HC Deb 29 January 1963 vol 670 cc759-63
Sir G. Nabarro

(by Private Notice)asked the Chancellor of the Exchequer what consultations he has had with the Iron and Steel Holding and Realisation Agency or talks with the directors of the state-owned steel firm of Richard Thomas and Baldwins concerning the latter's takeover bid, announced yesterday evening, for the non-nationalised firm, the Whitehead Iron and Steel Company, and whether he will make a statement.

The Chancellor of the Exchequer (Mr. Reginald Maudling)

The Agency has been in close touch with the Treasury at all stages. The reasons for the proposed action by Richard Thomas and Baldwins were fully explained in the announcement to which my hon. Friend referred.

Sir G. Nabarro

Does not my right hon. Friend appreciate, first, that this behaviour by Richard Thomas and Baldwins suggests that it has plans for overtly adding to the area of the nationalised steel industry, which is completely contrary to the declared policy of Her Majesty's Government?

Secondly, having regard to the fact that Richard Thomas and Baldwins has already borrowed £135 million from the Treasury, and is heavily in overdraft with its bankers, would it not be a fair conclusion that the firm would have to come back to this House to borrow more money to pay for Whiteheads if Richard Thomas and Baldwins were to succeed? Would not that be an intolerable position for the Conservative party to be placed in?

Mr. Maudling

No, Sir. The initiative was not taken by Richard Thomas and Baldwins, but by Stewarts and Lloyds. The directors of Richard Thomas and Baldwins thought that this bid by Stewarts and Lloyds, if successful, would seriously damage their own business and, therefore, they wished to act in defence of their business and in the interests of the people employed in it.

At the same time, it is my opinion that this action will make it easier rather than more difficult to complete the denationalisation of the steel industry. Anything which damages Richard Thomas and Baldwins will make it more difficult to transfer the firm back to private ownership.

Mr. Grimond

Do we understand from the Chancellor of the Exchequer's last reply that the bid by Richard Thomas and Baldwins is part of the policy of denationalisation? I think that he said that it would make it easier to denationalise? Is it not the case that the Conservative Party fought the last General Election partly on the policy that steel should be denationalised? Is it still the Conservative Party's view that it should be denationalised?

Mr. Maudling

The right hon. Gentleman has not followed my argument. It is simple. Pending the denationalisation of Richard Thomas and Baldwins, it is our policy that it should operate as a commercial concern and protect itself as a commercial concern can do. In so doing, it will make it easier for ultimate denationalisation to take place.

Mr. T. Fraser

Is the right hon. Gentleman aware that we on these benches want to see the steel industry organised in the way that will best fit it to serve the interests of this country? Is he further aware that some of us were concerned when the take-over bid was made by Stewarts and Lloyds, because it seemed to be calculated to deal a very heavy blow at Richard Thomas and Baldwins, since Whiteheads is such a large customer of R.T.B.s? Whiteheads' custom seemed in danger of being removed from Richard Thomas and Baldwins. Our view is the fact that Richard Thomas and Baldwins is a nationalised company should not stand in the way of its exercising the rights of private enterprise companies in the steel industry.

Mr. Maudling

I think that Stewarts and Lloyds was perfectly entitled to make its bid. The only decision before the Government was whether we should allow Richard Thomas and Baldwins to defend itself in the normal commercial way.

Sir C. Osborne

Since the object of the take-over bid is to compel Whiteheads to buy steel billets at £33 a ton from English manufacturers, whereas now it is buying them at £30 a ton from Canadian manufacturers—a price which includes freight—will this move not make the inefficiency of Richard Thomas and Baldwins even greater by guaranteeing this market for the firm, thus making it more difficult for steel finishers to sell their goods abroad?

Mr. Maudling

I am advised that Richard Thomas and Baldwins regard the Canadian competition in imported billets as a temporary factor on this level and not as a permanent one.

Mr. Ifor Davies

Is the Chancellor aware that the steel workers in my constituency welcome this intervention by Richard Thomas and Baldwins? Is he further aware of the statement, issued last night by Richard Thomas and Baldwins, that the immediate consequence of the success of the Stewarts and Lloyds bid would be the closure of the Elba Works, at Gowerton, in my constituency, which employs 500 men, and unemployment at Redbourn and Ebbw Vale? In view of this great threat of unemployment, will he see to it that the Government give every support to Richard Thomas and Baldwins in these negotiations?

Mr. Maudling

We think that the firm should act in these circumstances as any commercial firm would do in protecting its interests.

Sir C. Osborne

Where is it to get the money from?

Sir H. d'Avigdor-Goldsmid

In view of the disastrous record of Richard Thomas and Baldwins over the last four years, for which there is ample documentation in the speeches of its chairman, does my right hon. Friend think that the adding to Richard Thomas and Baldwins of a company now under private enterprise will make it easier to denationalise R.T.B.s? Is it not, on the contrary, much more likely that yet another company will fall under the same damaging auspices?

Mr. Maudling

I do not think that that is the position. Richard Thomas and Baldwins was not trying to take this firm over but it was faced by a threat from someone else which, in effect, would take away from it a very important customer and make its difficulties even greater.

Mr. M. Foot

Can the right hon. Gentleman say whether any attempt was made by the Government to prevent the original act of jungle aggression perpetrated by Stewarts and Lloyds and, if so, the result of that Government intervention?

Mr. Maudling

Stewarts and Lloyds is perfectly entitled to make this move if it thinks that it is in the interests of the company to do so. There was no reason to stop the company.

Mr. Ridley

Is my right hon. Friend aware that many hon. Members find it obnoxious that public money should be used for a take-over bid? Is not the solution to these problems the fact that it is essential that Richard Thomas and Baldwins should be sold back to the public so that private money, and not public money, can be used?

Mr. Maudling

It is our objective to denationalise Richard Thomas and Baldwins. As the House is aware, we have been continuing the process of denationalisation of the steel industry and Richard Thomas and Baldwins remains, but the job of denationalising R.T.B. will be made very much more difficult if, in the meanwhile, it loses one of its main customers.

Mr. Jay

Is not the decisive point the fact that Stewarts and Lloyds is likely to close down two plants in South Wales and that, even if public money is to be made available by way of loan, the prevention of that closing down is a perfectly proper use of public money in the spirit of the Government's own Local Employment Act?

Mr. Maudling

A certain amount of custom would be going from Whiteheads to one firm or the other in either event. It is perfectly reasonable that the decision should be taken on a commercial basis.

Several Hon. Members

rose—

Mr. Speaker

We cannot discuss this matter any further now.

Sir G. Nabarro

On a point of order. In view of the replies from the Treasury Bench, I beg to give notice that I shall raise the matter at the earliest opportunity.