§ 13. Sir G. Nabarroasked the Chancellor of the Exchequer, in view of the fact that the State-owned steel company Richard Thomas and Baldwins Limited has succeeded in its take-over bid for Whitehead Iron and Steel, and of the fact that Richard Thomas and Baldwins Limited already owes the Government £135 million, if he will make a further statement on Her Majesty's Government's policy about the denationalisation of the steel industry.
§ Mr. MaudlingIt remains the intention of Her Majesty's Government to complete the denationalisation of the steel industry.
§ Sir G. NabarroIs the Chancellor aware that the recent extension of nationalisation following the acquisition of Whitehead's has been greeted with dismay by all Conservatives in the country? Can my right hon. Friend give us an assurance that his statement of pious intention this afternoon, which has been repeated in the House a hundred times over in the last eleven years, will lead to the completion of denationalisation in this Parliament?
§ Mr. MaudlingI do not agree that the R.T.B. affair has been greeted with dismay generally. I think that people have recognised that as Stewarts & Lloyds made a take-over bid to take over an important R.T.B. customer, the Government were right to authorise R.T.B. to counterbid on commercial grounds. Had we not done so, serious damage would have been done to R.T.B. and the prospects of denationalisation.
§ Mr. MorrisWould it not have been better, once the decision was reached in the national interest for R.T.B. to take over Whitehead's, for the Government to have taken over Whitehead's as a great act of public ownership and so to have saved R.T.B. the huge sums which must be paid on the Stock Exchange?
§ Mr. MaudlingI do not agree. Stewarts & Lloyds was equally entitled to bid for a company which it thought would be useful for its industrial group. We followed the principle that the nationalised industries should be able to defend themselves on commercial lines and by the normal commercial methods.
§ Sir J. Vaughan-MorganIs it not a matter for consideration whether the powers of the President of the Board of Trade to intervene in take-over bids are adequate?
§ Mr. StraussDoes not the logic of recent events point in exactly the opposite direction to that suggested by the hon. Member for Kidderminster (Sir G. Nabarro)? Does not the Chancellor agree that whether it is desirable in the national interest that Whitehead's should be integrated with Richard Thomas & Baldwins or any other firm is a purely technical matter which should be considered on technical considerations only, quite exclusive of competitive take-over bids which are clumsy and extravagant? Does not the right hon. Gentleman realise that technical considerations can be the prime consideration only when all the major steel firms are under unified ownership under national control?
§ Mr. MaudlingI do not agree at all. The thing goes much deeper. The Government have no desire to see the ownership of R.T.B. extended further, but, faced with the situation with which R.T.B. was faced—the obvious threat of damage—we had to allow it to defend itself.
§ 14. Mr. Wadeasked the Chancellor of the Exchequer if he will make a statement on the present situation following the offer made by Richard Thomas and Baldwins for shares in the Whitehead Iron and Steel Company.
Mr. MandlingOn 1st February Richard Thomas & Baldwins Ltd. indicated their intention to make an unconditional offer to purchase the issued share capital of the Whitehead Iron and Steel Co. Ltd., not already owned by them at a price of 85s. 3d. per ordinary share of £1 each payable in cash. I understand that formal offer documents are being posted today.
§ Mr. WadeApart from the inconsistencies referred to by the hon. Member for Kidderminster (Sir G. Nabarro), are there not still wider issues involved? Is it satisfactory that the outcome of a take-over bid—a battle of this nature involving important questions of public interest—should be solely dependent on the amount of the bribe which the respective competitors could offer to the shareholders of the firm to be taken over? Does that still represent Government policy, however important the merger or take-over may be?
§ Mr. MaudlingI am surprised to hear a representative of the Liberal Party, a believer in the market economy, describing a bid as a bribe.
§ Sir G. NabarroDoes my right hon. Friend recognise that the price offered by Richard Thomas & Baldwins, at 85s. 3d. per share, was not only an uncommercial figure but one which would ultimately involve the taxpayers in a further heavy loss, and that there is an important matter of political principle clearly involved?
§ Mr. MaudlingI do not agree at all. If one considers the amount of profit that would have been lost to R.T.B. if it had lost its contract or connection with Whitehead's, it would have been a much bigger loss to the taxpayer than the money involved in making this good investment.
§ Mr. JayIs not this whole rather sordid story a strong additional reason for the public ownership of the whole steel industry?
§ Mr. MaudlingNo, Sir. If anything, this is a strong additional reason for getting on with denationalisation.
§ 22. Sir G. Nabarroasked the Chancellor of the Exchequer what was the total investment of State money in the steel industry, as at 1st February, 1963, includ- 1104 ing the two remaining nationalised firms of Richard Thomas and Baldwins Ltd., and Whitehead Iron and Steel Co. Ltd., and the £135 million owed to the Iron and Steel Holding and Realisation Agency by the former; what was the comparable figure of investment of State money at the commencement of steel denationalisation in 1952; and, having regard to steel output at a current rate of 21 million tons annually, out of a capacity of 29 million tons, what steps Her Majesty's Government are taking to increase the profitability of the State steel sector of the industry, prior to completion of denationalisation.
§ Mr. MaudlingThe book value to the Iron and Steel Holding and Realisation Agency of its investments and obligations on 13th July, 1953, was £364 million. The corresponding figure on 1st February, 1963, was £126 million, of which £96 million related to securities in and loans to Richard Thomas and Baldwins Ltd. In addition, my right hon. Friend the Minister of Power has lent £70 million towards the cost of development by Richard Thomas and Baldwins Ltd. at Newport and has undertaken to lend up to £50 million to Colvilles Ltd., towards the new strip mill at Ravenscraig. Her Majesty's Government look to the Board of Richard Thomas and Baldwins, acting on commercial lines, to do everything possible to increase the profitability of the firm.
§ Sir G. NabarroWhat estimate has my right hon. Friend made recently as to the occupancy of production of the steel industry in the next twelve months? Does he not realise that it is grossly uneconomic to operate an industry of this kind, with the huge capital investment in modern plant which is entailed, at somewhere about 70 per cent. of the maximum load factor, which is all it has been doing in the last twelve months?
§ Mr. MaudlingIdeas about the potential load factor in the steel industry in relation to the economics of the industry have changed in the last few years. There are immense differences between the heavy end and the light end of the industry. However, in either case the measures which I have taken recently, including the cut in Purchase Tax on motor cars and the bigger depreciation allowances, should be of great benefit to the steel industry.
§ Mr. GrimondWill the right hon. Gentleman confirm that this exercise in nationalisation has cost the taxpayer some £4½ million, that the Whitehead Company was denationalised for some £4½ million and renationalised at a cost of nearly £10 million?
§ Mr. MaudlingThe right hon. Gentleman's figures are not right. Whitehead's was sold originally at £3½4 million and since then £3½6 million additional profits have been ploughed back into the company and the latest purchase price was in the neighbourhood of £10 million. The point I made earlier—I believe that the right hon. Gentleman was not present—was that by making this bid Richard Thomas and Baldwins protected an outlet for its products which in terms of profit margins was very important to it.
§ Mr. CallaghanDoes not this show how stupid it was to sell the thing off in the first place?
§ Mr. MaudlingNo, but it shows that if people make bids for other people's customers, they must expect to meet some resistance.