan-Morgan

Yes, 40 per per cent. already qualifies under the Monopolies Act. My hon. Friend endorses my point. I think that most of us—I hope the Liberal Party, at long last—are convinced of the need for more publicity in these matters. I was searching the other day, and enlisting the aid of the right hon. Member for Battersea North, into the relevant quotation from Adam Smith, which should never be forgotten: People of the same trade seldom meet together, even for merriment or diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. I think that is still true whether it is under the roof of Thames House, East, in the nationalised industries, or in the boardroom of the Co-operative Wholesale Society. In the long run the principle is the same.

There is a further step which my right hon. Friend should take in this matter. It lies in the field of tariff protection. I think I am right in saying that this country now has the highest tariff in Europe. Many on these benches think that that is probably the cause of some of the flabbiness which exists in certain quarters. So far as I can understand the rather technical jargon of the relevant tariff codes, our tariff is higher than that generally prevailing in the European Economic Community, except for one particular item. I want my right hon. Friend to say why in the monopolistic position which might arise he would not advocate, if necessary, a reduction, or rather a suspension, of the existing duty. That would certainly please the users and would meet some of the misgivings which they might have at present.

Of course, I already have the advantage of knowing all the arguments which my right hon. Friend would deploy. He may say that it is a useful bargaining weapon and one which we should not sacrifice without a quid pro quo. I know all the arguments because I used them myself in Committee on the Tariff Bill against the rather silly suggestion by the Liberal Party for an across-the-wall 50 per cent. reduction. Now things have changed and there is no argument for an across-the-wall reduction, but there is an argument for a weapon of suspension or reduction in these circumstances.

My right hon. Friend might also say that he has not actually got the powers without having the usual inquiry, which takes something like two years. I suggest to him that in that case he might use the type of powers he has under the Fourth Schedule and that he should seek powers from this House to suspend duties to cover these cases where he is not satisfied that adequate competition exists in this country. In this case action would be justified by a quotation from I.C.I.'s own manifesto, or blast, in the present dispute. I am quoting a paraphrase of it in the Economist. It said: The directors attribute this sharp drop in profits to big falls in chemical prices, to the deliberate adjustment of prices to competitive levels in anticipation of Britain's entry into the Common Market. I can only read into that that in this sphere, perhaps also in man-made fibres, they have been sheltering behind the tariff. I hope that we can have an assurance that they will be deprived of that shelter, because I am sure that it applies to man-made fibres as well.

I turn now to the other decision, on the Imperial Tobacco Company. I share the views of the Commission and, I think, of most hon. and right hon. Members, that it is a most responsible company and a very good employer. I was at the Ministry of Health when it fell to me to make the announcement about smoking and lung cancer. The behaviour of the company on that occasion was in marked contrast with that of the companies in America. I also know it as an employer in Africa where it is a model of enlightenment. So I hope that nothing I say will be taken as in any way derogatory to that com pany, but I think that the decision of my right hon. Friend in regard to Gallahers' shareholders was a mistake. I think it was a bad decision, and I am not convinced of any of the arguments he has put forward for it today. Of course, I accept that the Government do not have to accept all the recommendations of the Monopolies Commission, but this was a serious snub because it was probably the first major recommendation which has been rejected——

Mr. Erroll

No.

Sir J. Vaughan-Morgan

—and I should feel quite differently if I were a member of the Monopolies Commission. My right hon. Friend has given two reasons for his decision. I think I am right in saying that the first is that competition has increased and, the second, that the Imperial Tobacco Company has agreed not to interfere with Gallahers. Taking the figures for competition, the figures of the Imperial Tobacco Company and Gallahers together, the percentage of the trade in 1956 was 94.7 per cent. and in 1959 it was 92.9 per cent. It was on the basis of those figures that the Commission made its recommendations.

My right hon. Friend says that competition has increased. I wish I could find evidence for that. Yesterday I asked him a Parliamentary Question. I asked for a breakdown of the figures for the Imperial Tobacco Company and Gallahers and the others. He referred me to the 1959 figures. Perhaps at some time he could enlighten us about changes which there have been since that date. One thing which is quite certain is that competition has not gone so far as to cause either of these Titans to totter. To me it is a mock battle between the two. If Imperial Tobacco loses on the swings, it gains 37½ per cent. on the roundabouts. Of course, this blunts the edge of competition. My right hon. Friend knows that any company which buys the trade investment of a competitor in the same line does so to enlarge its market. There can be no other very valid reason in my view.

The second reason which my right hon. Friend gives is that the company has given a guarantee of no interference; it has neutralised its shareholding. I think that that assurance should not have been given by Imperial Tobacco Company, although I accept entirely its responsibility, honesty and sincerity in giving it. It should not have been given and should not have been accepted. It may be that the shareholding is too large to sell. It may be that would be unfair to Gallahers' shareholders. My right hon. Friend suggested that it should be sold, but is that his concern? Is he the watchdog of Gallahers' shareholders?

There is an alternative. Why should there not be a distribution of the shares in Gallahers to shareholders of the Imperial Tobacco Company? Let them make up their minds whether they wish to have their money invested in a rival concern. Let them decide that for themselves. My right hon. Friend may say that there is a taxation reason. If so, let him give that reason, not the one he has given. If it is taxation, then all I can say is that it is about time he persuaded the Chief Secretary to the Treasury, who is sitting on his left, to look at taxation and to consider its effects. The rights in this matter of the shareholders of the Imperial Tobacco Company seem to have been entirely forgotten.

There is another aspect of the matter. We read in a report that Imperial bought the majority control in Gallahers to keep out American competition. At the moment the American Tobacco Company holds 13 per cent. in Gallahers. What is the effect of the neutralisation of the Imperial Tobacco Company's share in the equity? It is—I do not necessarily say that it would be a bad thing—that the American Tobacco Company now has to acquire only 18¼ per cent. to secure majority control. What would happen in that case? Would Imperial Tobacco Company fight the endeavours of a more vigorous competitor or would it acquiesce, and completely nullify the effect of its holdings?

This illustrates, in my view, the extraordinary position which has arisen from this curious decision. I think that there are lessons to be drawn from this and also from the I.C.I.-Courtauld battle. There are too many firms—responsible, upright and admirable employers—who treat their shareholders and the general public like children. They refuse to divulge information, they are far too secretive about their success and their failure. Then comes a crisis, and all the figures and the information are suddenly available to all, just as in a siege the beleaguered defenders rush around and reluctantly arm the striplings, the women and the children. It is a thoroughly unhealthy trend.

I hope that my right hon. Friend will recall that he, too, has a responsibility to see that the companies law is up to date. We are awaiting the Jenkins Report, but I do not think that many people, including the Government, are as alert to this danger—perhaps that is an exaggerated word—or to this trend as they ought to be. I think that in the present state of our economy, when we are fighting for our share of world markets, we must be untrammelled by some of the rather outmoded attitudes towards big business which exist.

I should like us to move far more towards—not the whole way but towards—the American attitude on monopoly and cartels. The American attitude is inimical to all concentrations of power, whether they are in private or in public hands. In that great nation they carry the attitude perhaps too far, but certainly I should like to see us moving a long way along these lines. We need as soon as possible to strengthen the Monopolies Commission, to restore it to its pre-1956 size, and to give it powers to sub-divide and to produce more reports, and we need to back up its recommendations—all of them. If we cannot back them all, we should give rather better reasons for not doing so than my right hon. Friend has given on this occasion.

I have known my right hon. Friend for many years, and I think that his views and mine on these matters run in parallel. Certainly I hope that we are not far apart in our views and that my right hon. Friend will help to bring us closer together.

6.4 p.m.

Mr. Austen Albu (Edmonton)

The lines of thought of the President of the Board of Trade and those of the right hon. Member for Reigate (Sir J. Vaughan-Morgan) may be running in parallel, but that only means that they are never likely to meet.

Seriously, I think that the House has not listened for a long time to such a thoughtful, witty and devastating speech as that made by the right hon. Member for Reigate. If it is not impertinent, I should like to say that on one matter the right hon. Gentleman made a suggestion which I had intended to make. It concerned tariffs. The suggestion of the removal or suspension of tariffs in cases in which there is a serious danger of monopoly in the home market seems to be one which the Board of Trade might seriously consider, at any rate during the period before that in which we enter the Common Market, if we ever do enter the Common Market.

There are two ways of handling a bad case. One is the way of the right hon. Gentleman the Minister of Housing and Local Government, which is to bluster and bang the Box and make a loud noise, and to get the House thoroughly disturbed so that nobody can hear what the case is. The other is the method employed by the President of the Board of Trade, which is to read, from a long foolscap document, a lesson in economic theory until the ears of the House are closed.

The right hon. Gentleman the President of the Board of Trade made some extraordinary statements, particularly in attacking my right hon. Friend the Member for Battersea, North (Mr. Jay). I particularly liked his quotation from my right hon. Friend's recent book on the ability of little men—he quoted some of them—to build up the substantial businesses which they now head. Can he tell me which of the present members of the I.C.I. or Courtauld boards were the little men who built up those businesses? If he can, I shall be very interested to know the answer.

We are all concerned with the public interest, and we know how difficult that is to define, but I think that in this case the public interest can be divided roughly into two. There is the interest of the public as consumers and there is also the interest of the public because its standards of living depend on an expanding economy, which means an expansion of exports. In considering the question of the degree of monopoly or of mergers, we have to balance these two interests. This is what the right hon. Member for Reigate meant when he referred to what was taking place in so many industries, including his own, a very successful scientific industry.

But these interests will not be balanced by a policy of Government abstension or laissez faire, a policy by which the Government take no part in the processes which are going on. That is my view and I think that it is shared by my hon. Friends. None of us doubts that there must be a reasonable degree of competition. This is essential for the protection of consumer interests. I believe that it is even necessary in industries which are in public ownership—not necessarily competition between the same services and the same products, but competition between alternative products or alternative services. I think that I am right in saying that none of the industries at present in public hands is not subject to competition of that sort.

If competition becomes impossible or is substantially reduced, then a greater or lesser degree of public control becomes essential. We must either have an industrial system which is based either on competition or one based on public control.

There is no doubt that the most undesirable form of monopoly is that of price fixing. The right hon. Gentleman said that the Restrictive Trade Practices Act has been successful. I agree with him that in the first year or two it had very substantial results. Some of us who had to look at the effects in one or two industries know that it brought about an enormous change and an extraordinary reduction in prices. I remember that in one commodity which I examined, and which is used both by nationalised industry and by private industry, the prices went down by 40 per cent.

But anybody who reads the latest report of the Registrar must be well aware that since that time firms have found ways of getting round the decisions of the court. They have done this, as my right hon. Friend pointed out, by the so-called information agreements which are mentioned in paragraphs 10 to 14 of the Report. By these agreements, companies inform each other of their prices. If they have had a habit of maintaining prices, they continue to do so, and even if they have not been in that habit, if one or two firms are leaders the others will very often follow the prices given in the information. There has to be the will to compete; otherwise, competition does not take place.

In my opinion, there is a need to provide a method of inquiring into the effect of the ending of registered agreements—in order to find out whether, when they are legally ended, they are in practice ended. This will mean some change in the present powers of the Registrar, but I think that they are powers which badly need to be enlarged.

It is true that some mergers, even when they lead to near monopoly, may increase efficiency, and may increase the rate of innovation. It is also true, as the right hon. Gentleman said, that price-fixing arrangements sometimes prevent necessary mergers from taking place. If the control of price fixing is made more severe, or if these informal price agreements are in some way prevented, it will undoubtedly lead to more mergers. The trends today are all in the direction of mergers, sometimes for financial reasons, as my hon. Friend the Member for Flint, East (Mrs. White) has said—and there may be something of this in the present proposals of I.C.I.—but also for technological reasons, such as the great increase in the cost of research and development, and of the size of plant. There is also the growing world competition, including that in some markets which used to be considered our own markets, in the Commonwealth, where we are finding growing competition with our own products, and in the Common Market. It was for some of these reasons that the Minister of Aviation brought about the merger in the aircraft industry.

There are other industries in which discussions are going on about similar needs. There is the situation in the heavy electrical industry, with the increasing size of a single generating plant and the extremely high cost of some of the more advanced types of research, like electro-hydrodynamics. There may well be a need for an increased concentration in marine engineering, and I cannot believe that even today there is room in this country for five mass-production motor-car firms, and, if we go into Europe, certainly no room for ten or a dozen such firms. There may well be a good many pro ducts in which we have too many firms making the same thing, and I am sure that this applies to some domestic electrical equipment.

This leads to a very serious situation, which we have to consider, but what we are considering today is not just a simple merger or the reduction from five motorcar firms to three. We are considering a merger which will result in the control of 90 per cent. of the output of a single product. This is monopoly. There is a way of deciding whether a degree of monopoly warrants Government interest, and this yardstick has already been laid down in the Monopolies Restrictive Trade Practices Act: it is when a firm controls one-third or more of the output of a particular industry.

I believe, as my right hon. and hon. Friends have said, that it is essential to have machinery which can take the initiative before a merger takes place. The argument that we cannot tell what the effect will be does not hold water. It seams to me to disclose a degree of amateurism in the Board of Trade which I cannot believe really exists. The Board of Trade must surely not only have resources itself but be capable of drawing on resources to make the necessary inquiries, or, alternatively, such a body as the Monopolies Commission or some similar body should certainly have the resources, legal, economic and technical, to make the sort of inquiry which is needed to find out whether or not a proposed merger is or is not in the national interest. This inquiry would have to determine the reason for the merger, and whether it is justified, the effect on the consumers at home, in the first place; secondly, on other industries and consumers, and, thirdly, the effect on the economy generally, particularly on exports.

There is no doubt that the speech which we heard this afternoon, re-emphasising what the President of the Board of Trade called a policy, which was really a self-denying ordinance on the part of the Government and a refusal to take any part in the economic process, makes absolute nonsense of the Government's new-found enthusiasm for economic planning. I do not see how they can possibly set about the setting up of a large body, to examine all aspects of the economy, to assist in the planning of investment, and, as the Financial Secretary to the Treasury said yesterday, even possibly taking account of scientific changes and having some scientific advice, if we are to allow very large firms, controlling a very large part, not only of the research and development but of the investment, employment and manufacture of certain products in this country, to come into individual hands, so that unless some other action is taken, they will be very difficult to control.

If they do come into individual hands, any Government which want to carryout a policy of economic planning or carry out decisions based on recommendations from the National Economic Development Council, would be forced to take such a large organisation either under public control or in one way or another, to participate in the decisions which it makes. The Government must inevitably face that. Personally, I do not know where are the rights or wrongs of the Courtualds I. C. I. issue. There are a great variety of arguments being used. I am not sure I agree with my hon. Friend the Member for Flint, East on the question of cheaper fibres. It may well be that advanced industrial countries have to give up making the simpler and cheaper products and make the more expensive ones while importing the cheaper ones, in the same way as we have had to do, to some extent, in the textile industry as a whole. This is not an argument that we can decide, but I can see the case for giving up making the cheaper products, and going into the production of the more expensive and higher conversion ratio products, but these are matters which an inquiry should ascertain in order to see whether the effects of such a merger would be in the national interest. Without such powers, not only are the consumers in this country in jeopardy but the whole business of economic planning seems to me to be made infinitely more difficult, if not impossible.

6.17 p.m.

Sir Harwood Harrison (Eye)

It is over seven years since I last made a speech in the House, not due to any lack of desire on my part, but because, by the traditions of the House, the positions which I had the honour to hold in the Government precluded me from taking part. I have, however, listened to a great many speeches from the Treasury Bench, and I have often felt that many excellent and sincere speeches were rather spoiled by the hon. Member concerned going on too long. I will try not to commit this fault myself, and to confine my remarks well within twenty minutes.

In arguing against this Motion, I should, first, declare an interest. I have a factory of I.C.I. in my constituency. Very recently, large sums were spent in modernisation and new plant. I have seen personally, and I know from talks with people concerned, that the factory runs their business efficiently, and that its labour relations are good. As is commonly known, many of the employees are shareholders themselves. I think that it is true to say that many of them have been rather shaken by all the publicity that has surrounded this firm during recent weeks, and they do not know quite what to make of it, although, naturally, they remain loyal to their firm. Perhaps I should also say that my wife holds a few shares in Messrs. Courtaulds.

We face a far bigger issue than the inquiry suggested into this case. The whole existence of our country and our high standard of living depends on our export trade. All our attention should be directed towards finding whether our firms are prepared to play a greater and expanding part in this vital drive. I was rather disappointed that neither of these firms, big exporters as they are, paid any attention to this problem in the first memoranda that they produced. I was glad to see that the statement issued by the I.C.I. last Friday started to mention exports, and it brought a counter-reaction from Courtaulds.

It is well known that this country has a mixed economy. We in the Conservative Party have accepted the nationalisation of certain industries; but these industries, whilst requiring much capital investment, contribute little or nothing in direct exports. It is true that by better communications or cheaper sources of power they can play a contributory part.

The other section is what we call private ownership—private enterprise. If ordinary people were asked what they conceived by private ownership, I think that their answer would be the right of any man to run his own business. Their conception is of the small firm—the small manufacturer, the farmer, the shopkeeper—where ownership and management are roughly in the same hands. But today in most of our large public companies management is completely divorced from ownership. Perhaps the criticism could well be levelled against this type of company that in recent years it has been too concerned with the wellbeing of those within the firm and not sufficiently concerned with keeping its prices low.

This or any other Government must look very carefully at this new pattern along which our industry in the private sector is developing and apply to it one vigorous test: are the activities of a particular firm contributing to our export drive? This is quite as important as whether an industry is a monopoly and not acting in the public interest by selling at too high prices.

No doubt these thoughts were in the mind of my right hon. Friend the President of the Board of Trade when he had talks with the two chairmen concerned. If we enter the Common Market, a merger such as this might well be advantageous to our export trade. Equally, if we do not enter the Common Market the reverse might apply. I understand that the exports of I.C.I. have expanded and increased in each of the last ten years. In 1960, they were over 26 per cent. of their production in this country. I hardly think that an inquiry would help over facts like these.

In a short debate on 18th July, 1952, nearly ten years ago, I raised this question of our export trade. Nothing that has happened since has caused me to alter the opinions I then expressed. In fact, I only wish a few of the ideas I put forward had been followed. My right hon. Friend the President of the Board of Trade has travelled extensively. There are more markets available to us than is generally recognised. I will quote two examples. A friend of mine from the City of London fairly recently went to Alaska, and very excellent business resulted from his visit. This is good individual enterprise.

A firm in my constituency, Munton and Fison, now exports over 10 per cent. of its malt products to over 22 countries throughout the world. The managing director of the firm is in India at present. I know from my talks with representatives of the company that this side of their business is not the most profitable, but they believe it is wise, both for themselves and in the national interest, to export their products.

I believe that there are far too many firms not prepared to enter the export market because it has been too easy to sell in the home market, or, because of the high level of taxation, they think that the risk is too great. It is imperative for the future of the country that more medium-sized firms—those employing 100 to 1,000 workers—should be induced to enter the export market. An excellent amount of guidance and help is given by the Board of Trade. We in industry are grateful for the extended guarantee of credits, but this applies only when goods have been sold. I believe that in the national interest some timid firms might well be taken over by bolder spirits.

I do not believe that it is enough for our trade attachés in foreign countries merely to say, "Buy British". I believe that they have got to be able to name individual firms. This may be a revolutionary step, but it is sheer common sense. I should like my right hon. Friend to compile a list of exporters of reputable goods and say that they can be mentioned by name in any country in the world. In return, we should have to ensure that these firms kept to delivery dates, packed their goods well, had spare parts available, and would put any faults right quickly.

To take an example, when a trade attaché, say in Tasmania, found that there was a sudden increased demand for lawn mowers, he would consult his list and see that the Suffolk Punch mowing machine, produced by the Suffolk Iron Foundry, is the most suitable machine for this market. There would have to be a direct link with the firm concerned and no "red tape". If there were such a list, it might well encourage firms not on it to get into the export market.

Speaking from my own experience of the export market, which is not inconsiderable, I say this to every manufacturer. However good the home market appears today, it will not always be so. Already, there are many imports competing in our own home market under a tariff. If a manufacturer is wise, and is thinking of exporting in 1964 or 1965, it is about time that he began tooling up.

My right hon. Friend the Prime Minister has in many speeches stressed the importance of exports. He did so at the Guildhall only last week. The Leader of the Opposition has spoken in similar vein. The Government must continue to do more than just utter words of exhortation. We all have different ideas of what could be done. I have thought that the Profits Tax might be lower on that portion of a company's trade which goes for exports, but from correspondence I have had with my right hon. and learned Friend the Chancellor of the Exchequer I gather that the Treasury does not think this practical. Might not increased depreciation allowances be given? Are ours as high as all other industrial countries in Europe?

Sir Oliver Franks, the Chairman of Lloyd's Bank, made some very interesting and pertinent remarks in his annual statement. In his view, contrary to the general belief, our prices are not too high. They are on a par with those of Germany and below those of the United States. Our costs of production are still favourable to us. His conclusion is that there is nothing to prevent us from meeting the challenge of overseas competition and regaining our former share of world markets, but this will not happen unless we are prepared to put right the things we know are wrong with our economy. These defects may well be the hidden reserves which will enable us to mount a real export drive.

I am glad that we are to have a productivity year. This is excellent, but not enough in itself. Increased production, unless goods are sold in the right markets, may be a millstone round our neck rather than a blessing. Selling the goods is not enough. They must be paid for. It is on this second point of selling that we as a nation show weakness. I will throw out another suggestion.

During the Productivity Year could we not emphasise selling by, for example, having a great national competition with suitable awards? We might even take it further and have a private contest between Lord Beaverbrook—offering a prize of £5,000 or £10,000 to be shared among the members of the firm with the best record of exports in the Commonwealth—against Lord Glad win and his associates to the firm with the best record of selling in the Common Market countries. Only with ideas such as these will we bring home to the men and women on the factory floor the importance of our export trade.

We in East Anglia very much appreciated the visit of the Minister of State, for it did much to encourage the efforts of many of the firms in the area. I am sure that these sorts of problems will be studied by the National Economic Development Council which the Chancellor has so wisely set up. The N.E.D.C. must surely be the answer to this Motion and I therefore support the attitude of the Government not only towards the Council, but to the debate as well.

While the Government are showing their wisdom in this matter, no Government can be complacent about the present pattern of our industrial life. The Government must fashion it in such a way that it is a useful weapon to achieve the aims of all hon. Members. We must particularly watch the amount of capital investment and see that the maximum is given where it will produce the best results in the export markets. If we are not successful in our export drive our general financial position will be weakened, our prestige in the world will be very much reduced and our ability to help the new independent countries of the Commonwealth will disappear.

If I may conclude on a personal note, twenty years ago tomorrow saw the fall of Singapore, the end of one of the most disastrous military campaigns in our history despite many brave actions on the part of men and companies, soldiers and airmen. That was brought about by a lack of forethought, lack of preparation, idleness by many people out there and a lack of leadership. Today, we have all the advantages, so do not let us dally and delay. After all, we have a Prime Minister who has had years of commercial experience and under his leadership and with the inventive genius, skill, and ability at all levels in industry we can meet and win this challenge.

6.33 p.m.

Mr. W. A. Wilkins (Bristol, South)

I am sure that all hon. Members welcomed the vigour which the hon. Gentleman the Member for Eye (Sir H. Harrison) displayed this afternoon after seven years of silence. I can appreciate how the hon. Gentleman must feel because I had twelve years of silence and I found it an extreme penance to have to serve. However, I cannot follow the observations of the hon. Gentleman, some of which seemed a little wide of the subject under discussion.

I think that I am being fair in saying that most of my hon. Friends are not necessarily—and I mean "not necessarily"—opposed to monopolies, provided they are public monopolies. What we oppose and challenge is something which I would like to have seen more vigorously taken up by speakers today; the behaviour of monopolies, for their behaviour should be receiving our greatest consideration.

The debate so far has taken the course which I had anticipated, but I must make an observation concerning the speech of my right hon. Friend the Member for Battersea, North (Mr. Jay), whose remarks to the President of the Board of Trade over the Monopolies Commission findings and the decision concerning the Imperial Tobacco Company were, I think, rather vicious. I have personal knowledge of this situation, because the major factories and headquarters of this company are in my constituency and I have spent a considerable amount of time, especially at General Elections, outside the factory gates speaking to the employees.

At the time of the 1959 General Election the first question those employees put to me was, "Will the Labour Party nationalise the tobacco industry?" I make this point deliberately, because I wish to relate it to the remarks made by my right hon. Friend about the President of the Board of Trade. I am a believer in public ownership, but I am rather "choosey" about the things I would wish to see taken into public ownership. I am far more concerned about those things which are vital to the nation's economic life than I am about the industries producing articles which must surely come into the luxury category. Thus, I would not put the tobacco industry on top of the list, but some way down it.

I say this to my right hon. Friend the Member for Battersea, North, because both he and the right hon. Gentleman the Member for Reigate (Sir J. Vaughan-Morgan)—who made an extremely interesting speech—failed to do justice to the argument which they were adducing. When referring to the Imperial Tobacco Company, the right hon. Gentleman the Member for Reigate used words to the effect that Imperial Tobacco had taken holdings in Gallahers because it would receive a 37½per cent. dividend.

Imperial Tobacco made its investment in Gallahers because the company hoped, I suppose, that it would draw a reasonable proportion of dividend from that investment. Both of these right hon. Members, when referring to this matter, were guilty of a slight injustice, because they did not refer to the circumstances and the time when this holding was taken. It was taken, in fact, in 1932, or about thirty years ago, when Imperial Tobacco thought—rightly or wrongly, I do not know; but, considering that the British American Tobacco Company has a factory in my constituency as well, Imperial Tobacco's decision was probably right—that there would be a direct threat to its operations by big American interests coming to this country and buying up many of the tobacco interests here.

At that time Imperial Tobacco, faced with possible big American competition, was somewhat dismayed and thought that the best thing that it could do would be to try to get some sort of control over the tobacco industry here. Of course, Gallahers was a negligible competitor to Imperial Tobacco at that time but today Gallahers is one of the most prosperous and certainly one of the most energetic competitors to Imperial Tobacco.

I have made these comments because I believe that any hon. Member having a constituency problem or opinion—be it raised by an individual, an organisation or a business firm—should make those views known in the House. Every constituency interest should know that it can be represented here. The major burden of the case made by various hon. Members has quite rightly been directed to the proposed I.C.I.-Courtaulds murder—[Laughter.] I meant "merger", of course, but I suppose that, in any case, it would, in effect, almost be one and the same thing.

I have been intrigued by what appears to be the new doctrine or slogan of the Conservative Party. I imagine that the President of the Board of Trade took it from the first paragraph of the document circulated to us by I.C.I. The slogan is, "Eliminate home competition in order that we can compete with foreign competition." That apparently being the new slogan of the Treasury Bench, I suppose that it will ultimately be supported by the Government back benchers.

We would be well advised to re-examine the evidence at present available on the operation of monopolies, or cartel agreements that may well occur. I would commend to my hon. Friends, in particular, a book, now in the Library, written by my hon. Friend the Member for Bilston (Mr. R. Edwards). It is an absolute mine of information about monopolies throughout the world, but especially here. The right hon. Member for Reigate reminded us that not so long ago Courtaulds itself could be regarded as a monopoly—[HON. MEMBERS: "It still is."] Not to the same extent, I imagine, in view of the competition coming from other places.

In my hon. Friend's book there is one very interesting passage which has a lesson for us to learn. Incidentally, I am assured that none of his facts has ever been controverted. He writes: By 1928, however, Courtaulds monopoly … process had been broken by the expiring of the patent and Courtauld's large profits, together with the increased demand for rayon products, had attracted a number of newcomers. Consequently, new companies sprang up in different parts of the country. The resultant competition"— and this is the interesting part— progressively lowered the price of rayon fibres until Courtaulds, who up to this point had refused to reduce prices, moved into the struggle, scattering their opponents and driving dozens of firms out of business by reducing prices by 15 per cent. in one stroke. That is what we might expect as these huge monopolies grow, and spread their tentacles in this country—and probably internationally, as well.

In 1932, I.C.I. reached an agreement with I.G. Farbenindustrie, which fixed prices, divided markets and limited competition in the European dyestuffs industry. As a result, the British Colour Users' Association complained that it could not purchase dyes at competitive prices and that, in fact, dyestuff prices had risen by 100 per cent. Therefore, I.C.I. and their associates were holding the consumer to ransom thirty years ago.

I say these things because I want the House to learn the lesson of history, although I would rather that people outside learned that lesson, and so knew how to vote in the next General Election. In view of all that evidence—and I have quoted only a couple of examples—why do we trust those people now? Why are the Government prepared to trust them if this merger takes place?

Advertising in the national Press last week, I.C.I. said something like this, "The merger is necessary in the country's interest in order that we can meet the severe competition from abroad." Does anyone seriously believe that, having monopolised the British man-made fibre industry, and having sewed up the lot in unbreakable nylon thread, those people will engage in an all-out competitive price war, in the sacred name of free enterprise, with Du Ponts in America and with I.G. Farbenindustrie in Germany? If anyone really believes that, he is either extremely naïve or, in common parlance, he wants his head examined.

I suggest that the sequence of events will be very much the mixture as before; more international agreements to eliminate a price war and to assure profits, more cartels, and, as a final result—and I beg my hon. Friends to remember this because, again, it is a lesson of economic or industrial history—more power for the people who own these monopolies to control our economic life.

Our complaint has always been that it is this kind of power, residing in very few hands, that has enabled those concerned to control our economic life throughout the years. That power should not reside in the hands of individuals. If we must have monopolies, they should be public monopolies, and I hope that my party will never apologise for that part of its programme, at any rate. I could at once name five principal industries—and there are a lot more than that—which, as I believe, should, in the country's interests, be publicly owned.

In yesterday's Evening News I read: Wolfson private empire to link with Drages. There is this building up of private empires by individuals. Thinking people must now be getting anxious about the probable conduct of our industry as it gets into the hands of the Clores, the Frasers and the Wolfsons, who are rapidly becoming power-drunk financiers, building their trading empires to a point at which, one day, they must inevitably become monopolies.

They do that with the cognisance—even with the approval and the applause—of quite a few hon. Members opposite, who prate with tongue in cheek at election time about the little man who, in any case, is being rapidly "folded up" by the supermarket people and the other tremendous organisations springing up under the control of the so-called business geniuses.

Monopoly is a hateful thing. Who says that? The people who say it are on the benches opposite. I do not think that monopoly is a hateful thing, but I have here a document which I expect a good many Government supporters have forgotten. It is "The Industrial Charter—A Statement of Conservative Industrial Policy," written in 1947, after the 1946 Conservative Party Conference. The headline on page 10 is "Highwaymen". We on this side would never have thought of such a subtitle. A highwayman, according to Cassels, is a man who robs the public on the highway. I put this on the record so that hon. Members opposite who may have forgotten what their party was telling the public in 1947 and 1948 may have it ready to their hands.

The document states: Making 'Corners' and Playing Ca-canny. A new piece of jargon has come into our langguage—'restrictive practices.' What does it mean? It means anything which prevents all-out healthy service by owners of businesses, on the one hand, and workers in businesses, on the other. You have a restrictive practice when some people get together"— Incidentally, I see that I have written at the top of my copy—I must have been going to a meeting about monopolies—"Tories now in power for five years and they haven't done a thing about it".— to keep down the supply of something and charge what they like for it. There is no competition. That is called a monopoly. Conservatives hate monopolies. This is their own document. It goes on: They believe in free enterprise which is the opposite. They believe that this is the way to keep fair prices and good quality. Therefore they will be stern in dealing with monopolies. That is their Industrial Charter. There are many more references in this document, directly related to the monopoly situation, which I should like to quote but for the fact that I know that other of my colleagues want to take part in the debate.

This document is now shown to be a completely fraudulent prospectus. In eleven years, the Conservative Party, after using this document as a policy statement in the 1951 General Election and the two subsequent General Elections, has never, in fact, taken any serious action against monopolies after they had been investigated by the Monopolies Commission. I am not saying that it has not taken any action at all, but when one remembers that there have been 24 references to the Monopolies Commission and the number of times we have heard complaints in the House that the Government have refused to implement the conclusions of the Monopolies Commission, I think that we are justified in saying that the prospectus was a fraudulent one.

I am quite certain that Mr. Speaker himself would never have subscribed to it had he seen it before the elections took place.[HON. MEMBERS: "oh."] I really mean that. I believe that such terminology, which was obviously fraudulent, would not have been something that Mr. Speaker, when he was a candidate seeking election, would himself have subscribed to. I certainly would not, had I been asked to do so.

I hope that in consideration of the Motion we shall not be so much concerned about the insular considerations of individuals or firms in the constituencies which we represent. I believe that we are discussing a principle of very great importance. I hope that my hon. Friends who follow me in the debate will make their declarations, as I have tried to do, on the question of principle and make clear our objection to this growing threat—the build-up of private empires which must inevitably become monopolies if they are allowed to go on.

I hope, therefore, that when it comes to the vote, especially as we seem to have a reasonable amount of support from some hon. Members opposite, we shall register our protest in the Lobby and tell the Government in the plainest possible terms, that not only should they have an inquiry into the question of the proposed merger of I.C.I. and Courtaulds, but that, if possible, they should say that the merger should not take place.

6.57 p.m.

Sir Hendrie Oakshott (Bebington)

The hon. Member for Bristol, South (Mr. Wilkins) began his speech in a very fair way, if I may say so, in regard to the Imperial Tobacco-Gallaher position, in which, as the Member for that constituency, he is, naturally, very interested. He was a little less fair, I thought, when he castigated I.C.I. for an arrangement with I. G. Farben which was made thirty years ago. He seemed to imply that this arrangement still existed. It came to an end long before the war—it did not last long.

Then the hon. Member had some fun with hon. Members on this side about our Industrial Charter. The document was produced in good faith by us in 1947 and was completely repudiated as unworkable and undesirable by hon. Members opposite and by organised labour. I shall say no more about it. Those are the facts. I do not think, after looking at my hon. Friends on either side of me that the hon. Gentleman was really serious in saying that they were a lot of highwaymen. I do not think that they look like highwaymen, or my right hon. Friends, either.

I start by advancing a proposition with which, I thought, the right hon. Member for Battersea, North (Mr. Jay) agreed, that in considering the actual terms of a merger such as the one now proposed—I want to confine myself to that—provided that the terms do not infringe the revenue or company laws, those terms are really a matter for the board of directors and shareholders of the two companies and not for the Government and Parliament.[HON. MEMBERS: "No."] I understood the right hon. Gentleman to accept that that was so. Perhaps I was wrong. In my view, it is more to the general principle of mergers that we should address ourselves rather than to the actual terms of a possible merger which may not even take place.

The Monopolies Act works reasonably well, although, with the present tendency towards the growth of bigger units, it is perhaps a drawback that to some extent at least it works only after the event. The Restrictive Trade Practices Act has worked very well. The hon. Member for Edmonton (Mr. Albu) admitted this in regard to the first two or three years of its operation, but then implied that it was not working so well now, basing himself to some extent, I think, on the Report of the Registrar.

I draw to the attention of the House that my right hon. Friend the President of the Board of Trade instituted his review some time ago. In making his announcement to the House on 30th January, he said: … I had already put in hand a general review of policy in the light of experience gained in the five years since Parliament passed the Restrictive Trade Practices Act in 1956."—[OFFICIAL REPORT, 30th January, 1962; Vol. 652, c. 896.] No doubt, that review will bring important information to light.

I think that the Act has been effective not only because of the operations of the Restrictive Practices Court, but also because the existence of the powers under the Act has in itself brought about the cancellation of quite a number of arrangements which otherwise would have come within its net. In other words, the Act has had a cautionary effect, rather like the influence of the policeman on the beat.

There may be a lesson in this for us when we are considering how, in the future, we should keep our eye on the problem of mergers. We could, perhaps, apply to monopolies the same sort of ideas and principles as we apply to restrictive practices, and in this way begin at least to overcome the defect to which I referred a moment or two ago. Nothing in either Act says that all monopolies are bad, that all practices which contain an element of restriction are evil, or that size of itself is a matter for condemnation.

Like other hon. Members who have spoken, I should, I suppose, make clear that I am not a shareholder in either company, and I do not take sides in what I confess I find the slightly unedifying public controversy between two great companies. I wish merely to put briefly and, I hope, fairly, a few comments on how the matter strikes me.

First, with respect to the right hon. Member for Battersea, North, I do not believe that the device of a public inquiry is a good one to adopt. I accept absolutely the reasoning of my right hon. Friend. I think that it would inevitably lead to prolonged delay and uncertainty. It would take a very long time. I accept, also, that, with all the good will in the world, the members of the committee of inquiry, however expert they might be, would be looking into the future in a manner thoroughly conjectural.

Mr. Callaghan

The hon. Gentleman says that it would lead to uncertainty.

Sir H. Oakshott

No, prolong uncertainty.

Mr. Callaghan

Prolonged uncertainty, then. What is the urgency about it.

Sir H. Oakshott

I did not say prolonged uncertainty. I said that it would prolong uncertainty. I should have thought that, with all the publicity and the glare turned on to the affairs of these two companies, unnecessary delay could only be bad. I think that we want to have the thing settled.

Mr. Denis Howell (Birmingham, Small Heath)

Oh !

Sir H. Oakshott

Certainly.

I do not suggest for a moment that the Government and Parliament should stand aside and wash their hands of this sort of development. On the other hand, I do not accept the charge that the Government are indifferent to the problem. Before this episode began, my right hon. Friend had already put in hand a review of policy which specifically includes the question of mergers and their possible effects in the future. On 30th January last, he made clear that the Government will look at the present powers and strengthen them if necessary. I welcome this very much, and I hope that they will be strengthened. There is a case for doing so, in my view.

In another sphere, touching the matter of form rather than the substance of mergers and their effects, the Government have done something else. They have set up the Committee on Company Law, the Jenkins Committee. This was instituted by my right hon. Friend's predecessor at the Board of Trade in 1960. I draw the attention of the House to one passage in the terms of reference of that Committee: To consider, in the light of modern conditions and practices, including the practice of take-over bids, what should be the duties of directors and the rights of shareholders; and generally to recommend what changes in the law are desirable". Those terms seem to me to cover precisely the sort of problem we are discussing today, and I hope very much that the Committee will report at an early date.

To digress for a moment—my right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan) referred to this—one rather disturbing feature has emerged as the negotiations for the merger have proceeded. All manner of information about prospects, growth, order books, the cash position—the famous £20 million to which reference has been made—dividend policy, and so on, has emerged. Why was not this information available to shareholders before? Would it have emerged even now if the negotiations had not been going on? No one expects boards of directors to make public information which will help their competitors, but I should have thought that in this case this was information which the shareholders should have had. I hope that, when the Jenkins Committee is considering the duties of directors, it will find time to examine this aspect of the matter.

As has been said by every speaker, I think, the real difficulty is in determining the public interest and how one can measure it. It is generally thought that the concentration of the aircraft industry is in the public interest. Some people have in the past said—the hon. Member for Edmonton said it today—that it might be good for the motor industry to be concentrated, too. I think it not impossible that in tomorrow's debate someone may say the same about shipbuilding. If the process of concentration were carried through 100 per cent., we should have very large units indeed and there would undoubtedly be an element of monopoly; and yet it might be a very good thing and in the public interest.

Sir C. Osborne

And it might not.

Sir H. Oakshott

It might not, but there is just as good a chance that it would be.

Sir C. Osborne

Does my hon. Friend assume that bigness of itself necessarily means efficiency?

Sir H. Oakshott

No, of course not. I did not imply that at all.

It seems to me that we can try to measure the public interest as it might be affected by mergers in several ways, I have not put them in any order of importance. First, there is the possible effect on the profitability of the new group, a matter in which not only the shareholders but their partner, the Inland Revenue, are very much interested. Secondly, there is the likely effect on the consumer. As hon. Members on both sides have said today, the consumer must not be exploited or held to ransom. Also, the suggestion of my right hon. Friend the Member for Reigate in regard to tariffs is closely relevant here.

Thirdly, there is the likely effect on the people employed in any new grouping. Will the standard of their conditions of employment and labour at least be as good as they were before? As regards the particular merger or possible merger we are now considering, I think that the record of both companies is very good in that respect. Fourthly, there is the matter of research to which reference has already been made. Would a merger avoid duplication? Might not the pooling of resources encourage invention and improve the prospects of some of these industries which are based on these remarkable new discoveries?

Lastly, and probably most important because the interests of the consumer, the interests of the people employed and, indeed, the other factors depend upon it, would a merger increase efficiency of production and, therefore, make the undertaking more competitive? This is really what matters.

Again, it could go either way. The effect might easily be the very opposite of what the right hon. Member for Battersea, North had in mind when he said that the merger was designed to limit competition. I should take the opposite view. The trend everywhere, whether we like it or not, is for bigger units to be created. Whether we join the Common Market or not, nothing will ever be quite the same again. Competition will be fiercer than ever either way. We have industrial giants in the United States, industrial giants in Europe, and in Russia, too, there is the example of the Russian fertiliser industry, on which I will not expatiate now because I do not wish to take up more time.

We may be forced along this road if we are to compete effectively and expand and extend our markets. I am sure that the Government are right to proceed carefully about this, for it is not inconceivable that a merger like this would "in the light of modern conditions and practices", as the terms of reference of the Jenkins Committee say, be positively in the national interest and in the public interest and not against it.

The right hon. Member for Battersea, North surprised me a little in this context when he said that even if it were proved to be a good thing, then it must be taken over. He did not use the dirty word "nationalise", but talked about "public ownership". This surprised me because I thought that not so long ago he was one of those who had the gravest doubts whether the Labour Party should adhere to this policy.

I do not deny, on the other hand, that in this trend towards larger and larger units, with the attendant risk of monopoly, there is something to which we ought to direct our attention. I am not sure whether a Mergers Court, or whatever one might call it, is the ideal answer. Any machinery which was devised should, as far as possible, work quickly, because as well as guarding the public interest, we must be fair to the parties. Any undue delay might be very damaging, and any machinery devised should work more quickly than the Monopolies Commission has been able to do. Justice and speed do not go easily hand in hand, and, certainly, I do not exclude a tribunal of some sort.

I would commend to the House the extremely thoughtful letter in the Daily Telegraph on Tuesday of last week from my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), in which he recommended a court before which a concern involved in anything like this would be given the opportunity to seek to establish that a monopoly is not, in fact, against the public interest. There is a lot in this, though I would myself prefer something more like the Restrictive Trade Practices Act in its operation as being rather more appropriate.

In the meantime, there are the review which the President of the Board of Trade is carrying out and the Committee on Company Law. I think that the Government are right to await the results of these. This is not timidity, but just plain common sense. I hope that we shall have these quickly, and I hope, too, that urgent consideration will be given to their findings, for I acknowledge that in view of the growth of this trend towards very large units in industry it may be found desirable for the Government of the day to have at least some powers of regulation.

7.13 p.m.

Mr. Arthur Holt (Bolton, West)

Towards the end of his speech the hon. Member for Bebington (Sir H. Oakshott) outlined a number of perfectly reasonable questions about the proposed merger of I.C.I. and Courtaulds, but he did not answer them. Many other people have asked these questions. Why, anyhow, should not an attempt be made to answer them before the merger takes place? It does not seem to me that anybody on the Government side has yet answered these questions.

The proposed merger stimulated the President of the Board of Trade in the end to make some examination of it, but in his reference to this today he did not seem to me to give his reasons why the Government had decided not to take any action. He said that the Government were concerned as to whether there were some special circumstances in the I.C.I.-Courtaulds merger which required a change in Government policy. Did he answer to himself satisfactorily some of the questions which have been put to us by the hon. Member for Bebington?

If the Government have satisfied themselves that the merger is, on balance, in the public interest, why cannot they give us the case for it? All that the President of the Board of Trade said today was that there was a general movement in the economy towards larger size. He said that often in new developments large amounts of capital were required and that these capital developments could not be made in certain industries unless there was already a large accumulation of capital.

I cannot think that that argument is relevant to either I.C.I. or Courtaulds. Courtaulds, the smaller of the two, still has a capital of £200 million, and it is rather inconceivable that any kind of desirable expansion in the man-made fibre industry cannot be carried out by a company which has that amount of capital assets.

I think that the Government cannot, in fact, possibly have been convinced by some reasons which they have not given us that it was in the public interest that this should go on. Monopoly, on the other hand, as we know from experience and from examinations already carried out by the Monopolies Commission, on balance brings with it all kinds of undesirable things, such as restriction of competition and a diminution of choice.

It was very interesting to notice the difference between the speech made by the President of the Board of Trade today and the kind of speeches I remember him making when he was simply the hon. Member for Altrincham and Sale and spoke from more or less the same position as did his right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), who made a passionate speech in favour of free trade which he always refused to me when I made my silly suggestions for cuts in tariffs and he replied to me from the Dispatch Box as Parliamentary Secretary to the Board of Trade. It is very interesting to note the different speeches which people make in different parts of the House.

I want for a few minutes to take the side of the customers. We have heard a great deal about the shareholders. The President of the Board of Trade astonished the whole House when, finally, in defence of no Government action, he said, "Who better than the shareholders of I.C.I. and Courtaulds to arrive at the right kind of commercial decision?"

This is a perfectly valid argument for a small company battling against widespread competition from other firms, but in the case of a semi-monopoly, with no Government legislation to protect the consumer, it really is not an argument that he ought to use at all as the President of the Board of Trade. It can obviously be possible for the shareholders of Courtaulds to come to a decision which is actually in their favour over the next two or three years. The decision might be to go in with I.C.I. and accept its offer. However, over the next few years that might be also completely against the interests of the customers of both companies, and particularly those of Courtaulds.

I should like to say a word or two about that. It is a matter of great interest in Lancashire, and particularly in my constituency at Bolton. I have here a very excellently produced glossy brochure by one of the large spinning companies in Lancashire, Combined English Mills. In it, attention is drawn to a complete re-equipment done at the Bayley Mill, Bolton, in order to spin man-made fibres up to a staple length of 8 inches. This has cost tens and tens of thousands of pounds. It is interesting to see in a brochure like this the almost dominant position of man-made fibres as distinct from cotton. This firm uses the kind of fibres about which we are talking and which are involved in this merger.

The cotton textile industry—the spinning, weaving and knitting parts—has had a pretty rough time in the last few years, and it is of paramount importance to the industry that it buys its raw material at world prices—and at the cheapest prices, if possible, in the world. Of course, it has not been doing this. It is very interesting to note in one of the letters which Courtaulds sent out—on 17th January—an important and very Liberal sentiment: Courtaulds are convinced that the manmade fibres industry … can only be competitive if fibre producers are free to buy raw materials in the best market and the textile industry is not limited in its choice of fibres.

Sir C. Osborne

Hear, hear.

Mr. Holt

"Hear, hear" say all of us in Lancashire.

Mr. Denis Howell

And in Lincolnshire, it seems.

Mr. Holt

And in Leicestershire and Nottinghamshire, I suspect, as well, and a few other places.

However, for the whole of the time since the war—and before—it has had high protection for all its man-made fibres. I have taken this up with the Board of Trade until I am almost tired of it. Viscose fibres and nylon are all protected under our import duties by a 20 per cent. tariff plus 9d. lb., but the actual cost of the 9d. makes far more impact on viscose fibres than it actually does on nylon. However, it is a very relevant matter, and it is of interest to note—and other Members of the House may be interested in it even if they are not directly connected with the textile industry—that continental nylon manufacturers have been jumping this large tariff and selling in this country nylon yarn to weavers and spinners at below the price put on by British Nylon Spinners.

Mr. Leo Abse (Pontypool)

Is it not a fact that, similarly, British Nylon Spinners has been able to jump the tariff abroad, and is it not characteristic of all large-scale organisations that they are in a position to give surplus products cheaply and that there is no special significance in the point the hon. Member is making?

Mr. Holt

Well, if the hon. Member can come and convince Lancashire spinners or weavers that there is no significance in the fact that they have to pay a duty which carries a tariff of 20 per cent. plus 9d. he is a better man than I am, but I can, as someone involved in the trade, assure him that this is a very material factor.

What we in Lancashire want—and I think that this would go for most of the people concerned who use any of these man-made fibres—is not less competition in this field but more competition, more choice, so that Lancashire has a fair opportunity to rebuild its position on the basis of the new manmade fibres.

A number of people have talked about the value of size and the ability of firms which are very large to carry out adequate research. I do not wish to dwell on this point for long but I should like just to draw the attention of hon. Members to some of the points which have been brought out in, for instance, the Monopolies Commission's Tyre Report: It is not always the same manufacturer who shows the lowest profits or the higher costs and vice versa. Nor is it invariably the smaller manufacturer whose costs are higher and profits lower than the larger manufacturer. The same kind of thing came out in the Report on Semi-Manufactures of Copper: There is no apparent correlation between the rate of profit achieved and the large size of the concern or the range of products made … although the larger units with a wide range of production tend to achieve rates of profit at or below the average level and some concerns with a limited range of products achieve rates of profit well above average. Certainly, on this subject of size and whether prices are lower or not, the information is completely inconclusive, and those people like the hon. Member for Edmonton (Mr. Albu) who assume that the car industries of Europe are automatically, when we go into the Common Market, going to amalgamate, and rightly so, into perhaps one firm—this is, as I understand it, his argument—really need to examine the matter. I rather dispute that it has been a good thing for the American nation or for the American car industry that the car manufacturing has come largely in the hands of one large company. I do not think this is at all brought about chiefly by the economics of price but possibly by other reasons, and that is why I very much regret that the Government have not pursued earlier their now avowed intentions of giving some examination to some of these present trends.

There is another point I should like to draw attention to. The argument has been used—I must say I was attracted by it initially—that we are going into the Common Market and firms will automatically become larger and we ourselves should not be at any disadvantage because of it. However, it is interesting to note that the tendency in the countries of the Common Market has been to strengthen their legislation about monopolies. Already the Belgian, Luxembourg and Italian Governments have all taken action. The Belgians, I think, have already put in legislation. Legislative proposals have already passed the Luxembourg Cabinet and are in draft form before Parliament. The Italian legislation, which is strongest of all, is in draft form and will soon be before Parliament.

I think the reason for this is simply that those countries, as they see the valuable effect of the increased competition in the Common Market, are concerned that their own industries are as bright and effective and competitive as any of the others. The Belgian Government obviously do not want Belgian industries to lose out on this game, and the Belgian Government to be faced with a community which has expenses and, as it were, no industry of its own. It is just an interesting thought to bear in mind and we should be well advised to bear it in mind.

People have talked in a loose fashion about putting our house in order, but I think that one of the things we must do, and very quickly, is to improve our competitive position, to remove things like resale price maintenance, to amend the Restrictive Trade Practices Act, to make price fixing illegal, and, on top of that, to strengthen and improve our legislation affecting mergers and monopolies.

Mr. Jay

Has the hon. Member for Bolton, West (Mr. Holt) also noticed that what is happening in the Common Market countries is that firms are forming joint international subsidiaries which are, in effect, dividing up the markets in the various countries and getting round the anti-monopoly legislation? I think that 600 such subsidiaries have been formed.

Mr. Holt

I agree that the Commission of Brussels will have to take care of that situation which is building up. However, the High Authority of the Coal and Steel Community has been fairly effective in dealing with this problem and, as a result of its comments, more than 100 out of about 200 mergers and amalgamations which have had to be registered have not gone forward. Experience of dealing with these things is growing, but I agree that something more must be done by the Commission of Brussels.

On the longer-term problem, the Government must strengthen the Monopolies Commission and increase both its membership and its staff. They must arrange that any proposed merger resulting in a monopoly, or which would produce more than one-third of the products of the trade concerned, shall have to submit itself to the Monopolies Commission. That ought also to apply to a firm which is expanding and which, without mergers, reaches the point where it is in danger of producing more than one-third of the products of its trade.

The Monopolies Commission should then examine the case practically, on its merits, to see whether the public interest will allow the merger, or the monopoly. I admit that it is possible that there are good reasons for a merger to be allowed, or a monopoly to continue, but if there are not good reasons the Commission must tell the monopoly or those promoting the merger that it cannot be continued. The actual power should rest with the Board of Trade.

On the present immediate problem, I am sure that the President of the Board of Trade ought to refer both Courtaulds and that part of I.C.I. concerned with man-made fibres to the Monopolies Commission for immediate investigation and ought to advise the companies in the meantime to hold up the merger until the Commission has reported.

7.33 p.m.

Mr. Peter Emery (Reading)

I want to take up that part of the speech of the hon. Member for Bolton, West (Mr. Holt) when he dealt with the need for more competition in the man-made fibre and textile industries and the need for more choice. What he said was excellent, but he left out the last part of what I would have liked to have been his argument—the need for the consumer to be protected. Little enough has been said today about the position of the consumers of the products of monopolies and oligopolies and duopolies. We have got bogged down in discussing I.C.I. and Courtaulds and Imperial Tobacco and Gallaher. We ought to be considering the long-term problems which have become more and more evident with the working of the legislation since the 1948 Act.

The Motion speaks of complacency and a timid approach. What has happened? In addition to the Socialists' Act of 1948, in 1953 we passed the Monopolies and Restrictive Practices Commission Act, when the Court was enlarged and powers and functions were given to smaller bodies. That action was considered necessary at the time and was taken in time. In 1956, we had the Restrictive Trades Practices Act, which was applauded by all sections of the Press and which brought in a judicial tribunal and made the collective maintenance of retail prices illegal. That was 'the biggest step forward in thinking along these lines which had been going on in the Conservative Party and in Conservative Party manifestos since the Workers' Charter.

The hon. Member for Bristol, South (Mr. Wilkins) mentioned that. I noticed that he damned all monopolies unless they were public and spoke of the need for taking many monopolies into public control, until it affected something which might be a monopoly in his own constituency. Then he insisted that we should not touch it. He is obviously a wise and clever politician and I can well understand that he has been in his party's whips' office for twelve years. I am sorry that he is not now present, but I am certain that he will not take my remarks amiss.

Since 1956, the Jenkins Committee has been set up and we hope that that will be reporting as soon as possible. There is also the Departmental review announced by my right hon. Friend the President of the Board of Trade. By no stretch of imagination can those actions be considered complacent or timid. It is important to appreciate the logical steps of the alterations achieved by this legislation.

I want here to deal with one of the grave weaknesses of the Monopolies Commission. Since 1948, only 27 cases have bene reported upon. The longest took four years and three months from the time it was referred to the Commission until the report was made—that was in respect of the export and supply of electrical machinery and plant; and the shortest, a sort of quick brew, was on the supply of tea, and took only one year. The average of those times is about two-and-a-half years. I fully appreciate the complexity of these matters and the need for thoroughness in making reports, but in this day and age no one can say that those times are not too long. Something ought to be done to speed up the inquiries.

It is also significant from its reports that when the Commission has made a detailed comparison of costs within an industry the costs of the largest firms have been the highest, or near the highest, and certainly well above average. I am not saying that that must be immensely significant, but there is something in those facts which needs further study. Since 1958, the Restrictive Trade Practices Court has dealt with about 1,200 operating agreements which have been registered with it. It has not considered all of them, because many have been withdrawn because of parallels with other agreements on which the Court has ruled, and there is no doubt that my hon. Friend the Member for Bebington (Sir H. Oakshott) was right when he spoke of the Court acting as a policeman on the beat.

It is interesting to see what restrictive practices have been condemned, for the pattern is now becoming clear. The loopholes and escape clauses have been severely interpreted. Very few agreements have been held to possess benefits justifying the inherent restrictions within them. Where these restrictions have been endorsed—in transformers and the block, bolt, and nut cases—the court has been careful to specify the precise aspects where these agreements have earned a clean bill of health, and this is immensely important. I believe that this Court has been an immense success. It has created a new attitude about price fixing, and has brought about a greater competitiveness in industry.

Let us also realise, and realise quite seriously, that as certain industries have had to withdraw from their price-fixing arrangements it has been in their joint interests to merge or amalgamate. One of the direct causes of the 1956 Act has been an increase in the number of mergers and agreements to join together.

Mr. Diamond

May I presume to help the hon. Gentleman by saying that I assume he meant "results" and not "causes".

Mr. Emery

I am delighted that the hon. Gentleman has corrected me. I meant to say results. I am sorry that I cannot be as kind to the hon. Gentleman as he has been to me.

What people must realise about these mergers—and this applies particularly to that shareholders of the firms that wish to take advantage of short-term gains—is that the more mergers there are the more these companies are setting themselves up to be taken over by a Socialist Government at some time in the future. It is all very well for the right hon. Member for Battersea, North (Mr. Jay) to talk about the cannibalism of mergers. The greatest witch doctor round the brew pot has been the Socialist Party, and the electorate knows this.

This legislation has brought about a different approach to expansion in industry over the last twelve years. Between 1947 and 1951 expansion was regulated by the previous year's production figures. This system has been swept away, and this has brought about greater competition and expansion.

The removal of import restrictions and tariffs has also had that effect, and one of the condemnations of some of the Socialist thinking on this is that so much of the policy they are pursuing would, in the final analysis, mean reimposing import restrictions, which would lead to less and less competition.

I return to the Restrictive Trade Practices Act with regard to price fixing and price leadership. Now that price fixing has become so outmoded, price leadership is a real danger to competitiveness in industry. What do we mean by this? Joe Bloggs rings up Harry Smith and says, "On the 31st of next month come and have dinner with me. It will be very interesting. Our prices on that day will be increased by 2½ per cent." If, on that same date, Harry Smith sees fit to put his prices up by 2½ per cent., this, according to the law, cannot be interpreted as a restrictive price-fixing agreement.

I do not see how we can legislate for this type of behind-the-counter agreement. I believe that it is impossible to do so, but I hope that as a result of this debate, and with the assistance of the professional bodies in industry, we will create a climate of opinion which will normally condemn such action, and will continue to condemn it at all times, and try to point out the ethical effects it can have on industry and the need for it to be swept away.

In the same way we must realise that there are sections of industry—thank goodness, fewer and fewer—which are much more interested in regulating a share of the market than in competing to get more of it. This applies to some of our biggest corporations. Indeed, only the other day I heard of one large concern approaching a nationalised industry with the idea that because it had lost to another competitor on a tender of considerable size this was wrong, and that the market of the nationalised industry should be shared equally amongst all the competitors in the industry. This is obviously the antithesis of competition.

Mr. R. Gresham Cooke (Twickenham

The Post Office does it.

Mr. Emery

That does not make it right.

Let us also realise that there are firms which say, "Competition is fine so long as we get control, but if we do not get it there is something unfair about the competition". We in this House have to be definite in our approach to such firms. However little they may like it, they must submit themselves to the economic cold draught of competition to bring the benefits to the consumer and not to themselves as shareholders.

In passing, may I put one question to my right hon. Friend the Chief Secretary to the Treasury. It is in relation to the Imperial Tobacco Company and Gallahers. It seems to me that a dangerous principle has been established by the acceptance by the President of the Board of Trade of the guarantees given by the directors of Imperial Tobacco. I am not suggesting that the Board of Trade was not honourable in accepting the guarantees. Nor am I suggesting that the directors were not honourable in giving them. But it seems to me that this might put an intolerable burden of conflict on the shoulders of the directors.

Consider the hypothetical case of Gallahers suddenly finding a chemical compound which will stop any possibility of cancer from smoking cigarettes, and putting this into its cigarettes. If the compound is not available to Imperial Tobacco, it is possible that the sales of Gallahers' cigarettes will skyrocket at the expense of Imperial Tobacco. The directors of Imperial Tobacco have to consider not only the guarantee that they have given the President of the Board of Trade, but their responsibilities as laid down in detail under the Companies Acts from 1844 to 1948. What will be their position?

I hope that my right hon. Friend will not suggest that this is all covered, because if they go back on this guarantee the Board of Trade will step in. It will step in too late. It will be closing the stable door after the horse has bolted. It is important that this new legal position, which could be brought about in the extreme case, is cleared up for the benefit of all company directors who might be in this position.

I should also like my right hon. Friend to state categorically that in his opinion, and in the opinion of the Government, the parties concerned in monopoly or oligopoly disputes, or take-over decisions, shall not be the judges in their own case. If this is not so the position is likely to get worse rather than better in the future.

I hope that we can have a guarantee that in the consideration given to these matters by the Departmental Committee that has been set up in the Board of Trade, international cartels, as well as the present internal monopoly position, can be examined. Only last week we saw the extension of Lucas, in France, and the possible nucleus for a growth of cartels throughout Europe, which could be very damaging. Hon. Members on both sides of the House would wish to avoid that, and I hope that we can be given a guarantee that the Committee will be able to consider that situation.

Because of the way in which legislation has moved since 1948, it is very difficult to draw lines or to differentiate between the work of the Monopolies Commission and that of the Restrictive Trade Practices Court, in relation to the necessity to consider the problems of mergers. I wonder whether all these matters could be dealt with by one body. There has been too much slow-time working by the Monopolies Commission, and I think that these matters could be dealt with better if they were all referred to one body. It is imperative that such a body should be allowed to initiate its own inquiries and not have to wait until subjects for inquiry have been referred to it either by the House or by the Board of Trade. It is also essential that it should be able to reinvestigate not necessarily the whole of an industry, but part of it, where and if the occasion arises.

I am thinking specifically of British Oxygen. In most instances, it is in an entirely competitive position, but in some cases, such as in the installation of a medical gas system and a medical vacuum system in a hospital, it is in a complete and utter monopoly position, and can ask whatever it likes. This kind of situation must be made the subject of possible consideration by a body of the kind which I have in mind, without its having to wait for such a matter to be referred to it by the House or the Board of Trade.

It is important that, where amalgamations or mergers are contemplated, such a body should have power to consider these matters. I strongly object to the suggestion that a special committee should be set up to deal with the I.C.I. problem, because unless these matters are dealt with generally we shall be setting a very dangerous precedent.

It seems that in any nation with the stresses and strains of new problems of the kind that appear in the British economy, new situations and new enigmas are bound to appear. What matters is not that these problems should appear, but that the Government, the Conservative Party and the climate of opinion—which is equally important—should be willing to face and deal with them. I believe that the Government are being quite active in trying to deal with this problem, and I hope that some of the suggestions which have been made by hon. Members on both sides of the House will be of assistance in enabling them to deal with this problem quickly and efficiently.

7.55 p.m.

Mr. Robert Edwards (Bilston)

I followed with great interest the admirable speech of the hon. Member for Reading (Mr. Emery). I am sure that my hon. Friends will agree with him in his praise for the work of the Monopolies Commission. He made the most constructive speech we have heard from his side of the House, and most of his contentions will be accepted by hon. Members on this side.

I was amazed to hear the reference by the President of the Board of Trade to the similarity between mergers in private industry and amalgamations of cooperative societies. This analogy was echoed by the hon. Member for Ilford, South (Mr. Cooper) and the right hon. Member for Reigate (Sir J. Vaughan-Morgan), who made references to amalgamations of co-operative wholesale societies. If we give a little thought to the difference between amalgamations of voluntary co-operative societies and mergers between firms in private industry, we come to the kernel of the issue the House is discussing today.

The hon. Member for Ilford, South talked about the take-over bids of the London Co-operative Society, and the President of the Board of Trade talked about the take-over bids of the Co-operative Wholesale Society. The cooperative movement has 13 million members. It does not matter how many shares each member holds; he has just one vote. Before any kind of amalgamation is considered consultations take place over many months. Meetings of the members are called, the trade union concerned is consulted, as are the employees at every shop, and their whole future is considered. There is a vast difference between this kind of voluntary amalgamation, based on consultation at every level with trade unions and shareholders, and the present take-over bid of I.C.I. for Courtaulds.

I suggest that the President of the Board of Trade and hon. Members opposite have an appalling ignorance of the technique, structure and accountability of the co-operative movement. In the co-operative movement it is a case of one member, one vote. On the other hand, one Belgian shareholder in I.C.I., living in Brussels, holds more votes in I.C.I. than all the workers employed by the company in every factory in this country. He indeed casts a block vote.

The workers in I.C.I. hold nearly 1 million shares in the company, but they have never been consulted to see whether they want to work for a vast monopoly that would bring in Courtaulds. Not at any level does their share capital involve any kind of control over the management or administration of any I.C.I. factory. At no time have they been consulted although they are shareholders and employees. I presume that power and money will prevail and that I.C.I. will take over Courtaulds, because the Government are doing nothing about it and it will be very difficult for the shareholders of Courtaulds to resist the expanding offers being made by Imperial Chemical Industries.

Courtaulds took over British Celanese, and at Spondon in Derbyshire there is a great centre of chemical production which used to be part of British Celanese. It is not involved only in the manufacture of rayon or man-made nylon fibre. It is a great centre of chemical production where 7,000 workers are employed. My knowledge of this establishment tells me that many thousands of those workers will face redundancy without any "golden handshakes", without any kind of adequate compensation, because much of their work is duplicated at the Billingham factories of I.C.I. and at Wilton and Widnes.

In a previous merger Courtaulds took over a great paint company. If this merger between I.C.I. and Courtaulds comes off, it means that this one company will produce 40 per cent. of the paint and varnishes manufactured in this country. This will be an addition to the whole list of exclusive monopoly products for which I.C.I. is responsible. Indeed, I.C.I. exclusively produces about thirty-nine vital chemicals in this country. There is no competition at all. I.C.I. produces many of these products because it obtained the exclusive patent rights from I.G. Farben of Germany, even when it was controlled by the Nazi industrialists, and as a result of arrangements with the American Du Pont Company.

I.C.I. has the exclusive monopoly for the production of basic materials and elements going into nylon. No other firm produces nylon products in this country. It is the exclusive monopoly of I.C.I., which controls patents which were handed over by the American Du Pont Company. But I.C.I. had to pay a price for this exclusive right, which was that there are certain markets of the world into which I.C.I. products cannot enter. It signed away our rights in many world markets. Does not that make nonsense of the talk about the necessity to bring I.C.I. and Courtaulds together in order that this country may be able to compete more successfully in world markets?

I.C.I. and Courtaulds were part of a great network of international cartels which achieved world power in chemicals and rayon between the wars. They allocated quotas in all markets of the Western world. The British textile industry, the textile industry in Lancashire, could not buy dyes from abroad because it was informed that the British market belonged to I.C.I. Some Scandinavians thought that I.G. Farben in Germany was charging too much for its dyes and so they applied to buy British dyes. They were informed that this market belonged to I.G. Farben and that Britain could not supply Scandinavian countries with dyes. This is characteristic of what happens when a few business men obtain exclusive control over vast industries. Once they have control of the whole home market they get together with their competitors in other countries to form international cartels which eliminate competition, not merely in their own country but in the Western world.

By so doing they keep prices exorbitantly high, and, because there is no competition, they keep the world poor as a consequence—or poorer than otherwise it would be. It is our contention, and surely it is a fair contention, that the workers, the employees, the scientists and the technicians, whose daily bread depends on stable production in I.C.I. and Courtaulds, should be considered and consulted in this take-over bid.

What protection have such people? Only the protection of this House. To whom do they appeal for protection if not to the Government? If the Government are not prepared to protect the workers whose whole future is uncertain, then the Government are betraying the people of the country, and the industrial workers. Frequent references have been made to the Conservative Industrial Charter during this debate, but that would become a mockery and a piece of hypocrisy. The Conservatives do not mean what they say at election times if they are not prepared to take some action to defend the interests of the industrial workers, the technicians and the research workers.

In this debate we are not merely dealing with the I.C.I. and Courtaulds. We are discussing the whole tendency towards monopoly and industrial concentration in our country. It is an appalling fact that this House has to discuss this vast subject, involving the future of our country, without knowing the facts. Nobody can tell us the facts relating to the industrial tendencies in Britain. We do not, as a Government, collect the facts. I tried to get some information from the Treasury about American capital investment in British industry. The Treasury could not tell me. Nobody knew, they could only guess. I could get the information from American sources, but not from the British Government. The Treasury did not know to what extent American monopolies had penetrated into our country.

Today there are 150 American companies operating in the British economy and they are all an extension in Britain of huge American trusts and are still controlled by American shareholders. We do not have the information, which we ought to have, on which to base our policy regarding the future of our country. We can base our policy only on the census report of 1935. Nothing has been done since then to analyse the extent of monopoly development throughout the British economy, apart from a few reports from the Monopolies and Restrictive Practices Commission.

It is my view that our country is more highly monopolised and more highly cartelised than any other country in the Western world. It is my view that a few business men have more control over the vital resources of our land than is the case in any other country, including the United States.

Mr. Callaghan

More than we have.

Mr. Edwards

Yes, more than we have. It was proved many years ago by the census report that the three largest units controlled 60 per cent. or more of the total production in each of ninety of our basic industries. That is a dreadful state of affairs which reduces competition 10 a farce.

It reduces democracy to a farce because it means that a few business men behind the closed doors of a board room can plan the whole pattern of our industrial society. They can plan the pattern of agriculture and sabotage science if it is not profitable to them. They can restrict production and maintain high prices in order to increase their profits without any kind of accountability at all. Even in the most dispersed industry in the land, the building industry, where there are 160,000 firms, four firms employ 33 per cent. of the labour force. In the building materials section of the industry, fifty-one firms control 80 per cent. of building materials supplies.

Time is passing and other hon. Members wish to take part in this discussion. Although I am arguing about monopolies, I do not want to be charged with being a monopolist of the limited time of the House. We have reached a stage in industrial concentration that is of the utmost danger, not merely to the economic future of the country, but to the principle of democracy itself. One of the reasons why hundreds of thousands of people, who ought to know better, are losing faith in British democracy and losing faith in Parliament is that great economic decisions affecting the future of our country are made outside Parliament, not merely in the board rooms of British industry, but in the board rooms in Paris, New York and Brussels. There has to be more accountability in British industry if we are to maintain a really healthy democracy in this land.

It is a disgraceful decision of the Government to refuse to halt this attempt of one huge industrial concentration to take over another huge industrial concentration, which would put unprecedented power into the hands of about fifty businessmen. It is a disgraceful betrayal of the interests of this country and a betrayal of democratic practices for the Government to refuse to have the inquiry which the Motion demands.

8.14 p.m.

Sir John Barlow (Middleton and Prestwich)

The hon. Member for Bilston (Mr. R. Edwards) will forgive me if I do not take up the points he made, but there is very little time at our disposal and several hon. Members, on both sides of the House, wish to make valuable contributions. I have much which I could, and should like to, say, but I hope that the hon. Member who follows me will confine himself, if possible, to about the same time as I take up.

It might be advisable to declare a partial interest in this matter. I am a director of a concern called the Calico Printers' Association, which discovered Terylene. The Association did not feel it advisable to develop it itself, so it sold the rights to I.C.I., which developed the product very well indeed. My company still draws substantial royalties which, unfortunately, will come to an end in a short time. So far as I can see, whether this great amalgamation between I.C.I. and Courtaulds takes place or not, it will not affect me personally at all.

Take-over bids are nothing new in industry. They have been criticised very much during the last ten years. Some have been good, some have been bad and some have been indifferent, but the take-over bid is something which we have had to live with and get used to. The present proposition of I.C.I. to take over Courtaulds is something entirely new in this sphere. Hitherto, larger take-overs by property companies did not savour at all of monopolistic characteristics because there is so much property of different sorts in the country, but this proposed merger, so far as I can discover, is something entirely new.

Each is a great monopoly in itself. Each might well be passed over to the Monopolies Commission to be investigated. It might be a very good thing if that were done. I.C.I. has done a tremendous amount of research work in many fields. It has not been successful in discovering new man-made fibres, but it has developed a man-made fibre extraordinarily well. Courtaulds has been successful in research work. It has discovered and developed several valuable man-made fibres.

Whether central research would be an asset, I have doubts. If we have in a great organisation a large research department running on the same general lines probably many things are missed. It is probably much safer for research to be done by several different communities or stations. They are much more likely not to miss some valuable discoveries. Take-over bids have been with us and will continue to be with us, but the Government should face the fact that this proposition is unique. Suppose, for example, that the Big Five banks said that they would join together. I have no doubt that they could make much more money collectively than individually, but surely the Government would have something to say about it. In pre-war days the Government indicated that they thought amalgamation of the banks had gone far enough. This is a new issue we have never had to face. It should be carefully considered by the Government before it goes through.

It is all very well to say that a Departmental committee is considering these matters. The President of the Board of Trade has told us that that committee will probably report towards the end of the year. It will probably take a further six months for the Government to make up their mind, and we do not know what may happen in the intervening eighteen months. It is far too dangerous to leave this matter to the future recommendations of a Departmental committee. It is so important that if this opportunity is lost the Government will regret not having considered the problem now.

The production of man-made fibres in this country up to the present has been approximately 83 per cent. by Courttaulds and 13 per cent. by I.C.I. It has been suggested that if we go into the Common Market we ought to have one gigantic monopoly because it could cope with the situation in a much better way. If there is to be any take-over, surely it would be much better for Courtaulds to take over the man-made fibre section of I.C.I. If I.C.I. goes through with its proposition it will have an almost complete monopoly of man-made fibres. It could easily have a complete monopoly in paint and fertilisers. Where is it to stop? It may be the right thing. I am not saying that it is not. But I want an opportunity to think the matter out very carefully, and an opportunity for the Government and the people to decide where we are going before it is too late.

It has been said that a large combine of the proposed kind is necessary to compete with America and with the Continent. I am informed that already production by Courtaulds and its subsidiaries is 20 per cent. more than that of Du Pont, in America, and a similar amount above the largest continental firm, so that the argument that we must have these amalgamations in order to be competitive and to go into the Common Market does not hold water.

I am very disappointed with what the President of the Board of Trade said today. This is a very important matter, and I feel that unless the Chief Secretary to the Treasury is very reassuring in his speech I shall find it very difficult to vote with the Government.

8.21 p m.

Mr. Denis Howell (Birmingham, Small Heath)

The hon. Member for Middleton and Prestwich (Sir J. Barlow) has made a very courageous speech, and I am sure that he will not mind if I do not follow his arguments, not least because he had the audacity to instruct the next speaker, who happens to be me, not to take longer than he himself took. I will, therefore, proceed at once to the question of non-ferrous metals, a question which has not been mentioned in the debate today.

The House will recall that some time before Christmas I attempted to put down some Private Notice Questions on the subject, and I also attempted to move the Adjournment of the House on the subject. I have no doubt at all that Mr. Speaker was right in stopping me from putting my Questions, and the House was probably right in not acceding to my request for the Adjournment, but it is rather serious when the House is prevented from discussing the state of British industry and when, even in a question which does not compare in magnitude with the proposed take-over in the chemical industry, we are precluded from discussing matters which are vital to the interests of many thousands of workpeople and, in respect of non-ferrous metals, in which our industrial potential is involved.

The best service that I can do will be briefly to give the facts of the case in which I am concerned, because I think that they ought to be on the record. Guest Keen and Nettlefold is a very large group which for a long time has had a monopoly interest in the manufacture of steel screws. The group also has a subsidiary called United Non-Ferrous Metals, which manufactures brass rod and brass wire. Delta Metal until a few years ago was a comparatively small company manufacturing brass rod, brass screws, brass strip and brass wire. There was then some new ownership of the company and an accountant came on to the board. I hope that my hon. Friend the Member for Gloucester (Mr. Diamond) will not mind my saying that once accountants get into positions of considerable authority, great difficulties seem automatically to flow from that fact. This certainly happened in the case of Delta.

While nobody has been looking, and in the last three years Delta has taken over eighteen firms, all engaged in this or ancillary fields. I have here a list of all these companies, and I intended to read them, to put them on the record and to give a little dissertation about each, but in view of the time I will not do so, and I will ask the House to accept it from me that in the last three years Delta has taken over eighteen firms and has now virtually cornered the market. There was, however, one firm, which manufactured brass screws, by the name of Davis and Timmins, and on two or three occasions the share market had indicated that Delta, which as everybody knows wants to take over more and more companies, was casting its eye on Davis and Timmins. After a certain time this takeover took place; in August of last year Delta Metal took over Davis and Timmins.

I have no doubt that this was a matter of concern to the United Non-Ferrous Metals Company, which, I understand, supplies most of its brass rods to Davis and Timmins. When Davis and Timmins had been taken over, obviously this business would automatically be transferred to the Delta Metal Company. It was also a matter of concern to people employed in the industry, particularly those in the scrap trade, which is a very important matter in brass manufacture, and perturbation was expressed in industrial circles.

Within four months of Davis and Timmins having been taken over, the board of Guest Keen and Nettlefold and the board of Delta Metal have come together and have decided to do a swap of subsidiaries. The United Non-Ferrous Metals Company will go to the Delta group, thus giving Delta a virtual monopoly in the manufacture of brass rod and brass strip, and Davis and Timmins, manufacturing brass screws, will go to the Guest Keen and Nettlefold group, thus giving that group not only a monopoly in steel screws but also a virtual monopoly in brass screws.

This cannot be in the public interest. When I looked into the matter I discovered that the number of competitors to Delta, for example, is extremely limited. There is I.C.I. Metal—and I am glad to say a good word for I.C.I. at this moment, for not much has been said for I.C.I. so far in the debate—and this company had announced that it will reorganise its metals interests and will compete. One hopes that something will flow from that. But a large firm called McKechnie Bros. already has ties with the Delta Metal group through South African interests. There are two other companies, one of which is Vickers Armstrong, and the other is a very small company indeed, Muntz.

The traders are extremely worried, particularly the scrap metal traders, because they know that the result of this and of the extremely tough policy which Delta follows will be that the whole of the trade in brass rods in the country will virtually be in the hands of Delta, which company has already been following a very tough line. There is a danger of it saying to people, "We intend not only to supply you with brass rods at prices which suit us but to insist on taking the scrap back from you at prices which also suit us". The price of scrap is a material factor because 60 per cent. of brass rod is made from scrap.

It is interesting to note that until now the price of scrap has been dominated by the London Exchange. If this new amalgamation takes place, that dominating factor and the fixing of the price of scrap metal will virtually disappear from the London Exchange and will be in the hands of the Delta Metal group. It is an interesting but sad commentary that although the price of brass scrap fluctuates from day to day, and the traders tell me that they have to have regard to the London Metal Market in this connection, the price of the finished commodity, brass rod, hardly ever fluctuates. That is the situation notwithstanding the importance of scrap metal in the commodity. Obviously something is very wrong. There is also a 10 per cent. import duty in respect of brass rods and there is no export from this country of scrap metal, which means that this industry is in a very peculiar and highly concentrated state.

One is bound to ask a question, are the metal merchants of this country right to be extremely alarmed about their future? But one may also ask the question, where does the consumer come in all this? This is a common question which we have been asking all day without getting much of an answer. Where does the consumer come in? It is clear that in the production and sale of nonferrous metals the consumer has a very small place. A production team went from this country to America quite recently to look at the situation and marketing of non-ferrous metals there, and on their return the members of the team reported that the whole of the price structure of the non-ferrous metals industry in this country should be changed.

In this country, one pays the same prices for one's brass whether buying a tremendously large quantity or a very small quantity. The basic price per lb. does not change. The production team that went to America said that in America the price varied, and if one bought a large quantity one got the benefit of a big sale, and if one bought a small quantity one obviously paid much more. This policy does not apply here.

There are same very interesting sidelights to all this. There was an organisation called the High Conductivity Copper Association. I understand that this means that it produces copper which does not conduct electricity.

Mr. Albu

No, it is the other way round.

Mr. Howell

It is the other way round? I am obliged to my hon. Friend the Member for Edmonton (Mr. Albu). The point is that this association was disbanded, and this has now led to the practice which the hon. Member for Reading (Mr. Emery) mentioned. This is the question of price leadership, which is the new racket operating throughout British industry, and about which, so far as I can find out from my small researches, the Government have not had a word to say on any conceivable occasion. In non-ferrous metals, aluminium sheets, brass rods, copper tubes and brass strip, where the practice of price leadership now operates automatically, customers are told that as from a certain date the price will be increased by so much, thus effectively and entirely eliminating any competition.

I should like to say a word about aluminium sheets. After I had raised this matter in the House, I got into touch with a man representing a very reputable firm in this country, who told me that he entirely agreed with what I was saying. He was involved in nonferrous metals, and he said that he himself had had 12 to 14 meetings with the Registrar of the Restrictive Practices Court to try to get the matter brought before the court and something done about it. He was a believer in healthy competition, but he was rather despondent as a result of his experience.

I will tell the House one of the things he did in his firm. If the President of the Board of Trade would like to see these particulars, he has given me authority to pass them on to the right hon. Gentleman, though, obviously, not to disclose them publicly. He wished to try to break the racket in aluminium—where the whole thing was price fixed—by importing it from the Continent.

The result was that the Delta Metal Company, having acquired one of the eighteen companies and having an interest in aluminium sheet, said to him quite blatantly "If you continue to import aluminium sheet into this country, you will cease to get the discount we are now giving you on certain commodities you buy from us." He replied "I am not going to tolerate that threat. I shall continue to import aluminium sheet." He is still importing it, but from that day to this he has never received the discount which he formerly got from the Delta Metal Company. This seems to me a very serious matter that needs to be examined. It seems to me that in non-ferrous metals we are having increasing monopoly, with complete disregard for the rest of British industry.

There is also the position of the work-people involved. My hon. Friend the Member for Bilston (Mr. R. Edwards) dealt with that admirably earlier on. It happened that people in these eighteen companies taken over by the Delta Company were getting in touch with me. One gentleman wrote me a letter in which he said that the last time they were taken over all the executives got the sack, and his wife suffered a nervous breakdown, as one can well understand, because of his uncertainty about the future, with his mortgage commitments and so on. Now that another merger is projected, I ask the Board of Trade to look at it, because this gentleman, having thought he had got himself into a more favourable position, now finds himself facing the same position again.

The last time it happened to him, he went to see the managing director of the firm being taken over and told him that there was considerable perturbation among the workpeople, and especially among the executives, about their situation. Two days later, the chairman walked on to the platform in the canteen, having called a meeting, seconded by his lieutenant, and said he was extremely sorry to hear that the work-people were concerned about the position and that there was no need for anybody to worry. He said that nobody would be dismissed. He said "We are a Christian company, and believe that we are all entitled to a living, and we as Christians will see that you get it." That chairman meant what he said, but he had been taken over, and the result was that although he thought the work-people would be well looked after, he, the man who had complained, and all the other executives found themselves on three months' notice within a few days. This is a very serious state of affairs.

Other hon. Members want to speak. I hope I have not taken up too much time. I have tried to concentrate what I have to say into a few minutes. I end as I began. It is extremely important that we ask ourselves two questions. First, where does the public interest lie? Much has been said about the position of the Labour Party. There is a great deal of difference between public monopolies and private monopolies. Hon. Members opposite, who came to power eleven years ago and inherited six public monopolies from the Labour Party, have done nothing to disturb them, which is a factor which should weigh in their minds, for many reasons. When an industry is a monopoly, if it is to be carried on under the existing management there certainly ought to be a great degree of public accountability. The case for public accountability has been overwhelmingly established today.

The second question concerns democracy. The British public has a right to know that the natural resources in raw materials and labour of this country are being utilised for the benefit of the nation as a whole. I end with one last hope, that one of the byproducts of all this will be that the House will look at its antiquated procedure which prevents Members of Parliament delving into these matters, asking questions, or raising the subject until there has been a fait accompli. This is a shocking procedure to operate in the British Parliament in 1962. I hope that this is only the first of many searching debates the House will have into the state of British industry, because they are very much needed and there is a tremendous amount of public concern about these matters.

8.37 p.m.

Sir Cyril Osborne (Louth)

I do not like monopolies.

Mr. Callaghan

A short speech, please.

Sir C. Osborne

I do not like monopolies, and I do not like being interrupted by someone who is guaranteed half an hour. If we are to have monopolies, they should be public monopolies which are accountable to the country. In this issue the public interest should override everything else.

I want to bring the discussion back to what I think is the main issue, namely, the I.C.I. grab to take over Courtaulds. I have three personal interests which I must disclose. First, I have been a director of two textile companies for over twenty years and we have bought Courtaulds' yarns for that period and are satisfied customers. Secondly, I have an equal interest, as far as I can make out, in both I.C.I. and Courtaulds' shares. Thirdly, and most important, the latest Courtauld factory was built in my constituency especially to produce Courtelle, the latest and finest man-made fibre. I do not want to risk that factory being closed down. I do not want to risk my constituents losing their jobs by becoming tiny cogs in the huge I.C.I. merger. I think that I am entitled to speak on their behalf.

I ask my hon. Friend the Minister of State to ask his seniors to look at the position again, because the Government have an obligation to the workers and to the nation not to permit this merger to go through until we are all convinced that it is not against the public interest. I do not think that we Conservatives, who always say that we believe in free enterprise capitalism, can possibly accept a private monopoly. The two things cannot be reconciled. Capitalism is only justified if there is adequate competition which brings down prices. Without that I do not see how we can, in this modern world, justify our faith and our way of life. I cannot understand why a Conservative President of the Board of Trade has refused to investigate a merger that will affect so many people in Britain, and I hope that he will look at the whole matter again.

I wish that both the President of the Board of Trade and the Chancellor were here because I should like them to hear my remarks. The case against the merger can be summed up in this way. Courtaulds has publicly accused I.C.I. on three important issues, to which I.C.I. has made no reply whatever. Firstly, Courtaulds has said that I.C.I. is charging for Acrylonitrile—the raw material for Courtelle, which is made in my constituency—double the price at which Courtaulds can now buy it both from America and Europe.

If this is true, then I.C.I., if the merger goes through, will have a monopoly of raw materials and will be able to charge just what it likes and British customers will have to pay higher prices for the goods which they themselves make.[Interruption.] For goodness' sake, be quiet. Such a position would be contrary to the public interest.

Secondly, Courtaulds has said that for caustic soda, a base material used in the making of rayon, between 1951 and 1961 I.C.I.'s prices rose by 50 per cent. whereas Continental prices in the same years dropped by 10 per cent. Is this true? We should be told the facts, and if I were the President of the Board of Trade it would not take me three years but half-an-hour to find them out. I should have both the top directors concerned in my office facing each other across the table and get the truth within a very short time.

Thirdly, Courtaulds has said—and this is the worst accusation it has made—that for chlorine, another base material, I.C.I. prices are 65 per cent. higher than German prices. Because of the competition that has been brought about since I.C I. and Courtaulds rather parted company, I.C.I. has dropped its prices, but they are still 30 per cent. higher than German prices.

These are very serious charges and I do not know if they are true. They may not be, but hon. Members should know the facts. If they are true it would be scandalous to let this merger go through. In the interests of the country the Government must think again, get the facts and bring them before the House, for hon. Members are entitled to know. If the merger goes through it is not so much that the supply of the various man-made fibres will be controlled by one hand but that the supply of raw materials will be controlled.

The Government are continually saying to those of us engaged in manufacturing that we must export more, but we need cheaper raw materials to do this. If I.C.I.'s activities will make our raw materials dearer it will be more difficult for us to sell abroad, and, therefore, if the facts are as Courtaulds has related them, the merger will act as a restraint on trade and against the public interest and should be stopped.

I hope I may use this language, but to me it looks like the old American nineteenth century take-over bids that Vanderbelt and Rockefeller engaged in fifty or sixty years ago. The American Government stopped that. Why should we not do likewise? I beg the Government to look at this again. It makes Courtaulds, with that company's immense "know-how" and experience in the production of raw materials, just a tied house to I.C.I., for Courtaulds must take I.C.I.'s raw materials at any price I.C.I. cares to charge.

I have one other much more serious point to put to the Minister, and this directly concerns the Chancellor. If the President of the Board of Trade allows this merger to go through without further investigation, without satisfying himself beyond a shadow of doubt that it is in the public interest, he will be sabotaging the Government's most important economic policy—the pay pause.

On this issue the Grimsby Evening Telegraph said something that has not yet been said in this debate. It said on Friday last: Six hundred employees at Courtaulds Humber Bank factory"— which is in my constituency— are to press for a substantial increase ' in their basic wages. This claim is understood to be a direct result of Courtaulds' forecast that profits would leap by £11,000,000 by 1964–65. The article goes on: Two weeks ago Courtaulds forecast its profits would leap by £11,000,000 by 1964–65 in a financial statement to stockholders on current and future prospects—the first big blast by the company to I.C.I.'s take-over bid. Let my hon. Friend bear in mind the following: The men claim that the firm is in a 'very healthy position', and if there is all this money about 'it is about time our basic wages were increased'. I do not blame my constituents for putting their plate out if they think that there is a lot of "lolly" going round—[HON. MEMBERS: "Hear, hear."] If I were one of them, I too, would put it out. Hon. Members opposite say, "Hear, hear", but let me put the other side. I.C.I. has announced that its profits for 1961 show a reduction of £26 million, but the workers, in the same trade unions, have not dashed off to the firm saying, "Your profits are down so we want our wages down, too". It only seems to cut one way.

That wage demand would not have been sparked off had it not been for the extravagant forecasts that Courtaulds has been compelled to make in order to rebut I.C.I.'s take-over bid. That is completely contrary to both the public interest and the Chancellor's policy. If the President of the Board of Trade really wants to ruin the Chancellor's wage-pause policy he is going the best way about it by standing on one side and washing his hands of the whole affair.

This is the crucial matter, because I believe that unless we have a pay pause—and a dividend pause as well; a pause all the way round—there is no hope of our selling enough abroad to pay for our basic requirements of raw materials and foodstuffs. This is the important issue, and by standing on one side, the President of the Board of Trade is doing the Government and the country a great disservice.

It is not good managerial policy for a board to scrape the barrel, as it were, put everything in the shop window, and promise and promise. Wise directorships keep as much up their sleeves as they can for a rainy day. To be forced, as I.C.I. has forced Courtaulds, to make what I believe to be extravagant claims for future profits is bad for us all.

The Government ought not to leave it to the shareholders to decide what is best in the national interest. It is unfair to shareholders to put that burden on them. That decision ought to be made by the Government. It is wrong to put it on the widows and little people in the country—the country doctor, the country lawyer—[HON. MEMBERS: "The insurance companies."] No. the insurance companies have not the votes to carry the business. It is the relatively small investors—about 200,000 of them, I suppose—who will decide, and it is unfair to put on their shoulders the decision of whether or not it is in the best interests of the country. Nor should niceties of Stock Exchange calculations decide whether or not the merger takes place; it should be a direct Government decision.

I am astonished that I.C.I. should have—if I may use the word—the impudence to make this bid when last year its profits dropped by £26 million. I should have thought that its directors had plenty to do to pull their own company round before trying to swallow one of their competitors. I therefore hope that the Government will look at the whole matter once again and decide to hold an inquiry.

In "United for Peace and Progress", which was our General Election manifesto for 1955, under the heading "Competitive Enterprise", we said, and I should like the Government to stick to it: We reaffirm our belief in the system of free competitive enterprise. The Conservative Party is strongly opposed to any further measure of nationalisation. We are equally anxious that private enterprise should be free from any reproach of harmful restrictive practices. Many of these practices, on both sides of industry, are relics of the past, quite out of place today … Our policy is to obtain an impartial statement of the facts and their effect upon the national interest, and then to take the action appropriate in each case. This, I think, the President of the Board of Trade has failed to do. I beg my hon. Friend to put it in front of him in the strongest possible terms, asking him to think again, and to think purely in the national interest.

8.51 p.m.

Mr. Leo Abse (Pontypool)

I am glad to have the opportunity of being able to say a few words, because I am well aware of the profound concern among the 6,000 employees in my constituency where British Nylon Spinners is situated. That industry is jointly owned by both Courtaulds and I.C.I. Now, with dismay amongst all, and disgust amongst many of my constituents, they find themselves booted around as a football, buried amidst a scrum of undignified and brawling directorates battling for personal power, shareholders' profits and capital gains. The dismay is all the greater because Pontypool knows B.N.S. to be a splendid success. It was constructed in this unlikely spot because of wise Government pressure during the time that Labour was in power, and it has triumphed as a consequence of a long co-operative effort by management and men in which all who have participated take pride. I think that it is as well for us to understand that it is a success because there are certain conclusions one can draw from it.

From an initial capital investment of £8 million its net assets have now grown to nearly £42 million. Profits have mounted dramatically. It commenced in the 1950s with £3.3 million profits. In 1960, the profits were £11.5 million, after depreciation of £2 million, and after spending millions on research. Nor, I should say in fairness, has it squandered all its profits on shareholders. The B.N.S. works at Gloucester have been extended, and, with extensions in Australia, it would be fair to say that this company has ploughed back its resources to finance expansion and innovation.

The first obvious lesson to be learned from all this is that British Nylon Spinners is a triumph of vertical integration. Its complete dependence upon I. C. I. polymers has, in my opinion, demonstrably in no way inhibited its development. The contrary is true. I.C.I. has determinedly endeavoured to marry up with the increasing and indeed voracious demands of Pontypool for greater quantities of polymers, and to suggest or imply that I.C.I. is necessarily a dead hand upon the man-made fibre industry is to talk palpable nonsense.

It is equally quite remote, in my view, from reality to suggest that the manmade fibre industry would necessarily be neglected because of disinterest on the part of the chemical industry when it is clear that I.C.I. has today a far greater capital investment in polymer plant than in B.N.S.

I have not the time to expand my theme, but one must recognise what has happened at Pontypool and then recognise similar trends which are going on throughout Europe. In Germany, Bayer and Hoechst, two big chemical industries, are entering the spinning field. In Italy, too, Montecatini is moving with great verve from the heavy chemical industry into fibres. In the United States also the fibre industry is vertically integrated with the big chemical industry in both the Monsanto-Chemstrand organisation and the gargantuan Du Pont organisation. Wherever one looks, one sees that the trend is towards a vertically integrated industry within which the chemical manufacturers and fibre manufacturers are coming closer together. My conclusion, although I have no time to demonstrate the reasons, is that this is an inevitable trend in the man-made fibre industry and that there will be more and more integration between chemicals and spinning.

In my view, it would be folly, therefore, if the House were to take a didactic or dogmatic stand on this issue and say that it is impossible and wrong for the two sides of industry to be integrated. If one reaches this conclusion and begins to believe that this type of integration is necessary, this is only because it is an inevitable economic trend which no amount of shouting or dismay will stop. After all, what we are witnessing now is what Marx prognosticated many years ago. Although it is fashionable nowadays to point out how Marx was wrong, this is one issue on which he was demonstrably right.

Large integrated industries are developing throughout the world. If we are to go into the Common Market, the domestic man-made fibre industries of this country will have to meet the whole power of Du Pont, based as it will be upon Europe, poised as it is for a vast expansion. Faced with these facts, we must realise that there can be no putting back of the clock. We must not imagine that we can go back to the 19th century and have a large number of small competing units. It would be folly to try.

As Socialists, we are in no dilemma here. It is hon. and right hon. Members opposite who are in a dilemma. Confronted with the facts, they fiddle-diddle, not knowing what to do, until, like this Government, they are utterly inhibited from doing anything at all. If I have one contribution to make to this discussion it is this. Confronted as we are with present developments, with the inevitable growth of vertically integrated industries and with the power of foreign competition which we shall have to meet if we enter the Common Market, it is high time for us to consider having a public sector vertically integrated within the chemical industry. Why cannot we have two I. C. I. s, one of them publicly owned? This is the type of approach which we who are Socialists are not inhibited from taking, and, moreover, I believe that it is something which, on empirical grounds, would suit the environment of this country.

I sincerely hope, therefore, that we shall not pretend that Courtaulds is a little David fighting the big Goliath. The House should not try to anthropomorphise the whole issue but should be realistic and recognise what are the inevitable trends and try to lead. I urge the Government to change their ways and not abdicate their responsibilities. Thinking always of the workers whom I and other hon. Members represent, I ask them to say that, in the national interest, there should be an inquiry. In my judgment, an inquiry would lead to the conclusion, first, that it is inevitable that there will be integration and, second, that the public interest will demand that at least one sector of industry must be publicly owned and controlled. We as Socialists can say that. The great dilemma of the Tories at this time is that, having maintained their philosophy and believing in competition, they find that economic forces are completely sabotaging their beliefs. They are trapped by their own outmoded and out-of-date ideas.

For those reasons, I readily support the demand for an inquiry.

8.59 p.m.

Mr. James Callaghan (Cardiff, South-East)

I should like the hon. Member for Louth (Sir C. Osborne), who has now left the Chamber, to know that I agreed with all his speech. I am sorry that Ministers were not here to listen to it. If the hon. Member should think that I was interrupting him unnecessarily, I ought to say that I appreciate my good fortune in being the last but one speaker in a debate like this and having a fixed amount of time to speak, and that the only reason I asked the hon. Member to make his speech shorter than his speeches usually are was that I was anxious that the voice of workers at the British Nylon Spinners factory in Pontypool should also be heard in the debate. I am very glad that my hon. Friend the Member for Pontypool (Mr. Abse) has now had the opportunity to speak.

I should like just to make one personal reference. Yesterday, a great friend of many of us in this House died. It is in Pontypool that one of the fruits of his work is to be found. All of us in South Wales are very conscious of the debt that we owe to Hugh Dalton. The British Nylon Spinners factory is a living monument—among many others—to his work for the people, for it is well known that if he had not insisted on its going to Pontypool it would have gone to the Midlands. Everyone in South Wales is very conscious of this.

I was invited by the President of the Board of Trade to say whether my hon. Friends and I thought that the I. C. I. Courtaulds merger was of such a size—"take-over" is probably the better term—that, by the very nature of the size of the proposal, there should be a public inquiry. My answer to that is, unhesitatingly, "Yes". Of course it is. When we consider the magnitude, the importance and the capital assets of I.C.I. and Courtaulds, they stand out in any sense as something of the first magnitude and first importance to this country.

Since the President of the Board of Trade asked me that, I have been looking at employment in private industry. Apart from Unilever, there is no other private company in Britain today which begins to stand comparison in terms of the number of employees with I.C.I., and certainly even less in the event of an I.C.I.-Courtaulds merger. The nearest to it—Unilever is bigger—is HawkerSiddeley, with 122,000 employees, and even giants like English Electric, with 80,000, Tube Investments, with 70,000, and Dunlop Rubber, with 95,000, are only half the size of I.C.I. in terms of numbers of employees.

What about the capital employed? As far as I can see, there is only one private company in the country, Dutch Shell, which has a larger amount of capital assets than I.C.I.-Courtauld. The capital assets of the new merger will be larger than those of the whole of the National Coal Board, not as large as those of British Railways, much larger than those of the gas industry and not as large as those of the nationalised electricity undertaking.

We are dealing in the House today with one of the great giants of British industry, and all that the President of the Board of Trade can tell us is that he proposes to leave the future of the industry to the shareholders. I tell him that there is a basic difference between us. We do not believe that such a decision should be left to the shareholders; no more do a number of his hon. Friends, and it is a great pity that he missed some of the speeches that have been made during part of the evening.

The merger is of importance from many points of view: from the point of view of our exports—at least £50 million a year; from the point of view of the home users, which has been put by a number of speakers in the debate; from the point of views of the workers in the industry; from the point of view of the consumers; from the point of view of maintaining British technical progress; from the point of view of the proper use of our capital resources—from all these points of view. Yet the Government are proposing to leave it to the offer that I.C.I. can make to the shareholders of Courtaulds, together with the counteroffer that Courtaulds makes to its shareholders. I tell the President of the Board of Trade that I regard it as frivolous on his part that he should deal with a great industry in this way.

Only the shareholders are to take the decision. They are not to decide the future of this great industry, one of the mammoth industries of the country, on the basis of which of the alternatives is likely to provide the exports which the hon. Baronet the Member for Eye (Sir H. Harrison) wants. Throughout the whole of his speech he talked to us about the export needs of the country. We were very glad to hear the hon. Gentleman again after so long a silence, but does he really believe that the shareholders of Courtaulds will decide on this counter-offer this evening on the basis of exports?

Mrs. White

Cash.

Mr. Callaghan

Will they decide it on the basis of the expected techniques and progress in the industry? Of course not. They will decide it on the basis of whether an amount of cash quickly taken now, selling out and reinvesting in some other industry before a capital gains tax is introduced in the Budget, will serve them best.

This is the way in which, the President of the Board of Trade tells us, the future of this industry is to be decided, by reference to no technical considerations, no considerations of public interest at all. Rarely has there been a more complete condemnation out of the Government's own mouth of the threadbare nature of contemporary capitalism.

The only people so far who have made any reference to the public interest in this dispute are the boards of the two companies, because the Government obviously are not interested in it. They are not even interested in it enough to have any sort of inquiry as to whether the public interest will be affected. The two boards, apparently more conscious of their responsibilities than the President of the Board of Trade is conscious of his, when they come to look at the national interest, disagree about it. They take different views about it.

I.C.I. says that the merger will be in the interests of the users of man-made fibres. Courtaulds disagrees. So, also, do the users themselves. I refer to a letter by Sir Ernest Goodale. I thought that a quotation from him might have been used many times in the House today, but there has not been one yet, so I can pick up a new one. He wrote in The Times of 23rd January that in our view the interests of the users of man-made fibres are best served by their having a choice of supplier, and as a consequence we share the philosophy of Courtaulds rather than that of I.C.I. So I.C.I. and Courtaulds, when considering the national interest, are in flat contradiction with each other as to what is best both for the users of man-made fibres and the national interest. I.C.I. believes that the merger would assist exports. It took a full page in The Times to tell us so. Courtaulds says, on the contrary, that it will subordinate man-made fibres exports to the needs of the chemical industry and that exports will be jeopardised. So here is another contradiction between the two.

I.C.I. believes that it is best to combine the manufacture of polymers with conversion into fibres and through marketing. It says the fundamental decision ought to be taken with a view to this question. Courtaulds takes exactly the opposite view. They cannot both be right.

Mr. Edward Wakefield (Treasurer of Her Majesty's Household)

There are two sides to the question.

Mr. Callaghan

There are two sides to the question. I am grateful to the hon. Gentleman for reaching the conclusion before I got there.

I.C.I. believes that the merger is in the national interest. Unanimously, it believes that it is in the national interest. The whole board agrees on this, but Courtaulds put out a statement to say that the merger will retard new developments, that it will harm the fashion trade, that it will harm the textile industry and the customer, and will jeopardise world markets. We cannot have a more flagrant contradiction than that.

Where does the truth lie? Has the President of the Board of Trade any idea at all? Does he care? He has done a bad day's work not only for his party but for the industrial progress of this country today by neglecting to take the steps which are proposed in this Motion.

There are other matters, too, which are at issue here and which have not been referred to in the statements of either company. According to The Times editorial today, which I am sure the President of the Board of Trade will have read, the German chemical industry does more research in proportion to turnover than I.C.I. The German chemical industry grows faster than I.C.I. The German chemical industry invests more heavily in its industry than does I.C.I. The German chemical industry exports more than I.C.I.

I do not know what the facts are. I do not know whether there have been some special elements in the German situation which have made it possible for the Germans to have a path of progress which has not been opened to I.C.I. Does the President of the Board of Trade? If he does not know, ought he not to know? He is standing aside and permitting a merger which will have and must have profound effects on the whole development of the man-made fibre industry in this country.

According to a new journal, European Chemical News, prices for most of the chemical products in France, Italy, Belgium and Germany have been compared with ours. Of 92 prices which compared, the British were higher in 39 cases, often by a wide margin. Last week's issue gave a further 102 products, of which the British prices were higher in 32 cases. Is there a reason for this? Does the right hon. Gentleman know? If he does not, ought he not to know before he allows a merger of this sort to continue unhampered?

I accuse the President of the Board of Trade of failing in his duties towards this great industry. Never before have I heard of a great industry of this sort, clearly one of the nation's vital industries, having its future determined by the higgling of the market and whether the shareholders of Courtaulds think that they will do better by getting tax-free cash plus a free issue of stock. This is instead of having, as we had when we considered the future of the coal industry, as we had when we considered the future of aircraft and as we had when we considered the future of transport, long public debates preceding action. There were substantial inquiries into the future of those industries, but now the right hon. Gentleman has shuffled responsibility on to the shoulders of the shareholders saying, "It is all yours; take it; decide the future of this industry; the Government could not care less".

This all adds up to an impregnable case for an inquiry by an independent body which could look into some of these issues. I cannot see—and nor can many hon. Members opposite—what prevents the Government from accepting this proposal and going ahead with an inquiry of this nature. The right hon. Gentleman says that if afterwards the Government find that damage has been done to the industry, there will be an inquiry and that the Government might even order something to be done. I expect that many of my hon. Friends will remember wayside pulpits and that outside chapels there used to be mottoes—I do not know whether the right hon. Gentleman will remember—which said, "Better a fence at the top of the cliff than an ambulance at the bottom". It is an aphorism, but it is far better that the right hon. Gentleman should have an inquiry now, before the damage is done, than that he should try to pick up the bits when lying in wreckage at the bottom of the cliff. It has been said many times before and, I have no doubt, much better.

One of the interesting things about this matter is that the two chairmen of the boards have been considering the question of the public interest. Mr. Chambers has said that his board is unanimously of the view that the public interest is best served by this merger. But is that a fair question for Mr. Chambers to ask or to answer? Is it his job? Let us suppose that he had reached a different conclusion. I am sure that he decided quite honestly when he concluded that both profits and the national interest would be served, as he said in his advertisements.

But let us suppose that he had reached the conclusion that the national interest would be best served by the merger, but that profits were likely to be lower. What would his recommendation to the shareholders then have been? What should his recommendation to the shareholders have been? Let us put it the other way round and suppose that he had decided that his profits would be higher, but that the national interest would not be served by the merger. What should he then have said to the shareholders? We know what has been said on previous occasions—"It may be anti-British, but it makes sense to me".

Does not the President of the Board of Trade realise the intolerable position into which we are getting today, in which chairmen of great corporations have to make up their minds about the national interest while the Government sit silent and supine? This is an abdication of all authority. I am sorry that more hon. Gentlemen opposite were not here to hear the speech of my hon. Friend the Member for Bilston (Mr. R. Edwards). Unless we control these monopolies, they will devour us. Let there be no doubt about this, because what is happening in the country at the present time, as anyone who studies the matter can see, and as is well known to hon. Gentlmen, is that the classical capitalism on which we were brought up when we first became Socialists, and in which many hon. Gentlemen still seem to believe, is disappearing under our eyes.

What is happening instead is the growth of private monopoly to such an extent that there are rival sources and centres of power in this country, unaccountable to anyone, and irresponsible in the true sense of the word. The late Aneurin Bevan used to say, and it is becoming ever clearer, that power does not reside in this House or in the Government. The Government are abdicating their authority. Power is residing today more and more in the hands of the Paul Chambers, and when one combines that with the setting up of the National Economic Development Council and the possible developments that could take place there, in which decisions quite outside the range and reach of Parliament may be taken about the direction and pace of British industry, one realises that it is high time the Government stopped being so complacent and supine about some of these problems.

What is the proper relationship of Parliament to the growth of these monopolies? I echo the words of the hon. Member for Louth. I am sorry that more of his hon. Friends were not here to hear them. If there is to be a monopoly, in the opinion of the hon. Gentleman it should be publicly accountable. The logical development of the capitalist system in this country is more and more towards monopoly. It is leading more and more to the position where the Government will have to abdicate completely and allow the economic system to be outside their control, or get out and let somebody else do the job for them, or take some action to make these industries accountable.

Joan Robinson, in a brilliant analysis of the situation about five years ago, said this in a broadcast on the B.B.C.: The tendency to monopoly is so deeply embedded in a modern industrial system that it is hard to see how to root it out without damaging the system. We all know that that is true. The tendency to monopoly is continuing and growing. At the last General Election, hon. Gentlemen opposite taunted us that if we got back to power 600 firms would be nationalised. How many of these 600 still exist? Does the President of the Board of Trade know? It would be an interesting and salutary lesson to him to find out, and to see what is taking place under his nose in British industry today.

I very much regret that we have not had a lead from the Government on this issue. Every speech from the other side of the House today, and I have heard every one of them, has been critical of the Government. Hon. Gentlemen opposite have been defensive. They have been worried. One or two even said that they would not be able to vote with the Government. They used to say the hungry sheep look up, and are not fed", but the hungry sheep were not even here to hear the speeches.

I cannot believe that any hon. Member who has been present today could go away satisfied that in the atmosphere that is developing in British industry, and in the concentration that is taking place, the Government know what they want to do, or have any plan for dealing with it, or even the energy to think about it. The more we look at the Government the more we wonder how they manage to hang on. I think that the only reason they manage to do so is that hon. Members opposite never listen to the debates, and, therefore, do not know the extent to which they are rolled in the dust by those of their supporters who are present.

It is astonishing. The Government seem to be divided between those, like the Chancellor of the Exchequer, who never have the glimmering of an idea what it is all about and those, like the Chief Secretary, who understand what it is all about but whose ideological prejudices are of such a character that they are quite inhibited from doing anything about it—and they are all led by a Prime Minister who retains his office only because his party cannot agree as to who ought to succeed him.

I want to give full time to the Chief Secretary to make his answer to this case. I do not want to deny him one minute of time. If he rejects accountability by private monopolies; if he rejects the solution of public ownership, which provides that monopolies shall be accountable to the people, through this House, what does he offer in its place? Will he tell us? What is the Conservative Party's solution to the problem? We no longer hear any prattling about competitive private enterprise. The Conservatives do not believe in it themselves now. They are already thinking up slogans for the next General Election. They need make only one simple addition to their previous slogan—"Conservative Freedom Works." After having heard the speeches today we know that they need add only one word, "Conservative Freedom Works—Abroad". We have to have monopoly in this country in order to be able to compete abroad. This is the new hope that the Tory Party has to offer our people.

There is a very natural and instinctive distaste of monopoly in this country. It is very deep-rooted. Indeed, the Conservative Party capitalised on that sentiment when it dealt with such issues as British Railways, the National Coal Board, and the rest. But, as has been said by hon. Members on both sides of the House this evening, it is equally true that British industry has moved into a position where monopolies, with the large economies that can be obtained from large-scale enterprise, may well be necessary.

That being the case—and it seems fairly common ground on both sides of the House—what does the Conservative Party intend to do to ensure that this instinctive, deep-rooted, and, in my view, very proper distaste of monopolies shall be quieted, and to ensure that we arrive at a position in which we can tell the people that when the power of which they are rightly jealous is exercised by private persons they shall be brought under public control in some way? This is the challenge to the Conservative Party.

We have our solution. We think that public ownership is the first step towards solving these problems. It is not the last step; we have discovered that over the last twenty years. Hon. Members opposite are very ready to abuse public ownership, but we are trying to face these problems honestly, whether the Minister of Aviation is or is not. It is clear that, under public ownership, when the pressure is taken off, the danger still arises of the industry becoming less efficient. The danger may also arise of prices being fixed at inappropriate levels, because there is no competition.

All these things exist under public ownership, and none of us shirks the fact. But we say that at least under public ownership there is accountability. The hon. Member for Kidderminster (Mr. Nabarro) has made a "corner" in the nationalised industries for the last ten years. I will say this, that at least we have had many more facts brought into the open, and we know much more about the Coal Board and British Railways than we do about I.C.I. and Courtaulds.

It was said this afternoon that it was not a very edifying spectacle to see the chairmen of these two companies quarrelling. I do not know whether it is edifying or not, but I say let them get on with it. At least, it has been instructive for those who did not know what was going on. There are many lessons to be learned from this. If the Conservative Party rejects our solution, what is its own solution? This is what we still want to hear. We are right to accuse the party opposite of being "timid and complacent". Indeed, I go further, and say that we should have also put the word "neglectful" in our Motion. We are right—the people know that we are right and many hon. Members opposite believe that we are right—to demand an inquiry before the merger goes on. Let us hear from the Chief Secretary to the Treasury what excuses the Government can make for resisting it.

9.26 p.m.

The Chief Secretary to the Treasury (Mr. Henry Brooke)

In fact, the Opposition are wrong. Hon. Members opposite are wrong, because they are running away from the actualities. The Conservative Government intend to further everything in their power which would help British industry obtain the exports without which this country cannot live. None of this talk or argument about public or private ownership, accountability or non-accountability will avail us one iota in the end unless we get those exports, and we shall gel them only if we so manage our affairs as to secure the highest degree of efficiency of management, production and techniques throughout British industry.

The One Nation Group in the Conservative Party published an extremely interesting booklet a few years ago, called "Change is our Ally". I have not had the privilege of being a member of that Group, but I am quite certain that we cannot fulfil our commercial and our industrial destiny in the world if we are afraid of change. Having listened to this debate, it seems to me that the theme of the Opposition has been that before we allow any change, we should have a public inquiry. That is not the way in which we shall beat our opponents in the tests of international trade.

This debate has been extremely good-tempered and valuable and interesting. I should like, in all humility, to pay tribute to the thoughtful speeches which have been made from both sides of the House. I think that hon. Members would like me to congratulate my hon. Friend the Member for Eye (Sir H. Harrison) on his near-maiden speech which charmed us all. I wish to seek to deal with a number of points which have been raised because, although we are debating a general issue of the first importance to the country, we are doing it in the particular context of certain specific cases which have occupied a good deal of public attention lately. My right hon. Friend the Member for Reigate (Sir J. Vaughan-Morgan), who made one of the most valuable contributions to the debate, spoke about the Government's opposition to the Monopolies Commission recommendation relating to Imperial Tobacco and Gallaher. The essential fact is that Imperial Tobacco at the present time owns 37½ per cent. of the shares of Gallaher, and the Monopolies Commission found no evidence of interference with Gallaher by Imperial Tobacco through its large shareholding. But it argued that that large shareholding made, or tended to make, or might tend to make, Imperial Tobacco compete less keenly with Gallaher.

The facts are as they were set out in the Report, that 11 per cent. of the total trade passed from Imperial Tobacco to Gallaher in a period of four years. One would certainly think that a loss of business on that scale would make Imperial Tobacco sit up and take notice. I am not sure whether it was the argument of the Commission, but it certainly was the argument of some hon. Members in the debate, that that did not matter to Imperial because Imperial would get it back through its shareholding. It was argued that this was a matter of gaining on the swings what one lost on the roundabouts, six of one and half a dozen of the other. But it is not six of one and half a dozen of the other; it is five of one and two of the other.

I have yet to meet the person who is trying to sell something and says, "It does not matter if you give me £5 or £2 for this, it is all the same to me". That is exactly the situation of Imperial Tobacco. Imperial Tobacco cannot in any circumstances secure the benefit of more than 37½ per cent. of the value of any trade that it loses to Gallaher. The other 62½ per cent. will go elsewhere and no one who is responsible to his shareholders can overlook that. The facts as established are that Imperial Tobacco had not interfered with Gallaher over the period of thirty years in which Imperial had had this large shareholding, at one time a majority shareholding. It had given an undertaking not to interfere with Gallaher, and, as I pointed out, it had every financial reason to compete as vigorously as possible against Gallaher.

My hon. Friend the Member for Reading (Mr. Emery), who also made a very thoughtful speech, asked what would happen if Gallaher were to make some break-through discovery—for instance, in a form of cigarette which would be safeguarded against any tendency to produce cancer—and Imperial found its trade being damaged thereby. I cannot tell what would happen in those hypothetical circumstances. What I can say is that in thirty years no such situation has arisen. One should not condemn a common sense solution of this difficult problem on account of some highly unlikely contingency which in thirty years has not eventuated. In the light of the completely objective examination which the President of the Board of Trade gave to this important Report he found—and I agree with him—that there was no case for drastic action against a hypothetical possibility which it would be Imperial Tobacco's interest not to make into an actuality.

I think my hon. Friend the Member for Reigate said that this was a snub to the Commission. Other hon. Members made similar suggestions, but no one has ever suggested or maintained that the Monopolies Commission is an executive body or a body whose findings are final and conclusive. No one has ever suggested—this was accepted on both sides of the House when the legislation was going through—that the Commission is anything other than advisory to the Government. If a body is advisory to the Government, the Government themselves must carry the responsibility of taking the final decision.

The Government must take the decisions. They have that responsibility. They must answer for them to Parliament as my right hon. Friend has done today. I have no doubt whatever that he was entirely right in judging that the case had not been made by this very valuable and authoritative advisory body, the Monopolies Commission, for drastic action to deprive Imperial Tobacco of its large shareholding in Gallaher when it appeared that no harm had come in thirty years from that shareholding and Imperial Tobacco had given an undertaking—which, frankly, it seemed to be in its own financial interests to give—that it would not interfere in the management of Gallaher.

As I said at the beginning, we have to deal with actualities, and in dealing with actualities, we must have quite clear and precise policies. Several hon. Members referred to the Jenkins Committee. The Jenkins Committee is at work on certain aspects of these matters. The relevant part of the Committee's terms of reference was quoted earlier, and I need not repeat it. I was asked when the Committee was likely to report. My right hon. Friend tells me that the Committee has indicated that it hopes to report within the next six months, and its report will then receive very careful consideration.

Some time before this Courtauld-I.C.I. marriage, whether a shotgun marriage or otherwise, was heard of, my right hon. Friend had set up this inquiry within his Department into the working of monopolies policy. My hon. Friend the Member for Reading asked how extensive that would be. As far as I can judge, it would cover the various matters which he mentioned, but may I take this opportunity of extending an invitation which my right hon. Friend the President of the Board of Trade gave? He said that his Department would shortly be inviting expressions of opinion from trade associations and the like. He felt that it went without saying that he would welcome opinions expressed by hon. Members on both sides of the House. I know that he will bring to the attention of those who are conducting that inquiry what my hon. Friend the Member for Reading said, and if he or any other hon. Member cares to amplify his remarks in this debate or to bring forward any other points which ought to be taken into account in the inquiry. I know that my right hon. Friend will be very grateful indeed.

Mr. Jay

Will the report of this inquiry be published?

Mr. Brooke

I cannot say that. At this stage this is an inquiry within the Department. The right hon. Member for Battersea, North (Mr. Jay), who opened the debate in a speech which I think we all appreciated, said, if I remember rightly, that over the whole field of mergers or intended mergers or threatened mergers there was a vague feeling of public unease. I put it to the House that the right answer to a vague feeling of public unease is not a vague kind of public inquiry, and yet that is what the Opposition have been asking for. No one has said what shape this inquiry into the proposed Courtauld-I.C.I. merger should take. No one has said precisely what this inquiry should inquire into. Nobody has said who would be qualified to undertake it.

The Opposition said that they were not in a dilemma. Of course they are not in a dilemma, because they are running away from all the hard decisions which have to be taken. It is very easy, when faced with a difficult choice, to turn one's back on it.—[Interruption.] If hon. Members will allow me to speak, let me repeat that I have never heard such an abject failure to specify the form and the shape of the inquiry which the Opposition said they were recommending. It is the very point made by my right hon. Friend the Member for Reigate at the beginning of his speech. The hon. Member for Edmonton (Mr. Albu) alleged that the Board of Trade attitude here was amateurish. It seems to me amateurish to ask anybody to inquire into precisely what will happen under a merger which has not yet been formed.

Reference was made to the American experience. It was asked why cannot we be as tough as the United States is in fighting monopoly. The review which is now being made of all monopoly policy will naturally take into account the American law, but the economic conditions in the two countries are very different, and it certainly does not follow that a system appropriate to American conditions will meet our own needs, which, in important respects, are different from theirs.

The United States economy, for one thing, is far less dependent on export trade than is the economy of the United Kingdom. That means, for one thing, that they can apply much more readily than we could an anti-trust policy based on social rather than economic considerations. It is much easier for them to take the line, which they tend to take, that monopoly is wholly bad and should be stopped. We have to consider in all these things what will be to our economic interests, because we have no great margin to spare.

The Government's policy has been to consider our plans and our attitude primarily from the economic standpoint, and not on the basis of a prior judgment that monopoly is intrinsically and always bad. If the Americans were as dependent as we are on international trade, they might not be able to afford to maintain in their home market their present anti-trust policy, which certainly does seem to observers in some cases to make certain sections of American industry less efficient than they otherwise would be.

Mr. Holt

We seem to be getting a little way from the I.C.I. and Courtaulds merger and on to the general problem. Would the right hon. Gentleman say, as there could be many different kinds of inquiry, why a reference should not be made to the Monopolies Commission of the man-made fibres division of I.C.I. and the whole of Courtaulds?

Mr. Brooke

I shall come back to that point. I noted it in the hon. Member's speech, and it was a point also made by my right hon. Friend the Member for Reigate. I assure the hon. Member that I am seeking to do justice both to the general issue and to the particular issue before us. When he interrupted me, I was about to say that undoubtedly the American practice, while it may have certain advantages, has certain disadvantages, and these disadvantages might be particularly harmful to our industries, because our industries are dependent so much more than theirs on the export markets of the world.

The one question which matters here in a case like that of I.C.I. and Courtaulds is whether the merger will make the manufacture of synthetic fibres more efficient, and sell them more competitively, than with the two firms, or not. I am certainly not judging that, and I am glad to say that most hon. Members who have taken part in the debate have admitted that they are not competent to judge that, either. The answer, in fact, depends on technical, commercial and management considerations which, as my right hon. Friend pointed out, cannot be foreseen and cannot be evaluated.

There is a difference between the judge who has to inquire into the question whether there are grounds for the divorce of two parties who have been married for some years and what the Opposition are asking for, which is an inquiry, before the marriage or the liaison starts, to determine whether it will turn out a successful marriage and whether the offspring will be a credit to the nation.

The Opposition's case this evening has failed, first because no inquiry into unknowns can be reliable or a safe and sound basis for decisive action. It fails, secondly, because no test has been suggested from any quarter as to which mergers should be the subject of advance inquiry. As my right hon. Friend the President of the Board of Trade said, there are a number of mergers now in course of discussion, as anybody who reads the financial columns of The Times can tell. Is the test to be merely this: will the final merger, if it goes through, be very large? Yet a merger may be comparatively small by external standards, because the whole of the industry is a small one.

What is the test to be? Should there have been an inquiry before each of the mergers which have taken place over the last ten or fifteen years in the motor industry? What is the meaning of "monopoly"? In the old days "monopoly" meant 100 per cent. control of a trade. Now since we have had the Monopolies Commission a firm can be held to hold a monopoly when it controls no more than one-third of the trade. Yet by the old standard that is nothing like a monopoly and it may be subject to the most extreme competition from other firms. Despite the speeches of Opposition Members, there is no easy test to decide which of these mergers or projected mergers should be the subject of an advance inquiry and should be held up for a period of months or more until the inquiry has been completed.

Sir C. Osborne

Will my right hon. Friend give an undertaking that he will ask I.C.I. whether the charge made by Courtaulds that I.C.I. is charging excessive prices for raw materials is well founded?

Mr. Brooke

I am not going to enter into this sort of argument. It would be entirely wrong for the Government to say that they were not going to set up an independent inquiry into this and then for individual Ministers to express views on this or that aspect of the matter which might be thought to be biased.

Mrs. White

Will not the Chief Secretary agree that whatever definition he chooses a 90 per cent. monopoly of a major industry would surely be a qualifying one?

Mr. Brooke

It must be remembered, as I am sure the hon. Lady knows, that man-made fibres constitute only 28 per cent. of all the materials being used by this country's textile industry. I think that what the hon. Lady has in mind is the question raised by the hon. Member for Bolton, West (Mr. Holt) and my right hon. Friend the Member for Reigate as to whether my right hon. Friend would here and now refer the case of Courtaulds to the Monopolies Commission or would give a warning to Mr. Paul Chambers that he would do so immediately if the merger went through. I have consulted my right hon. Friend on that. He tells me that he has no grounds for referring either company to the Monopolies Commission, because he has no evidence before him that either company is exploiting its position as a producer of man-made fibres. It would be entirely wrong for any President of the Board of Trade, regardless of party, to refer something to the Monopolies Commission when he has no evidence at all that exploitation of the monopoly is taking place. But, naturally, it is open to any hon. Member who has suggested this to submit evidence and I can certainly say that he will take it into consideration. The interesting thing is that the consumers and users of these products—who are, one would think, those most closely interested—have not taken any steps of that kind.

Mr. Gresham Cooke

Is my right hon. Friend aware that the consumers' association—representing the users of man-made fibres—wrote a letter to The Times expressing great concern about the possibility of the tie-up between Courtaulds and I.C.I. and wondering whether there would be an increase in prices if the merger came about?

Mr. Brooke

What my hon. Friend says illustrates the impossibility of having an inquiry into something that has not yet happened, because, with great respect, no one can foresee whether the new merger, if it comes into effect, will be an exceptionally favourable instrument of British industrial policy in the world or will exploit its position. That is what this matter turns upon. I am not going to express a view on this argument

I can tell the hon Lady the Member for Flint, East (Mrs. White) that she and other hon. Members were fully justified in raising questions on behalf of their constituents who may be employed by one or other of these firms. One thing is perfectly clear; that both of these firms are expansionist minded. Neither of them has shown the slightest inclination to restrict production for profit purposes. Both of them are in a highly competitive industry, up against international competition, and the greatest security for those employed by them will be that the firm which employs them shall have attained the highest possible degree of efficiency.

Frankly, I think that the events of the past few weeks have themselves done good for British industry.[HON. MEMBERS: "Oh" The reason is that both of these firms have, as a result, publicly made known their targets for the future. Whatever happens they will be keyed up to fulfil those targets and that must be for the good of the nation as a whole.

Mrs. Barbara Castle (Blackburn)

Is the right hon. Gentleman really telling the House that Courtaulds' announcements that it is prepared, if necessary, to realise £120 million worth of its assets in order to throw in a counter bribe to its shareholders to offset the I.C.I. bribe is really in the public interest? Is that for the good of the nation and for the best use of our resources at a time when the Government are calling for a restraint on incomes policy for the workers?

Mr. Brooke

I cannot pass a final judgment, but I can say that if there are millions of pounds lying unused in the possession of any company it is probably in the national interest that they should be brought into use, by whatever means that is done.

I have been asked what action the President of the Board of Trade will take about tariffs. No one can tell as yet whether we shall enter the Common Market. If we join the European Community, the I.C.I.-Courtaulds merger will certainly not be a monopoly supplier. There will be strong competition—indeed, there is strong competition already—among continental producers. If we do not enter the Common Market then whatever happens we shall certainly need industrial organisations strong enough to enable us to hold our own in a world in which manufacturing units are steadily growing bigger.

Some hon. Members have spoken as though this merger, should it go through, would be of unparalleled size. In fact, there would be no fewer than fifteen industrial organisations in the world still larger than the I.C.I.-Courtaulds merger. If we join the Common Market we may have to make certain changes in our monopolies legislation. Broadly, the approach to monopolies in the Treaty of Rome is much closer to our own than to the American approach. The aim under the Treaty is, like ours, the control of the abuse of monopoly power rather than control of monopoly as such.

I was asked what would be the Government's attitude towards the tariff protecting these man-made fibres if there were to be evidence of exploitation of monopoly. The United Kingdom customs duty on man-made fibres is generally high; it varies from one product to another. My right hon. Friend has authorised me to say that if any representative body of users felt that the merged organisation—or, indeed, either of the firms should a merger not take place—was sheltering behind a protective tariff and not selling at the lowest prices that might be obtained, such consumers could apply for any import duties in the man-made fibres sphere to be reduced. In those circumstances, the Board of Trade would immediately consider such an application—[Laughter.]—but it would give the firms or the industry affected the right to reply.

If hon. Members laugh, they must be very little concerned about the good of British industry or of the consumers—[Interruption.] I sometimes wonder whether the Opposition realise the intensity of modern business competition. In the modern world, one cannot have everything held up for twelve months while an inquiry takes place. It is no good harping back to the old days. What matters, if we are to fulfil our export obligations, is that we shall secure throughout British industry vigorous and highly intelligent management, and if we are to do that we must not say that in no circumstances shall there be any change until there has been a public inquiry.

That is the first test—not whether it is private or public, not whether there is accountability or non-accountability. I do not remember long, independent, objective public inquiries before the Opposition nationalised coal or steel—[Interruption.] I do remember a great deal of prejudice, and much confession that the Opposition had not really thought out their policy. We have thought out our policies, and we intend to carry them through.

Question put:—

The House divided: Ayes 230, Noes 317.

Division No. 90.]	AYES	[10.0 p.m.
Abse, Leo	George, Lady Megan Lloyd (Crmrthn)	MacColl, James
Ainsley, William	Ginsburg, David	McInnes, James
Albu, Austen	Gordon Walker, Rt. Hon. P. C.	McKay, John (Wallsend)
Allaun, Frank (Salford, E.)	Gourlay, Harry	Mackie, John (Enfield, East)
Allen, Scholefield (Crewe)	Grey, Charles	McLeavy, Frank
Awbery, Stan	Griffiths, Rt. Hon, James (Llanelly)	MacPherson, Malcolm (Stirling)
Beaney, Alan	Griffiths, W. (Exchange)	Mahon, Simon
Bellenger, Rt. Hon. F. J.	Grimond, Rt. Hon. J.	Mallalieu, J. P. W.(Huddersfield, E.)
Bence, Cyril	Gunter, Ray	Manuel, A. C.
Bennett, J. (Glasgow, Bridge ton)	Hale, Leslie (Oldham, W.)	Mapp, Charles
Benson, Sir George	Hall, Rt. Hn. Glenvil (Colne Valley)	Marsh, Richard
Blackburn, F.	Hamilton, William (West Fife)	Mason, Roy
Blyton, William	Hannan, William	Mayhew, Christopher
Boardman, H.	Hart, Mrs. Judith	Mellish, R. J.
Bowden, Rt. Hn. H. W. (Leics, S. W.)	Hayman, F. H.	Mendelson, J. J.
Bowles, Frank	Healey, Denis	Millan, Bruce
Boyden, James	Henderson, Rt. Hn. Arthur(Rwly Regls)	Milne, Edward
Braddock, Mrs. E, M.	Herbison, Miss Margaret	Mitchison, G. R.
Brockway, A. Fenner	Hewitson, Capt. M.	Monslow, Walter
Broughton, Dr. A. D. D.	Hill, J. (Midlothian)	Morris, John
Brown, Rt. Hon. George (Belper)	Hilton, A. V.	Mort, D. L.
Brown, Thomas (Ince)	Holman, Percy	Moyle, Arthur
Butler, Herbert (Hackney, C.)	Holt, Arthur	Mulley, Frederick
Butler, Mrs. Joyce (Wood Green)	Houghton, Douglas	Neal, Harold
Callaghan, James	Howell, Charles A. (Perry Barr)	Noel-Baker, Francis (Swindon)
Castle, Mrs. Barbara	Howell, Denis (Small Heath)	Noel-Baker, Rt. Hn. Philip (Derby, S.)
Chapman, Donald	Hoy, James H.	Oliver, G. H.
Cliffe, Michael	Hughes, Cledwyn (Anglesey)	Oram, A. E.
Corbet, Mrs. Freda	Hughes, Emrys (S. Ayrshire)	Oswald, Thomas
Craddock, George (Bradford, S.)	Hughes, Hector (Aberdeen, N.)	Owen, Will
Cronin, John	Hunter, A. E.	Padley, W. E.
Crosland, Anthony	Hynd, H. (Accrington)	Paget, R. T.
Cullen, Mrs. Alice	Hynd, John (Attercliffe)	Pannell, Charles (Leeds, W.)
Darling, George	Irvine, A. J. (Edge Hill)	Pargiter, G. A.
Davies, Harold (Leek)	Irving, Sydney (Dartford)	Parker, John
Davies, Ifor (Gower)	Janner, Sir Barnett	Parkin, B. T.
Davies, S. O. (Merthyr)	Jay, Rt. Hon. Douglas	Paton, John
Deer, George	Jeger, George	Pavitt, Laurence
Delargy, Hugh	Jenkins, Roy (Stechford)	Pearson, Arthur (Pontypridd)
Dempsey, James	Johnson, Carol (Lewisham, S.)	Peart, Frederick
Diamond, John	Jones, Rt. Hn. A. Creech (Wakefield)	Pentland, Norman
Dodds, Norman	Jones, Dan (Burnley)	Plummer, Sir Leslie
Donnelly, Desmond	Jones, Elwyn (West Ham, S.)	Popplewell, Ernest
Driberg, Tom	Jones, J. Idwal (Wrexham)	Prentice, R. E.
Ede, Rt. Hon. C.	Jones, T. W. (Merioneth)	Price, J. T. (Westhoughton)
Edelman, Maurice	Kelley, Richard	Probert, Arthur
Edwards, Rt Hon. Ness (Caerphilly)	Kenyon, Clifford	Proctor, W. T.
Edwards, Robert (Bilston)	Key, Rt. Hon. C. W.	Pursey, Cmdr. Harry
Edwards, Walter (Stepney)	King, Dr. Horace	Randall, Harry
Evans, Albert	Lawson, George	Rankin, John
Fernyhough, E.	Ledger, Ron	Redhead, E. C.
Fitch, Alan	Lee, Frederick (Newton)	Reid, William
Fletcher, Eric	Lee, Miss Jennie (Cannock)	Reynolds, G. W.
Foot, Dingle (Ipswich)	Lever, Harold (Cheetham)	Rhodes, H.
Foot, Michael (Ebbw Vale)	Lever, L. M. (Ardwick)	Roberts, Coronwy (Caernarvon)
Forman, J. C.	Lewis, Arthur (West Ham, N.)	Robertson, John (Paisley)
Fraser, Thomas (Hamilton)	Loughlin, Charles	Robinson, Kenneth (St. Pancras, N.)
Gaitskell, Rt. Hon. Hugh	Mabon, Dr. J. Dickson	Ross, William
Galpern, Sir Myer	McCann, John	Royle, Charles (Salford, West)
Shinwell, Rt. Hon. E.	Symonds, J. B.	Wigg, George
Silverman, Julius (Aston)	Taylor, Bernard (Mansfield)	Wilkins, W. A.
Silverman, Sydney (Nelson)	Thomas, George (Cardiff, W.)	Willey, Frederick
Skeffington, Arthur	Thomas, Iorwerth (Rhondda, W.)	Williams, D. J. (Neath)
Slater, Mrs. Harriet (Stoke, N.)	Thompson, Dr. Alan (Dunfermline)	Williams, LI. (Abertillery)
Slater, Joseph (Sedgefield)	Thomson, G. M. (Dundee, E.)	Williams, W. R. (Openshaw)
Small, William	Thornton, Ernest	Williams W. T. (Warrington)
Smith, Ellis (Stoke, S.)	Timmons, John	Willis, E. G. (Edinburgh, E.)
Snow, Julian	Tomney, Frank	Wilson, Rt. Hon. Harold (Huyton)
Sorensen, R. W.	Ungoed-Thomas, Sir Lynn	Winterbottom, R. E.
Soskice, Rt. Hon. Sir Frank	Wade, Donald	Woodburn, Rt. Hon. A.
Spriggs, Leslie	Wainwright, Edwin	Woof, Robert
Steele, Thomas	Warbey, William	Wyatt, Woodrow
Stewart, Michael (Fulham)	Watkins, Tudor	Yates, Victor (Ladywood)
Stonehouse, John	Weitzman, David	Zilliacus, K.
Stones, William	Wells, Percy (Faveraham)
Strachey, Rt. Hon. John	Wells, William (Walsall, N.)	TELLERS FOR THE AYES:
Strauss, Rt. Hn. G. R. (Vauxhall)	White, Mrs. Eirene	Mr. Rogers and Mr. Short.
Swingler, Stephen	Whitlock, William
NOES
Agnew, Sir Peter	Crowder, F. P.	Hobson, Sir John
Aitken, W. T.	Curran, Charles	Hocking, Philip N.
Allan, Robert (Paddington, S.)	Currie, G. B. H.	Holland, Philip
Allason, James	Dalkeith, Earl of	Hollingworth, John
Amery, Rt. Hon. Julian	Dance, James	Hope, Rt. Hon. Lord John
Arbuthnot, John	d'Avigdor-Goldsmid, Sir Henry	Hopkins, Alan
Ashton, Sir Hubert	de Ferrants, Basil	Hornby, R. P.
Atkins, Humphrey	Digby, Simon Wingfield	Hornsby-Smith, Rt. Hon. Dame P.
Barber, Anthony	Donaldson, Cmdr. C. E. M.	Howard, Hon. G. R. (St. Ives)
Barter, John	Doughty, Charles	Howard, John (Southampton, Test)
Baxter, Sir Beverley (Southgate)	Drayson, G. B.	Hughes Hallett, Vice-Admiral John
Beamish, Col. Sir Tufton	du Cann, Edward	Hughes-Young, Michael
Bell, Ronald	Duncan, Sir James	Hulbert, Sir Norman
Bennett, F. M. (Torquay)	Eccles, Rt. Hon. Sir David	Hutchison, Michael Clark
Bennett, Dr. Reginald (Gos & Fhm)	Elliot, Capt. Walter (Carshalton)	Iremonger, T. L.
Berkeley, Humphry	Elliott, R. W. (Nwcstle-upon-Tyne, N.)	Irvine, Bryant Godman (Rye)
Bevins, Rt. Hon. Reginald	Emery, Peter	James, David
Biffen, John	Emmet, Hon. Mrs. Evelyn	Jenkins, Robert (Dulwich)
Biggs-Davison, John	Errington, Sir Eric	Jennings, J. C.
Bingham, R. M.	Erroll, Rt. Hon. F. J.	Johnson, Dr. Donald (Carlisle)
Birch, Rt. Hon. Nigel	Farey-Jones, F. W.	Johnson, Eric (Blackley)
Bishop, F. P.	Fell, Anthony	Joseph, Sir Keith
Black, Sir Cyril	Finlay, Graeme	Kaberry Sir Donald
Bossom, Clive	Fisher, Nigel	Kerans, Cdr. J. S.
Bourne-Arton, A.	Fletcher-Cooke, Charles	Kerby, Capt. Henry
Box, Donald	Fraser, Hn. Hugh (Stafford & Stone)	Kerr, Sir Hamilton
Boyd-Carpenter, Rt. Hon. J.	Fraser, Ian (Plymouth, Sutton)	Kershaw, Anthony
Boyle, Sir Edward	Freeth, Denzil	Kimball, Marcus
Braine, Bernard	Galbraith, Hon. T. G. D.	Kirk, Peter
Brewis, John	Gammans, Lady	Kitson, Timothy
Bromley-Davenport, Lt.-Col. Sir Walter	Gardner, Edward	Lambton, Viscount
Brooke, Rt. Hon. Henry	George, J. C. (Pollok)	Lancaster, Col. C. G.
Brooman-White, R.	Gibson-Watt, David	Langford-Holt, Sir John
Brown, Alan (Tottenham)	Gilmour, Sir John	Leather, E. H. C.
Browne, Percy (Torrington)	Glover, Sir Douglas	Leavey, J. A.
Bryan, Paul	Glyn, Dr. Alan (Clapham)	Leburn, Gilmour
Buck, Antony	Glyn, Sir Richard (Dorset, N.)	Legge-Bourke, Sir Harry
Bullard, Denys	Goodhart, Philip	Lewis, Kenneth (Rutland)
Bullus, Wing Commander Eric	Goodhew, Victor	Lilley, F. J. P.
Burden, F. A.	Gough, Frederick	Lindsay, Sir Martin
Butcher, Sir Herbert	Gower, Raymond	Linstead, Sir Hugh
Campbell, Sir David (Belfast, S.)	Grant, Rt. Hon. William	Litchfield, Capt. John
Campbell, Gordon (Moray & Nairn)	Grant-Ferris, Wg. Cdr. R.	Lloyd, Rt. Hn. Geoffrey (Sut 'nC' dfield)
Carr, Compton (Barons Court)	Green, Alan	Lloyd, Rt. Hon. Selwyn (Wirral)
Carr, Robert (Mitcham)	Gurden, Harold	Longbottom, Charles
Cary, Sir Robert	Hamilton, Michael (Wellingborough)	Longden, Gilbert
Channon, H. P. G.	Hare, Rt. Hon. John	Loveys, Walter H.
Chataway, Christopher	Harris, Frederic (Croydon, N.W.)	Lucas, Sir Jocelyn
Clark, Henry (Antrim, N.)	Harris, Reader (Heston)	Lucas-Tooth, Sir Hugh
Clark, William (Nottingham, S.)	Harrison, Brian (Maldon)	McAdden, Stephen
Clarke, Brig. Terence (Portsmth, W.)	Harrison, Col. Sir Harwood (Eye)	MacArthur, Ian
Cleaver, Leonard	Harvey, Sir Arthur Vere (Macclesf'd)	McLaren, Martin
Cole, Norman	Harvey, John (Walthamstow, E.)	McLaughlin, Mrs. Patricia
Collard, Richard	Harvie Anderson, Miss	Maclay, Rt. Hon. John
Cooke, Robert	Hastings, Stephen	Maclean, Sir Fitzroy (Bute & N. Ayrs.)
Cooper, A. E.	Hay, John	Macleod, Rt. Hn. Iain (Enfield, W.)
Cordeaux, Lt.-Col. J. K.	Heald, Rt. Hon. Sir Lionel	MacLeod, John (Ross & Cromarty)
Corfield, F. V.	Hendry, Forbes	McMaster, Stanley R.
Costain, A. P.	Hicks, Beach, Maj. W.	Macmillan, Rt. Hn. Harold (Bromley)
Coulson, Michael	Hiley, Joseph	Macmillan, Maurice (Halifax)
Courtney, Cdr. Anthony	Hill, Dr. Rt. Hon. Charles (Luton)	Macpherson, Niall (Dumfries)
Craddock, Sir Beresford	Hill, Mrs. Eveline (Wynthenshawe)	Maddan, Martin
Critchley, Julian	Hill, J. E. B. (S. Norfolk)	Maltland, Sir John

Manningham-Buller, Rt. Hn. Sir R.	Pym, Francis	Temple, John M.
Markham, Major Sir Frank	Quennell, Miss J. M.	Thatcher, Mrs. Margaret
Marples, Rt. Hon. Ernest	Ramsden, James	Thomas, Peter (Conway)
Marshall, Douglas	Rawlinson, Peter	Thompson, Kenneth (Walton)
Martin, Neil	Redmayne, Rt. Hon. Martin	Thompson, Richard (Croydon, S.)
Matthews, Cordon (Meriden)	Rees, Hugh	Thorneycroft, Rt. Hon. Peter
Maudling, Rt. Hon. Reginald	Rees-Davies, W. R.	Thornton-Kemsley, Sir Colin
Mawby, Ray	Renton, David	Tiley, Arthur (Bradford, W.)
Maxwell-Hyslop, R. J.	Ridley, Hon. Nicholas	Tilney, John (Wavertree)
Maydon, Lt.-Cmdr. S. L. C.	Ridsdale, Julian	Touche, Rt. Hon. Sir Gordon
Mills, Stratton	Rippon, Geoffrey	Turner, Colin
Montgomery, Fergus	Roberts, Sir Peter (Heeley)	Turton, Rt. Hon. R. H.
More, Jasper (Ludlow)	Robinson, Rt Hn Sir R. (B'pool, S.)	Tweedsmuir, Lady
Morgan, William	Robson Brown, Sir William	van Straubenzee, W. R.
Morrison, John	Rodgers, John (Sevenoaks)	Vane, W. M. F.
Mott-Radclyffe, Sir Charles	Roots, William	Vaughan-Morgan, Rt. Hon. Sir John
Nabarro, Gerald	Ropner, Col. Sir Leonard	Vickers, Miss Joan
Nicholson, Sir Godfrey	Royle, Anthony (Richmond, Surrey)	Vosper, Rt. Hon. Dennis
Nugent, Rt. Hon. Sir Richard	Russell, Ronald	Wakefield, Sir Wavell (St. M'lebone)
Oakshott, Sir Hendrie	St. Clair, M.	Walder, David
Orr, Capt. L. P. S.	Scott-Hopkins, James	Walker, Peter
Orr-Ewing, C. Ian	Seymour, Leslie	Walker-Smith, Rt. Hon. Sir Derek
Osborn, John (Hallam)	Sharples, Richard	Wall, Patrick
Osborne, Sir Cyril (Louth)	Shaw, M.	Ward, Dame Irene
Page, Graham (Crosby)	Shepherd, William	Watkinson, Rt. Hon. Harold
Page, John (Harrow, West)	Skeet, T. H. H.	Webster, David
Pannell, Norman (Kirkdale)	Smith, Dudley (Br'ntf'd & Chiswick)	Wells, John (Maidstone)
Partridge, E.	Smithers, Peter	Whitelaw, William
Pearson, Frank (Clitheroe)	Smyth, Brig. Sir John (Norwood)	Williams, Dudley (Exeter)
Peel, John	Soames, Rt. Hon. Christopher	Williams, Paul (Sunderland, S.)
Percival, Ian	Spearman, Sir Alexander	Wills, Sir Gerald (Bridgwater)
Peyton, John	Speir, Rupert	Wilson, Geoffrey (Truro)
Pickthorn, Sir Kenneth	Stanley, Hon. Richard	Wise, A. R.
Pike, Miss Mervyn	Stevens, Geoffrey	Wolrige-Gordon, Patrick
Pilkington, Sir Richard	Steward, Harold (Stockport, S.)	Wood, Rt. Hon. Richard
Pitman, Sir James	Stodart, J. A.	Woodhouse, C. M.
Pitt, Miss Edith	Stoddart-Scott, Col. Sir Malcolm	Woodnutt, Mark
Pott, Percivall	Storey, Sir Samuel	Woollam, John
Powell, Rt. Hon. J. Enoch	Tapsell, Peter	Worsley, Marcus
Price, H. A. (Lewisham, W.)	Taylor, Sir Charles (Eastbourne)	Yates, William (The Wrekin)
Prior, J. M. L.	Taylor, Edwin (Bolton, E.)
Prior-Palmer, Brig. Sir Otho	Taylor, Frank (M'ch'st'r, Moss Side)	TELLERS FOR THE NOES:
Profumo, Rt. Hon. John	Taylor, W. J. (Bradford, N.)	Mr. Edward Wakefield and
Proudfoot, Wilfred	Teeling, Sir William	Mr. Chichester-Clark.