IRON AND STEEL BILL

HC Deb 25 July 1966 vol 732 cc1215-363

Order for Second Reading read.

3.30 p.m.

Sir John Hobson (Warwick and Leamington)

On a point of order, Mr. Speaker. May I seek your guidance as to the nature of the Bill? I respectfully submit that there are strong arguments for holding that the Bill ought to be treated as a Hybrid Bill and that therefore, in accordance with Standing Order No. 36, it should be referred to the Examiners in order that they may report to the House whether any or certain Standing Orders relating to Private Bills are applicable or not—in other words, the Examiners should decide whether this is or is not a Hybrid Bill.

You have, yourself, recently stated that the question of whether a Public Bill should be treated as a Hybrid Bill is one of the most difficult and complex points of procedure of the House. But it is not a point which you need yourself decide today. In my submission, all I have to do is to satisfy you that there is a case for the Examiners to consider and you need only ask yourself whether or not the Bill could possibly be a Hybrid Bill. If there is the possibility that it might be a Hybrid Bill, then the Examiners should have the right to consider it, for the House has entrusted to them the task of considering and reporting their views on this question to the House.

Of course, the Bill is a Public Bill and is presented by the Government, and it deals with questions of public policy. Unless it did so, no question of its hybridity could arise, and it is only when one has a Bill of that nature that the further point arises as to whether it is not something more—namely, whether it specially picks out particular private interests for special treatment. In my submission, that is exactly what this Bill does.

You will no doubt remember the definition given in Erskine May, adopted from your predecessor, as to what a Hybrid Bill is, namely: … a public bill which affects a particular interest in a manner different from the private interests of other persons or bodies of the same category or class. While this is a procedural matter, it is one of considerable importance for those who are affected; I believe it was Professor Maitland who said that: Justice is secreted in the interstices of procedure. I hope that the House of Commons, the High Court of Parliament, will be acute to see that justice is properly done in accordance with its rules. The principle of our rules is clear. If one is applying a general rule to the whole of a category or class, then the representatives of the people assembled in this House alone need discuss the Measure and decide upon it. But if there is a discrimination between members of a category or class, then, for 500 years, this House has allowed those discriminated against to have the right to make a separate defence of themselves and their interests.

The Bill proposes to nationalise 14 companies set out in the Schedule to the Bill. These are all large and substantial steel companies which, either themselves or through their subsidiaries, are concerned with the production of steel in Great Britain. It is common knowledge that it is not proposed to nationalise many other large and substantial companies which, either by themselves or through their subsidiaries, are also concerned with the production of steel. I give the names of only seven of those which are not to be nationalised: Guest Keen and Nettlefolds, Tube Investments, Vickers, Duport, Cammell Laird, Thomas Firth, John Brown and Hadfields.

On this occasion, I am all in favour of the abolition of the death penalty for all steel companies. but if some are to be condemned to death and others not, I submit that those to be condemned should upon the first occasion have the opportunity of defending themselves because they are being treated differently. I submit that it is quite plain that the Government have picked 14 companies and no others and that the Bill will therefore affect, to quote the definition, "the particular interests" of the scheduled companies … in a manner different from the … interests of …. the non-scheduled companies, which are of the same category or class, and that therefore there is every reason for you to find that this Bill is a hybrid and that it should be considered by the Examiners.

The Government have plainly recognised that there is a difficult problem and, in the Bill, one can see the method by which they have endeavoured to avoid it. They have put in Clause 7(3). If you look at the substance and pith of this matter, however, as one should on a constitutional question, that subsection is nothing but an ingenious device to try to prevent the companies which the Government have picked on from having the right to defend themselves, while wholly failing to create a category or class all of whose members are being treated the same. I say that for three reasons.

First, Clause 7(3) has no legislative effect at all, and it matters not whether one is or is not within the description included in it. All that matters is whether one is in the Schedule. Secondly, the subsection does not create a category or class at all but is no more than a descriptive formula designed to cover the desires of the Government to take over 14 particular companies. Thirdly, there is plain discrimination between large holding companies, two only of which are to be nationalised and three of which are not to be nationalised, and the distinctions in the Bill relating to the holding companies are wholly unreal and irrelevant and create a discrimination which could not possibly be justified as dividing the big holding companies into different categories or classes. May I say something on each of these points.

First, the Bill, and Clause 7(3) in particular, does not deal, nor purport to deal, with a class or category other than the 14 scheduled companies. It has no legislative effect in creating a class or category of companies which are to be nationalised or in excluding any company from nationalisation. I say that because the securities of these 14 companies are to be vested in the Corporation by the effect of Clause 1, which, together with the Schedule, simply takes over their securities.

Even if any of these 14 companies could snow that they were not within the definition laid down in Clause 7(3), they would still have all their securities taken over, while any company not listed in the Schedule but within the definition in Clause 7(3) would not be taken over because the sole operation of the Bill is based upon Clause 7(1) and the Schedule and nothing else.

Mr. Archie Manuel (Central Ayrshire)

On a point of order, Mr. Speaker.

Sir J. Hobson

I am on a point of order.

Mr. Speaker

The right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) is addressing me on a point of order.

Sir J. Hobson

This is a matter of some importance, and you will remember, Mr. Speaker, that your predecessor ruled upon this matter when the Iron and Steel Bill, 1948, first came before the House. It is obligatory upon me to point out the reasons why I say that you should rule differently on this occasion from the ruling given then.

There are, I submit, two major differences between this Bill and the 1948 Bill. In 1948, Mr. Speaker, your predecessor based his decision on the fact that the purpose of that Bill was to bring under public ownership all important companies producing iron ore and certain basic iron and steel products, and dealt with private interests only generally as respects a particular class. That Bill affected 107 companies and very low limits of production indeed excluded from nationalisation. Here 14 only out of the numerous companies concerned with steel have been picked out.

But there is this further distinction. Under Clause 11(3) of the 1948 Bill it was provided that the companies which were specified were those which in the Minister's opinion fulfilled the conditions set out in one or other of following paragraphs. Therefore, it was possible on that occasion for a company to show on the facts to the Minister that it ought not to be within the Bill and it would not then have been nationalised. But there is no means by which any company specified in this Bill can say, "I am not within the classes or category and I ought, therefore, to be out". This, I submit, shows plainly that all this Bill is doing is nationalising 14 named companies.

Secondly, Clause 7(3) does not create a category or class at all. It is simply a descriptive device to pin on these 14 companies the terms of Clause 7(3). The formula that has been adopted is one that relates to the relevant annual period and the amount of the production. Of the 28 month-ends between December 1963 and March 1966 which might have been selected, there are only three which can be selected when all the scheduled companies are above the level and no other company is above that level. One of these three month-ends is, of course, in the Bill.

The figure of 475,000 tons which is selected is only just above the level of one of the great producing companies which is not in the Bill. Indeed, one of the companies which is not in the Bill has 97.5 per cent. qualifying production. If anybody moved an Amendment to the Bill to reduce the level by 5 per cent. it would bring an extra company within the definition. It would not nationalise that company because it would not be in the Schedule of the Bill. To this extent it shows that the formula is no more than a device.

Thirdly, in relation to dealing with holding companies, the effect of subsections (b) and (c) of Clause 7(3) is to differentiate between the way in which holding companies are dealt with by importing the test of whether or not they have 50 subsidiaries. Of the large steel holding companies—

Mr. Charles Pannell (Leeds, West)

rose—

Sir J. Hobson

—two are to be nationalised entirely, not only for their subsidiaries which are steel, but all their subsidiaries, and three are not to be nationalised at all.

If one looks at the Government's White Paper of March, 1965, it plainly shows—[Interruption.]

Mr. Speaker

Order. The Chair is being addressed on a very serious point of order. It must hear it.

Sir J. Hobson

—that in April of 1965 the Government had decided to pick out two companies and leave out three. There is no mention in that White Paper that the decision was taken that this test of 50 subsidiary companies should be used at all. The question of the 50 subsidiary companies bears no relation to whether the subsidiary companies are steel or non-steel or related to steel or related to non-steel. They do not even exclude dormant companies. One of the holding companies that is excluded is excluded only because it has, luckily, among its more than 50 subsidiaries 14 dormant companies, and if one did not count these it would be one which ought to be nationalised. How one can say that one is creating properly a class or category by counting up the number of dormant companies that an organisation has, I find it difficult to understand.

By way of illustration, let me suppose —[Interruption.]—that it was proposed to cut the salaries of some but not all Members of Parliament. It could hardly be said that a category or class had been created if the reduction was applied to all Members of Parliament who had up to today been Members continuously for not more nor less than 16 years and had during that period represented two adjacent constituencies. Mr. Speaker, you would be the only person who would be within that description, and you would know that it had been devised solely, as it has been, to pick you out and not anybody else. This, I submit, is precisely what is being done in the formulas which the ingenious draftsman has devised in Clause 7(3).

I submit that these 14 companies are being separately and individually and specially treated; that they are not members of any special category or class; that the Bill does not create any such category or class; and that, therefore, it would be in accordance with the Standing Orders of the House if you were to refer the arguments which I have advanced, Mr. Speaker, for consideration by the Examiners upon whom the House has placed the responsibility of deciding this matter and reporting on it.

Mr. C. Pannell

Further to the point of order, Mr. Speaker. Will you also reflect whether we have any precedent for a point of order being addressed to the House to the length of the one to which we have just listened? If you are going to accede to or reject the argument which has been put forward, it could surely have been put to you on a narrower point which could have taken less than 15 minutes.

Mr. Speaker

The simple answer to the right hon. Member for Leeds, West (Mr. C. Pannell) is that there are precedents for exactly what has happened. The last time a similar order was submitted it took longer.

I am grateful to the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) for giving me notice of his intention to make a submission. I would like to assure him first that he has not in any way prejudiced his case, by raising it now, after the Order of the Day has been read for Second Reading of this Bill. The Ruling I have to give is one which will affect the interests of many outside this House. I must rule on the matter in a quasi-judicial capacity and, like my predecessors, I take no account in what I have to say of the convenience or otherwise for the Government programme. As the house is aware, Standing order No. 38 requires that if: It appears that the Standing Orders relating to Private Business may be applicable to a Bill the examiners of Petitions for Private Bills shall be ordered to examine the Bill with respect to the applicability thereto of the said Standing Orders. Since this is a matter of carrying out a Standing Order, it falls to me, advised by the Officers of the House, to decide whether in fact Standing Order No. 38 is in fact applicable to the Iron and Steel Bill, and I need hardly say that ever since its publication this question has received the earnest attention of myself and my advisers.

Let me say at the outset that I readily accept the first point in the right hon. and learned Gentleman's submission. The Standing Order is quite clear: if "the Standing Orders relating to Private Business may be applicable", then the Bill is to be examined by the Examiners, whose duty it is to decide conclusively whether they are applicable. In other words, as the right hon. and learned Gentleman has said, I have to decide only whether there is a prima facie case for referring the Bill to the Examiners, and if there is any doubt in my mind, then it is my duty to rule that the Bill should be so referred.

The Private Business Standing Orders in question are those numbered 4.68, but there is nothing in these Orders themselves, which, of course, were drafted to regulate Private Bills, that offers any clue as to their applicability to a Public Bill. I have therefore to rely on the Rulings of my predecessors and, in particular, on that of my immediate precessor quoted at the foot of page 871 of Erskine May. Mr. Speaker Hylton Foster said: I think that a Hybrid Bill can be defined as a Public Bill which affects a particular interest in a manner different from the private interests of other person or bodies of the same catagory or class. This is the test, therefore, which I have to apply to the present Bill.

Clause 7 provides that the companies named in Schedule 1 shall vest in the National Steel Corporation and subsection (3) states that these companies satisfy one or other of the conditions set out in paragraph (a), (b) or (c).

Paragraph (a) includes every company which is not a subsidiary and itself produced the prescribed amount of steel in the prescribed period. Paragraph (b) includes every holding company with not more that fifty subsidiaries of which one or more together produced the prescribed amount of steel in the prescribed period.

Paragraph (c) includes every subsidiary company in a holding company of more than fifty subsidiaries which produced the prescribed amount of steel in the prescribed period.

The right hon. and learned Gentleman's principal contention, as I understand it, is that the companies which fall within each of the three groups determined by these criteria do not form genuine classes, and he has alleged that the criteria were chosen so as to include certain companies and exclude others. Fortunately, it is not for me to consider the reasons why these particular criteria are chosen.

All that I have to consider is whether the criteria chosen are germane to the subject matter which they are required to distinguish. Essentially the criteria are based on one consideration: output during a particular period. Having in mind the vast complexity of the steel manufacturing industry. I find it difficult to conceive a more appropriate kind of consideration on which to base the criteria. The fact that the criteria, as drawn, leave certain companies on one side of the line and certain companies on the other is something which I do not have to consider. In whatever manner the criteria had been defined, the result would have been to produce what are bound to appear anomalies in the eyes of one person or another. I conclude therefore that the three classes which result from the definitions contained in subsection (3) of Clause 7 are genuine classes and that they do not justify me in ruling that the Bill should be referred to the Examiners.

The right hon. and learned Gentleman makes a further submission. He suggests that the operative words in the Bill are the list of companies in the Schedule rather than the criteria laid down in Clause 7. I do not accept that view, and in so ruling I am fortified by the Ruling given by Mr. Speaker Clifton Brown in regard to the Iron and Steel Bill of 1948–49, of which the legal structure was similar in this respect. Nor do I consider that the omission of the words "in the Minister's opinion" in any way undermine the precedent. On the contrary, their omission removes one of the arguments which was used on that occasion to support the reference of the Bill to the Examiners.

I therefore rule that it does not appear that the Standing Orders relating to Private Business may be applicable to this Bill and that therefore Standing Order No. 38 does not require it to be sent to the Examiners.

3.50 p.m.

The Minister of Power (Mr. Richard Marsh)

I beg to move, That the Bill be now read a Second time.

I must begin by apologising to the House. Had I realised that the exclusion of so many steel companies would cause so much trouble I could have reconsidered it and included the lot. I suppose that in a way this is typical of the position that we have got into. It is unfortunate, but I suppose inevitable, that there are very few subjects upon which it is more difficult to get a rational discussion than the future of the British steel industry.

The arguments arouse such very deep emotional feelings that there is a tendency to lose sight of the very wide measure of agreement which exists over part of this controversy. Everyone accepts that the iron and steel industry occupies a dominating position in the British economy. It earns over £1,400 million a year, with capital expenditure of around £600 million for the next five years.

Exports of iron and steel or of goods containing steel accounted last year for half of our total exports. I give the case immediately that there is no manufacturing industry of such basic importance to the British economy. Given these facts, quite clearly any Bill which changes the method of organisation quite rightly has to be examined very carefully and critically. There are three questions that we have to ask.

First, should the steel industry be left to continue as in the past, and is it, above all, operating as efficiently as we would wish? There was a reference to that in The Times of 2nd July. The Times, which has not been wildly enthusiastic for steel nationalisation, said: Over the past years the steel industry has not been operated in a markedly efficient fashion. The quality of some products has been poor. British steel has not been as competitive in world markets as it should have been. Secondly, if the industry does need vast major changes—and I do not think that there is much dispute that it does—can it be relied upon to accomplish these changes itself, or is it essential for the State to intervene in the interests of the country? Thirdly, if it is agreed that the State should intervene, is this Bill the best method of achieving it? As far as I can see, the answer to the first question is unanimous.

The Guardian in an article on 2nd July, said: All concerned, from the steel masters to Mr. Marsh recognise that the British steel industry must rationalise or perish. This is the harsh economic, non-political, undoctrinaire reason for reorganisation. On these grounds the case for nationalisation is stronger now that it was in 1949. No one disputes the need for changes in the structure and organisation of the British steel industry. The Conservative Party, the leaders of the steel industry and, if one might be light-hearted, the Liberals have all argued not against the need to introduce some new element into the administration of the steel industry but only as to how this should be achieved.

Let me say at the beginning that it would not be fair or sensible, because this is a key industry, to paint the current position of the British steel industry in terms of black disaster. We have some first-rate people, some very modern plant and a very good record in very many fields. Having said all that—and this is the key to the debate—no one can deny the seriousness of the growing challenge to an industry which we have all agreed is crucial to our entire economic performance.

This is a field where the economies of scale are very real indeed. Let us look at some of these arguments of scale and look at the position of the British steel industry in a world context. The largest British company, which happens to be the nationalised R.T.B., has a capacity of around 31 million tons a year. In the past few days a major German-Dutch merger has created a new combination with a capacity of around 10 million tons a year. In France, a country which can hardly be described as an example of rampaging doctrinaire Socialism, plans have been announced for concentrating the great bulk of the industry, which produces nearly 20 million tons a year, into only three units, two of which will have a capacity of more than 7 million tons a year.

The Yawata Steel Company of Japan is already producing over 7 million tons a year, while in the United States of America there are three companies producing more than 10 million tons a year and another five producing more than 5 million tons. We have reached a position where there are already 22 steel companies outside the Communist countries which are larger than anything we have in Britain.

If we had only to catch up we would be faced with a pretty tough job, but to stay in business it will not be enough just to make good lost ground; we have to ensure that the British steel industry is able to compete with even bigger units, planned for the late 'sixties and 'seventies.

The Iron and Steel Board recently summed up the problem when it said: The Board have long been of the opinion that the industry needs to be reorganised into fewer but individually larger, units equipped with plant of a greater size than is generally the case at the moment. Technical studies undertaken in the Board's organisation certainly support the view that great advantages are to be derived from the concentration and reorganisation of production. The Observer, on 3rd July, was less delicate when it said: The case against the Government's Bill would be much more persuasive if either the Conservatives or the steel masters had produced a convincing plan for bringing about the industry's much needed rationalisation without full-scale public ownership". Since the argument about the future of the steel industry has now lasted for nearly twenty years, that failure is as surprising as it is regrettable.

This leads me to my second question. Given the need for the reorganisation and rationalisation of the industry, can the industry be left to carry it out itself? The short answer to that is very clear. The industry has had fourteen years in which it could have done this. It could have done it in the same fourteen years as in fact its foreign competitors did. The brutal truth is that it did not even start the job. In the end, the Government, in the last Parliament, decided that public ownership was the only way to ensure that this essential job was done.

Hon. Members will remember the debate which took place last year. [HON. MEMBERS: "Hear, hear."] Not surprisingly, it was a lively affair. In the closing stages of it a couple of my hon. Friends happened to ask my right hon. Friend the First Secretary of State if he would agree to listen to alternative proposals from the industry which would give effective Government control without 100 per cent. ownership—something which we have been asked to examine since. My right hon. Friend agreed to look at any such proposals.

Twelve months later, my right hon. Friend the Prime Minister asked me whether I should like to be Minister of Power with a seat in the Cabinet, which, I must confess, seemed to me at the time a pretty pointless question. It always seems dangerous to raise queries on these occasions. I was appointed Minister of Power. One of my first actions on taking office was to see whether any proposals had been submitted to the Ministry. I recognise that sometimes proposals can be made between Government Departments and outside bodies which cannot be bruited around. If ever proof were needed that the British steel industry was unwilling or incapable of putting its own house in order, that proof was provided by the fact that, even despite the threat of nationalisation, there were no proposals from the industry twelve months after the invitation had been extended. It was not until March of this year that the British Iron and Steel Federation appointed a committee under Sir Henry Benson to study the future structure of the industry. But I repeat that it submitted no proposals to me or to my predecessor until 10th May this year when everyone knew that it was too late.

Even though those proposals were submitted so late in the day, it was an important issue and we halted discussions on the Bill and examined the Federation's proposals very carefully. I am bound to say that they were quite unrealistic and would not have provided an instrument for tackling the problems of the industry.

What were those proposals? There was to be a new supervisory authority consisting of a commission with a part-time chairman, two full-time executive members and five part-time members, which would determine the authority's policy and exercise its formal powers. Real power was to reside, however, in the Consultative Council which, despite its name, was to be responsible for the day-to-day running of the Authority with the right to advise the Minister on the appointment of the executive members of the commission.

This body was to have 26 members. Sixteen of them were to be steel masters. Separate companies were to be retained with their own shareholders, with the result that the primary and legal responsibility of the directors of those companies would have been to continue to conduct the affairs of the companies in the interests of their separate shareholders and not in the interests of the industry as a whole. One cannot have in that type of organisation a level of rationalisation which would secure the full economic benefits to be derived from modern management techniques.

To give an obvious example, it might well be desirable to require an individual company to pursue a course of action which reduced its own returns in order to optimise the returns of the industry as a whole. That surely cannot be done when there is a large element of private ownership. Directors in a company have a moral as well as a legal responsibility towards the interests of all their shareholders. We can do the sort of thing which we all agree needs doing only with the full public ownership of the main companies in the industry.

There has been talk about a 51 per cent. holding. It is worth making the point that the leaders of the Federation rejected a 51 per cent. State shareholding in the State companies for the same reasons as the Government put forward last year. Namely that it would produce an awkward and divided responsibility to the State shareholders concerned with the efficient development of the industry as a whole in the national interest and to the private shareholders whose perfectly legitimate concern it would be to maximise the return on their investments. In the light of all these considerations, the Government decided to proceed with a Bill based on the White Paper.

Before dealing with some of the details of the Bill, perhaps the House will forgive me if I say a few words about nationalisation in general, because we seem to have argued on the specific point in far too general terms. I have never understood the violent emotions which seem to be released whenever this subject is discussed. It is a peculiarly British phenomenon. Most industrial nations accept the need for a large public sector. While there are always arguments about the nature and extent of State intervention, only the British seem to have succeeded in elevating those arguments to the level of theology in recent years.

I have never made a secret of the fact that I do not believe that nationalisation of itself necessarily solves anything. I think that it is frequently an essential means towards the achievement of desirable ends; but it can never be an end in itself. But while I find—[Interruption.] Hon. Members opposite and the country at large would have been in serious difficulties in recent years without the efforts of the nationalised sector. While I find the view of the very small band—[Interruption.] If the Conservatives do not think this is so, one cannot help wondering what they were doing when they had 13 years in which to hand the lot back. While I find the views of the very small band of those who believe in nationalisation on principle somewhat illogical, the views of the doctrinaire anti-nationalisers seem to me no less illogical and frequently more dishonest. The impression is given that the Conservatives are opposed to nationalisation in principle. Except for possibly the right hon. Member for Wolverhampton, South-West (Mr. Powell), this is not true.

The late Sir Winston Churchill, Mr. Harold Macmillan and the whole of the Conservative Party in the last 13 years have all accepted, and in some cases even extended, a large publicly owned sector of industry. To coin a phrase, we are all nationalisers now. But let us not be too mealy-mouthed about this. Those and there are many of them in the House—who have not the slightest intention of bringing about any major reduction in the nationalised sector but who take every possible opportunity of highlighting. exaggerating and manufacturing criticisms of the nationalised industries are deliberately damaging the national interest. It is high time that right hon. and hon. Members opposite declared themselves either in favour of handing the whole public sector back to private enterprise or stopped this constant desigation of people who are trying to manage great industries on behalf of the nation.

Even when ownership is transferred to the State, there are still many different ways in which State industries can be administered. I do not personally believe that great industries can be administered from Whitehall. While Governments have to retain power to protect the national interest, the dynamism essential to a successful industry can be generated only by the enthusiasm, knowledge and, let us face it, ambitions of people whose whole lives are intertwined in the industries which they serve.

It is precisely these considerations which have led me to produce the Bill which is, I freely admit, virtually an enabling Bill. It deliberately does not define the future structure or organisation of the steel industry. Nor does it present the new Steel Corporation with a rigid structure which would of necessity have had to be built up on the basis of inadequate knowledge and expertise. We all accept that the leaders of the industry are not enthusiastic for any nationalisa- tion measure, but I think that right hon. and hon. Members opposite will accept that most of them would feel that if there had to be a nationalisation Bill they would rather that it were done in this way.

Sir Gerald Nabarro (Worcestershire, South)

No.

Mr. Marsh

If they did not, it would not be difficult, even now, for the Government to determine how this should be done. What I am hoping is that people, whatever their views until this debate, will join with us after this debate to see how we can produce the best form of structure for the British steel industry. The offer is a clear one.

The Bill takes into full public ownership the 13 privately-owned companies listed in Schedule 1, about which we have heard a lot. These companies, with R.T.B., form the dominant sector of the industry, with a capacity of nearly 29 million ingot tons. They account for over 90 per cent. of our capacity to produce iron ore, pig iron, crude steels, the heavy products, sheet and tinplate. They own all our 22 integrated iron and steel works and nearly all the other major works, including the three in the Scunthorpe complex, all the major works on the North-East Coast and the three big works in South Wales. The National Steel Corporation will therefore control this dominant sector and will he able to deal effectively with all the important problems facing the industry, including the problems of structural reorganisation. At the same time, concentration on these 14 major groups will make it easier for the Corporation to concentrate on major issues of policy without the distractions that would have been caused by the acquisition of a larger number of small companies.

I do not believe that a level of competition within and between State-owned industries is impractical or necessarily undesirable. Nor do I think it would be wise to underestimate the importance of the pride which many workers, at all levels, feel in the achievements of the companies whose names are sometimes internationally famous. The steel industry has accepted for over 30 years a substantial measure of central control exercised by the Iron and Steel Federation—there does not seem to be much objection to that—and latterly by the Iron and Steel Board, which hon. Gentlemen opposite set up, in certain main fields of policy, including prices, investment and raw materials supply.

This central control has, however, been largely negative; for example the power of the Iron and Steel Board to veto development projects initiated by the companies. This has created a situation in which the industry has had neither the stimulus of effective competition nor the advantages of positive central policy formation. It has had the worst of both worlds. [Interruption.] I am glad to see that we have reached agreement with the Liberals on this. Common ownership of the dominant sector of the industry will make it possible to develop existing central controls in a positive direction and give the companies or other subordinate units an effective measure of responsibility in those matters which cannot with advantage be dealt with centrally. Let me give some examples. The use of computers and mathematical optimising techniques makes it possible to plan production and supply over a wide range. The value of this has been demonstrated by the oil companies, who have secured considerable economies by the centralised planning of their world-wide refining and marketing operations. Some steel companies have gone a long way in developing the use of computers in process control.

Another example—the Corporation will be able to plan investment programmes centrally and ensure that new projects are initiated in accordance with a national programme designed to ensure that adequate capacity is provided in units of the right size and in the right places. It will also be in a position to decide the right economic balance between continuing to use obsolescent plant with high operating costs and incurring heavy capital expenditure to replace it. Its position will be very different from that of the Iron and Steel Board, which has complained year after year that capacity which has been classified as absolete is still in use. The Corporation will be able to ensure that its conclusions on these and on other matters are put into practice. There is a very strong case for examining the possibilities of increased productivity in the industry and the present level of manning, but here again it is no good just looking at penny parcels of the steel industry. The whole question of manning is a very real human as well as a technical problem. The examples of the National Coal Board and British Railways have shown that nationalised industries are well able to deal with the problems of surplus manpower in a humane but at the same time an effective manner. The Bill in fact provides for strengthening the machinery of joint consultation in the steel industry; and for experience in the organisation of workers to be among the qualifications for membership of the Corporation.

I know that some of my hon. Friends feel strongly that the Bill should provide for a measure of direct workers' participation in management. [HON. MEMBERS: "Hear, hear."] That is a complex subject upon which there are strong views which go far beyond the steel industry. I do not think that the steel industry would necessarily be the right place for an experiment as far-reaching as this at a time when it faces a major structural reorganisation.

Sir G. Nabarro

Hear, hear.

Mr. Marsh

I believe that there is a real need for us to consider ways in which workers can be made to feel a greater sense of involvement in industry generally, and I shall certainly be interested to hear more on this problem.

As I have said, a Committee under Sir Henry Benson has been examining the structure of the industry for the past four months. Its Stage I Report was issued early on Saturday morning. I have only had a chance to give it preliminary study, as has every other hon. Member.

Sir G. Nabarro

No. I read it over the weekend.

Mr. Marsh

We have learned from experience that the hon. Gentleman's studies tend to be so superficial that they give him an advantage over the rest of us.

The Report contains one very interesting but, very controversial suggestion—that the Iron and Steel Board's policy of encouraging the provision of sufficient capacity to meet all foreseeable peaks in demand from home output should be abandoned. Instead the Committee feels that the industry should return to the old policy of trying to relate capacity to trend demand and relying on imports of steel to deal with peaks.

All the work of the Benson Committee is, in its own words, related to what structural changes ought now to be aimed at by an industry which, while reserving final decision-taking to autonomous companies has nevertheless long experience in developing corporate policies for industry-wide action. Common ownership of all the main steel works resulting from nationalisation will create new options for the future structure of the industry, including those I have just described, which the Benson Committee naturally did not feel able to take into account. Within the next few weeks it is my intention to establish an Organising Committee which will contain the chairman designate of the National Steel Corporation and a number of members who will begin to plan for the smooth transition into public ownership and the reorganisation of the industry. The Benson Committee's work will be of very real assistance to the Organising Committee and I hope that both Sir Henry Benson and the Committee's members will be willing to assist the Organising Committee in the work which it has in front of it.

The nationalised sector will consist of the 14 companies listed in Schedule 1 and their wholly-owned subsidiaries, of which 33 are in the iron and steel industry. That leaves nearly 200 companies forming the private sector of the iron and steel industry, about which I would now like to say a word.

Clauses 24 and 25 provide for the dissolution of the Iron and Steel Board and for the transfer of its assets and liabilities to the Corporation. Clearly the remaining private sector, although it is certainly important, does not occupy the same dominating position in the industry as do these major companies, and there is no more need for a supervisory authority for this relatively small sector of the industry than there is for any other industry. There is a special problem of ensuring that investment in the private sector does not develop in such a way as to hamper the pattern of investment for the entire industry. This is dealt with by Clause 13, which continues in relation only to the basic fields of iron and steelmaking a control over investment projects similar to that which is now exercised by the Iron and Steel Board and which will after vesting be exercised by the Minister.

Apart from the powers available to Ministers in relation to industry generally, I have in mind the establishment of the two new bodies on a non-statutory basis: the first an advisory committee on the lines of an Economic Development Committee, to bring together representatives of the nationalised and private sectors, the trade unions and Goverment Departments to provide for the participation of the whole industry in national economic planning. The second will be an Advisory Council on Research and Development to keep under review all R. and D. programmes affecting iron and steel activities, to advise me on the gaps to be filled and the avoidance of unnecessary overlapping.

One of the main problems affecting the private sector—a complex and important problem—will be that of rationalising re-rolling capacity, about half of which will remain in private hands. I think that rationalisation in this field will be mainly achieved by two factors. First, there is already a strong tendency towards the acquisition of re-rolling companies by the big companies. This tendency will undoubtedly continue and the Corporation under Clause 2(2,a) will be able to purchase by mutual agreement companies in the private sector. Secondly. this economic tendency will be hastened by the process of genuine competition between nationalised and private sectors and by private companies themselves.

Considerable interest has been expressed in the future of the British Iron and Steel Federation. It is clearly essential that the nationalised companies should withdraw as quickly as possible, on fair terms, from the B.I.S.F. and that the central trading services operated by the Federation should be transferred to the Corporation. The arrangements of the Federation and the central trading services are, for reasons at which we can all guess, quite extraordinarily complex. Yet it is clearly essential in the national interest that the central trading services should continue without any interruption.

There is no reason why, given good will, this could not be achieved by leaving the withdrawal of the nationalised companies from the Federation and the transfer of the central trading services to the Corporation to be dealt with by negotiation. In the brief contact I have had with them, I must confess that I have received courtesy and co-operation so far in my dealings with the leaders of the Federation, and I am quite sure that we can reach a quick and reasonable settlement by this means. But, in fairness to everyone, I must make it quite clear that if these negotiations fail the Government will take any other measures necessary to achieve a settlement.

Probably the most controversial feature of the Bill has been the provisions for compensation. In the case of quoted securities, this is to be based on the average of Stock Exchange quotations on mid-month days for alternative periods, whichever gives the higher valuation—a long period from April, 1961, to April, 1966, and a short period from November, 1965, to April, 1966. The value of unquoted securities is to be settled between the Minister and stockholders' representatives. If they cannot agree, it is to be of such value as may be determined by arbitration to be the value the securities would have had had they been quoted. I am pleased to be able to announce that. My right hon. Friend the Chief Secretary for the Treasury will be dealing in detail with the technicalities of this when he winds up the debate this evening. But since the argument is not only about the total amount of compensation but about the principles involved in the choice of this particular formula, I should like to say a word about it.

Our proposals on compensation were arrived at only after careful consideration of many possible bases besides Stock Exchange values. We had it in mind that the base should be objective, clear and expeditious, that terms should be fair to the community as well as to the shareholder and that our actions should accord with recognised international standards. The use of Stock Exchange values relates compensation to actual values that investors put upon securities during the chosen periods. A formula which offers an average price over a period of five years, or over the last six months of that period, if that is more favourable, and which still provides a figure which was in excess of the market price at the time of publica- tion, seems to me about as fair—both to the shareholder and the taxpayer—as anything which can be devised.

Some of my hon. Friends indeed have left me in no doubt that they consider the terms over-generous. They have studied the industry's performance. They have read some of the predictions of the industry's possible future. They are entitled to their views, because this is an argument upon which there is no absolute truth. But I am sure they will forgive me if I think, probably, that some of them are not as objective as they should be.

I want to turn to another authority—the right hon. Member for Taunton (Mr. du Cann), the Chairman of the Conservative Party. I have given him notice of this and we have discussed the point. On 3rd February lie launched a £3 million unit trust and his list of investments—we have examined them—included nine steel companies, all of which the Government were then committed to nationalise. He did this on the basis of the White Paper proposals for compensation saying, "I don't think the Labour Party has dropped the idea of nationalisation".

Having convinced himself that the Labour Party would continue with nationalisation, it was upon this basis that he decided that investing in these nine companies was a worth-while exercise. May I quote from the Daily Mirror? On 4th February, under the heading "Tory chief rocks steel men"—I bet there was some truth in that—we read that the right hon. Gentleman said, "I don't think the Labour Party has dropped the idea of nationalisation". His joint managing director on the same occasion went on to say, "How can you go wrong? Look at the anticipated compensation prices for steel shares and then look at their prices on the Stock Exchange". At least Oliver Twist had the decency to wait until his mouth was empty before he asked for more. I hope that we shall not hear any further suggestion that we have been insufficiently generous with the taxpayers' money.

Mr. Peter Tapsell (Horncastle)

The hon. Member has laboured the point about fairness and at some length. But if the Labour Government or Opposition of the day are committed to nationalisation and public opinion polls indicate that they will win the next General Election, does not the right hon. Gentleman feel that this is bound to depress the stock market value of the real underlying security?

Mr. Marsh

I am surprised that the hon. Member, with his expertise in the subject—which is accepted—misses the point. The whole point is that the threat of nationalisation was regarded as an incentive to people to invest, not a disincentive.

Sir G. Nabarro

Does not the right hon. Gentleman fail to perceive that investment in steel companies was often satisfactory from an income point of view? I happen to be the chairman of a unit trust. [HON. MEMBERS: "Oh."] I declare my interest at once. There is nothing dishonourable about that. Does not the right hon. Gentleman realise that many unit trusts concentrate on income as opposed to capital growth, and that there are scores of unit trusts with different purposes? There is nothing wrong about that.

Mr. Marsh

I am sure that if he meets my hon. Friend the Member for Poplar (Mr. Mikardo) the hon. Member for Worcestershire, South (Sir G. Nabarro) will be able to argue this with him. I am only pointing out that there are different points of view.

Sir G. Nabarro

The right hon. Gentleman is sunk.

Mr. Marsh

The hon. Member has failed so many times to sink his own Front Bench that surely he must do a lot better before he can sink us.

In an effort to bolster up weak arguments, a great deal is being made of the fact that a number of the provisions of the Bill provide for the reviver of a number of purely technical provisions of the 1949 Act. Right hon. Gentlemen should look at these things a little more closely. We have adopted this procedure, which is by no means new—I could give the House precedents going back to 1322—simply to save the time of the House in regard to matters which are to a large extent of a procedural nature and common form in the nationalisation statutes.

If I may turn finally to the time-table, Clause 7(5) provides that vesting day shall be no later than 36 weeks after the Royal Assent and Clause 4(2) re- quires the Corporation to submit to the Minister within 12 months of vesting day a report on the future organisation of the nationalised industry. Let me make it quite clear, however, that both these periods are maxima. I think that it is essential that we should do all in our power, on both sides of the House, once the Second Reading is over, to shorten them. Once the decision has been taken there is no sense in prolonging the uncertainty of the industry.

As I have said, I hope to appoint an Organising Committee at the earliest possible date. The main job of the committee will be first to prepare for vesting day to take place as quickly as possible after the Royal Assent; second to start work on the future structure of the industry; and third, to start negotiations with the British Iron and Steel Federation for the withdrawal of the nationalised companies and the transfer of the central trading services.

I hope that today's debate will see the end of the controversy about steel and I know that this view is shared by the industry and by people outside the steel industry in all parts of industry and commerce generally. The policy implemented by this Bill has been endorsed by the country in two successive General Elections and I have no doubt that it will be endorsed by the House tonight. It is in everyone's interest that from ten o'clock tonight, the efforts of everybody concerned in the industry and outside it should be directed towards maximising the efficiency of the State Corporation. I hope that after the Second Reading today the leaders of the steel industry will consider whether they cannot now best serve the interests of the industry and the nation by offering co-operation and constructive advice in implementing the Bill.

Mr. John Peyton (Yeovil)

Before the right hon. Gentleman goes on with that headlong peroration, will he spare a moment—I am astonished by this omission—to say in outline what he intends to do with the steel industry, what sort of broad intentions he has and how these intentions are likely to help?

Mr. Marsh

The hon. Gentleman will find I have dealt with part of this if he reads it, but I had not reached my peroration. That was only a subsidiary one leading up to the main one, for I want to deal with some of those points. I put this to the hon. Gentleman quite seriously. I am quite prepared to argue on what I personally regard as the ideal direction in which to organise this industry, but what I am saying at the moment is that we will start with a fairly clean sheet on this; with an enabling Bill, and then with the co-operation of those prepared to give it, we will produce what we regard as satisfactory for the reorganisation of the industry. There are only two or three different options on this, and a number of factors I have already dealt with.

I want to move on to say that we all recognise the need now to make ourselves more efficient as a nation if we are to maintain the high standards of living which our people demand. Fifteen years ago the Conservative Party believed that this particular industry would be better able to meet the challenge of the day if it were returned to private enterprise. All the facts and all the figures, without exception, prove them wrong.

I have been concerned, for example, about the possible need to import large diameter steel pipe to meet the requirements of the Gas Council in relation to the new finds of North Sea gas. It is open to argument as to how far the industry could reasonably have been expected to have made provision for this problem which, after all, one could not foresee; but, of course, pipelines and natural gas are not just peculiarly British phenomena in a growing market in industrial countries. I have to tell the House that on the basis of the information I have received from the Gas Council I had already prepared to sanction imports of pipes for North Sea gas totalling 111,000 tons in 1967, with the possibility of a further 80,000 tons in 1968. It now seems that the position will be easier, but only because of the unfortunate difficulties we encountered in Syria, and the pipe which we will in fact be using was in fact that which was designated for the Syrian export order.

Mr. Robert Maxwell (Buckingham)

Can my right hon. Friend give the foreign exchange element—what the amount is?

Mr. Marsh

It is open to argument, but I do not want to get involved in figures on this. I make this as a first point, and I freely give my hon. Friend the point that it is open to argument how much would need to have been taken—

Sir William Robson Brown (Esher)

rose—

Mr. Marsh

I should like to finish this point.

Sir W. Robson Brown

Where is the right hon. Gentleman going to get the steel from—from this pipeline?

Mr. Marsh

Where shall we get the steel? Does the hon. Member mean for the pipe?

Sir W. Robson Brown

For the pipelines.

Mr. Marsh

I have already said, as the hon. Member will see, that a large proportion of these will come from home sources, because—[Interruption.] No. The hon. Gentleman has missed the point —because of the cancellation of the Syrian contract. Up until then we would have been importing it from a number of other countries and the orders were being placed. I do not want to labour this point.

Sir W. Robson Brown

Is the right hon. Gentleman saying that it all comes from the cancellation of the Syrian order? Which other countries?

Mr. Marsh

Contracts were being considered and discussed and were being placed by the Gas Council with specific British companies and foreign companies, but it does not make any difference to the argument as to which countries.

Let me now continue. I am also concerned about the trend of imports of pig iron. In the first four months of 1965 we imported 98,000 tons of pig iron. In the first four months of this year imports had risen to 166,000 tons of pig iron. Pig iron is entering this country at the moment at the rate of 37,000 tons a month, mostly from Norway. Suppliers have to meet freight costs and a very small E.F.T.A. duty, but they are still able to sell in this country at £19 a ton, as opposed to a domestic price of £26 a ton. In both examples I have just mentioned there are very real factors outside the control of the steel industry. It would not be fair to lay at the industry's door the blame for everything which has gone wrong. We have to face, however, that so far this year total exports are down by 8 per cent. on last year, production is down by 9 per cent. on last year, imports have risen by 45 per cent. this year. How much longer do hon. and right hon. Members believe these trends can be allowed to continue?

This Bill will give the State, in the interests of the nation, the power to ensure we stop just talking about the difficulties which face the steel industry and get on with the job which everybody agrees needs doing. We are faced with the position at the present time, when we look to see what was happening, that there has been this period of years when the industry has tried private enterprise. How anyone can say, on the basis of the figures which I have just given, and on the basis of the evidence which exists, that a Measure to take control of the industry and to change it is irrelevant to the existing situation, I really do not understand. This Bill is no irrelevant genuflection to any dead dogma of the past: it is in fact the industry's only hope for the future.

4.36 p.m.

Mr. Anthony Barber (Altrincham and Sale)

For the Left wing of the Labour Party, today is a day of victory—

Mr. T. W. Urwin (Houghton-le-Spring)

Rubbish.

Mr. Barber

—but for the nation it is a return to the shibboleths of fifty years ago. To pretend that the solution of the problems of the steel industry lies in a return to old-fashioned doctrinaire nationalisation is to fly in the face of all the facts, as I shall show. It will impede modernisation and efficiency; it will raise costs and prices; and it will give comfort to our overseas competitors. I would say to the right hon. Gentleman that to proceed with outright nationalisation of steel at any time, in the view of my right hon. and hon. Friends, would be wrong, but to press ahead with it at this particular time, when Britain is in the midst of a dire economic crisis and living on borrowed money, is sheer lunacy. I have no doubt that it will help the right hon. Gentleman the Prime Minister at the party meeting which he is having at 6.30 this evening, but it will certainly do nothing to help Britain.

I shall come later to the merits of the proposal, and I shall also state the policy which I believe the Government ought to have pursued, but first I want to say something about the decision of the Prime Minister—because, obviously, it was his in the main—to push forward with the nationalisation of steel at this time. Now there are two factors about the present situation which must be accepted. Firstly, the extent of the deflationary measures with which this Socialist Government have burdened the British people is a consequence of the complete breakdown of overseas confidence in the Government. They are no longer trusted. Whether this withdrawal of confidence is justified or not is a matter which, of course, we shall be debating tomorrow, but it is a fact. Secondly, it is a fact, justified or unjustified, that overseas opinion believes that the nationalisation of steel is a retrograde step which will impair the international competitiveness of British industry.

That is what they believe, justifiably or unjustifiably. And in the dire straits in which this country now finds itself it is what overseas opinion believes that matters. This is what matters. Indeed, the right hon. Gentleman the Chancellor of the Exchequer himself said: What people abroad believe about us is as important as the truth, especially in relation to the strength of sterling. In these circumstances, to bring forward this Bill today is irresponsible and it is wicked. It is wicked because, the avowed purpose of the Government being to restore overseas confidence, if this Measure had been dropped or even if it had been merely postponed, the package of gloom to which the nation is now to be subjected could have been less stringent.

It is paradoxical that one of the consequences of the Left-wing victory on steel has been the Prime Minister's measures designed to put half a million men and women on the dole. I hope that right hon. and hon. Gentlemen opposite are satisfied with their achievement.

The truth is that the Prime Minister, by proceeding with this piece of Socialist dogmatism, has put the cohesion of the Labour Party before the interests of the nation. If I may say so to his face, in so doing he has forfeited any claim that he had to call upon the British people to act in the national interest. As the whole country knows, this is the right hon. Gentleman's pay-off to the Left wing of his party, on whose backs he climbed to power.

Mr. Maxwell

I happen to have spoken to steel sellers as well as manufacturers in Japan, France and Germany over the past six weeks. All of them are considerably concerned that nationalised British steel will be a very sharp competitor.

Sir G. Nabarro

Subsidised.

Mr. Maxwell

The second point which I wish to put to the right hon. Member for Altrincham and Sale (Mr. Barber) is this. Foreign bankers cannot understand why Her Majesty's Opposition should use the nationalisation of steel as a weapon to beat their own country by fostering the lack of co-operation which they are doing.

Mr. Barber

All that I can say to the hon. Member for Buckingham (Mr. Maxwell) is that if he is right it is very odd that 90 per cent. of the steel-producing capacity in the free world is in private hands, and there is no prospect of extending nationalisation in those other countries.

Mr. Maxwell

It is in the hands of the steelmasters.

Mr. Barber

I want to say something briefly about the history of this matter. In his opening remarks, the right hon. Gentleman referred to the debate which we had in May of last year on the White Paper, and he castigated the steel industry for not being more forthcoming. When one considers the antics of the Government over the past 18 months with the steel industry, the account is both a sordid one and a ludicrous one.

I would like to state the facts. On 27th February, 1965, within a few months of the Labour victory in the Election in October, 1964, the steel industry approached the Prime Minister and pointed out that the industry shared with the Government two main aims: first, to achieve the maximum efficiency of the steel industry", and secondly, to ensure adequate public accountability". The industry went on to suggest that there should be undertaken an authori- tative review of the steel industry and its organisation in the light of the total national situation. That was in February of last year. The Prime Minister, he will remember, turned it down flat.

Then came the debate on the White Paper in May of last year, with the First Secretary's concluding remarks which' the hon. Member for Poplar (Mr. Mikardo) somewhat generously described as a contemptible way of buying a couple of votes. Let me remind the House of the concluding words of the First Secretary and one of his hon. Friends in that debate. The hon. Member for Bosworth (Mr. Wyatt) asked: Do I understand my right hon. Friend to say that, if the industry will come forward and concede the complete control which we both agree is necessary on something less than 100 per cent., he is prepared to listen? If so. I shall vote for his White Paper. The right hon. Gentleman the First Secretary replied: 'Listen ' is the word. Listen, certainly."—[OFFICIAL REPORT, 6th May, 1965 Vol. 711. c. 1694.] The First Secretary's manoeuvre was as simple as it was disingenuous. The hon. Member for Pembroke (Mr. Donnelly) and the hon. Member for Bosworth were duly duped and voted with the Government.

That was 6th May. The very next morning, on 7th May, the industry suggested discussions. That same afternoon, the First Secretary of State issued the following statement: If the Industry can produce proposals by which complete public control can be achieved with the Government's taking over less than 100 per cent. of the shareholdings, then the Government is prepared to listen to them. The First Secretary was prepared to consider a proposal involving less than 100 per cent. of the shareholdings. But, not for the last time, the First Secretary was overruled by the party tactician at No. 10. On the following Wednesday of the next week, the Prime Minister declared in a statement: The Iron and Steel Bill goes on, on the basis of the White Paper. That meant that nothing less than 100 per cent. ownership was to be accepted. That was not what the First Secretary said in the debate or in his statement, but he was overruled. It is perhaps not insignificant that when steel was considered in the major debate held on the Queen's Speech after the Labour victory at the election, it was the First Secretary who spoke for the Government on steel. When we debated steel on the White Paper last year, it was the First Secretary who wound up. It was he who spoke for the Government. However, he has not taken the trouble to come here today, and I am not surprised, judging by the way that he was overruled on that occasion.

Everyone knows, looking at the facts, that this was just another classic example?—

Mr. Maxwell

Where is the Leader of the Opposition?

Mr. Barber

It was just another example of Wilsonian double-dealing. The Prime Minister admitted that the matter had been considered by the Cabinet. It is there in his statement and, for good measure, he added words that have a somewhat strange ring today: We were constructive, forward looking and united. Early this year, the industry suggested that the Government might secure up to 50 per cent. of the equity holding in new rationalised groups of companies. Once again the Prime Minister turned it down, for there was to be no compromise of the full-blooded Socialist solution.

Mr. Marsh

When?

Mr. Barber

It was earlier this year.

Mr. Marsh

The right hon. Gentleman is now referring, to the first proposals which the Federation made to the Government's specific proposals. Would he mind telling the House when?

Mr. Barber

Erlier this year. That is what I said. It Was not so very long ago.

Mr. Marsh

'Olen, may I put him in the picture and tall him that it was after the election and after the Queen's Speech. Does he not think that it was a little late?

Mr. Barber

What I cannot understand is that the right hon. Gentleman, who I thought was trying to be fair about the history of the matter, did not even mention the earlier approach. Perhaps he was not told about it by his predecessors. He never referred to the fact that in February of last year an approach was made to the Prime Minister for a com pletely new look at the difficulties of the industry to see whether a decision could be reached to take it out of politics—[Interruption.] It is no good the right hon. Gentleman saying that it never came. The industry wrote to the Prime Minister on 27th February, 1965, and he turned it down flat.

Mr. Woodrow Wyatt (Bosworth)

The right hon. Member for Altrincham and Sale (Mr. Barber) has referred to me, and perhaps I can shed some light on the history of the matter. It is certainly true, as he suggested, that the First Secretary agreed to listen to any proposals. I begged and implored the steel industry to come forward with proposals for something less than 100 per cent. ownership on which the Government could compromise. It offered to make concessions on almost every point, but it would not give way as to one single share. The matter went on month after month, and I was intimately concerned with it. It was not until after the General Election that the steel industry said that it was willing to consider the Government's having a half-share in the industry. If it had said that before, probably we should not be having a debate in this form today.

Mr. Barber

Is that what the hon. Member for Bosworth thinks of his own Government, that just because a proposal comes too late we are having a Bill of this kind? It is absolute nonsense.

I am not suggesting for a moment that the industry might not have come forward earlier with something more specific. But, after all, to take a wrong decision merely because it is late is surely not the way that Government should behave. The whole country knows that in the present economic crisis the Government have acted too late, but we hope that they will do the right thing, and that is what we would like them to do with the steel industry.

Even though it may have been late, the fact is that a proposal was made for the Government to secure up to 50 per cent. of the equity holding in new rationalised groups of companies. It is known, for reasons on which people may differ, that it was turned down flat by the Prime Minister. There was to be no compromise of the full-blooded Socialist solution.

The Times, in what the Prime Minister no doubt regarded as just another wet editorial, commented: It is difficult to imagine a decision less gracious towards the countries whose central banks have just agreed to provide a new help for the £. This was the decision to go ahead with nationalisation. It then said: To reject the Federation's scheme smacks uncomfortably of deliberate, dogmatic obscurantism. If the Government want their economic policy to be taken seriously, they must do better than this. Finally The Times said: The announcement that this measure is now to be brought forward, coming on top of the continuation of the seamen's strike, is likely to do damage to the £. The Times was cruelly accurate. The sequence of events was inexorable—first, the right hon. Gentleman's decision to go ahead with outright nationalisation, secondly, the contribution which that made to the weakness of sterling, and, thirdly, these measures designed to create half a million unemployed.

I turn next to the hotchpotch of reasons which are advanced by Labour spokesmen in favour of the nationalisation of steel. The first reason was well put by the First Secretary in the debate last year. He rested his case almost entirely on the size of the industry, and it is worth quoting that he said: It is of such a size that its impact on the economy, its impact on our social structure, is bound to be tremendous. It will dispose of power which in my view cannot be left to individuals."—[OFFICIAL REPORT. 6th May, 1966; Vol. 711, c. 1690.] If that is the reason, what about the chemical industry, the motor industry and the ship building? Why bother to rationalise the shipbuilding industry in accordance with the Geddes proposals, why not nationalise it? If nationalisation is the only solution, how comes it that our overseas competitors, so assiduously praised by right hon. and hon. Gentlemen opposite, are not extending nationalisation?

Mr. Maxwell

They have done.

Mr. Barber

The hon. Gentleman says that they have done. How is it that 90 per cent. of the steel produced in the non-Communist world comes from works which are not nationalised? Why should Britain alone slavishly follow the Soviet Union and the under-developed countries? This is the only part of the world which is significantly extending the public sector in steel.

Then there is the argument about competition and rationalisation, and concentration, referred to by the Minister of Power this afternoon. When, last week, I asked the Prime Minister how the nationalisation of steel would help to strengthen sterling, he complained that because of the industry's pricing policies it is not a competitive industry".—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 648.] Is there anyone in this House who seriously thinks that nationalisation will bring more competition within the industry? Does anybody believe that?

Mr. Maxwell

rose—

Mr. Barber

Even the right hon. Gentleman would not claim that.

Mr. Maxwell

rose—

Hon. Members

Sit down.

Mr. Barber

The Minister of Power talked, quite rightly, about one of the fundamental questions which have to be considered, namely, the question of rationalisation, but the interesting thing is that the Germans, to whom the right hon. Gentleman referred, are now abandoning the system of rationalisation which he proposes to inflict upon the industry. Perhaps I might quote from a passage in the Benson Report. It says: … the Committee noted with interest that the rationalisation of the German steel industry, which had been earlier envisaged on the basis of product monopolies, is now likely to proceed on the basis of four sales syndicates each dealing with a range of products. Even after taking account of the impact of entry into the European Community, the Committee therefore recommends strongly that rationalisation should not normally be undertaken on a product basis, but should create multi-product groups normally subject to United Kingdom competition over their whole range of output. The Report says that there should be competition within the United Kingdom, but the Government have stated quite clearly that they do not believe in stimulating greater competition within the British steel industry. The First Secretary mentioned it twice in his speech last year. When we debated the White Paper he said: Given an industry of this kind, greater competition is not the answer."—[OFFICIAL REPORT, 6th May, 1966; Vol. 711, c. 1689.] Thus, we cannot rationalise on the lines of the Germans, because the principal purpose of their action is to provide competition within the Community itself.

Mr. Marsh

It is about time that the right hon. Gentleman got down to his own policy on this. I have never suggested that the industry should be rationalised on a product basis. This is a view held by some people. I think that the spread of our different industries is such that it cannot be done this way. The Guardian summed it up best by saying that the world that we compete with is not in Scunthorpe but in Europe. The argument between our industry and German industry is that they both started with the same system of ownership, but one achieved a measure of rationalisation, the other did not even start it.

Mr. Barber

I shall come to our relations with Europe in a moment. The right hon. Gentleman has not answered my question that, on the basis laid down by the First Secretary—unless that policy has been changed—it would be impossible to rationalise on the same lines that is being done in Germany.

Mr. R. E. Winterbottom (Sheffield, Bright de)

rose—

Mr. Barber

I cannot give way. I have much to say, and many others wish to take part in this debate.

Next we get the argument about common pricing, but what are the facts? Last year the industry drew up a new pricing system, under which individual companies would determine their prices entirely independently and publish price lists. These were submitted to the Iron and Steel Board, a statutory body, whose members are appointed by the Government. The Board agreed, but the Government threatened to bring in legislation if it went ahead with bringing about more competition in pricing.

Then we are told that nationalisation is necessary to increase exports and to cut down imports, but what is the truth? The Prime Minister says that we should not knock British industry, but apparently the steel industry is the exception. We remember the right hon. Gentleman's predecessor, who is still a member of the Cabinet, talking about the industry being "on the sick list". I do not know whether the Minister of Power subscribes to this. The right hon. Gentleman went on to say: At the moment it just manages to limp along"— I am sure that my hon. Friends will agree that the next sentence is pretty rich— provided the economy doesn't move too fast. There is not much danger of that.

Today the Minister criticised the industry, though not in such lurid terms as his predecessor. He said that 15 years ago the industry was given its chance, and the facts proved that we were wrong to have done that. The right hon. Gentleman gave a few selected facts about production and the balance of payments in steel this year. Does he not realise that when the economy is running down, and when industrial production has been stagnant for virtually 16 or 17 months, this is the result of the deliberate deflationary action of the Government? Does he think that this has no effect on industry?

The Chief Secretary to the Treasury (Mr. John Diamond)

What about exports?

Mr. Barber

I shall deal with both imports and exports, and I shall look at the whole of last year before the Government's measures began to bite. Why did not the right hon. Gentleman mention that the production of steel in 1964 was an all-time record, and that again last year it shot up another 4.6 per cent. to a new level of 27 million tons? Why did he not say that the total tonnage of British steel exported was higher last year than in the previous record year of 1964? Why did he not tell us that the total value of steel exports last year was up 6 per cent. on 1964? Why did he not say that steel exports were more than six times as much as steel imports? Why did he not say that the imports of steel were down last year by more than 50 per cent.? That is the answer to the Chief Secretary. Why did the right hon. Gentleman not tell us that the value of steel exports last year was £159 million more than the value of steel imports? Why did he not go on to say that labour relations in this industry are among the best in the world? I could go on like this for some time. He told us none of these things.

Whatever the shortcomings of the industry, nationalisation cannot be justified on its merits, and so we have had these generalisations—we had them again today from the right hon. Gentleman—that all the facts proved that we were wrong to return this industry to private enterprise.

How would this proposed new monolithic State enterprise fit into the European system to which the right hon. Gentleman referred? Under the Treaty of Paris, ownership per se is immaterial.

Mr. Marsh

indicated assent.

Mr. Barber

The Minister nods. We agree about that. But the control and operation of steel enterprises is, as he knows, subject to definite requirements, and the Government's proposals in the Bill are in fundamental conflict with the E.C.S.C. system. I have the Treaty of Paris here, and I can refer to it in detail if required. That system operates on the basis of a miscellany of individually operated companies, each representing—and this is the important point—no more than 10 per cent. of the total Community capacity.

Last year we were told by the Minister of Power that the object of the Bill was to create a single unit of direction with a capacity of about 30 million tons of crude steel a year."—[OFFICIAL REPORT, 6th May, 1965; Vol. 711, c. 1581.] It is a fact that the National Steel Corporation would represent 22 per cent. of the capacity of the combined E.C.S.C. and United Kingdom markets, compared with 8 per cent. of the combined market for the largest E.C.S.C. group at present. I say with every respect that I do not believe that the right hon. Gentleman would have said what he did if he had even begun to consider the significance of his proposals in the event of our joining the Community. I can tell him that because of the "dominant position"—those are the words of the treaty—of the National Steel Corporation, the High Authority would have the power to override the Minister of Power. It would have power to fix prices and to draw up production programmes for the Corporation. Is that what the right hon. Gentleman wants? That is the factual position. This is not a power which the High Authority would have if the British steel industry were rationalised on the lines suggested by the Benson Committee. This is one more instance of deliberate Government action making it more difficult for the United Kingdom to enter Europe.

Before I come to the policy which I believe the Government should have adopted for the industry, there are three other major objections to the Bill to which I wish to refer. I will not go into details now, because we shall no doubt have an opportunity of debating the issues in Committee, but the Bill as drafted makes impossible fair competition between the National Steel Corporation and the private sector of the industry—the 10 per cent. which is to remain outside nationalisation.

The Minister said that there was no need for supervision over the private sector, but under the terms of the Bill any company remaining in the private sector will he obliged to disclose to the Minister all its books and records, and to furnish such other information as may be required by the Corporation or the Minister. This means that the Corporation and the Minister will have access to all the confidential and secret documents of their competitors. That power is coupled with the Corporation's power to acquire these companies—I acknowledge that it will be by agreement—and the conclusion is plain. I hope that the right hon. Gentleman will give careful thought to these provisions.

The second objection concerns the compensation terms. The basic issue today is whether or not the industry should be nationalised. I hope that the Chief Secretary, who will no doubt wish to deal with the compensation terms, will deal with the general points arising on the major issue which we shall be discussing before ten o'clock.

Although the main issue is whether or not the industry should be nationalised, to the 200,000 shareholders in the companies to be nationalised—not to mention the pension funds and other funds—the question of compensation is of considerable importance. What the Government did can be very simply stated: they leaked the fact that they were going to reduce the compensation. The market was duly depressed. They altered the period governing the calculation of compensation, with the result that there has been a cut of £90 million. If any financial buccaneer had so rigged the market in his favour he would today be in goal. But what do hon. Gentlemen opposite care about breaches of faith? Breaches of faith are fast becoming their stock in trade.

I hope that the Chief Secretary will deal with the point made by his right hon. Friend the First Secretary of State concerning compensation terms in last year's White Paper. This is what he said: I am a social democrat and I believe that if you do have sufficient reasons to acquire something you are under moral obligation to pay a fair and just compensation for it.

Hon. Members

Hear, hear.

Mr. Barber

Wait a moment. The right hon. Gentleman went on: It should be remembered that the shareholders in steel companies included superannuation funds and pension funds. ' It would affect a lot of people whose interests we ought to have at heart.' The right hon. Gentleman went on to say that he thought that the provisions were "just about right"—when they were £90 million more than under the provisions to which the Chief Secretary has now subscribed his name.

This debate is concerned with two basic questions. What should be the objectives of any changes in the arrangements for the steel industry, and, secondly, will outright nationalisation achieve those objectives? The policy of the Conservative Party can be simply stated. We believe that the objectives should be to provide the maximum scope for competition and the maximum opportunity for those in the industry to exercise their commercial judgment and their technical expertise. This is the very antithesis of nationalisation and the provisions of the Bill.

What changes are needed? First, what is needed to replace the existing Iron and Steel Board is not a monolithic State Corporation, completely under the domination of the Government, as proposed in the Bill, but a supervisory body with functions which would actively promote competition instead of stultifying it.

Secondly, I agree that under the existing system the present arrangements no longer make sense, but the answer lies not in the provision of a more rigid pricing system but in greater flexibility and competition.

Thirdly, certain sections of the industry have been faced with problems which have prevented rationalisation going either far enough or fast enough. The main inhibiting factor has been the threat of nationalisation. But even allowing for this, if it is necessary for the Government of the day to help to speed the rationalisation of the industry, the answer does not lie in nationalisation. It is quite absurd to pretend, as the Party opposite does, that in every case where there should be a change in the structure in the industry we should have discussions and consultations but that the answer should ultimately lie in a simple edict from Whitehall.

Fourthly, within the framework of the requirements of this country, the new arrangements should be such as to facilitate our entry into a wider European grouping. The Government's proposals run completely counter to existing European arrangements.

This is the approach which the Government should have adopted. In an era when we have to surmount intense international competition the simple truth is that we cannot afford a nationalised steel industry.

None of the four basic principles of policy which I have outlined is capable of fulfilment under nationalisation. But —equally important—those four principles are also incapable of fulfilment under the existing arrangements. While we shall certainly repeal the Bill, that does not mean a return to the present position and to existing arrangements. There will be no question of a return to square one.

The Government have made the mistake of assuming that because fundamental changes are required in the existing arrangements the only solution is nationalisation. That is a non sequitur. None of our major overseas competitors has turned to more nationalisation. But, as we know, Kier Hardie and the hon. Member for Poplar have won the day, and the very fact that the Government have turned down flat every compromise proposal put to them has made it crystal clear that they put Socialist doctrine before the national interest.

Mr. Marsh

The question of the future policy of the party opposite is an important one. I hope that the right hon.

Gentleman will not commit his party, regardless of the achievements of the nationalised industry, or whatever happens to it, to any fixed position.

Mr. Barber

I was going to point out that 47 pages of the bill—half the Bill—consists of a Schedule which merely rehashes the old Steel Act of 1949—[Interruption.] The right hon. Gentleman says "A technicality," which shows one thing clearly, that in the intervening 17 years they have learned absolutely nothing.

It would have been easy to rest the case of the Opposition solely on the disadvantages of nationalisation, but I have not done that. I have laid down the general principles of policy which we believe to be in the national interest. These are principles which involve radical changes from the existing arrangements. The question remains, what action would the Conservative Party take in the event of this Bill becoming fully operative before the next election? The issue here for us is not one of ideologies. If the right hon. Gentleman doubts my word, I would say that, when we were in office, we accepted, albeit with some reluctance, the nationalisation of certain service industries [HON. MEMBERS: "Oh."] We accepted it. Despite the inherent difficulties of State control, we devoted our energies to improving the efficiency of those industries and to infusing some financial discipline into them—and jolly difficult it was.

I am not concerned with the pros and cons of nationalisation as an abstract political concept. What matters is the practical consequences for the nation of absolute control by the State, not of a service industry, but, for the first time in Britain, State control of a great manufacturing industry with no effective competition within our tariff wall and with none of the commercial and financial disciplines essential to efficiency. As the month and years roll by, I believe it would be disastrous.

It was, after all, the present President of the Board of Trade who said: The truth is that the public monopoly was suitable only for public utilities like London Transport, gas or electricity; but not for manufacturing industries". We shall therefore repeal this Bill and we shall denationalise the industry to whatever extent is necessary and practic- able to conform with the principles which I have mentioned and to provide the disciplines of competitive enterprise.

There is one other aspect of the Bill which I must mention—the powers which the Government seek in Clause 2, powers which have nothing to do with the production of steel. I do not believe that the rest of British industry has yet woken up to the consequences of these provisions. It is known that, in taking over the companies named in the Schedule, the National Steel Corporation will gain contro! of 40 per cent. of all structural steel work in the country. It is known that the Corporation will take over the chemical, plastics and engineering activities of the companies named.

But that is only the beginning, under Clause 2. The National Steel Corporation will be permitted to carry on any activities specified in any of the memoranda of association of the 14 named companies—

Mr. Maxwell

What is wrong with that?

Mr. Barber

That is interesting. I hope that we have a few more interjections from him.

Furthermore, the Corporation will be able to do this without the sanction of Parliament. Indeed, it will be able to do so without even informing Parliament or anyone else.

Why are these powers being taken? If the Bill becomes law in its present form, the State will have power, without reference to Parliament, to engage in any of the following activities—aircraft manufacturing, the manufacturing of motor cars and vehicles, glass manufacturing, the manufacturing of cement, pharmaceutical and medicinal preparations, fertilisers, plastics, engineering of all kinds—[HON. MEMBERS: "Hear, hear!"] —hon. Gentlemen opposite are beginning to cheer now, are they? —in the manufacturing of chemicals, farming, shipbuilding, construction and operation anywhere, of all forms of transport undertakings, hotels, newspapers, breweries, shops, private dwellings.

Why is the right hon. Gentleman taking all these powers? I hope that the Chief Secretary will tell us. There was no need to do this. These are only a few of the activities in which the State will in future be able to engage. If this Bill goes through in its present form, there will never again be a need for a Socialist Government to introduce another nationalisation Bill. The Government will already have every conceivable power they need.

It is worth recalling that the Prime Minister's first words on becoming Leader of the Labour Party were to reaffirm Clause Four. That statement came in answer to an interjection by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), who has been concerned with this, as we know, over the last twenty years. It was the Prime Minister who wrote: Instead of our previous defensive and almost apologetic postures, we shall be able to show that, by our nationalisation policy, and only by that policy, can we carry out a plan essential for Britain's future. Perhaps now the true intentions of the Prime Minister will dawn upon the nation. We on these benches will do everything properly within our power to frustrate them.

5.16 p.m.

Mr. C. R. Strauss (Vauxhall)

I should like to congratulate my right hon. Friend the Minister of Power on his admirable speech. I cannot give higher praise than to say that it was as good as we expected it to be, judging from his past performance in the House. I was particularly pleased that he argued his case on strictly practical grounds and not on emotional or ideological ones. I shall want later to make one or two critical comments on some of the things he said, but I should first of all like to deal with the speech of the right hon. Member for Altrincham and Sale (Mr. Barber).

All the possible arguments which may be advanced against this Measure were put forward by the right hon. Gentleman, but his speech would have been more convincing if he had not omitted one essential feature of the situation—that for years, during the period when he and his colleagues had power in this country, he and they were well aware that the structure of the industry needed reorganising. During the latter years of their power, they were aware that the problem was becoming urgent. Every economist, every industrial writer with any knowledge of the industry pointed this out on every possible occasion. Yet he and his colleagues did nothing about it.

One can only assume that the reason was the natural political reluctance of those of the Conservative faith to interfere in any way in private enterprise, except, on occasion, perhaps, to give it subsidies. We can also understand the reluctance of the leaders of the Conservative Party to do anything—such as imposing a Governmental or semi-Governmental authority over the industry —to cause the resentment of the most ardent supporters of the Conservative Party in the country and the most generous contributors to Conservative Party funds.

However, whatever the reason, the fact remains that no solution of any sort, not even the solution which the right hon. Gentleman put forward this afternoon—that of a reconstituted Iron and Steel Board—was ever put forward by the Conservative Party. Therefore, they cannot be in the slighest surprised or indignant if, when their political opponents, the Labour Party, come into office, they introduce a Measure to bring about a structural change in the iron and steel industry or if that Measure is different from the one which they would have put forward.

It is not as if the right hon. Gentleman and his friends have not had ample opportunity to do these things. The right hon. Member for Streatham (Mr. Sandys) remembers well the arguments which we had over the denationalisation Bill. We on this side, occupying the benches opposite at the time, argued that the powers that were being given under that Bill to the Iron and Steel Board were too weak and too negative to bring about any effective control over the industry. We begged that the Iron and Steel Board should have positive powers so that it should bring about such reorganisational changes as might prove necessary. The right hon. Gentleman and his colleagues, however, said, "No", and they refused to meet us in any way. That is one of the reasons why the industry today is in such urgent need of reorganisation.

The Conservative Party had further opportunities for grouping the industry effectively when the individual companies held by I.S.H.R.A. were sold back to private enterprise, but they did nothing. Therefore, I repeat that the arguments put forward today by the right hon. Member for Altrincham and Sale against our proposals had little validity in view of the fact that when he had the opportunity of doing something, his party did nothing at all.

I support the Measure which is before us today in the absence of a better one drawn up on other lines which I would have preferred and which, I think, would have been better. I agree 100 per cent. with the objectives of my right hon. Friend the Minister which are contained in the Bill, but I do not do so for any ideological reason. I do not do so because, as the right hon. Member for Altrincham and Sale suggested, Keir Hardie believed in general nationalisation or anything of that sort. I am not a supporter of nationalisation of any industry because it is a symbol of Socialist faith and, therefore, should remain inviolate. I do not support the Bill for that reason. I support it because I regard it as the only practical measure before us today and before the country whereby the urgent reorganisation of this industry is likely to take place.

What I am about to say is in criticism to some extent of what my right hon. Friend the Minister has said. I do not accept the argument that the present managerial and technical control of that part of the industry which it is proposed to nationalise or its marketing arrangements are grossly inefficient, with the corollary that all this will be better under public ownership. I do not think that the case lies there at all. I do not think that those propositions are true and I do not think that it is fair or necessary to argue any inefficiency in the British iron and steel industry to prove our case for the Bill.

Sir G. Nabarro

Hear, hear.

Mr. Strauss

In my view, the managers, scientists, technicians and operatives in the industry are as good as those in any other industry in the country. Moreover, although there are, of course, considerable exceptions, broadly speaking the British iron and steel industry is as efficient as the iron and steel industry in Europe. If it is judged on the two criteria which are the best—price for product, and quality—there is no difference at all in the performance of our industry compared with the performance of the industry in Europe. Certainly we in this country spend far more in scientific research in the iron and steel industry per unit product than is done in the countries which belong to the European Coal and Steel Community.

When it is said that so much steel has been imported into this country, with so much damage to our economy, we must remember that there is substantial world overproduction of steel and that, on balance, this country is a great exporter of steel.

Mr. Maxwell

Will my right hon. Friend also say how we stand on the basis of manpower employed per ton produced?

Mr. Strauss

I was just coming to that and am grateful to my hon. Friend for reminding me not to overlook it. On that criterion, this country is very bad indeed. Our manning per unit of output is worse than in the United States and in Europe. There is no doubt about that. The number of men employed in the British iron and steel industry per unit of output is far higher.

For heaven's sake, do not let us forget, however, that manning problems are a question of agreement between management and trade unions. Although the manning position has become very much better during recent years, agreements have not yet been reached between management and trade unions—I am not putting the blame on either side—which have allowed the manning to be decreased per unit of output. I suggest to my hon. Friend that with our experience of the nationalised industries, one cannot say that public ownership of an industry necessarily eases the solution of this problem.

Miss J. M. Quennell (Petersfield)

So that the House can get the difference in manning into full perspective, can the right hon. Gentleman also give the comparative ferrous content per ton of ore between the British industry and the European and American industries?

Mr. Strauss

I am sorry, I cannot do that. No doubt the hon. Lady, if she has an opportunity, will do so.

Mr. Winterbottom

On the question of manning, has my right hon. Friend any figures to indicate whether the size of the units in Europe has any effect upon the manning position? In fact, the greater the size of the unit, the fewer the number of men required proportionate to output. This is one of the biggest accusations against the British industry.

Mr. Strauss

Of course, I agree entirely with my hon. Friend. When we get bigger units, the manning situation should be much better. I was merely explaining why the manning situation in this country today is poor. One of the reasons is the one which I have stated to the House and which my hon. Friend has underlined.

It is not because of technical day-to-day management, which can be improved, selling arrangements or anything else that the Bill is important and deserves the support of the House. It deserves the support of the House for the far larger and more important reason that it is the only way of effecting the major reorganisation of the industry. That means amalgamations, which may have to be enforced against recalcitrant companies, and is the sort of work which the Industrial Reorganisation Corporation has been set up to do in other fields. But, obviously, this is much too big a task for that Corporation and a separate body is necessary to deal with it.

The new body that will be set up—the National Steel Corporation—will have the heavy and difficult responsibility of advising where and on what scale the new and larger steelworks are to be erected. For this purpose the recently-published conclusions of the inquiry set up under Sir Henry Benson, undertaken by the Iron and Steel Federation, may be a useful guide. The recommendations of that inquiry are, admittedly, incomplete, and the fact that they were rushed through and published only a day or two before Second Reading of this Bill makes them suspect. One interesting and incontrovertible feature of that report, however, is that the smaller firms, where mergers or closures will be particularly necessary, are not included in the ambit of the Bill. One thing which seems to me to be certain is that, whatever structural changes or plans for future development are finally accepted, can be carried out only by a Government-appointed control authority armed with drastic powers, including that of buying any company that stands in the way.

That raises the fundamental question which worries me: is this really the best way of doing it, and is it really right to nationalise the whole of the basic part of the industry in the orthodox way and turn it into a national monopoly? I had no doubt that that was the right thing to do when I was in charge of a similar Measure in 1948. One of the arguments I advanced at that time was that the industry had shown itself to be restrictive in thought and action and was likely to remain so, by its very nature, in the future. I pointed out that the owners found it more profitable to have less capacity than was necessary and would, therefore, in all probability, continue to act on that assumption.

I suggest, however, that that argument has largely disappeared in post-war conditions and that—with one exception, which was a difference of opinion over sheet steel development the industry today is trying to expand at a far greater rate than the Iron and Steel Board would like to see. The industry is not restrictive but expansive and we must, therefore, consider the problem as it exists today and from other angles.

We as a party believe that our major industries must come under sufficient public control to make them responsive to the public interest. But we also believe in a mixed economy and have said that some industries—very important ones, such as the motor industry, which is almost as important to the economy as the steel industry—should remain in private hands and be motivated by private enterprise.

These two industries are different in many ways, although there are many similarities. First, in spite of what has frequently been said, there has been, and is today, quite a measure of competition between the major steel units in the British steel industry, and that competition will be increasing substantially as a result of the change in price-fixing and the abolition of the one price, which arose from the Iron and Steel Board's policy.

But the competition is not confined to prices, quality and service. It covers a wider, intangible, but perhaps equally important area; rivalry of general performance, measured not only by balance sheets but by reputations for scientific and technical advance. If we consider this realistically—we must acknowledge the danger, I put it no higher, that in the course of time a national monopoly, however much it tries to preserve the identity of individual companies, may weaken that competitive spur which we acknowledge to be highly desirable in manufacturing industries.

The nationalisation of this industry, as proposed in the Bill, will effectively accomplish the necessary rationalisation. If it would not, I certainly would not be supporting it. However, I am entirely unconvinced that this could not be done equally well with good will and less friction by leaving most of the industry to operate under private enterprise, but under the effective control of a strong board armed with the necessary power. I believe that, in the long run, such a set-up would produce a healthier industry. I have previously put these matters before the House and I do not intend to weary hon. Members by repeating my arguments. Having said in the past what sort of board that should be, I will make only make two brief comments on this subject.

Mr. Maxwell

Would my right hon. Friend be good enough to tell the House, were we to accept his suggestion—which I am afraid he does not stand much chance of achieving—how the country would be protected against the Conservative Party one day being returned to Government and monkeying about with the kind of arrangement my right hon. Friend has in mind?

Mr. Strauss

My hon. Friend must make up his mind about this. He must realise that, whether or not the Opposition are again returned to office one day, there is nothing to prevent the Government of the day from doing what they want to do with this or any other industry. However much one may wish to, one cannot do anything about that.

Mr. Brian O'Malley (Rotherham)

Would not my right hon. Friend agree that although it is arguable that difficulties might arise as a result of the provisions of the Bill if we wished to go into the Common Market, it is certain that the strengthened Iron and Steel Board which my right hon. Friend is envisaging would run directly contrary to the Treaty of Paris?

Mr. Strauss

There are difficulties inherent in either solution and I do not believe that one set of difficulties is any greater than the other. If we had a powerful Iron and Steel Board reorganising the industry, one essential would have to be that it should have undisputed control over the Iron and Steel Federation, its machienry and personnel. It may be significant that the present leaders have said that they would be prepared to hand over the Federation to a Government-appointed board along these lines.

My second point is that I have found, in talking with a number of progressive people in managerial positions in the steel industry, who are dissatisfied with the present situation and believe that a body of this sort would be able to bring about a reorganisation more quickly, effectively and with better lasting results than could be achieved in any other way.

We have before us a Bill which is very similar to the one I introduced in 1948. It is gratifying to think that it repeats in broad terms the scheme of public ownership which I hammered out in my Department before presenting that Measure to Parliament. It repeats many of the key phrases to which we devoted so much thought at that time. It seems strange that the public ownership structure set out in that Measure, which was considered an ingenious novelty at that time, should today be regarded as satisfactory.

Mr. Marsh

A lot has been made of this point of revival procedures. Is my right hon. Friend aware that virtually all of them are technical points which are common to all the nationalised industries and are not specific points of policy?

Mr. Strauss

I do not think that my right hon. Friend has sufficiently studied the Act for which I was responsible. I assure him that, while I am flattered that many points in this Bill are copied from my Measure, they are not contained in any other nationalising Measure. I have a few points in mind and I will tell my right hon. Friend about them later. I am merely pointing out how delighted I am that the work which we did in those days is still considered to be worthy of repetition today.

The major difference, of course, is that under this Bill only 14 companies are to be taken over instead of about 100 which we took over in 1948. This is an improvement, as I believe that we took over too many. However, on the other side is the weakness that whereas in the previous Measure, there was a substantial amount of public control over the smaller sections of the industry—such as the rerollers, which is the most inefficient section—under this Measure there will be no control whatever, even the existing control will disappear and that is a pity.

I conclude by appealing to the leaders of the industry. I had a great deal to do with them at the time of the 1949 Act. While that Measure was passing through Parliament the leaders' representatives and spokesmen in the two Houses fought with every Parliamentary weapon to defeat it. They were perfectly entitled to do that and nobody complains about their action. However, it was outrageous that when the Bill had passed through all its stages in Parliament and had received the Royal Assent, they made strenuous and continuous efforts to sabotage it. They did all they could within the law to render Parliament's decision inoperative. They forbade anybody of any standing in the industry to serve on the Iron and Steel Corporation and, by their tactics, did their best to delay and damage some of the proposals which the Iron and Steel Corporation put forward. I think that the worst damage they did was deliberately to deprive the industry by forbidding the cooperation of any of its able people—of the expertise which the industry required—and I hope that today, when the leaders are different, the older ones having gone, they will not behave in that way.

However critical they or others may be of the Bill, it will become an Act. Although they may dislike some of its more important features, particularly the wholesale public ownership aspect, I trust that they will feel it their duty on this occasion to continue to use their expertise ungrudgingly for the benefit of the industry and to co-operate with my right hon. Friend the Minister of Power in speedily and smoothly bringing about the drastic reorganisation the industry requires in the national interest.

5.40 p.m.

Mr. Sandys (Streatham)

The right hon. Member for Vauxhall (Mr. Strauss) has supported the Bill with more doubts and reservations than with arguments in its favour. To follow the right hon. Gentleman is quite like old times for me, when he and I debated the Iron and Steel Bill in 1953. He prided himself on being the author of the Iron and Steel Act of 1949. As a fellow author of the 1953 Act, I am naturally disappointed today to see that the structure which I devised with much thought is now to be totally dismantled. But perhaps in a few years' time I shall have the same satisfaction as the right hon. Gentleman of seeing the 1949 Act again scrapped and the 1953 Act reinstated with suitable amendments.

The Minister expressed the hope that his Bill will be accepted as a final settlement. That is the hope of all Ministers. I had the same hope 13 years ago, and perhaps with better reason, because the 1953 Act was not a doctrinaire Measure like this Bill. It was not a mere reversal of the nationalisation of 1949. That is the big distinction. It did not seek to bring back unrestricted private enterprise. While restoring freedom of decision to individual firms, it retained a strong element of public control. Managements regained their independent initiative, so essential in the steel industry, which, unlike railways, gas and electricity, has to hold its own in the markets of the world and which provides the principal raw material for so many of our manufactured exports. But at the same time we set up the Iron and Steel Board, with extensive powers to supervise the industry in the interests of the consumers. This combination of private ownership with public supervision is, I believe, the system best suited to the special needs of, the steel industry.

I am the first to recognise that after 13 years many, and perhaps important, adjustments were necessary to take account of changes in the situation. But to throw everything back into the melting pot and disrupt the partnership which has been built up between the industry and the Government is utterly irresponsible.

Why is it being done? No case has been made out, either before or during this debate, to show that this will benefit either the industry or the nation. Re-nationalisation is totally unjustifiable and will do untold damage to the efficiency of the steel industry and to its competitive position in the world. It is all too obvious that the only reason for introducing the Bill is to appease the awkward squad on the left flank of the Labour Party.

The Minister appealed to the Opposition not to commit themselves to repeal this Measure irrespective of the way it works. He would have been in a stronger position to make this appeal if the Labour Party had not, through the mouth of the right hon. Member for Vauxhall, done that very thing in 1953..During our debates then the Labour Opposition pledged themselves up to the hilt to go back to 1949 as soon as they got the chance; and that is what they are doing today.

I do not propose to discuss the detailed provisions of the Bill. The whole Bill is bad—bad in its concept; bad in its purpose; bad in its effects on the future of the industry; and particularly bad in its timing.

How can the Prime Minister seriously appeal for the Dunkirk spirit and at the same time throw this apple of discord into the national arena? The right hon. Gentleman evidently fancies himself in the role of Churchill in 1940. But surely he must see that he does not fit the part. At the time of Dunkirk we had a great national leader who enjoyed the respect and confidence of the whole British people and whose every deed and every word was designed to unite them. Today we have at the head of affairs a discredited and distrusted political manoeuverer.

Mr. Maxwell

On a point of order. Is this germane to the Second Reading of the Bill.

Mr. Deputy Speaker (Sir Eric Fletcher)

So far nothing that the right hon. Member for Streatham (Mr. Sandys) has said has been out of order.

Mr. Sandys

We have at the head of affairs—I will repeat this for the benefit of the hon. Member for Buckingham (Mr. Maxwell)—a discredited and distrusted political manoeuvrer, who, by insisting on going on with this divisive Measure, has once again put party before country. The Bill will no doubt be passed by a large majority, but many hon. Members who intend to vote for it must surely be ashamed that, in this hour of national crisis, they and their party have failed to rise to the level of events.

5.50 p.m.

Mr. John Hynd (Sheffield, Attercliffe)

I wish to pay a compliment to my right hon. Friend the Member for Vauxhall (Mr. Strauss) for the way in which he approached this debate, because we are dealing with a serious subject and, whatever his misgivings about the details of the Bill, he at least dealt with it objectively as did my right hon. Friend the Minister of Power, who moved the Second Reading, but we have not had the same approach from the other side of the House. That is a pity.

The right hon. Member for Altrincham and Sale (Mr. Barber), who opened for the Opposition, began and the right hon. Member for Streatham (Mr. Sandys) proceeded on the level of suggesting that this Bill has been brought forward for no other purpose than to appease a minority on the Left of the Government party. They must know—indeed, the right hon. Member for Streatham said it—that during the course of denationalisation in 1953 the Opposition of that time made it clear that it was our purpose to bring in a renationalising Bill at the earliest possible moment. There was no question then of trying to appease a group of hon. Members in the present Parliament.

We have the evidence of the Labour Party's manifestos at the last two General Elections, which made it crystal clear that it was the intention of the Government, if elected—irrespective of wings or sections—to bring in this Bill as a matter of essential national policy. Why do hon. Members opposite descend to this kind of argument? The answer is that they are lacking in substantial argument, for otherwise they would not do so. On this occasion there is no question but that this Bill is introduced in accordance with the mandate we received from the country in the last two General Elections.

The Opposition frequently in the past have made great play of the fact that in 1951 and in succeeding elections no mandate was given to Parliament for the renationalisation of the steel industry. On the same logic and by the same principle they must now recognise that the country has given a clear mandate on two occasions. In the city of which I have the honour to represent part in this House, the results in the last two General Elections made it very clear where people concerned with steel stand in this matter.

All the constituencies directly concerned did so.

In the Hallam constituency the Conservative majority was reduced by 5,000 in 1964 and by 4,000 in 1966 when steel nationalisation was a key issue of the election. In the Heeley division, which elected a new Labour Member at the last election, there was a reduction in the Conservative majority of over 8,000 in 1959 turned into a Labour majority of 4,000 in 1966. My majority in Atter-cliffe went up by 3,000. In the Bright-side constituency the majority went up by 3,000 and in the Park division it went up by 4,000. In the Hillsborough division it went up by 7.000 and in Rotherham it went up by 4,500. This is the mandate of the people concerned directly with the steel industry.

Mr. Edward M. Taylor (Glasgow, Cathcart)

If that is the case, can the hon. Member explain why the Prime Minister, the First Secretary of State and Secretary of State for Economic Affairs, the President of the Board of Trade and the former Minister for Technology did not think steel nationalisation important enough to refer to it in their 1964 election addresses?

Mr. Hynd

My right hon. Friend who introduced the Bill made that clear. He went into the history and showed that the Government had shown great tolerance in trying to persuade the steel manufacturers to produce their own plans. Are the Opposition suggesting that the Labour Party should start breaking their pledges? The Opposition are always prepared to accuse us of doing that, but now they are inviting us to do it. They are trying to frustrate the democratic will expressed in two General Elections. At least in this debate we have not had the case which they used to try to argue about the merits of free enterprise against State control. Apparently that has been dropped.

Even during the denationalisation Bill debates in 1953 when Mr. Oliver Lytteltort was addressing the House he made it very clear that this industry should no longer be left to the free play of private enterprise. He said: we believe that the industry must have the benefit of a massive central organisation. … we think that a great basic industry like the steel industry, employing a large number of men, and considering the widespread use of steel in other industries, and the power of the steel industry to contribute to our exports, is so important that it should have Government supervision.

Sir G. Nabarro

What date was that?

Mr. Hynd

This was during the debate on denationalisation in 1953. Mr. Lyttelton proceeded to say: We do not believe that it would be right, where such large and vital interests are concerned, to permit competition to play over the steel industry without any Government interference or without Government approval. This was goodbye to the argument about free enterprise. The right hon. Member for Streatham has told us that he also was concerned with that Bill. He said that on that occasion the Conservative Government accepted that State interference and the advice of the men from Whitehall were necessary to keep private enterprise serving the purposes of the nation. He claimed that by setting up the Steel Board they had provided an effective instrument to ensure that public interests were properly safeguarded. That was why the Board was set up.

At the time the Labour Party in opposition argued strongly that the Board was not competent to safeguard the public interest, that it was not provided with the powers to safeguard the public interest and that in an industry of this strength and economic power so long as private enterprise was allowed to operate the Board could not serve the public interest whatever powers were given to it. Those were the arguments which we produced at the time. Far from the Board having proved, as the right hon. Member claimed, to have been an effective instrument for safeguarding public interests, it has miserably failed, not because of the inadequacy of the members of the Board but because of the reasons given by the Labour Opposition at the time that it could not do so with the powers given to it, which were quite inadequate.

What were the powers? It was first required to maintain competitive conditions. I remember at the time of the denationalisation debate Mr. Oliver Lyttelton said: we believe that the prices charged by the industry should be subject to Government supervision and approval. The idea that the industry is able to throw dust in the eyes of the Government in matters of prices is too ridiculous to require examination."—[OFFICIAL REPORT, 15th November, 1958; Vol. 458, c. 94, 95.] That is precisely what it was doing after 1953, as it admitted when it was brought before the Restrictive Practices Court. It admitted that, while it was maintaining a façade of competitive prices, there were no competitive prices in the industry. These were men with the technical knowledge and experience of the industry who claimed that it was not possible to operate on the basis of competitive prices.

Mr. John H. Osborn (Sheffield, Hallam)

Is the hon. Member aware that prices were set so low that the return on capital in the steel industry has presented real problems in financing capital development?

Mr. Hynd

That may be and I will deal with that point later. I am not arguing whether the prices were adequate or inadequate, but about the powers, the intention and the capacity of the Board to provide the competitive prices it was set up to ensure in the interests of the public.

It was not only in the matter of prices. We were told after the Restrictive Practices Court's decision was given that there was competition in quality. There is very little, if any, competition in quality between similar types of steel in the industry, as was borne out by Mr. Judge, Chairman of Dorman Long, who said before the Court: Opportunities for quality competition in heavy steel products were fairly remote. This was said by one who ought to know what was going on under the Steel Board.

Its second job was to ensure the efficiency of the industry. I do not want to go back to quote the devastating report of The Times special inquiry into the industry in 1945, which described the squalor in the industry, the disorganisation and disorganised chaos of the yards. That has been quoted often in the House. We had the admission by the Steel Federation of the chaos in the industry at the time and that there were unregulated competition and disorderly conditions throughout the 1920s and the early 1930s. We had the 1948 plan, produced at last by the industry only when the threat of nationalisation was imminent when the steel companies themselves admitted that it was an attempt to prevent the industry going back into the chaos of previous years.

Now we have the present Board's own Reports for 1964 and 1966. The 1964 Report pointed to the need for more efficiency in the use of manpower and for changes in the structure of the industry with greater concentration in its units. It referred to the need for … a more determined effort to eliminate obsolescent capacity of all kinds … That was in 1964—nearly 20 years after The Times Report and others had stated that there was an urgent need for the elimination of obsolescent capacity of all kinds. In the 1966 Report, the Board again referred to the unsatisfactory manning situation—just as was done in 1964 and 1945—drawing attention to the fact that we require 12 per cent. more men per unit of production than do our competitors in Europe.

The Board also drew attention to the way in which the industry, with its proud record of creation and innovation, had fallen far behind European countries in introducing modern methods. The Sheffield Telegraph, which is a paper concerned more directly with steel than almost any other, drew particular attention to this aspect and added, in a leading article on 27th April, 1966: It is quite clear that nationalisation causes deep resentment in those who oppose it. It is extremely doubtful if it is necessary—for rationalisation needed could as easily, and probably less painlessly, be achieved by a free industry.

Sir G. Nabarro

Hear, hear.

Mr. Hynd

The hon. Gentleman says "Hear, hear", but why did not the industry do it? Why, over the years, before the war and in 1945, in 1954, in 1964 and in 1966 have we repeatedly had to face the fact that the private industry has failed to carry out precisely that?

Sir G. Nabarro

Has not the hon. Gentleman observed that, throughout this debate, the only right hon. and hon. Members who say that the steel industry has failed are right hon. and hon. Members opposite? I do not accept his argument that there is room for rationalisation.

Mr. Hynd

What the hon. Gentleman overlooks is that the quotations I have been making about the failure of the industry to maximise its efficiency have not been of right hon. and hon. Members on this side of the House nor of other Members of the Labour Party. They have included such independent observers as The Times, the Financial Times, The Guardian, the American Inquiry team which came over in 1945, Sir William Firth and a whole range of others. They were certainly not from this side of the House.

The Conservative Party will not admit this situation directly. Nevertheless, they admitted it in effect when, upon denationalisation, they set up the Iron and Steel Board to see that the industry at least d id not destroy the national interest. Right hon. and hon. Members opposite have admitted in their speeches today that they still recognise that it is essential that so vital an industry to the national economy should not be left to free enterprise because of the danger of its falling back into chaos and obsolescence. They have therefore admitted the need for Government supervision.

We are not simply saying that the whole industry is inefficient. It is not all inefficient. As my right hon. Friend said, there are some very good steel producers but, by and large, there is no question but that the industry has failed to live up to the needs of the national economy and the public interest and the question now is, how much longer must we go on, year after year, having these reports and recognitions and admissions that the industry requires a vast reorganisation, including its manpower, without anything being done about it just because the Government of the day, responsible for the national economy and for our standard of living, have up till now, been afraid to grasp the nettle? At last, we have a Government who are not afraid to grasp the nettle—indeed, they are doing so in this Bill. But we have tremendous problems after all these years. The Board as it at present exists cannot solve them with private interests operating, within the industry. Its 1966 Report said that its powers … comprise a weak veto on company development schemes … and a right to fix maximum prices … all these powers are negative and passive in character". The right hon. Member for Altrincham and Sale claimed, however, that the Board was the instrument with which to protect the public interest— they have not proved to be as effective as was hoped in stimulating efficiency nor can they be used to force the industry to adapt itself to present-day requirements. That is the up-to-date judgment of the Board which the right hon. Gentleman claims to be an effective instrument. It goes on: A more determined effort is needed to eliminate obsolescent capacity of all kinds"— that call occurs year after year— with a view to reducing the production costs of the industry as a whole, but it may be that, with ' rationalisation ' of the industry, progress in this respect will be slow. Again, I ask, who is going to do the rationalisation? The industry itself has obviously failed over the years and surely 40 years is more than enough to wait before the Government take responsibility. What are the Opposition suggesting? The right hon. Gentleman suggested, I gather, that there should be a stronger Board with more powers. He was asked what the policy of the Conservative Party was and was going to make a positive answer. He said that such a Board would provide the maximum scope for competition and opportunity for those in the industry to exercise judgment based on their experience. But we have had 40 years of that with not very good results.

What, in fact, does it mean? If it means stronger power for the Board, what happens to all the talk about free competition? If it is an admission that the man in Whitehall does know best, are we going to get very much further by creating more powers for a Board operating within the ambit of private operations in the industry, based on the incentive of private profit and no other? Will it be more effective?

My right hon. Friend the Member for Vauxhall told us what happened in 1949 when we nationalised the industry last time. We heard from him—and hon. Members opposite did not query it—how those mainly responsible for the operation of the industry immediately set out, presumably in the interests of the public weal, to sabotage the industry as much as they could at every point and to destroy its effectiveness once it had been brought under public ownership.

Are these the kind of people likely to co-operate with a stronger board? Would they not, rather, react to the strength given to the board with equal strength in trying to frustrate the national purpose, as they have done before? I have referred to the unfortunate history of failure of the industry to bring itself up to date to meet national demands. What is the answer of the industry? A little while ago it published a pamphlet—one of the very expensive "glossies"—called, "Leave Well Alone". That was the industry's answer presumably to all the problems. We cannot afford to leave well alone in those terms. If that is well, we had better not leave it alone. The right hon. Gentleman and his friends have been suggesting that this is not the time to introduce this Bill, that when the country is faced with serious economic difficulties this is not the time to bring in a Measure of this kind. Surely, on the contrary, in view of the admitted fact that the industry badly requires overhaul, reorganisation, modernisation and better use of its manpower, and has been doing so for 40 years, is it not particularly at this time that we should realise that we have no more time to waste?

As the right hon. Member for Altrincham and Sale said, every industry in the country depends on the steel industry; all our prospects of building up our economy depend on its efficiency. How shall we tackle our urgent problems unless we deal with this industry which is at the core of our problems and try to do something about it before it is too late?

Why has the industry not been able to do something about it itself? The answer—I have given it before—is precisely that the purpose of the industry is not the national purpose; it is the purpose of getting as much personal profit out of the industry as possible. Sir William First said a long time ago that this was the case, and one of the reasons why he was disgusted with the industry was that it would not put the public interest before personal profits.

Geoffrey Crowther said precisely the same thing in a devastating article a long time ago, in 1939—that the evil of the industry lay in the fact that the private financial interests of shareholders and directors and others were placed before the national interest. One has only to look at the history of the dividends since denationalisation. In 1954 the dividends amounted to £1.4 million and in 1963 to £26.6 million. The total from 1954 to 1963 was £172 million.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

rose—

Mr. Hynd

An hon. Gentleman opposite asked me earlier about the difficulties of finding money for reinvestment. Why could the industry not have spared a little of the £172 million for reinvestment on development? Is it not the case that even up to 1959 the industry had spent no less than £11 million on anti-nationalisation propaganda? Is it the purpose of an industry so important and vital to the national economy to spend £11 million on anti-nationalisation propaganda when it might well have been spent on development? There is, of course, very big money involved in this, and this is the reason for the Opposition—

Mr. Geoffrey Wilson (Truro)

Oh.

Mr. Hynd

It is no good an hon. Member opposite saying "Oh". One thing is very clear in this situation, as in any such situation. Many members of the Opposition and the people with whom they are concerned and whom they represent here are directly financially concerned in the industry.

Mr. Geoffrey Wilson

Mr. Deputy Speaker, I said "Oh". But I have no financial connections with the steel industry. It is nowhere near my division. I am listening to the debate as a matter of political interest because I do not believe in nationalisation.

Mr. Hynd

I did not accuse the hon. Gentleman—

Sir G. Nabarro

Whom did the right hon. Gentleman accuse?

Mr. Hynd

I accuse many right hon. and hon. Members opposite, and the people they represent in many cases, who have a direct financial interest in the industry, and I hope that those who speak on this occasion—

Sir G. Nabarro

On a point of order, Mr. Deputy Speaker. Your predecessors in the Chair have frequently ruled that it is out of order to impute a personal interest in a matter being debated in the Chamber without hon. Members being given an opportunity to declare their interest when they catch your eye. Would you, therefore, as your predecessors have frequently ruled on the point, cause the hon. Gentleman to withdraw his disgraceful and opprobious imputation?

Mr. Deputy Speaker

In answer to that point of order, as I understood it, the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) did not impute any personal motive to any particular member of the Opposition.

Mr. Hynd

rose—

Mr. Geoffrey Wilson

On a point of order. I was the hon. Member who said "Oh", Mr. Deputy Speaker, and it was in consequence of that remark that the hon. Gentleman said—

Mr. Hynd

I did not accuse the hon. Gentleman.

Mr. Deputy Speaker

In answer to that point of order, I understand that the hon. Member for Attercliffe has disclaimed any intention of imputing any dishonourable motives to the hon. Member for Truro (Mr. Geoffrey Wilson).

Sir G. Nabarro

Further to that point of order, Mr. Deputy Speaker. In view of you r Ruling, will you cause the hon. Member for Attercliffe to withdraw the disgraceful and approbrious imputation which he made?

Mr. Winterbottom

Further to that point of order—

Mr. Deputy Speaker

To reply to the point of order raised by the hon. Member for Worcestershire, South (Sir G. Nabarro), as I understood the speech of the hon. Member for Attercliffe, he was making a general observation and was not attaching any personal imputation to any particular hon. Member of this House.

Mr. Sandys

Further to that point of order, Mr. Deputy Speaker. Surely it is far worse that the hon. Member for Attercliffe should make a general smear on the whole of the Opposition, implying that the attitude we are taking against nationalisation is inspired by personal financial interest.

Mr. Deputy Speaker

As I understand the position, the hon. Member for Attercliffe was saying that certain persons had interests in steel shares. He was not implying any dishonourable motive to any hon. Member of the House.

Mr. Hynd

rose—

Sir G. Nabarro

On a point of order, Mr. Deputy Speaker. This is a new point of order. The hon. Member for Rother Valley (Mr. David Griffiths), sitting on the bench opposite with his feet in front of him, has just observed as an interjection in your Ruling "Of course you have" and pointed at me. Would you cause him to withdraw that disgraceful and opprobrious intervention?

Mr. Deputy Speaker

I did not hear any such intervention.

Mr. David Griffiths (Rother Valley)

Further to the point of order, Mr. Deputy Speaker. Might I point out that I never moved my hands, and so I could not have pointed at the hon. Member for Worcestershire, South (Sir G. Nabarro)? What I said, and what I still maintain, is that by imputation and by declaration hon. Gentlemen opposite have at all times opposed us with steel nationalisation.

Mr. Hynd

Perhaps I might continue with my speech, Mr. Deputy Speaker. The Opposition know very well that there are hon. Members and right hon. Members who have financial interests in the steel industry. I hope that those who have and who speak today will announce it. I am sure that they will as honourable men.

The only point I am making is that those who are opposing the nationalisation of the industry—I have referred to the £1½ million that the directors of the companies themselves have spent in opposing renationalisation—at least have very substantial personal financial interest in preventing nationalisation. No one can accuse anyone on this side of seeking nationalisation because we shall make any personal profit out of it.

Sir G. Nabarro

Jobs for the boys.

Mr. Hynd

In this question of public ownership and private ownership, we can be concerned only with what we consider to be the public interest and nothing else, and this is the great question which must be raised, therefore, in the mind of everybody in dealing with this problem.

Only on Thursday last, when we had heard so much about the national economic crisis and the need for pulling together and helping the country out of its difficulties, the hon. Member for Chippenham (Mr. Awdry) asked the Prime Minister: In view of the Prime Minister's appeal yesterday for national support for his measures and the obvious need for that national support, will the right hon. Gentleman think again about having the Second Reading of the Iron and Steel Bill next week, in view of its controversial nature?"—[OFFICIAL REPORT, 21st July, 1966; Vol. 732, c. 8781 So the Opposition are prepared to offer a price for supporting the national effort, and their price is the withdrawal of the Iron and Steel Bill in the interests of people who will make financial profit out of the steel industry. They say that if the Government will withdraw the Iron and Steel Bill they will support the national effort—as if that meant anything at all.

Mr. Frederick Harris (Croydon, North-West)

Nasty mind.

Mr. Hynd

I think that the nasty mind is in this Question. I know very well that we could withdraw the Bill, cancel prescription charges and give away the whole of our programme, but we never get the co-operation of right hon. and hon. Members opposite as long as they are not in Government.

I should like to remind hon. Members opposite that if they want to bring this matter above party politics they had better forget the kind of accusations they made about the Labour Party, about nationalisation, and threats of renationalisation, making it impossible for the industry to function efficiently, making it a plaything of politics, and saying that no industry can function when it is under the threat of further changes.

The party opposite have said that they are looking forward to the opportunity of denationalising the industry again. Do not let us have this kind of hypocrisy once more. We have heard it for so long. Cannot they rise, for once, in view of the national interest, to the level shown by Mr. Harold Macmillan in that Tory pamphlet, "The Middle Way" when he said: The Socialist remedy should be accepted in regard to industries and services where it is obvious that private enterprise has exhausted its social usefulness or where the general welfare of the economy requires that certain basic industries and services need now to be conducted in the light of broader social considerations than the profit motive produces. I hope that some hon. Members opposite will show that national spirit when they vote tonight. May I say to our Liberal friends that it is not so very long ago that they published a pamphlet "A Radical Economic Policy for Progressive Liberalism", in which they said: Steel, coal, transport and power are examples of industries which it is vital should be owned by the community. That was at a time when the Liberal Party was a great party, when it was recognised as a true radical party. In latter years we have heard so much about the need for a great new radical front. The Liberal Party will have the opportunity tonight to demonstrate whether it is still a radical party or whether it is going to follow those who will protect private monopoly against the public interest.

6.24 p.m.

Sir William Robson Brown (Esher)

I am very glad to follow—

Notice taken that 40 Members were not present; House counted, and, 40 Members being present—

Sir W. Robson Brown

I am very glad to be following the hon. Gentleman the Member for Sheffield, Attercliffe (Mr. John Hynd), because he has made some allegations about people in the steel industry which I now repudiate, personally and generally. It is usual in a debate of this nature to declare one's personal interest. I have lived with steel all my life and hope to continue doing so in a modest way over the years to come. I have but a few thousand shares in any steel company. Hon. Members opposite over the years have made enormous play, as the Minister did today, of the steel masters, pretending that there were individual owners of steel companies today. We all know that they are non-existent. We know perfectly well that the shareholding of the great British iron and steel industry is broadly spread across the economy.

Management of the industry has not in any instance that I am aware of particularly high personal investments in the industry. Taken as a whole, the management and men of the steel industry are a grand team. It needs a special kind of chap to be a steelmaker, and it is not everyone who can do it. Certainly the industry will not be helped by the bureaucrats to whom I will refer later.

I do not believe that the average steelmaker is greatly concerned about the political consequences of the nationalisation of steel. He is greatly concerned about British steel and the world of steel, and he wants to be much more competitive than he is today. Everyone in the steel industry feels the same way, and I will give some reasons why they are being held back.

The first question we have to ask is: has the steel industry been progressive? The answer to that is that there have been hundreds and hundreds of millions of pounds spent on huge computerised plant, the most modern in the world. This modernisation has been carried out against a background of the threat of nationalisation. The steel leaders have been remarkably courageous men, always having the guillotine hanging over their heads, and yet expanding in the most magnificent fashion.

Throughout recent years I have visited many countries and their steel works. As late as last year, I visited the United States and other parts of the world. I was in Germany a fortnight ago, and I go to France for the fifteenth time in a fortnight's time. A few months ago I was in Austria. I am so concerned about my industry that I give up much of my personal vacation time in order to see what other steel countries are doing.

Productivity per ton per man employed in the United States makes us look darn silly; I would not deny that for a moment. But in technical advances in the last three or four years we have been spectacular and, in some respects, superior to any other steel-making country—from super-integrated plant to individual pieces of machinery which in total have absorbed hundreds of millions of pounds. This is new capitalisation on top of all the capitalisation which has taken place since the war, and it is a magnificent record.

The compensation terms have worried me and are derisory. How are we going to finance these compensation terms? The Minister did not answer that question. What effect is this going to have upon deflation? I am not concerned with the compensation terms but with their effect upon very many humble and ordinary people—trade unions as well. The Minister is laughing. He should not laugh, because there are thousands of millions invested in the steel industry, in pension funds, personal savings, trade union funds and the like. We must not forget that.

I have an uneasy feeling that, like so many things that the Government have been doing in the last two years, this Bill has not been thought out effectively and comprehensively. It has just been talked in this afternoon. We are learning things today that we did not know yesterday. Are things going to be done on these lines all the time? Great play has been made on the relative size of the industry over all. The hon. Gentleman the Member for Attercliffe, in his biting and scathing attack on everything and everyone in the industry, did not mention that last year we reached an all-time record for production and would have exceeded it this year if the recession had not set in. These are the facts and they should not be skirted over. It is all right on the platform of your own constituency—

Mr. Speaker

Order. I did nothing on a platform in my constituency.

Sir W. Robson Brown

I am sorry. I remember that at the last election you did not need to do that. Thank you for pulling me up. Broadly, steel has kept pace with demand, even boom demand. That has been the analysis of the efficiency of the industry. In 1964 there was a tremendous, unprecedented demand for steel, particularly at home. The industry did what was right and proper and what was required of it: it fulfilled its obligations at home before dealing with exports. That is why industry in general was able to expand. It has been said that the steel industry has not expanded as much as it might have done. But the engineering, shipbuilding and many other industries have not been increasing their demand for steel as our competitors have been doing. If the demand had been there, more money would have been provided and bigger plants would have been built.

The Minister dealt with exports. I think that it was the only time that he let off all the guns. My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) blew them all away. I never saw such a comprehensive refutal in my life. Apart from strip, there has been remarkably little importation of steel. We have overcome the shortage of strip. The tinplate and strip situation is now reversed: we have huge capacity and not enough orders to keep the plant busy.

Mr. Maxwell

What about pig iron?

Sir W. Robson Brown

Do not just say, "What about pig iron?". Develop it.

Mr. Maxwell

I am obliged to the hon. Gentleman. Pig iron is being imported from Norway, in spite the freight and material handling costs and duty, at one-third below the price at which British suppliers of pig iron are willing to sell to purchasers in this country.

Sir W. Robson Brown

You do not know that—

Mr. Speaker

Order. The hon. Gentleman has been here long enough. He must address the Chair,

Sir W. Robson Brown

I am sorry, Mr. Speaker. One gets in the habit of addressing the hon. Member for Buckingham (Mr. Maxwell) direct, because he is up and down so much. In the last couple of years, there has been heavy dumping of pig iron, and it is continuing. We are meeting this kind of thing from all over the world. At this moment prices being quoted from South Africa are very competitive and very alarming.

Mr. O'Malley

Is the hon. Gentleman aware that one of the major difficulties of pig iron producers in this country is the cost of the iron ore brought in through the Federation? The iron companies are very disappointed and alarmed at the prices being charged by the Federation. The reason for these high prices is not only because we have inadequate port facilities, but because of the disastrous long-term arrangements which the Federation has made.

Sir W. Robson Brown

The import duties imposed by the Government in the last few months have been one of the contributory factors for the higher prices of imported iron ore. Had you thought about that? These are—

Mr. Speaker

Order. The hon. Gentleman must address the Chair.

Sir W. Robson Brown

If there are no more interruptions, I will not make any more mistakes.

It has been said that exports, particularly of finished steel, have been extremely high. The figures speak for themselves as record figures.

Let me take price as the next criticism. We denationalised steel. My right hon. friend the Member for Streatham (Mr. Sandys), who spoke about this matter from direct knowledge, failed to use the phrase which I used in the debate years ago—the acceptance by the steel industry of accountability to the nation. That was why I supported denationalisation of steel then, and it is why I fight against the nationalisation of steel today. Accountability to the nation is a very great test of honour. In setting up the Iron and Steel Board, they controlled the price of steel with a rigid and iron hand. Anyone in the House who suggests that the iron and steel industry fiddled the figures makes a direct accusation against the accountants looking after the price structure of the industry from that day to this.

I should explain what was required, because it is necessary to do so. I want to make my speech short, but these facts must be known. They take the cost of every manufacturer in every section of the industry and strike a balance of the best 60 per cent. or so which are most efficient and they set the price for the product on that level. The inefficient are being driven to the wall in recent years. Under the Tories, the controlled prices were far too low to permit the industry to make a proper and reasonable profit to enable it to put as much money into modernisation as it would have liked. The recent position has been very serious, with a climb in wages and costs and a fall in profits and output, which will fall still further. If the Bill were to go through in its present form, the Government would find on their hands an industry which was largely in the red.

I criticise the Iron and Steel Board because after the initial stages it did not show any sense of leadership to the industry, and it did not provide it. I criticise it because it was composed of men—

Mr. Winterbottom

rose?—

Sir W. Robson Brown

I do not want to get into trouble with Mr. Speaker again, but I will give way to you.

Mr. Winterbottom

You are saying—

Mr. Speaker

Order. Two very old and distinguished Parliamentarians ought to know the rules of the House.

Mr. Winterbottom

The hon. Gentleman said that if nationalised we should find that most of the industry was in the red. Would he say how the industry will reorganise into six or seven giant combinations in terms of the Benson plan if it has not the money to meet its obligations?

Sir W. Robson Brown

One of the largent steel companies in the country is already nationalised, it has a magnificent plant and management—and it is in the red. This will happen with other companies. Therefore, before very long, the price of steel will have to be increased. We have clamped down on the price for too long.

I have been criticising the composition and leadership of the Iron and Steel Board. I believe that it should be entirely reorganised and strengthened. The rationalisation of steel should never allow the companies to operate on their own or in combination of any kind. The industry should be positively controlled in price. research, development and expansion by a competent Iron and Steel Board very much more representative of the management side and the union side. Its responsibilities should not be confined to these [2 companies. The responsibilities should cover all sections of the industry, including products not even mentioned in the Bill which I know from my long experience and which many people in the industry know need more rationalisation than any one of the big companies could ever need. Whether it is done by rationalisation or nationalisation, the miraculous economies which the Government expect to be achieved will not be made, particularly from doubling the size of plants. Has anybody any idea how long it takes to double the size of a great integrated plant from the time of the first market research studies to the time when the hot metal goes through the mill? It takes years.

Therefore, this Bill is irrelevant to the problems. We have to act quickly, and act together. The Minister asked how it could be done, and I say not by nationalisation. This is not an ideological prejudice of mine. My heart is too much in the industry to bother about politics in it. It has been beset with politics for too long by too many people. I am concerned that the nationalisation of the industry would put it in the hands of the bureaucrats, and they do not know anything about the industry and never will. That is what is worrying me.

The Minister pretends that he will provide competition. What kind of competition will be provided? There will be a complete and absolute monopoly. The steel industry has been rationalising year after year since the war. There is no question about that, if one looks at the increase in productivity. But steel is not just like a ton of coal, a therm of gas or something like that, or a railway truck full of merchandise. There are hundreds of products in the steel industry, and one should be very careful in messing about with so complicated an industry. Almost every section of the industry has been rationalising right along the line. I am not ashamed of my small part in one section of the industry. It bears reasonable examination.

There are no steel masters left. We have to drop that old cliche, which sounded well enough in 1945 but is now outdated. I am very proud to count steel men among my friends. When I came into Parliament I felt it my duty to withdraw from any contact with the British Iron and Steel Federation. I had been a member of the executive at one time, but when I came into politics I felt that I could not serve two masters, and Parliament was the more important master for me. I assure the House that I have had no personal contact with the Federation from that day to this, except between friends.

I can speak for them because I know them. These men recognise their moral responsibilities for the industry. They have always honoured the Boards control of the Industry, and the biggest and most acid test is that they have honoured the price structure. No hon. Member can prove to me—I shall be shocked if he can—that any of the large steelmakers, not some little insignificant firm or organisation on the fringe, have not honoured their price structure, even when the temptation has been very strong, in times of high demand, to get a little on the side.

They have also battled with regard to quality. There is a very strong battle between the consumers of steel in Great Britain, particularly the motor trade, and the steel manufacturers. Both sides are going at it hammer and tongs. That is a good thing to have. Let the consumer demand better steel and higher quality and better ranges of steel, and let the steelmakers supply it. They are doing that very much better than anybody expected.

I followed the Minister's speech very carefully. I am sorry that he it not with us, but I pay him the compliment that he was gentle and avoided raising any heat in the debate, but he has not convinced the House that the Bill should be introduced at this stage. I ask him now, even at this late stage, because we are finding that the Government are changing a lot of their ideas week by week and day by day, to go back to the Iron and Steel Federation, that is, the corporate body, and discuss with it now its proposals for rationalisation. The Government may not agree at first glance on the proposals of these gentlemen, but something could be thrashed out and the differences between us would be very narrow. Is that not better than lunging on with the Bill? Hon. Members opposite know that they need these men. The industry cannot be operated without the nucleus of the best men in it. I ask the Minister to get the best men of the industry together now and to see what can be done together.

The world outside has been watching our nationalisation policies as an experiment, and we in this country have also watched nationalisation broadly as an experiment. When I first became interested in politics I made a statement on my first public platform that if the nationalisation of coal succeeded in the first five years I would vote for total nationalisation of every section of the community. I knew very well from my own contacts in the coal industry that it could not be done in that time, and it has not yet been achieved.

We are asked to give a wholesale licence for the total nationalisation of 50 per cent. of the nation's products, in addition to those which have already been nationalised. That, in essence, is what my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) said this afternoon. I pledge that if the Bill goes to Committee and I am a member I shall study it carefully line by line on its merits, and I shall give it all the help I can and all the criticisms that I believe to be necessary.

The Minister mentioned the pipelines for the North Sea gas, and highlighted straight away some problems that have always faced the steel industry. A steel industry cannot be built for unprecedented peak times. One must plan it for the normality of things and a progressive rise. The pipes for the Syrian project were already sold, and the Gas Council wanted delivery in months and could not wait. Therefore, it was proposed—and I hope has now been forgotten—that it should buy the pipes abroad.

Nationalisation will be beset with political considerations. We shall find that we are looking at particular plants and saying that they are not as efficient as the rest, but for this or that reason we had better not close them down. These will be political considerations motivated by, perhaps, some of the best intentions with regard to unemployment, or even cynical considerations about the votes situation in that district. I could mention some plants that would be likely to have the axe fall on them straight away, but I shall not. The Bill says what it wants to do, but it has no idea of how to do it.

Why have the Left-wing Socialists worried about steel nationalisation and given it so much concern? Because it is their "old man of the sea". They want to get him off their backs. There are other things that they want to attack, but they want this one off their backs.

Nationalisation has also been the industry's old man of the sea. It has had to carry it backwards and forwards. The industry has been constantly under fire. If the Government cannot agree to meet the steelmakers and discuss the whole thing anew, I challenge them to put the matter to a national referendum. I should not worry. I know what the result would be. It has been made clear, because in the last General Election the Labour Party never mentioned nationalisation of steel because they knew that it would not be a vote-getter, and that the more they talked about it the less votes they would get. Rationalisation, with a powerful Iron and Steel Board, is my answer. A lot of detail is not necessary at this stage. If there were this meeting of minds I suggest it could then be discussed at length.

I was very glad that my right hon. Friend the Member for Altrincham and Sale spoke so lucidly and clearly about the Common Market. I do not think that the Government have given proper consideration to this aspect of the matter. It is clear that the Common Market steelmakers will never accept us in the Common Market with a nationalised steel industry, because they will be faced with our monopoly steel, and prices which we could fix at any level.

By controlling steel, the Government will control virtually all other steel-consuming industries, either direct or indirect. They will have created a cast-iron monopoly which will be gripping this industry and with it the country, and it will be done by men who do not know and who do not appreciate anything about any one of these industries. They will have tremendous power, which nobody will be able to check. All the Committees that we may talk about, including Select Committees of this House, will never be able to keep them in place. The damage that will be done will be found out too late.

The whole world is watching our efforts to stem the outflow of our economic lifeblood The Bill will cut the jugular vein of out economy. I sincerely hope that the Government will think again, for the interests of the nation and not of party. I support every argument advanced with such convincing power by my right hon. Friend the Member for Altrincham and Sale.

6.51 p.m.

Mr. Brian O'Malley (Rotherham)

It is interesting that on one of the rare days when this House has the opportunity of discussing the steel industry, for the first 25 minutes a former Attorney-General, the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson), in language reminiscent of esoteric jargon straight from Dickens, raised the old red herring of hybridity before us. Then, in the first 20 minutes of his speech, we saw the right hon. Member for Altrincham and Sale (Mr. Barber) involving himself in an argument about who said what to whom and when and what the timing was. Coming from a steel constituency, it seemed to me that the men who work in the industry would not look very favourably upon this House if they thought that it would spend a day, and a very rare day, on the steel industry, on nonsense of that kind.

The debate this afternoon has ranged over familiar and well-trodden ground, with the exception of the introduction of the issue of Europe, which has been brought in by the hon. Member for Esher (Sir W. Robson Brown). It is quite clear, as the right hon. Member for Altrincham and Sale said, that there is nothing in the Treaty of Rome which would prevent this country going into the European Coal and Steel Community or into the European Economic Community because our steel industry was under public ownership.

What is perfectly clear is that if one feature of the British steel industry contravened the Treaty of Rome, it would be a strengthened Iron and Steel Board on the lines laid down by my right hon. Friend the Member for Vauxhall (Mr. Strauss) and the kind of organisation which the British Iron and Steel Federation suggested in its recent proposals which it put before the Government. In addition, it seems to me to be a curious argument that we can hope to get into Europe only if our steel industry is weak and that if the British steel industry is strong the Europeans would not want us.

The Tory attack on the Bill this afternoon has split into two quite distinct sets of arguments, each weakening the other. First, we had the old-fashioned type of argument, with the hon. Member for Worcestershire, South (Sir G. Nabarro), the Tory dinosaur of 1966, from a sedentary position yelling out the reason as being "jobs for the boys". I say only one thing to the hon. Member. I hope that under nationalisation and with a publicly-owned steel industry, neither on the national Corporation nor on any unit of the industry will there be a director, a director's cousin, a director's cousin's brother, a director's cousin's brother's two sons, and a managing director and his son. This is merely to quote an example of jobs for the boys in the steel industry under private ownership at the moment.

It was rather rich of the hon. Member for Worcestershire, South to stand up on points of order and object to what he believed that my hon. Friend the Member for Sheffield, Attercliffe (Mr. John Hynd) said when, in the debate in the House on 18th February, 1963, the hon. Member did not declare the interest that he had shares in Stewarts and Lloyds until my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) pointed it out and asked whether that was the fact.

Sir Keith Joseph (Leeds, North-East)

Is the hon. Member prepared to defend the appointment of Mr. Ted Hill as a member of the Egg Marketing Board?

Mr. O'Malley

That does not arise from the debate this afternoon when we are discussing the future of the steel industry.

Sir G. Nabarro

The hon. Member has referred copiously to me and made an allegation that I failed to declare an interest. In the debate on 18th February, 1963, a copy of which I have with me, I declared my interest in all privately-owned steel companies and in a publicly-owned steel company. The matter arose because I accused the hon. Member for Ebbw Vale (Mr. Michael Foot), who is not now in his place, of failing to declare his interest as a shareholder in Richard Thomas & Baldwins, of Ebbw Vale. The hon. Member is, as usual, totally misinformed.

Mr. O'Malley

I will, of course, withdraw if I am incorrect, but as I recall that debate it was my hon. Friend the Member for Ebbw Vale who asked the hon. Member for Worcestershire, South whether he had an interest in Stewarts and Lloyds.

The Tory attack on the Bill today is split in two. First, there are those hon. Members who argue, as they have done over the years, that the record of the iron and steel industry is satisfactory and is comparable with the record of our competitors overseas, particularly our European competitors. This has been the battleground of past years when the Federation and the Tory Party have refused to admit the shortcomings of the industry.

It is, however, clear at this stage that whatever the difficulties of statistical comparisons and despite the smokescreen of the kind of "phoney" and irrelevant statistics which the Federation has been putting out—and without attempting to denigrate the British steel industry, because that is not something which I want to do—our productivity is much lower than productivity in the American steel industry, our productivity has fallen behind that of many European steel producers and our export record in large sections of the industry has been often patchy and on occasions deplorable.

The right hon. Member for Altrincham and Sale mentioned record export levels in 1965. What he omitted to do was to state the level in 1964 and make a comparison with the growing exports from European countries over a period of years and the growing exports from this country over a period of years. If the right hon. Members looks at HANSARD for 5th April, 1965, he will see from some Written Answers that the export record of the British steel industry compared unfavourably—I am sorry to say this—over a long period with the record of European steel producers.

It is also true that the flood of iron and steel imports into this country over the tariff barrier is largely attributable to the shortcomings of the British iron and steel industry. It is also a fact that a vast sum of investment has not been deployed to the best advantage and that the bunching of that investment has led in some years to restricting the demand which the investment was designed to satisfy.

Mr. J. H. Osborn

The hon. Member has mentioned European prices. Would he not agree that Europe has had the benefit of a cheap energy policy and the advantage of importing cheap coal from the United States of America?

Mr. O'Malley

Certainly that is not the case with Germany. The hon. Member will be aware that only a week or ten days ago, the German steel industry asked for subsidies for its coking coal, because the price of German coking coal was about four dollars more expensive than the price of the coal which was being landed from the United States at Rotterdam. The hon. Member's argument, therefore, does not hold.

Secondly, wages in the British iron and steel industry have risen more slowly than in many of the Continental industries. Certainly, on the argument of wage levels, the British industry is not suffering any disadvantage compared with the Continental industries.

The hon. Gentleman the Member for Esher (Sir W. Robson Brown) was engaged with myself and my hon. Friend the Member for Buckingham (Mr. Maxwell) in a discussion on the price of ore. I made the point that many of the iron producing firms in this country complain that the cost of their pig iron is higher than it would be were it not for the restrictive practices of the British Iron and Steel Federation, whose investment policies and long-term shipping arrangements have made the cost of iron ore dearer in this country than they are elsewhere. I will quote examples. Some little time ago, when I was interested in a particular case, I learned that the price of Itabira iron ore from Brazil to this country was 22d. per f.e. unit while, to move it in world bottoms to Amsterdam, the price per f.e. unit was only 18d. This is the kind of thing they are complaining about. I can quote a number of letters sent to me on this subject. The first is from a very well known iron company: We are just as eager as you are to see any improvement that can be made with B.I.S.C. (Ore)". The second letter says that Owing to certain arrangements which the ore producers have made with BISCOR Organisation the trade is now very restricted. A further letter from an import-export company says: Dear Sir, Although I am not a supporter of the Labour Party, nor an advocate of nationalisation as a cure for the ills of the United Kingdom steel industry, I must say that I heartily endorse your contention that Messrs. B.I.S.C. (Ore) Ltd. are partly responsible for British steel producers being charged substantially more for imported ore than Continental competitors. So the balance of the argument is very strongly against the Tories and their old line of argument over a number of years.

But now we have a different set of arguments, and the right hon. Gentleman the Member for Altrincham and Sale was in some difficulties this afternoon, because he had to try to argue both cases at once. There was a split in his argument because not enough time has elapsed yet to drop that kind of argument he used to use. The second set of arguments used by the Tory Front Bench, as the creature of and in the wake of the Federation, leaves their supporters using the old arguments high and dry. They now say that the problems of the steel industry can be faced only if there are far-reaching structural changes.

The document which the Federation put out recognised the need for a new dynamism in steel". It is very interesting that the right hon. Gentleman the Member for Streatham (Mr. Sandys), who is no longer with us, and who put the 1953 Bill through, heard his right hon. Friend say this afternoon that the Conservatives have no intention, if the industry is nationalised, of going back to those arrangements. The right hon. Gentleman the Member for Streatham made a very brief speech in which he did not attempt to defend or justify the workings of the 1953 Act.

The timing of the proposals put forward by the Federation, the timing of the change in the attitude of the Tory Party, smacked greatly of a deathbed repentance. We are told by the rationalisation committee that "in the limited time available" they could not deal with all of the problems. It is significant that the rationalisation committee was set up only in March of this year and that the Press conference release, I understand, was on Friday last week. The Federation, which was always sending me pamphlets through the post, has not sent me a copy of the report; at any rate, I have not got one through the post. I should have liked to have seen one. I have had to depend instead on newspaper reports about this issue.

I think that because of the timing of this we and the public are entitled to be sceptical about the real intentions of the Steel Federation.

Mr. Barber

I am following the argument of the hon. Gentleman, but it seems to me that he is saying that because the Federation has been late in putting forward proposals and that because the Conservative Government ought to have acted earlier to amend the 1953 Act, this is an argument for the nationalisation of steel. It is an argument for some change. Will he explain why he thinks, bearing in mind what he has said about our competitors, that nationalisation is a better system than the system which they operate on the Continent?

Mr. O'Malley

That is precisely what I am going to do. The right hon. Gentleman should not hide from the responsibility of his party in this matter, nor should he fear that the present position of the steel industry is being pinpointed, which is what I intend to do.

Mr. Winterbottom

rose—

Mr. Speaker

Order. I have no power to stop interventions, but interventions prolong speeches, and there are many hon. Members who wish to speak in this debate.

Mr. O'Malley

Then perhaps my hon. Friend will excuse me if I do not give way on this occasion.

Secondly, it is interesting that the Federation put its "new competitive pricing system" before the Iron and Steel Board only in September, 1965 after its agreements had been rejected by the Restrictive Trades Practices Court. There are those hon. Gentlemen who say that the iron and steel industry ought to have price freedom. We have heard a good deal of this in the last few weeks. People have said that the profits have been held down because of rising costs and because the industry could not put its prices up. But one thing which has not been said and which ought to be said is that the iron and steel industry was offered price freedom and rejected it. This is to be seen from the transcript of the evidence before the Restrictive Trades Practices Court of 17th April, 1964. The Federation put its proposals for reorganisation to the Government in May, 1966, only after the election, and its proposal that there should be some State participation in ownership came only in June of this year.

I think one is entitled to ask why there could not have been rationalisation with the industry's urgent participation during the 13 years in which the Conservatives were in office. I should have thought that it could have been argued by the Federation and the Tory Party that if they had put their house in order, if they had rationalised as the Continental industries are doing, that would have been their defence against nationalisation, and yet they left everything until the last ditch, until their proposals were too late to be convincing, too late to put their house in order by the methods they proposed.

We have been told that this is a doctrinaire Bill. I agree with hon. Gentlemen when they say that it is doctrine which has bedevilled the steel industry throughout the whole of the 'fifties and the early part of the 'sixties. It is the doctrine of the Tory Party. There was obvious need for structural reorganisation in 1951. It was understandable in political terms that they should have sought to denationalise under an apparently unwilling Conservative Administration, but the manner in which it was done missed any remaining opportunity for sensible regrouping of the industry. They sold off haphazardly the works at Scunthorpe and in the North-East, and small producers were left to languish without any link with any large firms.

This policy not only cost the taxpayers money, as in the case of the Whitehead's furore of three years ago, and with the sale of the Staveley Iron Company in 1960, but, what was more important to the future of the industry, it perpetuated the fragmented company structure of the nineteen-thirties to meet the challenge of the 'sixties.

The attitude of the Tory Party throughout the 1953 debates was that the party would stand or fall on its solution, a degree of central supervision combined with private ownership. The admissions of recent months of a need for structural change are admissions of the failure of that policy which the right hon. Gentleman the Member for Streatham did not attempt to defend this afternoon.

It is obvious that the powers given to the Board were inadequate to secure the healthy development of the structure that was necessary, and that the supervision of planning given to the Board was a 'façade behind which private companies could refuse to acknowledge even the most urgent representations of the Iron and Steel Board and behind which sectional company projects dominate overall planning rather than planning guiding the projects. I believe that the verdict of history on this doctrinaire experiment of the Tory Party between 1953 and 1966 will be that, as with the Coal and Electricity Commissions of prewar years, because of the inherent defects in its structure, its composition, its powers and because of its constitutionally anomalous position, the Iron and Steel Board's efforts were foredoomed to failure or, at the very best, marginal success.

It is of little use bewailing what could or ought to have been, and here I come to the kinds of questions which the right hon. Member for Altrincham and Sale asked. There are two fundamental questions underlying the debate today, and I do not know of any disagreement on what they are. The first is, what needs to be done to fit the steel industry for the challenge of the 1970s? The second is, how can those changes be brought about most speedily and effectively?

Any examination of the problem leads one to the conclusion that there is a need for greater industrial concentration in the steel industry if we are to allow our domestic steel consuming industries to remain competitive and if the steel industries of Europe are not to be pushed out of world markets. The problem goes far beyond conventional competitive thinking. In the "contest of the laboratories", only large concerns in a world freeing itself of trade barriers can survive. I believe that it is essential for the health of the small specialised firms that there should be large integrated units to supply them with the materials that they need.

The big steel enterprises of Europe have now become the small ones of the world. It is being agreed by the experts of the steel industry that in the 1960s that, for maximum economies of scale and to achieve the full benefits of auto- mation, a steel mill should have a capacity of about six million tons a year, with a lower limit of four to five million tons. That has been the experience of the United States and Japan, and that is what the Europeans have been concerning themselves with in recent years. We have 25 per cent. of the unit structure in Europe now with plants of over four million tons capacity and four units with other six million tons capacity. In the United Kingdom, there is not one company with a four million ton capacity. The situation in 1966 is that our European competitors have a head start on us in the race for world markets.

The task, therefore, is a dual one: first, how to achieve the necessary changes in the organisational structure to secure the large plants which we will need in the 1970s and beyond; and, secondly, because of the high level of investment in smaller and often modern plants—precluding the premature scrapping of plants, how can we integrate the running of them in the short and medium term to get the best economies of scale and the best use of the capital investment that we have in plants of that kind?

It is a fair argument for hon. Gentlemen opposite to say, for example, that the West German steel industry and the French steel industry are trying to put their houses in order short of nationalisation and to ask why the British steel industry should not be allowed to attempt to do the same. That is an argument which needs answering.

In recent years in Europe, there have been significant numbers of mergers and takeovers to obtain rationalisation, specialisation, the full benefits of investment capital, co-ordinated sales effort and, in general, to make existing plants more efficient within their present limits and locations. In addition to mergers and take-overs of this kind, we have seen the building of new coastal plants, sometimes jointly owned, to take advantage of cheap foreign ores and cheap coking coal. There have been no similar moves within the British steel industry. What the Continentals have found—

Mr. Charles Fletcher-Cooke (Darwen)

rose—

Mr. Speaker

Order. Again, I cannot prevent hon. Gentlemen intervening, but this speech has been going on for some time already and there are a lot of hon. Members who wish to speak.

Mr. O'Malley

I hope the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) will excuse me if I do not give way.

What the Continental industry has found is that voluntary mergers and coordination take time. They often fail to come to fruition. This Bill gives us a unique opportunity for unified control without the pressure of entrenched private interests, and it is speedier than the alternatives which have been used on the Continent.

It should also be borne in mind that the Germans and French themselves accept that there are limits to the benefits which can come from mergers of existing units. That is the reason why the German industry is groping its way towards specialisation cartels, agreed investment and co-operative selling arrangements. For example, we see seventeen firms cooperating in the setting up of a pelletising plant outside Rotterdam. In May of this year, the German steel industry applied to the High Authority of the European Coal and Steel Commission for four co-operative organisations to be set up with agreed quotas, a single sales office and shared profits.

When the right hon. Member for Altrincham and Sale is suggesting that they are moving in the direction of competition, this looks suspiciously like cartelisation rather than the production of competition. What they have wanted to do is set up a single cartel for the whole of the West German steel industry's exports to other countries. The German Press regards the scheme as falling a good way short of thorough-going rationalisation. The reorganisations which the French are proposing are said by the French Press to be no panacea and are described as not going as far as they could to get full rationalisation.

The House should observe closely the way that the wind is blowing in the European steel industry, and see that in this kind of situation price agreement and price leadership is inherent.

Even if one looked on these ideas with favour for the British steel industry, which I do not, it is instructive to look at the very partial degree of success which is being obtained on the Continent by these methods. There was an attempt to agree to the setting up of a co-operative steel mill with a capacity of 15 million tons a year at Rotterdam a couple of years ago. Nothing has come of it. The Germans are finding that their mergers are partial. An earlier attempt in 1964 to syndicate by four German steel firms was approved by the High Authority, but came to nothing. The French steel giant of Pont-a-Mousson had a secret plan for a vast amount of integration, and it came to nothing. When we see what private industry is doing in France, we should realise that the plan for merging there, in an industry with a long history of company resistance to mergers, is only happening and can only happen because of the dependence of the French steel industry at the moment on the State for its finance.

In this Bill, we have a unique opportunity to organise the use of present plant and investment to maximum advantage in the short and medium term, more quickly than in any other way. We will be able to plan our long-term without the tug of divided interests and loyalties. The steel producing nations of Europe are responding in different ways to the challenge which confronts them in world markets. I believe that our way will be more speedy and effective. It will allow us to catch up on the ground that we have lost with our European competitors and go ahead of them.

We are told by the Benson Rationalisation Committee that there will be many changes in the industry, and that, in the next few years, 100,000 fewer men will be required in it. Thinking of my constituency, and bearing in mind what happened when a consortia of the large steel firms closed Baker and Bessemer, without consultation, without warning, in a manner reminiscent of the 'thirties, and when I read of the demonstrations which took place in one of the German steel works only a few weeks ago because of this problem, I would fear any such rationalisation unless it were under public ownership.

The men in the steel industry, in my constituency and elsewhere, believe in public ownership, and, although we can discuss the details in Committee, I hope that the first thing which my right hon. Friend will take great care to secure is the right kind of men on the National Steel Corporation which he is to set up. I hope that he will get a chairman from outside the steel industry, someone who is not concerned with the old loyalties and old squabbles. I hope that he will get as members of the Board people who do not have too much on the record in their dislike of public ownership, because such people will not be received with any confidence by the men in the industry. I hope that my right hon. Friend will go to the Treasury and say that he will have to pay the rate for the job to get the right kind of men for it.

My constituents are largely dependent for their future livelihood on the judgment and decisions taken by the Minister in the coming weeks and months. If he gives the industry the right kind of leadership, if he provides the right kind of climate within the industry, if he can supply the industry with the raw materials and supplies that it needs at the right kind of price, then steel under public ownership will be able to play its part in the world and have a prosperous future in the economy of the country.

Mr. Speaker

I must remind hon. Members that each of the last three speeches has averaged half an hour. A long speech deprives some hon. Members the opportunity of speaking after they have sat here all day.

7.22 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

I shall watch the clock carefully to try to ensure that my speech is brief. The fact that the House is debating steel today is a sad event for me, and I believe that if the Bill becomes an Act, which it may well do, but this is by no means certain, it will turn out to be a sad day for the nation.

The Bill does nothing to deal with the problems of the industry, it is but a platform from which to deliberate on its structure in the future. By contrast, we have the Benson Report, which has dealt with the problems of the industry, and the nation will look forward to its second report. The fact that we are debating this Bill today will, alas, undermine overseas confidence in this country, a loss of confidence which we can ill afford at a period, of so much economic stress.

The nationalisation of steel is an issue of vital concern to all those affected by it. As I said during the debate in November, 1964, there are many in Sheffield, particularly in my constituency, whose livelihood, directly or indirectly is tied up with the steel industry, and who are concerned that the industry should continue to be prosperous. This is because the prosperity of Sheffield is to a large extent dependent on the prosperity of steel as a whole.

Reference has been made to the results in various constituencies in Sheffield during the last election. I would remind the House of the opinion poll conducted by the Daily Express on 25th March of this year. In answer to the question, "Do you think steel should be nationalised?" 25 per cent. replied "Yes", 56.2 replied "No", and 18.2 replied "Don't know". In my view those figures do not give the Government a mandate for the nationalisation of steel, which the Minister claimed this afternoon he had. The Times has also stressed that it is difficult to imagine a decision less gracious to the countries whose central banks have agreed to provide a new help for the £. In view of the comments which have been made, I should remind the House that on previous occasions I have declared my interest in the steel industry. I have lived in Sheffield and I have studied steel and some of its technologies, and I have had a continuing knowledge of the industry for more than a quarter of a century. I have an association with, and an interest in, a steel firm which is not on the scheduled list. I think it is right that a Member who has a personal interest such as this should not be afraid to speak in the House of Commons. After all, speeches from people who have had experience of an industry or an activity can be the most valuable.

I think I am right in saying that when some Members on this side of the House considered the reform of Parliament—they are the authors of "A change or decay" —they hoped that hon. Members would take part in "little Neddies". I am convinced it is right that industrialists who take part in the deliberations in "little Neddies" should think of the interests of the industry as a whole and not of their own specific interests. If any industrialist falls into the trap of doing the latter, he will no longer be required to deliberate on the interests of the industry as a whole. I am certain that that is the yardstick which should apply to debates in the House of Commons.

My interests are therefore to help determine what is best not only for the Sheffield steel industry, which is connected with my constituency, whether large firms or small ones, but for the steel industry as a whole, and I believe that most of the contributions in this debate have been to that end, but have taken different forms.

The right hon. Member for Vauxhall (Mr. Strauss), whom I followed in the last debate, reminded the House of some of the successes of the steel industry. We have had reminders that production has gone up in four years from 20.49 million tons, to 27 million tons this year. The target is 35 million tons by 1975. We are talking about an industry which has 285 works engaged in common steel, and 63 in alloy and special steels, but when we talk about capacity we must relate capacity in this country to world capacity.

Tables in the Benson Report show that there has been surplus capacity. By 1975 there will be surplus capacity of 71 million tons. According to the Iron and Steel Board's report, the capacity usage ranged from 74 per cent. in 1962 to 88 per cent, last year. It is no use laying down productive capacity unless there is a market for it, and this is the criteria which whoever is in charge of the industry, be it a State board or the director of a company, must clearly discern.

Of course management is fallible. It has made mistakes, but management in this country and elsewhere is acquiring new scientific techniques to keep itself informed. Mistakes have been made in the electricity supply industry. B.O.A.C. has missed opportunities on the South American route. A private shipping line has taken over some of the Channel operations from British Railways because it has been able to apply a new approach, which has overcome the failures of the British Railways. I would not wish to elaborate on some of the difficulties at Beverscote Colliery. These are management problems, but if an error is made in a corporation, whether under national management or not, it is a big error, and it is in the nationalised industries that we are in danger of seeing big errors.

Much information has been given about capital expenditure in this industry. In the last ten years this figure has amounted to more than £1,000 million. There has been rationalisation. Iron making production has gone up from 7.8 million to 17.5 million tons, while the number of furnaces has dropped from 98 to 66. There has been rationalisation in the sheet and tinplate sector.

New technologies have been brought in. The increase in oxygen consumed in the last three years has been nearly three-fold. Automation has been brought in and to quote a statement in the National Plan, the steel industry has long been in the forefront of the application of such modern techniques as operational research and process control by computers". The final proof whether an industry is competent is that its prices are competitive. The Benson Report states: Very little information is, of course, available on present foreign production costs; but such as there is suggests that British steel costs are broadly in line with those of E.C.S.C. and below those of American makers, with significantly lower costs being shown only by a few small economies … We have discussed the export record. In the last five years there has been a surplus, on the average, of 2.2 million tons exports over imports. In those circumstances it is wrong to imply that the British steel industry is either inefficient or incompetent. It has a record of which it can be proud, and it is wrong to denigrate it.

I now turn to some of the compensation problems. The compensation has been moved over another period. The Government have revoked the terms published in the White Paper, which has caused a good deal of alarm in international circles. The Government has set a bad example to other Governments, especially Governments in the Commonwealth and other developing territories, which can do nothing but harm to our investment overseas. I have been involved in the work of I.C.C. and the World Bank in this connection and I recently looked up a report of the International Bank of Reconstruction and Development which contained a chapter on the scope of protection and referred to political risk, which it defined as: Government action which deprives the investor of ownership, or substantially interferes with control. What would have been the attitude of an American investor encouraged to take part in our British steel industry? Are we going to attract outside investors to finance our British steel industry when we are short of money? The bridges have been blown, and we may find that a State organisation will be denied the finances that it needs.

There are complications in respect of compensation when the State wanders into the private sector. Recently we had the Richard Thomas & Baldwins-Stewarts and Lloyds argument over Whitehead Iron. There was a charge that the taxpayer lost £4 million over this. This was not true. The then Chancellor of the Exchequer—my right hon. Friend the Member for Barnet (Mr. Maudling)— said: Whitehead's v, as sold originally for £3.4 million and since then £3.6 million additional profits have been ploughed back … and the latest purchase price was in the neighbourhood of £10 million."—[OFFICIAL REPORT, 12th February, 1963; Vol. 671, c. 1105.] Again, there were arguments at this time that the taxpayer had been robbed. We felt on this side of the House in many ways that perhaps I.S.H.R.A. should have got on with its job more quickly. It would have been better that, if necessary, it had sold shares at a discount in order to put them on the market. But much water has flowed under the bridge, and it is now too late.

We have had the argument about the return on capital employed. That is the yardstick by which any undertaking must be measured. We shall never obtain new capital equipment unless the shareholders get a fair return on capital invested. Until new plants are working at full capacity and some of the bugs have been ironed out they give an immediate poor return on capital—this applies particularly in the steel industry but in its Annual Report the Iron and Steel Board said: Despite high levels of production in recent years, the earnings of many steel companies have been below the level that in the opinion of the Board is necessary in the long term. The Chairman of the United Steel Company pointed out last year that in five years tie increased costs have been £11.9 million due to a variety of factors, and that profits which ought to have been £23 million had dropped to £14 million. In the Benson Report there is a reminder that the most important raw material is capital.

I suggest that one trouble with the 1953 Act is that the agency—the Iron and Steel Board—has kept prices too low.

The nationalisation of steel will prevent outside funds coming into this country, and the fact that we are going ahead with it is completely antagonistic towards the Treaty of Paris, and is something that the Government will regret in their efforts to bring the British steel industry into line with the E.C.S.C.

Mention has been made about the need for rationalisation. Other industries need rationalisation, but we must bear in mind the changed climate that has existed in the last five or six years to bring about an acceleration of rationalisation and change. Rationalisation involves social change and occasional hardship. There have been factors which have accelerated this, and in "Economic Trends", November, 1965, it was shown that in the four years prior to 1958 the average acquisitions by companies was £116 million in industry as a whole per year and that this has risen to £300 million since then. Of firms with a capital of over £25 million, one in every three have acquired a new company each year. But there has been, in addition, the creation of little N.E.D.Cs., which have brought a much better understanding of the need to rationalise throughout industry. Rationalisation means closing down old plant. Only last week in the Sheffield Press I saw that a steel works was to be closed down. Three years ago every Member representing a Sheffield constituency would have asked Questions about it.

Reference has been made to the Baker-Bessemer purchase by United Steels. It was right that they should have been rationalised at that time, but it was criticised by hon. Members who had constituents who were affected. At the time there was a debate on the I.C.I.-Courtauld merger proposals. Whatever the rights and wrongs of the matter I remember the hon. Member for Nelson and Colne (Mr. Sydney Silverman) asking for a debate on the refusal of the Government to prevent the imminent creation of a giant monopoly against the public interest. He described this as "a damaging and evil thing for the nation. "This was the political atmosphere in which amalgamations and mergers were taking place only a few years ago. That atmosphere has changed, partly because of the Redundancy Payments Act, but it has been whitewashed completely by the White Paper on the Industrial Reorganisation Corporation and rationalisation has become respectable. This is something that I have always supported.

The Benson Committee has had to operate under a threat of nationalisation. In my view there should be a structure for managing the steel industry which combines both Government and the leaders of the industry, perhaps based on the concept of "little Neddies." I wrote an article about this in one of a series in Iron and Steel in 1964 edited by me.

As time is short, I turn to the situation in Sheffield. There are many re-rollers and small firms in the industry. They will be affected by the Bill, although they are not directly nationalised. Clause 34(1) affects the whole of the private sector. It provides that any person who produces material that is supervised by the present Iron and Steel Board has to show the Minister his hooks, records and documents, and to supply copies and extracts from them. The Minister can also obtain forecasts of output and capacity, and the Corporation can obtain from representative interests whatever information it requires regarding the organisation. In addition, the Corporation may acquire by agreement interests in other companies.

All this means is that the State monopoly has power to buy over some firms. These powers, when exercised, will drastically affect the Sheffield steel industry. This is not necessarily a bad thing. The only point is that rationalisation should take place only with maximum agreement, and in a case like this there will be bound to be redundancies. It is to be hoped that the workpeople from these firms, who have served years and generations in them, will not suffer too hardly under the Bill.

I said that the National Steel Corporation would have powers to adjust prices. What is to prevent it, where there is competition, from lowering prices so as to break the small firms? What guarantee is there in the Bill that it will not do that? I believe that the Bill constitutes an unfair threat to the Sheffield industry and I hope that this side of the House will do what we can to modify these threats in Committee. The Bill will affect others, many companies not on the schedule, many in the Sheffield area.

There is a case to justify a completion of the review which has been published by the Benson Committee and a need for those affected by it to come together. What must be the attitude of the industry now? I speak as one who has had a lifelong interest in it. Much can happen to the present Government between now and vesting day, and it is wrong to assume that nationalisation is a foregone conclusion. A review of the industry and its structure, on the other hand, should go on. I would recommend co-operation with the Minister's Committee because rationalisation has to take place, whether or not the Bill reaches the Statute Book. The modernisation of the industry would go on faster and better without nationalisation.

7.41 p.m.

Mr. Donald Coleman (Neath)

I speak in support of the Bill as one of the few hon. Members who has experience of working in a modern integrated steelworks, which was built and brought into being when the iron and steel industry was nationalised. I am a member of the British Iron, Steel and Kindred Trades Association, the trade union which represents the views of the overwhelming majority of those engaged in the industry. Because of this position, I enjoy the confidence of steel workers and know their views. Like most steel workers, I have a jealous concern for the well-being of the industry and those who work in it. This is why I speak.

The debate takes place when the prospects for iron and steel production are at their gloomiest for some years. This is mainly because of growing world producing capacity and more slowly rising demand, with resultant increasing competition. This is not a problem for the British steel industry alone but affects the thinking of those overseas who have to make the same kind of appraisal as we do of what the future holds for the industry in the face of present world conditions and how best the difficulties can be overcome.

I would rebuke those who, for whatever purposes, knock the British steel industry for being in difficulties. When they do so, they do neither the industry nor the national economy any good. The debate should therefore be concerned with what is needed to enable the British steel industry to overcome the worldwide difficulties and also to help the industry to increase efficiency so as to meet and overcome those difficulties and any which might arise in future. There can be little disagreement that if the British steel industry is to make its contribution to the solution of the country's balance of payments difficulties through steady increase in exports and to satisfy home demand for steel, its efficiency must be increased.

This will involve the industry in a programme of rationalisation and reorganisation. This has been found necessary in steel industries in other countries. It does not reflect discredit on our own industry that this is necessary so that it can compete on equal terms with other steel-producing countries. The difficulty which divides the parties and other interested bodies is the method of reaching this objective.

The parties opposite, with some variation, believe that the objective can be achieved by allowing the industry to go on as at present organised, largely in private hands and supervised by the Iron and Steel Board, which, because of its terms of reference, is a negative body. Its powers are so restricted that it cannot initiate any programme of rationalisation and reorganisation, which, judging from the debate, all hon. Members recognise is required.

But the Board has powers to veto proposals put to it by private owners and to grumble from time to time about the failings of private owners to do something. This is how the British iron and steel industry has been conducted since 1953. It is reasonable to ask if the method of running the industry advocated by the party opposite is all that they claim, why the industry's efficiency has not been strengthened by rationalising and reorganising it in the way which is accepted by both sides to be necessary.

The answer lies in the huge capital outlay involved in new plant. It has been calculated that to lay down a new, integrated steel plant costs anything upwards of £150 million. Also to be taken into account is the fact that considerable expenditure is involved in carrying on operations while such a plant reaches its full profitable production, which is not a short period.

The industry is so constituted that it has to find sums of money from its own resources without excessive price increases which would price British steel out of existence. Therefore, the money needed to finance the required expansion would have to come from the taxpayer. Since the manufacture of iron and steel is so important to the economy—either as an export in itself or as an essential component of exported manufactured goods—money to finance expansion and modernisation must therefore be made available from this course.

This leads to a consideration of the nation's interest and the return it gets from its investments in the industry. Already huge sums have been put into the industry from public funds. While the industry is under private control, the public has little, if any, say as to how this money should be spent. There can be no direction as to its spending, only a refusal to spend. Such a situation is not in the last helpful to an industry which faces fierce world competition in iron and steel production.

One of the alternatives to the present control of the industry that is put forward is a kind of State and private partnership in the running of the industry. Such a venture is likely to be successful only while the interests of both partners are compatible, and there are bound to be times when harmony will not exist and when a situation will arise which can only aggravate the position of the industry. The outcome of such a situation would undoubtedly be to the disadvantage of the nation in general and to my fellow members in particular, remembering that their investment in the steel industry, as represented by their skill and labour as steelmakers, must be recognised in this debate.

The answer which my hon. and right hon. Friends put forward for solving the problems facing the steel industry—one which we believe will ensure its efficiency in the future—is embodied in the Bill, which will bring into public ownership the 14 companies which comprise the major portion of iron and steel producing in Britain and which provide employment for 70 per cent. of the industry's manpower; namely, about 220,000 people.

In making this proposition we are contending that if the nation is to be expected to contribute large sums of money to ensure the future prosperity of the steel industry, then the nation has the right to demand that it has effective control over its investment and that its interests are met before the interests of those for whom the industry can really be regarded only as a means of speculative gain.

The approach to nationalisation must, therefore, be one of a responsible nature for all concerned, and this includes the trade unions affected. The future of everyone concerned with the industry is, as it always has been dependent entirely on the success of the industry and we must, therefore, segregate ourselves from the claims of propaganda on either side and concentrate on the realities. The provision made by the Minister in the Bill for a committee to examine, and work out, the sub-structure required for the industry is to be welcomed, for alongside the need to bring about the rationalising and reorganising of the industry—and involved in this must be the question of how the industry is to be grouped to bring about the greatest efficiency—there will also be thrown up certain social problems, the consequences of which will require careful study.

One question which this committee will have to consider is that of company identity. I remind some of my hon. Friends who may be in doubt on this issue that the products of the British steel industry are many and varied and are often sold on the reputations of individual firms. This advantage should be carried into nationalisation. Further, the morale of those engaged in the industry —people who have become accustomed to having a company identity for their employment—should be taken into account. I urge the Minister to ensure that the most careful consideration is given to the question of company identity.

Another matter which will arise from the nationalisation of the industry under any form of control, public or private, is the position of those parts of the industry which are centred in Scotland and Wales, for in Scotland—and, to a lesser degree, in Wales—burdens could be placed on plants producing steel because of the higher cost of coal in these places. In Scotland and Wales there are the added difficulties of transport, though in respect of Wales recognition must be given to the decision of the Government on the siting of the iron ore ports to serve the steel plants in the east and west of South Wales. I urge the Minister to ensure that arrangements are made so that those parts of the industry sited in Scotland and Wales do not suffer an unfair disadvantage through these factors.

The steel industry has a reputation in the conduct of its industrial relations which is the envy of many industries. I urge that due regard is paid to the system that has been built up over many years, for no matter how good the equipment and the machinery available to any industry, at the end of the day it is the standard of human relationships that ensures efficiency and success.

I have refrained from boring the House by refuting the propaganda that has been put out about the nationalisation of the steel industry. As I am in regular touch with steel workers and their families, I am aware that they have consistently expressed, in one election after another, their view on how their industry should be run. These people grow impatient at the controversy that has ranged about their industry. The nation is becoming bored with the continued kindling of arguments. I hope that, as a result of this debate and the final passage of the Bill, steel will cease to be an argument of political controversy.

7.59 p.m.

Mr. Richard Wainwright (Colne Valley)

I was interested and encouraged to hear the hon. Member for Neath (Mr. Coleman) championing the identity of many of the existing steel companies. But I do not agree with him that it would be impossible to envisage personal risk capital being found for re-equipping the steel industry. I believe that under proper conditions risk capital could be raised in sufficient quantities to re-equip the industry and that such capital could flow again into constituencies like Neath, into which so much capital was poured at the turn of the century when the South Wales tin plate and other steel making trades were developing so fast.

We have heard today some curious versions c1 the theory of an alleged mandate for this Measure. The hon. Member for Sheffield, Attercliffe (Mr. John Hynd) treated us to the voting figures for Sheffield arid Rotherham and stated that the people of Sheffield were concerned with steel. It was an essential part of the Minister's case, in his opening remarks, that this was a matter of great moment for the whole nation and not a question of a mandate from Sheffield. If there were to be a mandate at all, which I deny, it would have to be a mandate from the whole country.

Mr. Marsh

They did vote for us.

Mr. Wainwright

In my own case I managed to detach a few. It is not my experience of Sheffielders, some of whom commute from my constituency, that they imagine that they have an almost exclusive concern for steel. Most of them have regard for the customer. They know that it is the customer whom they must please if they are to keep their trade.

If I speak for any one in my constituency, I do so for the people who make tractors, textile machinery, and various other forms of traction. Amongst them I find a very ready hearing for the view that their jobs will be in danger if they have to put up with a steel monopoly which is either inefficient or unduly costly. I believe that some of the support which I received when I was arguing that at their factory gates for about ten years was turned into votes for me at the last election.

I have been surprised at the comparative absence of reference to the customer during the debate. It is my belief that the United Kingdom customer for British steel has had a very poor deal ever since 1932. The Bill holds out no hope of an improvement.

Liberals will certainly endorse the point emphasised by the Minister, that our steel industry has had the worst of both worlds. It certainly has. We do not attempt to lay it at the door of the Labour Party, in the main, that the steel industry has suffered so gravely from lack of competition for over 30 years and from lack of leadership at the centre. But we must lay it at the door of the Labour Party that the industry has also suffered for far too long, and is now about to suffer for a further period, from uncertainty.

I ask the Minister to consider whether, by prolonging uncertainty by this Bill, he is not running a serious risk of provoking some of the most valuable young people in the industry—I am thinking particularly of researchers, young managers, and so on—into voting with their feet and clearing out and carrying on their expertise in some other country.

I have met researchers in the industry—I cannot speak for managers, because I have not come across them—who are seriously thinking of answering the tempting, beckoning, calls from America and elsewhere. There is no doubt that in the present political climate, which, it may be, was not foreseen when the Bill was drafted, this uncertainty is acute. It needs only a few more Carmarthens, a few more Orpingtons, a few more Roxburghs, and there will be a very distinct atmosphere of uncertainty running right through the industry.

Apart from the dangers implicit in the mere existence of a Bill of this character, I shall mention only two of the main dangers in the Bill, because so many of them have been carefully rehearsed this afternoon. I must refer to the aggravation of the ever-present danger of political pressure in the resiting and reshaping of the industry. The industry has suffered so often from this kind of political pressure. There will be hon. Members in the House who will recall the difficulty which Stewarts and Lloyds faced when they decided, on very good economic grounds, to transfer so much of their production down from Scotland to Northampton.

There have been warm references this afternoon to Sir William Firth. Sir William was frustrated in his avowed desire to build a wide-strip mill at Immingham, which has all the advantages of being a deep water port. Sir William was unable to take a new Richard Thomas and Baldwins wide-strip mill to Immingham because of the pressures which were exerted in favour of the relatively unsuitable site which had to be adopted at Ebbw Vale.

Mr. O'Malley

Would the hon. Gentleman agree on the social desirability of giving Colvilles Limited in Scotland part of the new sheet mill capacity, for social reasons?

Mr. Wainwright

Whenever these issues arise, the last word should be with those in charge of the plant, if they can demonstrate that it simply will not pay. That is why my right hon. and hon. Friends and I are in favour of a wholly new approach to pricing policy, taking into account the experience that the Common Market countries have already accumulated.

The second danger implicit in the Bill is something on which I have never been able to get an explanation from those who belong to the Labour Party. Nationalisation nowadays is a means of exposing managers, who, as often as not today, belong to non-Conservative parties, to the risk that as the result of a General Election their nationalised industry will be in the hands of Conservative Government. That is the risk implicit in the Bill.

There is one defence against this serious risk which I was hoping to hear the Minister invoke this afternoon. If an industry must be exposed to the risk that it will eventually be run by a Conservative Government, at least the precaution could be taken of protecting those who have to work in it, by a measure of worker control. On this subject we had observations from the Minister which were positively octogenarian in their terms. The right hon. Gentleman sounded as though he had been wheeled up from Bournemouth to express doubts and fears about the terrible risks of worker control.

There are many schemes of worker-participation afoot, but I want to draw the Minister's attention to a relatively recent one in mid-April of this year from some very responsible members of the Amalgamated Engineering Union. In the course of a fairly hefty dossier on this subject, they come down to their proposals at plant level. This is what they say under the heading, "At Plant Level":

1. "(i) An enterprise or plant board should be established.
2. (ii) It should comprise the chairman of the enterprise (subject to ratification by the workers council); six departmental managers or foremen ratified by departmental committees or 1316 shop committees, and six workers elected by the workers councils."

If we had heard something on those lines from the Minister this afternoon, there would at least have been crumbs of comfort in the Bill.

Mr. Winterbottom

There is nothing to stop that.

Mr. Wainwright

I refer not to anything in the Bill but to the words of the Minister this afternoon when he referred to that topic.

Finally, there has been some talk today about the compensation proposals. I want to make it clear that what offends Liberals about the compensation and the cost of this party political treat is that it turns £350 million of healthy risk capital into a fixed interest burden on the British economy. I should be interested to hear my Parliamentary neighbours from the Dearne Valley, from the Rother Valley, and from Rotherham declaiming in their constituencies, which adjoin mine, "Cheer up, lads. Never mind. Your sweat and your taxes are being used to endow former steel shareholders with 8 per cent. for life".

Liberals regard this Bill, coming forward at this moment, as a wholly unecessary, ill-timed, political luxury which the country in its present state cannot afford.

8.10 p.m.

Mr. Desmond Donnelly (Pembroke)

Because I want to be brief if I can, I will not reply at once to the hon. Member for Colne Valley (Mr. Richard Wainwright), but I will deal with some of his remarks in the course of my speech.

I propose to make only three points. First, I should like to say a word or two about the case for nationalisation and the problems which nationalisation will raise. Secondly, I should like to say a word or two about the climate in which this Bill is introduced and the context of the situation; thirdly, about some of the reasons which I think lie behind it, and finally, to draw a conclusion.

Before I do any of these things I ask what is the specific objective we have in mind in this House this afternoon. We are not really debating nationalisation of the steel industry. It is not a question of nationalisation as such but a question of the future of this industry and the best possible way in which it should be run.

This is the central objective. It is not a question of specific dogma, it is—or should be—a question of practicality. What is the central case in favour of nationalisation as out by my right hon. Friend i.he Minister? If I may be allowed to say so, he made as good a case as anyone could for this proposal. The first case he put was that it brings the industry into a form of accountability to the nation. Secondly, it can make the industry more efficient. Thirdly, it makes the fitting of the industry into the National Plan and into national economic planning in the national interest more easy and more effective.

Let us look at accountability. Is there any real accountability to this House, not only concerning the nationalised industries, but over the whole range of Governmental activity at this moment? Millions of pounds are voted week by week without the House knowing what is going on and what is happening. We cannot run industries with this kind of loose control. If there is not the hard criteria of the shareholders to ask how an industry will be run, any industry will find itself beyond the discipline which should be imposed on an effective industry in this competitive age. The whole basis of the accountability of the nationalised industries is most unsatisfactory.

The second question is about efficiency. A lot of play has been made about efficiency. Let us look at the other nationalised industries. I agree that some of the yardsticks do not apply completely, but here is the precentage return of capital employed in the nationalised industries, in the private steel industry and the nationalised Dart of the steel industry. In British Overseas Airways it is 22 'per cent., in British European Airways 3.5 per cent., in the National Coal Board 3.7 per cent., in the gas area boards 4.3 per cent., in the electricity area boards 5.7 per cent., in the private sector of the steel industry 7.2 per cent. and in the publicly-owned steel company .2 per cent. Those figures are absolutely devastating.

On the question of planning a great deal has been said about social reasons for the steel rolling mills going to Newport and Ravenscraig. The view of the Iron and Steel Board was that there should have been one strip rolling mill. The view of the industry was that there should be one. The efficiency of the industry demanded that there should he one strip rolling mill. The future of this country depends on the most effective use of every pound of capital employed, wherever it may be, in the national interest. Yet what happened? The party opposite must accept the blame. We had a series of invidious meetings in which some of my hon. Friends from Wales would rush to see the Minister and next day some hon. Members speaking in guttural Scots would rush to see him. The whole circus went on until the Government lost their nerve and split the project into two to have one at Newport and one in Scotland. The ideal situation would have been to have one, probably in Wales. I shall not argue that now.

This cannot be defended either on the grounds of accountability, efficiency or effective national planning in the national interest. I do not accept this social nonsense which goes on. Of course there has to be a social context, but the real social reasons should be the effective running of these industries. That is truly the greater benefit for the nation as a whole. Industry is not a social service. We have heard of the railways being a social service. Next we shall be hearing of steel being a social service. Finally, we shall be hearing of everything being a social service. Then this country will be inhabited by a few small rather limited people with doubtful political outlooks. The rest of us will have gone.

We have to address our minds more clearly to the whole concept of public ownership. No one is against public ownership as such. I agree entirely with my right hon. Friend that where it serves the national interest it should be implemented, but it is not only an end in itself. All this "Clause Four" nonsense has gone out of the window. It is no longer relevant to the British political scene. What we have to realise is that it may be possible to run these industries by public ownership, but we have not yet got the system right. Until we have got it right, is it wise to extend it into this major production industry which has so many ramifications, which spreads out and affects so many sections of our national economy at this time?

This brings me to the second point, the question of the climate in which this Bill is introduced. There is the international climate. Some of my hon. Friends are great internationalists on the so-called Left, but they live as if in a sense they were in persistent economic isolationism. We have to recognise that economics and internationalism go hand-in-hand. This country cannot be run as a great trading nation or the centre of a reserve currency in an isolationist concept. Foreign confidence has a bearing on the whole situation. When it comes to a question of foreign confidence it is not that foreign bankers are doctrinaire but that they are practical men who want to know whether the measures which are being introduced are relevant to the national economic scene. That is the query raised in their minds by this Bill.

Then there is the internal economic climate. I do not want to go into detail on the question of compensation, but I think it indefensible to come forward with one set of proposals and a year later to change it and come forward with something like £90 million less. We are introducing a Measure which extends the Government's credit by £580 million. Anyone would think that the Government's credit was admirable at this moment. Anyone would think that the Government's credit was limitless, but £580 million is almost £1 million per constituency. Does any hon. Member not want £1 million for his constituency for housing, roads, schools or whatever it may be? No doubt they do not want anything at all in Ebbw Vale. They have no requests for any kind of extension of the Government's credit for new capital investment programmes there.

Mr. Winterbottom

Cheap.

Mr. Donnelly

To extend the Government's credit by £580 million at this moment does not make any sense at all to any responsible person.

Mr. Marsh

I have been listening closely and recognise the strong feelings which prompt my hon. Friend the Member for Pembroke (Mr. Donnelly) but how did he sign a nomination form at the last election accepting just this policy?

Mr. Donnelly

My right hon. Friend does not understand. I accept the stand ing orders of the Parliamentary Labour Party, but they do not mean accepting the entire programme. If they did they would rule out half the hon. Members of this House. What about the unilateralists? None of them would even be able to contemplate being endorsed as a Labour candidate. The proposition my right hon. Friend puts forward is not tenable. It is based on a misunderstanding of the Labour Party.

Having said that about the extension of the Government's credit, I ask what are the reasons behind this Bill? In my judgment, it would have been possible to arrive at an agreed solution along the lines some of which were proposed by my hon. Friend the Member for Bosworth (Mr. Wyatt) in a speech just over a year ago which was full of courage and dignity. But it has not been the view either of industry or of the Government that that kind of proposal could have been brought forward. Why, then, are we having this proposal at the moment, manifestly irrelevant though it is to national requirements at this time?

My view is that it is because of the fear of the so-called "Left" and I think that the criticisms that have been made are perfectly true.

Mr. Winterbottom

rose—

Mr. Donnelly

I am not talking about my hon. Friend the Member for Sheffield, Brightside (Mr. Winterbottom). This is one of the few things about which I disagree with him. If he will keep his backside for a moment, I will explain more fully.

It has been manifestly clear for a long time that, notwithstanding the national interest, on a number of measures the Government have been motivated by fear of the so-called "Left". Why, otherwise, did my right hon. Friend the Prime Minister go to the Kremlin and thus be in the wrong place at the wrong time? Why, otherwise, was this Bill introduced? It is simply because the Prime Minister wrongly believes in paying Danegeld—but when one pays Danegeld one does not get rid of the Dane. That is why so far in this debate we have seen so few Labour Left-wingers here. They have been castigating my right hon. Friend upstairs.

Sir G. Nabarro

Where is the hon. Member for Ebbw Vale (Mr. Michael Foot)?

Mr. Donnelly

We all know that my hon. Friend the Member for Ebbw Vale is only a cardboard Cassius and we have no reason whatever to be concerned about that. But, in terms of the national interest, the situation regarding one of our major industries is very serious.

This time last year my hon. Friend the Member for Bosworth and I decided to support the Government, in a moment of melodrama which was too melodramatic for me, because we felt, at the end of that debate, that it was our duty to give the Government the benefit of the doubt. It was our Government and we had worked to put it there.

This Measure does not merit any benefit of the doubt. It is a bad and irrelevant Measure. Regrettably, I must say it is not in the national interest. Very regretfully, therefore, I must say that there are times when one has to put prejudice on one side and adopt practicality in its place, when common sense has to replace 30-year-old dogma and when country must come before party. In these circumstances, I regret that I shall not support the Government in the Lobby tonight.

8.25 p.m.

Sir Gerald Nabarro (Worcestershire, South)

I add nothing to the admirable speech of the hon. Member for Pembroke (Mr. Donnelly). He has made a far better speech against the Bill than I could ever hope to make, and, of course, he is speaking the truth. In the limited time available and in view of the appeal made by Mr. Speaker for short, terse speeches, despite the 33 minutes taken by the hon. Member for Sheffield, Attercliffe (Mr. John Hynd) and the 31 minutes taken by the hon. Member for Rotherham (Mr. O'Malley), I shall not emulate their example.

The hon. Member for Rotherham has made his speech and left us. He twitted me that I have not formerly declared an interest in the steel industry. I always declare my interest on every occasion when appropriate. I have an interest in the steel industry—a personal interest—and within the provisions of this Bill. I am, of course, a steel shareholder. I have been ever since I started investing money through the Stock Exchange. Today, I own modest quantities of Colvilles shares, modest quantities of Stewarts and Lloyds shares and modest quantities of United Steel shares.

Mr. Winterbottom

A very modest man.

Sir G. Nabarro

I am also a modest and successful investor, and I have invested and disinvested in steel shares on many occasions, generally earning an appropriate capital appreciation. 1 am, of course, a shareholder in Richard, Thomas and Baldwins and in the remaining steel companies in this Bill through the medium of unit trust units which 1 own.

Thus, I have declared my interest adequately, and I hope that at no future stage on the Bill will I be accused of not declaring it. For I shall sit on the Committee considering the Bill and shall oppose the Bill as vigorously as I am able. I shall oppose most of the provisions in it. I shall not say in pious fashion that I hope to improve the Bill. I shall obstruct it. I shall be fractious in every conceivable way in my opposition. I shall do so because I condemn the Bill, as did the hon. Member for Pembroke—who, I hope, will also sit on the Committee—as wholly bad.

The Minister of Power laid down certain criteria for a national ownership of the steel industry. They were three in number. I shall not weary the House by repeating them or alluding to them in much detail. I shall only respond to him by saying what my criteria are for an efficiently conducted steel industry, whether privately owned or publicly owned. My criteria are four-fold, and I believe that individually and selectively they are generally met by the condition of the British steel industry today.

I have almost spewed in my place this afternoon at the continuous repetition of the word "rationalisation". The Minister started it, and right hon. and hon. Members on both sides have repeated it—that awful word "rationalisation". And nobody knows what it means. Nobody could define it. In fact, in this context it is a generic term for altering the methods of operation in the industry. I would not pretend that every facet of the conduct of the steel industry is impeccable, but the same applies to every other industry and, on a wider scale, to every form of human organisation.

excepting only some pious idiots who believe they are perfection themselves.

Of course there are some faults in the way this industry has been conducted. I say without hesitation that the Conservative Party during 13 years in office failed to do two important things. Those who will study the OFFICIAL REPORT for those 13 years, when I sat on the back benches opposite, will find that I was continually attacking my own Ministers for failing to do these two things.

The first was that they failed to complete the denationalisation of the industry by selling off Richard Thomas & Baldwins. The reason why they did not sell it was that it was a continuous loss earner. In the last two years alone it has lost £12 million of public money. I was delighted that the hon. Member for Pembroke brought out the figures so vividly in his speech. He said that the return on capital vested in the 90 per cent. of the steel industry privately owned was 7 per cent. and that the return on the publicly-owned sector of 10 per cent,—namely Richard Thomas & Baldwinswas 0.2 per cent., notwithstanding that huge sums of Government money were injected into Richard Thomas & Baldwins to build the Spencer Works. That was one grave error by the Conservative Party.

The second grave error was the fact that the Conservative Government never broke the price ring in the steel industry in spite of the Monopolies Act, 1956, followed by the Restrictive Trade Practices Act, 1964, of both of which I as a private enterpriser industrialist was a powerful supporter. I have never been in a cartel in my life. I enjoy competition in business and industry. But my party failed to break the price ring. It failed to put the steel companies before the Restrictive Trade Practices Court to end the pernicious habit arising from a buyer send out an invitation to tender to, say, six steel companies for, say, 1,000 tons of cold rolled strip and the buyer receiving the identical price from each of the six companies. That is wholly bad.

Those were the only two major errors that the Tory Party made. Other than that, the Act of 1953 was sound in every regard. It vested in private investors the ownership of the industry but it maintained a proper form of State regulation of their activities through the Iron and Steel Board with an accompanying agency called the Iron and Steel Holding and Realisation Agency for selling off the steel assets. Those were the two faults of which my party was guilty, but that is not a sufficient ground for changing the ownership of the industry.

I return to the four criteria, and I ask four questions. Is private enterprise steel efficient? I think it is. British steel is sold the world over in competition with German, Belgian, French, Italian and American steel, and by and large, with one or two minor exceptions, British steel is cheaper. I believe that British steel is of the best quality in the world.

Mr. Winterbottom

In 1953 British steel was the cheapest in the world, without any doubt at all. In 1964 the gap between the price of British steel and that of our Continental rivals had narrowed considerably, and in some cases our prices were higher. How does one stop the rot in terms of not only stopping the narrowing of the gap but of preventing us from having the dearest steel in the world?

Sir G. Nabarro

I dispute at once that British steel is the dearest in the world. That is manifest.

Mr. Winterbottom I

did not say that.

Sir G. Nabarro

That is, in any case, a Committee point. I shall sit on the Committee and I shall demonstrate, with adequate proof, that by and large British steel is highly competitive in the markets of the world.

Secondly, is the output of British steel adequate to home requirements and to overseas demands? My answer to that is again in the affirmative. Last year 27 million ingot tons of British steel was produced, and of that about seven-eighths was consumed at home and about one-eighth exported. Only a relatively tiny quantity was imported, and that was generally in respect of grades, sizes and types for which there was a special demand at the time.

Thirdly, is the British steel industry self-financing? I believe it is. Had it not been for the political influences of the threat of nationalisation of the steel industry, there would never have been a time in the last 15 years when the British steel Industry found itself incapable of raising on the stock market sufficient sums of money for modernisation and the rate of expansion required.

Fourthly, does the British steel industry serve the national interest? I believe that in the last 13 years since the Act of 1953, in which I played a prominent part, as the OFFICIAL REPORT will show, the British steel industry has continuously served the national interest. At the end of the war our output of steel was 16 million ingot tons. Last year it was 27 million ingot tons. That is an increase of approximately 70 per cent. It is an increase at a rate commensurate with the year-by-year requirements of British industry and exports.

The Benson Report, to which adequate reference has been made today, predicts, and i1 can only be hypothetical, that the demand for British steel in 1975 will be 35 million ingot tons, compared with last year's output of 27 million ingot tons. That is an increase of 8 million ingot tons over a period of nine years. It projects for nine years forward a rate of increase in output of British steel commensurate to the rate of increase in recent years which has proved adequate for our home and overseas sales requirements.

I want to apply a simple refutation of the outrageous inaccuracy of the hon. Gentleman the Member for Sheffield Attercliffe (Mr. John Hynd). He is no psephologist. He said that the Labour Party had a clear mandate for nationalising steel. Nothing of the kind. I quote the figures from the last General Election when there were 13,065,000 labour votes, allied to 62,000 Communist votes, a total of 13,127,000 votes, for the nationalisation of steel. Against it there were 11,418,000 Tory votes and 2,327,000 Liberal votes, a total of 13,745,000 votes against the nationalisation of steel. If one wishes to apply a psephological test as to the positions of the major political parties, there is a majority of 618,000 against the nationalisation of steel. To test this psephological point, I turn to the hon. Gentleman the Member for Orpington (Mr. Lubbock), who is sitting behind me —[HON. MEMBERS: "He has gone."]—he was there when I asked him. Hon. Members are hair splitting. I said to the hon. Gentleman, who is the Liberal Chief Whip, "And where do the Liberal Party go to vote?" And he said, "Into the Lobby with the Tories". I said, "All twelve of them?" and he said "Aye, all twelve of them". There is no doubt about the honouring of their Liberal election pledges. The psephological assessments of the hon. Gentleman the Member for Attercliffe were utter nonsense.

The hon. Member for Pembroke was right when he said that the real danger of nationalisation was political influence. Take the leader in the Financial Times this morning. It said: The Government may quarrel with details of this report; it cannot afford to quarrel with the broad outline if it means to make the industry more efficient. The danger in nationalisation is that it may cause economic considerations to be subordinated to politics on a scale that the country cannot afford. Of course the country cannot afford it. The hon. Gentleman the Member for Colne Valley (Mr. Richard Wainwright) talked about compensation. I am glad to see the Chief Secretary in his place. The hon. Gentleman spoke of compensation of £350 million. He was wrong. The compensation required under this Bill will be of the order of £630 million, at today's figures, including the bank overdrafts of the 14 companies to be nationalised. I shall not go into details; it is a Committee point. But I remind the right hon. Gentleman—and I hope that he will deal with me when he replies—that never has money been more expensive in Britain than it is today. Never has it cost 8 per cent. to raise a debenture. That is what it is costing at present. When this Bill is through, we may have, if the Labour Government are still in office, a Bank Rate of 9 per cent., costing 10 per cent. to raise money on a fixed interest security. What is today a coupon of 8 per cent. resting on a 7 per cent. Bank Rate might be a 10 per cent. coupon resting on a 9 per cent. Bank Rate with the Labour Party in power. Labour would be guilty of any financial impropriety.

Mr. Michael Foot (Ebbw Vale)

Do not look at me.

Sir G. Nabarro

I am looking at the hon. Member for Ebbw Vale (Mr. Michael Foot), hoping to goad him into one of his famous interruptions in my speeches.

Those are some of the financial consequences of the Bill. I regard the Bill as wholly bad, as destructive of the national interest, as mischievous. I shall oppose it by every Parliamentary means and by the most fractious methods of which I am capable—and they are plenty. [Interruption.] The hon. Gentleman may not be worried. He will funk sitting on the Committee, but we shall have the hon. Member for Ebbw Vale on the Committee so that I can pair with him occasionally when I do not want to be there. I shall oppose the Bill by every means in my power.

8.42 p.m.

Mr. E. L. Mallalieu (Brigg)

I do not think that the country as a whole, or indeed the House, will pay much heed to the psephology of the hon. Member for Worcestershire, South (Sir G. Nabarro), but I think he is entitled to have someone from this side of the House acknowledge that, although this may be an occasion of great controversy, and although he expressed himself with his customary vigour and announced what he would do about this Measure in its future stages, at least he did not try to raise the heat of the House. The whole debate has been remarkable for that. It might well have been an occasion of great heat, just as it is obviously a question of great controversy. In fact, the only two speeches which in any way attempted to raise the heat were those of the right hon. Members for Streatham (Mr. Sandys) and Altrincham and Sale (Mr. Barber). Even that was only a very temporary interlude.

I will not attempt to apportion the blame for the fact that this great industry is once again in the cockpit of party politics. I think that I am interpreting the tradition of this country when I say that if a great change is brought into being as a result of constitutional process it is not generally upset by a subsequent Government. It is the tradition of this country not to upset it unless there is absolutely no shadow of doubt that the country wants a further change. I am thinking of such things as the Parliament Act, 1911. Great revolutions pass, with subsequent Governments coming in and not interfering. This was not the case with the denationalisation of steel.

Controversial though this matter is, this occasion could be made the subject of a reconciliation in this great industry. It could be the occasion for the casting aside of dogma by both sides and looking the needs of the industry straight in the face.

I am not afraid because of something which was recently said here, to say that the reason for the introduction of the Bill, more than any other reason, is the need for the rationalisation of the industry. It grew up haphazardly, and very little of it was either built or sited in accordance with national needs. International competition at the time when most of it grew up was comparatively irrelevant. Companies were formed, existed for a little while and were then swallowed up by, as often as not, a competitor. They were not necessarily swallowed up by companies which were near them or were even contiguous.

On the contrary, it was often a remote company which swallowed them up, with the result that products now leave one works and take a long transportation to another works to continue their evolution towards the finished product. They do not undertake that transportation for fun or even for efficiency, or because it is best in the national interest that they should go to that particular works, but merely because, by historical accident, the firm from which they have come and that to which they go happen to be in the same ownership. That is the essence of the case about the rationalisation of the industry, which the hon. Member for Worcestershire, South seemed unable to understand.

Of course, the powers in the industry are great private empires at the present time. We were asked not to speak about steel masters, and there is a lot to be said for that. But there is no doubt in my mind about the existence of these great private empires, and they are ruthless, cannibalistic or just plain murderous in the course of their warfare.

The rationalisation that everybody now seems to admit needs to be carried out, has not been carried out. It has been shown beyond a shadow of doubt that this rationalisation never could come about under the present set-up. It is true that there have been the proposals by the Iron and Steel Federation to which reference has already been made, but they came extremely late in the proceedings, when the Government's plans were already known.

Only a dyed-in-the-wool, anti-Labour Government at all costs man would take those proposals as a serious alternative to the Government's proposals. I do not say that they should not be taken seriously, for any suggestions should be taken seriously, particularly when they come from right inside the industry. The Corporation which is to be set up will have very great regard to the considerations put forward in the report of the Iron and Steel Federation's committee, but not as a serious alternative, especially having regard to the late stage of the proceedings at which they were produced.

I have not yet heard any real argument—and I have sat through the whole debate— to show why the rationalisation which we all want, except, apparently, the hon. Member for Worcestershire, South, will be less likely to be brought about under national ownership and control than it would be at present. Nobody has suggested how the obstacle which the private empires have constituted to rationalisation is to be got out of the way otherwise than by national ownership.

In the absence of such arguments, it is only sensible to say that the Government's proposals are the only serious contenders. It is not surprising that there is opposition to these proposals from the private empires, in other words from the men in the board rooms of the companies into which the industry is fragmented, the men who settle its policy in little huddles in the Iron and Steel Federation, who rig their prices and arrange their own price restrictions to the point where the court has to say that they have acted contrary to the public interests. Opposition naturally comes from these men, who settle their own emoluments and who take their own cuts out of the industry, without any responsibility to anyone else except to some of their friends who happen to be in similar positions.

Even more serious than the things I have already said, these are the men who have been cocking a snook at the Iron and Steel Board ever since it was set up in an attempt by the party opposite to persuade people that these tycoons could be controlled in the national interest without national ownership. They are virtu- ally the only people in the industry now who really oppose this Measure. Of course, they have their spokesmen on the benches opposite, and I do not blame right hon. and hon. Members opposite for being their spokesmen; they are quite entitled to do it. Under certain leaderships, oppositions will use any stick to beat a government with.

As we who represent steel constituencies know and we are mostly on this side of the House; I think that there is one hon. Member opposite who could be said remotely to represent a steel constituency in that he represents a residential area of Sheffield—from the highest paid man to the lowest paid men in the industry, the great majority of the people in this industry now know that this sort of proposal which the Government are making must come and they want it to come.

Only so, they believe, will the industry be able to pull out its full potential and use its resources to the best advantage. Only so will it be able to spend enough on research and the use of the newest techniques. Only so will it give the best chance to the technicians and to the workers in the industry to make the industry buzz, for itself and for the nation.

Managers and technicians of all sorts in the industry, who are prepared to put their skill and their work at the service of this industry, have everything to gain, and they know it, from such proposals as the Government are putting forward. Virtually all those who do not have seats on the boards are quite sure of this. That is my belief from my experience in my constituency. I believe that this is now the occasion when everybody in the industry, whether in a board or out of it, should support the Government's Measure and try to bring a degree of peace to the industry which this occasion gives them the chance of doing.

Sir Harmar Nicholls (Peterborough)

The hon. and learned Member is suggesting that the result of the election gave some support for this Measure. He ought to keep in mind that his party lost about four elections because this was in their platform and that they got it on this occasion by accident rather than by design.

Mr. Mallalieu

The hon. Member has only just come in to the debate. We have had all this before and I will not repeat it again. The hon. Member will be able to read it in HANSARD tomorrow. He can see that it is dangerous for anyone, on either side, to claim a mandate for a particular Measure having regard to the Constitution. If, however, it is possible to claim a mandate for anything under our Constitution, it surely is for this Measure that is now before the House.

Mr. Ian Lloyd (Portsmouth, Langstone)

If it is dangerous to attribute a mandate, is it not equally, if not far more, dangerous to attribute unanimity in point of view to a large class of employees in the steel industry—the whole of the executive class, some several thousand people?

Mr. Mallalieu

I do not think I said "unanimity". I said "the very great majority". That is my experience in my constituency, and it is the largest steel-producing area in the country. It is quite plain to me now that that is the case there.

Last time, when national ownership was attempted, there was undoubtedly sabotage by people who were left in control of the industry after it was taken into the ownership of the State. There was bullying from the top of managerial persons particularly, who showed some understanding of the necessity to have a complete change. I very sincerely hope there will be none this time, because I think we have a chance to begin afresh now and to do the best thing for the industry. I hope that there will be a marked degree of industrial democracy inside this new industry when it is taken over, and that there will be to-ing and fro-ing on a substantial scale between the boardrooms and the shop floors. If we can bring this about we really have a chance to make the people in the industry feel that they have a stake in it: and if they feel that, well then, they are far more likely to be able to pull together than ever they have hitherto, and then indeed the future of everyone in the industry with something to offer, and who is prepared to offer it without stint, will be secure. The nation will see to that.

8.56 p.m.

Colonel C. G. Lancaster (South Fylde)

At this very late hour, I do not propose to go over the arguments which have been adduced from both sides of the House, and if I do not follow the hon. and learned Gentleman the Member for Brigg (Mr. E. L. Mallalieu), it is because I want to refer in particular to three speeches made this afternoon. To start with, there was that of the Minister of Power, and I should like to congratulate him on his elevation to his high post. He made a very pleasant speech. He did not convince me very much. He himself seemed a little unconvinced as well. He claimed that this was only the beginning, that it was not the end. He was right in saying that. If he had said it was, he would have had to prove to the House how he thought this would bring about greater efficiency, a lowering of costs, and higher production. No one can claim that it will.

Even more important, I say with respect to the right hon. Gentleman the Minister, was the speech of the right hon. Gentleman the Member for Vauxhall (Mr. Strauss). He speaks with great experience; he brought in the original Bill; and he is a man with a long experience in the commercial world. It was evident that, apart from his saying that he would vote on behalf of this, he was in great measure opposed to the proposal. He was against it because he, likewise, could not see that this was the most effective means of bringing about what I am sure everybody in this House wants to see brought about, the efficiency of this industry, its prosperity, and its future development. I believe this can be brought about, but I do not believe that nationalisation is the only way to bring it about.

The Minister said we in our party had an obsession against nationalisation—but we have not got Clause Four in our constitution; and we oppose nationalisation perhaps because it has been borne in upon us that it really is not an answer to so many of these questions.

Finally, I just want to say one word about the very able speech of the hon. Member for Pembroke (Mr. Donnelly), who always speaks delightfully. I thought he spoke very lucidly this afternoon. Some of the arguments he brought to bear were a very real indictment of the suggestions of his own party, but I do not want to make too much about that.

If I may bring in a personal aside to all this, one reason why, I presume, I caught your eye, Mr. Deputy Speaker, at this late hour in the debate, although I have very little claim to do so, because I spoke on the last occasion, is, perhaps, that I have had the rather unique experience of being nationalised twice, in coal and steel. It may be said that as a result of that I am bigoted against nationalisation. I hope I am not. I am against nationalisation on quite other grounds.

For the last 10 years, I have worked on the Select Committee on Nationalised Industries, which is far longer than anyone else in the House. The value of that Committee is that we have been an all-party Committee dealing dispassionately with the industries which we have considered. Such success as we have had, and I believe that it has been considerable, is because we have brought to bear an objective view in inquiring into the various nationalised industries, reporting on them and finally making recommendations. But I should be intellectually dishonest if I said that I had come to any other fundamental conclusion than that nationalisation was not the answer to so many of our industrial problems. However satisfactory the results of the nationalised industries may seem, they do not measure up to the standards which private enterprise has to impose upon itself. If the House decides tonight that steel is to be nationalised, I feel that it will fail for the same reason.

9.0 p.m.

Sir Keith Joseph (Leeds, North-East)

We come to the end of what, to my surprise, has been a curiously muted debate. Perhaps that is because members of the Left wing of the Government party, having got their objective, found themselves too busy in other activities on the Committee floor to be present to gloat. But we have had some distinguished speeches from right hon. and hon. Members with experience on both sides of the House. The right hon. Member for Vauxhall (Mr. Strauss) on the Government side, and my right hon. Friend the Member for Streatham (Mr. Sandys) on the Opposition side, both brought considerable experience from previous battles over steel to their con-

demnation of the Bill. The hon. Member for Pembroke (Mr. Donnelly), although I heard only part of his speech, was obviously in incandescent form in his demolition of the Bill, and I understand that the hon. Member for Neath (Mr. Coleman) made a number of very shrewd comments from his long experience as a trade unionist.

This evening, we are to hear the right hon. Gentleman the Chief Secretary to the Treasury, and I hope that we shall not get a pure Treasury answer to this important debate. We expect him to deal with the question of compensation, because the Minister said that that was what he would do. But I would give him warning now of four major questions on which we should like the Government's answer, and I give him the warning so that he has plenty of time to think about them.

The first is the relatively technical but very important question about investment. I gathered from the Minister's speech that he was criticising the steel industry of the past for adhering under the Iron and Steel Board to what is called the trend line for investment. I do not know whether he meant to do so, but he implied that under nationalisation the industry would cope autarchically with peak demand. We should like to know from him whether that is the Government's intention, because, in the present world of glut, it could be a hideously expensive policy.

Secondly, we should like to know how the Government propose to finance the compensation and what effect they expect it to have on an economy gripped, as it will be if the Government's policies are effected, by almost the toughest squeeze in recorded modern history.

The third question which we should like to hear answered by the right hon. Gentleman is what the Government propose to do about over-manning. We have not heard many warnings to the workers that nationalisation will mean an attempt to increase output per worker. We want to know whether that means that the Government will tackle it but have not warned anyone, or do not propose to tackle it at all.

The fourth question is this. The Government are battling for foreign confidence in sterling. Do they acknowledge, yes or no, the shock to confidence abroad of going ahead with this Bill?

This debate is not about the imperfections of the private enterprise steel industry, but about the best way of improving the industry. On the one hand we have the nationalisation solution, and on the other we have private enterprise on the lines set out by Benson stage one, and it is hoped Benson stage two to follow. Having heard the Minister's speech, we on this side of the House believe that no adequate case has been made for the nationalisation alternative.

What did the Minister give us? Not even his dearest friends could say that he gave us anything more than a few carefully selected facts, delivered in isolation, without any background. Let me try to fill in some of the background which the Minister failed to give the House. For many years after the war, as most of us know, there was a steel famine in the world, and it was against this condition of universal shortage that the maximum price, perhaps at any rate for that period, made some sort of sense. But that period of famine has passed, and since about 1960 we have had a situation of world glut and large world surpluses of steel, and the hon. Member for Rotherham (Mr. O'Malley), with his knowledge of the industry, and his hon. Friend the Member for Neath both emphasised this.

That is the background, unacknowledged by the Minister, to the recent success of the private enterprise industry. It is against this background of a world steel glut that the British steel industry has held, or very nearly held, until last year, its share of the world steel trade. American steel exports have plunged. Japanese steel exports have rocketed. European steel exports have fallen heavily, and only recovered slightly last year. British steel exports, however—the Minister did not even acknowledge this—have remained steady throughout the shortage, and throughout the glut, until last year when under a Labour Government, but I make no point of that, they fell slightly. This surely should be said by a Minister who, as he proclaimed, is trying to be fair to the industry.

As my right hon. Friend the Member for Altincham and Sale (Mr. Barber) said, last year there was an export record from this country. We exported six times as much steel in value as we imported. There was a production record, and if production has fallen it is because under a Labour Government the gross national product as a whole has fallen and that affects steel production. If imports are now moving up from last year's low level, it is because the world glut has reduced prices so sharply abroad that we are getting dumping of steel and dumping of pig iron to which reference has been made.

Despite our anxiety to bring out the real facts, and the background to these facts, we on this side of the House recognise that, like every other industry in this country, the steel industry is not perfect. We do not propose, simply because we are against the Bill, that the future should be exactly the same as the past.

As my right hon. Friend said, we have four major objectives. We want to see that competition within the tariff wall in this country is sharp. We want to see that rationalisation occurs on the lines scaled out in Benson one. We want a pricing system more in tune with competition, as is now being practised by the new zonal arrangements introduced by several of the steel companies. We want to see that all our arrangements for steel are compatible with entry into Europe at the earliest possible date. Since these objectives cannot be reconciled with nationalisation, we have declared our intention to oppose the Bill.

I want now to turn to the main arguments, such as they are, which have been used to justify nationalisation. First, there is the argument of rationalisation. I am a layman, and the arguments about ideal size and structure of the industry are highly technical and complex. Even experts disagree on what is the right tariff answer for the different size of markets.

Over and above all that, new technical processes may occur which, in time, alter the optimum scale of any sort of plant, but even a layman can say certain undeniable things about this industry. In the Minister's opening speech he failed, in his analysis, to make a fundamental distinction between the size of steel firms and the size of steel plants. The giants to which the Minister referred are giant companies, composed mostly of non-giant plants. Economies, particularly in scale, flow from large plants and not at all from large companies. There are only 14 larger plants in the world than our largest plant, and of those 14 only one is in Europe, so the Minister made a fundamental confusion in his analysis.

It is true that rationalisation is taking place in Europe. Since the glut at the turn of the decade there has been a wave of defensive mergers aimed, as far as I can see, at restricting competition and raising prices. In Germany, 31 steel outlets have been cut to four—perilously like a cartel. We know that the E.C.S.C. is against cartels and has had to adjust its rules to allow this operation to take place in Germany. The Minister must be aware that such an operation would be dead against our Restrictive Trade Practices Act, and anyway, the threat of nationalisation and the fear of monopoly charges have stifled any such movement in this country. But rationalisation into larger companies could come quickly here.

The full benefits of rationalisation come only from fewer larger plants and, as the Minister is well aware, fewer larger plants cannot be speedily achieved in this country, whether or not under nationalisation, because most United Kingdom plants have been modernised and it would be costly to scrap existing works overnight and concentrate output in order to garner the economies of scale.

This programme of concentrating the output is what Benson proposes as a private enterprise programme over the next 10 years. What he envisages is fewer but larger United Kingdom plants, and this can be done without nationalisation. The next surge of investment decisions is what matters, and they can begin without this Bill in order to provide the economies of scale that we want.

The second argument sometimes proclaimed in favour of nationalisation is concerned with labour relations. Here, I must: refer' to the hon. Member for Neath, a steel trade unionist, who said that industrial relations in this private enterprise industry are the envy of all. Nobody could show that nationalisation is any guarantee of good industrial relations.

I now turn to another aspect of labour relations—output per man, or what is sometimes referred to as over-manning.

We are not sure of the Government's view of over-manning after the Selective Employment Tax, by which they reward over-manned industry. We presume they must be against over-manning, but what will they do about it in steel? The Benson Report proposed that more steel can be produced in 10 years in fewer, larger plants, from a labour force reduced by 100,000 workers, by means of wastage or a reduction of one-third in the size of the present labour force.

What do the Government propose to do about this over-manning? The best known example of over-manning is in the Steel Company of Wales. It is well known because the directors have announced that they are over-manned by international standards and are taking careful advice how to tackle it with the minimum damage to the workers. But this is not only a private enterprise problem. I make no criticism of the zealous management of Richard Thomas and Baldwins, but in terms of output per worker, or productivity, as far as I can see the output of that plant, newer by 10 years than the Steel Company of Wales, is scarcely any better in terms of over-manning. Therefore, what will the Government do about over-manning? We hope that the right hon. Gentleman will tell us whether or not they will tackle it. These are some of the questions which we hope the Chief Secretary will answer.

In general, we maintain that no case has been made out for nationalisation. Even if a case had been made out on theoretical grounds, we believe that the disadvantages of nationalisation are such that it would still be the wrong solution. Right hon. and hon. Gentlemen opposite must not believe that, because we passionately perceive the evil results of nationalisation, we base our attitude entirely on ideological grounds.—[Hon. MEMBERS: "Oh."] I will spell out to the sceptics opposite some of the undoubted disadvantages of a nationalisation solution.

First, it imposes a monopoly. It denies the users any choice in price, in quality or in delivery. If anyone imagines that the user in this country—a vast range of engineering industry dependent upon steel price, quality and delivery—can rely upon imports if he does not like the product of a nationalised steel industry, he should remember what Governments, admittedly of both parties, have done to protect nationalised coal from imports.

Administratively at the drop of a hat, the choice of steel from abroad could be denied to British engineering industry. Nationalisation blurs cost consciousness. As it is a monopoly, the customers are captive and can go nowhere else. Naturally, the result for the management of nationalised industry is that they pay far less heed to what the customer wants and to the price and quality.

Nationalisation slows and concentrates the taking of decisions. That means that every decision which should be dispersed through as many decision-takers as possible is taken by very few people and where it is wrong the error is maximised. This is one of our main reasons for opposing nationalisation. Decision-making should be dispersed over a rapidly-changing competitive market. Nationalisation concentrates it and maximises the risk of error. It prevents the cross-fertilising process of managers moving from one company to another. I believe that there are many tales in the steel industry of managers who are discontented and frustrated in one company finding opportunities to show their initative and skill in another company.

All that disappears with nationalisation. [HON. MEMBERS: "No."] As it creates a monopoly, nationalisation cuts the scope for individual management initiative and management incentives. I ask the Minister, who praised ambition, to listen a moment. It cuts the scope for honourable managerial ambition. However zealous nationalisation staff are, there cannot be the same financial discipline and cost-consciousness as in private enterprise, because the taxpayer pays.

Nationalisation robs management of the driving force of the pursuit of profit and the fear of loss. It blurs the forces of the market. Nationalisation is slow to adapt. The very cost of nationalisation and the blunting of the edge of cost consciousness offsets any theoretical advantage which nationalisation might show. Unless a chairman of a new nationalised steel company is a superhuman and godlike man, nationalisation has so many forces inherent in it operating against efficiency and market forces that the in-

dustry is bound to be fossilised, ossified and unresponsive to the needs of the customer.

I would remind the Government that there are many examples in steel—I would quote the instance of the works at Workington—of social objectives and economic ones being in conflict. But nationalisation makes the grasping of these dilemmas no easier. The nationalised industry still has to decide whether to make a decision in favour of efficiency or social objectives. Nationalisation, in short, kills the identity of greatcompanies, bleeds the taxpayer and the customer and blunts the search for efficiency and service.

With all this weight of argument against the solution which the Government are adopting, we are told that it would be unpatriotic to undertake to repeal the Measure. We take the opposite view. In view of the disaster that this Bill will bring to the steel industry, it would be unpatriotic if we were not to undertake to repeal it. Nationalisation will be a disaster for the efficient management of this industry.

Granted that private enterprise steel is not perfect—[HON. MEMBERS: "Hear, hear."]—but which industry is?—nationalisation is absolutely no cure whatever. Hon Gentlemen opposite do not cheer when I say that. If steel is not perfect nor are several industries which have been nationalised for many years. [HON. MEBMERS: "No."] Find one that is. The Bill will not only be the ruin of a great British industry, but it threatens other industries, under Clause 2, with subsidised competition. We shall, therefore, repeal this Measure and denationalise the industry to whatever extent is necessary and practicable to conform with the objectives I have mentioned and to provide for the discipline of competitive enterprise.

I turn not to the Bill itself but to its timing. It would, in the light of the arguments in which we believe, be disastrous at any time, but to nationalise steel now is surely an act of lunacy. Has not the Prime Minister yet realised that it is confidence in him and his Government which is at issue throughout the world? Confidence in the right hon. Gentleman and this Administration has been shattered abroad —yet here the Government are deliberately introducing, at a time of sterling crisis, a Bill which is widely regarded as completely irrelevant to the economic problems of the country. It is seen abroad simply as a piece of petty Socialist backward-looking dogma. This is bound to have an effect on sterling and an effect on the gravity of the measures which the Prime Minister has had to announce to defend sterling.

I suppose that it is too late to hope for good news this evening from the Chief Secretary. My hon. Friends and I had hoped that the Prime Minister and the First Secretary would be here during the closing stages of this important debate. The Prime Minister's shifts and evasions have done desperate damage to sterling. Now the right hon. Gentleman has his chance this evening, through the Chief Secretary, to do great good to country, sterling and the steel industry.

The Prime Minister will have his Second Reading. He will have his little triumph for his party conference in the autumn. However, we had hoped that he would announce through the Chief Secretary tonight, perhaps in view of the sterling crisis, that the Government would not pursue the Bill any further. That is not too much to hope—that is, if the Prime Minister would put the national interest before his party interest. Let him have his triumph in the Bill, but not pursue it—at least, not for the moment; not until the country and the economy is stronger and can stand this damage to confidence abroad. If the right hon. Gentleman will not do this and if the Chief Secretary has come to us with a barren, sterile Treasury brief, then the Prime Minister will be losing the opportunity to do something solid and effective for the good of sterling and Britain.

If that is not what we are to be told tonight, we must urge the Chief Secretary to answer the four questions which we have put to him. Let him tell us what the investment proposals, peak or trend, are under a nationalised industry. Let him tell us whether or not the Government propose to do anything about over-manning. Let him tell us what effect he expects the compensation to have on an economy which is in the grip of the tightest squeeze in modern recorded history. And let him tell us whether the Government accept—we want a "Yes" or "No" answer to this—the bitter damage that this Bill has done to foreign confidence in sterling; the damage it has done and is doing in this country and abroad.

This is a bad Bill at a bad time. We shall vote against it. We hope that, even at this late hour, the Chief Secretary will have a decision, taken on grounds of national interest, to tell us about. But, knowing the Prime Minister, the weak and wanton holder of a great office, we doubt it.

9.25 p.m.

The Chief Secretary to the Treasury (Mr. John Diamond)

I want, first, to thank the right hon. Member for Leeds, North-East (Sir K. Joseph) for being so courteous as to finish his speech five minutes before he said he would finish it.

Sir K. Joseph

Two minutes before I said I would.

Mr. Diamond

I do not want to do the right hon. Gentleman an injustice; he is absolutely right. I was hoping that the right hon. Gentleman was coming to his criticism of the Bill, as opposed to his inborn, innate, traditional, Conservative, opposition to an idea to which he has not given full consideration but which was accepted by the whole of his Party and given full effect to during the whole of the time they were in government. For 13 years they coped with these so-called problems of nationalisation. It is a little late now for the right hon. Gentleman, because he cannot think of anything to say about steel, to devote ten minutes out of a speech which lasted for 25 minutes to giving us a lecture on nationalisation generally.

I propose to deal with the Bill. I propose to answer all the questions which have been put to me, particularly those asked by the right hon. Gentleman and by the right hon. Member for Altrincham and Sale (Mr. Barber), and to say what we are doing and why we are doing it and to answer the questions about timing and other matters which were put to me.

I agree with the right hon. Member for Leeds, North-East that, until the last few minutes, it has been an extremely calm debate—muted, as he called it. I imagine that most hon. Members who spent the whole time in the Chamber—I have spent very nearly the whole time here—would agree with me that the debate has been muted because there is really no major opposition to the Bill.

Hon. Members

Nonsense.

Mr. Diamond

The exception was the speech, the whole of which I did not hear, of my hon. Friend the Member for Pembroke (Mr. Donnelly). I know that my hon. Friend sincerely opposes the Bill. The speeches made by right hon. and hon. Members opposite demonstrated that they have no alternative proposal to make to a situation which every one of them recognised was totally inadequate. Not one opposition Member said that we ought to do nothing. The right hon. Member for Altrincham and Sale made it clear that, when the Conservatives returned to power, they would denationalise up to a point, but the right hon. Gentleman covered this with very careful conditions so that it could mean absolutely anything.

However, one thing which the right hon. Gentleman said specifically was, "We are not going back to square 1". This was because everyone realises that square 1 is a totally unsatisfactory position. Everyone realises that we are not talking about a private enterprise industry. We are not comparing a private enterprise industry with a public enterprise industry. We are talking about the necessary improvement, and how it is to be effected, to an industry which is already carried on under what can only be described as a mixed economy. It is partly private. It is partly public. The largest firm is public. It has been under some measure of control for about 30 years.

The 1953 denationalisation, which the right hon. Member for Streatham (Mr. Sandys) proposed, gave the industry what the right hon. Gentleman thought would be a satisfactory measure of public control, a satisfactory measure of supervision. What the right hon. Member for Streatham then said is what the Opposition Front Bench spokesmen are saying now. The right hon. Member for Streatham said then that if he were to produce a board with the necessary powers it could achieve the necessary reorganisation, price competition and efficiency within the industry. However, his right hon. Friends are saying that this has failed. They are saying that they have to do something about it, but all they have done is to repeat the old theories which the right hon. Gentleman proposed himself.

Mr. Barber

I did state this afternoon four principles of policy which I believe would be of assistance to the steel industry and to the nation. They are inconsistent with nationalisation, they are inconsistent with the present arrangements. I want to know from the right hon. Gentleman what objections he has to them.

Mr. Diamond

I am coming to them. I was making the point that they are inconsistent with the present arrangements, and the present arrangements were introduced by the right hon. Member for Streatham. In reply to my right hon. Friend the Member for Vauxhall (Mr. Strauss), who made an interesting speech, the right hon. Member for Streatham said that he hoped he would introduce another Bill in due course exactly the same as last time, and he gave us to believe that he was pleased to introduce it.

Mr. Sandys

If the right hon. Member will read my speech he will see that is not what I said. What I said was that after 13 years no doubt amendments, and in some cases important amendments, would need to be made to take account of the changed circumstances.

Mr. Diamond

I am sorry that I omitted to draw attention to the important amendments which the right hon. Member would propose. The right hon. Member put it to us as though he was very glad to introduce the Bill in 1953. I was interested in that because it does not correspond with what was told to us by the right hon. Member for Wolverhampton, South-West (Mr. Powell)—who ought to be regarded as the authority on the topic of anti-nationalisation—when writing in the Spectator in March, 1959. He said: It was the Conservative back-benchers who forced a reluctant Government to denationalise steel and road transport. I assume from that that we are back in the usual situation where we have Conservative back-benchers married to a particular dogma and a particular out-dated theory trying to insist that whatever happens we must denationalise and have private enterprise.

The present situation has shown that after 15 years of this denationalised, privately controlled, supervised industry we are falling further and further behind our competitors. Those who think that we can pull through by leaving things as they are or by putting in the kind of body we already have for supervision are failing to look at the real problem.

The real problem, as everyone knows, is the problem of getting firms of the right size and plants of the right size. The right hon. Member for Leeds, North-East twitted my right hon. Friend the Minister for not having drawn the distinction sufficiently clearly. My right hon. Friend was talking about nationalisation under which we produced a large-sized firm which enables us to do all the things which other competitive large-sized firms in Japan, in America and on the Continent are enabled to do.

It is also the case that our proportion of large plants is inadequate. Our attention has been drawn to this by the Steel Board itself. The facts, as one of my hon. Friends pointed out, are that we get vastly increased economies of scale as we increase the size of the plant. We get a reduction in costs of something of the order of 10 per cent. if we go from a plant which produces I million ingot tons a year to one which produces 2 million and a reduction of something of the order of 15 per cent. from a plant which produces 4 million ingot tons a year. It is because we have this inadequately sized plant, because we have these firms which have failed to amalgamate, that we are all trying to find a solution. What I am saying is that the solution at present suggested by the Opposition is wholly inadequate because—and I beg the right hon. Member for Streatham to recognise this—it has been tried.

One cannot produce a board which can go to private steel owners and persuade them to amalgamate when it means some of them losing their jobs, many losing their power and old dynasties being broken up. One cannot do this because a body which had similar powers to do it in face of growing competition and growing amalgamation abroad failed to do it.

Mr. Barber

It is not true.

Mr. Diamond

It is true.

Mr. Barber

rose—

Hon. Members

Sit down.

Mr. Barber

The Chief Secretary had three minutes more than he wanted. The system I put forward has not been tried in this country, and he knows it. It has been tried in Europe, and it has succeeded. These are our competitors. What we want to know is what objections the right hon. Gentleman has to the system which operates in Europe.

I want to say one other thing. [Interruption.] The right hon. Gentleman complains that he has too much time, so he will not object to my intervening. He goes harking back—[Interruption.] The Prime Minister comes in and intervenes and does not even realise that the Chief Secretary was complaining a few minutes ago that he had three minutes too long in which to reply. We have had enough of the Chief Secretary and his cracks harking back to what we might have done and what the steel industry might have done. What the nation wants from the Government is to know what is best for British industry.

Mr. Diamond

I listened most carefully to all the right hon. Gentleman's points about policy and I shall answer his questions. He said that the Opposition were proposing a body from which the steel industry should accept the need to expedite reorganisation through consultation. He proposed that we should have a supervisory body to promote competition. He has just asked me how it comes about that the necessary increases in the size of the plants of steel firms have taken place abroad and not here. He has asked why competition under private enterprise has taken place abroad and not here. These are most interesting questions. I have asked myself the same questions many times.

I have asked myself often how it comes about that, in a country which is presumably determined on all sides to get a powerful and efficient steel industry and which can see competitive costs coming down abroad, our costs are no longer competitive. [HON. MEMBERS: "Rubbish] American productivity is about twice ours. The costs of production in the E.E.C. have fallen. Once we were cheaper. Now we are not.

Mr. Ridley

The right hon. Gentleman does not know what he is talking about.

Mr. Diamond

The Opposition say that all that needs to be done is to achieve economies and point to the tremendous amalgamation drives going on abroad, including France and Germany. I have often wondered how it came about why we did not do it. Presumably we did not do it because the owners of steel companies were more concerned to retain their jobs than to create an efficient industry, because they were more concerned with their empires and individual positions than with achieving a satisfactory industry in the interest of the nation, and because they were more concerned with their individual empires than with amalgamation, although some of their mills adjoin one another with not even a fence in between. Even then they could not amalgamate. It is because they have been protected, because there has been protection going on ever since 1935, because price has been protected, because there has been no price competition, that they have had no stimulation—they have had no need—to do the things that the other industries which have been run on a really competitive basis have seen the need to do and have thus gone for larger plants and larger companies.

That is where we failed, and because we failed, and because it is vital for this country to have an efficient steel industry, because it is basic to our needs, and because the system that we have had for the last 13 years has failed, and because what the right hon. Member for Altrincham and Sale is saying is dressing up the old system, just as the right hon. Member for Streatham put it forward—for all these reasons we are bound to say that this system has not worked and will not work and we can no longer leave it to chance whether people will change their minds.

Mr. Barber

When the Federation and the Iron and Steel Board, which is a statutory body—

Mr. A Woodburn (Clackmannan and East Stirlingshire)

On a point of order, Mr. Deputy Speaker. Is it not the custom that when an hon. Member makes two or three speeches he asks for the permission of the House to do so?

Mr. Deputy Speaker (Sir Eric Fletcher)

The Chief Secretary gave way to the right hon. Member for Altrincham and Sale (Mr. Barber).

Mr. Barber

When the Federation and the Iron and Steel Board, which is a statutory body with members appointed by the Government, suggested that there should be price competition instead of common pricing, why was it that the Labour Government turned them down and threatened to legislate?

Mr. Diamond

The right hon. Gentleman is still trying to pretend—[Hors. MEMBERS: "Answer."]—that there has been price competition in the steel industry.

Mr. Barber

No.

Mr. Diamond

The right hon. Gentleman, then, agrees that there was no price competition in the steel industry. Perhaps the simplest thing to do is to get an authoritative answer to the question of competition based on price in the steel industry. The most authoritative person is Mr. Judge, the Chairman of the British Iron and Steel Federation. He was examined—I know not whether on oath or not, but I am sure that he would be telling the truth in any event—about this issue in the Restrictive Practices Court. The questions and answers ran as follows:

• "Q. In 1953, as a director of the Dorman Long group of companies did you welcome denationalisation of steel? A. Yes.
• Q. Why? A. Because I felt that under denationalisation there would be return to greater enterprise and initiative within the company.
• Q. But is not competition in price one of the fundamental characteristics of private enterprise? A. Yes, but not as applied to the steel industry in my view. I do not accept it as an essentially good thing for the steel industry.
• Q. It is right, is it not, that as soon as steel was denationalised in 1953 the steel industry entered into price fixing agreements? A. I should imagine so, yes.
• Q. So that the steel industry did not grasp the freedom that it was offered under denationalisation? A. As far as price is concerned, no, it did not grasp it.
• Q. So far as the customer is concerned, what is the difference under your present price agreement and under nationalisation? A. As to paying a fixed price for the products, I cannot see that he is in any immediate difference."

Sir K. Joseph

rose—

Mr. Barber

Give way.

Mr. Diamond

There cannot be any dispute of fact. I have merely quoted excerpts from the shorthand writer's report of the evidence. I am sure that the right hon. Gentleman would now like me to go on and give some more of the information.

Mr.Barber

On a point of order. Is it not reasonable, when the right hon. Gentleman complained at the beginning of his speech that he had too much time and as I have put a specific question to him about why the Labour Government prevented price competition, that he should at least try to answer it?

Mr.Deputy Speaker

The right hon. Gentleman knows perfectly well that that is not a point of order. The Chief Secretary has given way a number of times. It is entirely within his discretion when and how often he will give way.

Mr. Diamond

I have given way four or five times. The right hon. Gentleman did not feel able to give way once. I hope that we can feel that I am not being discourteous to the Opposition Front Bench, and that we can now get on to answering some of the questions. I have been asked a number of questions about compensation.

It would be in the interests of the House if I made an authoritative statement about the problems relating to compensation. The interesting thing is that, with one minor exception, there has been no complaint about the essential basis chosen for compensation. Everyone recognises that the Stock Exchange price is the sensible way of approaching it, and is the customary way. It has happened on every occasion except where the State has been acquiring assets instead of undertakings.

I am glad to note that we are all agreed that the Stock Exchange is a sensible basis. I wish to quote two sets of figures. The figure proposed for compensation for equity securities under this Bill, is £484 million which compares with a market price on 1st July, 1966 of £464 million. The proposed compensation is £20 million in excess of the market price at that date.

Mr. Geoffrey Hirst (Shipley)

So what?

Mr. Diamond

The hon. Gentleman the Member for Shipley asks, "so what?" It is very important whenever the State is compulsorily acquiring assets that it should be seen to be paying a fair price.

It is very important that I should demonstrate that. All that I wanted to say was how glad I was that everyone is now accepting that.

Mr. Hirst

I accept the premise of the argument but the Government by their various actions have forced down the share prices.

Mr. Diamond

The Government have not forced down the price. Anyone looking at the price will be interested to see that, although there was a sort of pyramid in the market price quotations five or six years ago when there was a boom, ever since then, in the last four years there has been a plateau when prices have remained remarkably constant, and if one were to take an average of the prices during that period when they have remained remarkably constant—which is the kind of figure any businessman, broker or accountant would be inclined to take as demonstrating the real value as between purchaser and seller on an open market one would arrive at a figure of £451 million, which is £33 million less than the price being paid.

My hon. Friends are quite right. One can criticise the compensation being offered on the grounds that it is unduly generous. I can only say to them that it is very important to demonstrate that, when one is acquiring assets compulsorily from an unwilling vendor, it should be shown that one is paying the full price, as we are doing.

Mr. Ridley

rose—

Mr. Diamond

No, I will not give way. Some of those sellers are foreign sellers and, again, one must establish that this country acts not only fairly but on the generous side of fairly. I hope that my hon. Friends will accept that situation.

I have been asked what the effect of this will be on the market. As everybody knows, the effect on the market has been discounted already. The amounts in question may seem large, but they are a very small proportion of the total of equities or the total of gilt edged securities. The total of quoted equities is £50,000 million. We are therefore removing from that market 1 per cent. That is approximately what is involved. Moreover, my right hon. Friend in this year's Budget—and everybody will remember this—provided for an exceptionally low figure of borrowing this year—E287 million compared with £724 million in the previous year. This produces a situation in which additional borrowing can be very easily accommodated. We do not have to overlook the wise management of the Bank of England which comes to our assistance for this purpose. Far from the market being anxious lest we should nationalise it, the market's sole anxiety is lest we do not nationalise it.

I am sorry that I did not hear all of the speech of my hon. Friend the Member for Pembroke. I am told that he was anxious about the expenditure of £500 million on the acquisition of shares which could have been spent on schools, hospitals, and so on. I am sure that he will not mind my pointing out that we are exchanging paper for paper, and it does not make the slightest difference to the resources available of the kind to which my hon. Friend referred. It would be most unfortunate if anybody were to take the view that this in any sense affects the amount of resources available for the social services. It does nothing of the sort.

I was asked about timing and why the Government were choosing this time of all times to nationalise steel. I will give the answer. I preface it by saying that I was interested to note that all those saying that we must not nationalise now —perhaps a little later would be all right —are saying, "As soon as we get back to power we shall denationalise completely". The first answer is that there has been sufficient uncertainty in the steel industry, and we do not propose that it should continue. That is a good reason for nationalising now.

The second answer is that as a Treasury Minister naturally I have had to pay particular regard to foreign opinion. For that reason, we have been in touch with all our embassies abroad. We find nothing in the replies which we have had from all our embassies abroad to support any of the anxieties expressed by the Opposition. Those anxieties are based on outmoded views, as if in, for example, Austria, which has a wholly nationalised steel industry, Italy, which has a partly nationalised steel industry, and other parts of the Continent the idea of a nationalised steel industry is so extraordinary and revolutionary that it would affect—

Mr. Philip Goodhart (Beckenham)

rose—

Mr. Diamond

I will not give way again, as I told the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).

Therefore, there is no danger whatsoever of foreign opinion being in any way prejudiced or hostile to what we are proposing to do.

The major answer is, as will emerge more clearly in tomorrow's debate, that the state of our economy does not permit us to allow the steel industry to continue in a situation in which, because of its private ownership, full efficiency is denied. Full efficiency is made impossible. It is not a question of whether we can do it now i we cannot afford to wait any longer. There is urgency about it, and that is why we are proposing to get on with the job. [Interruption.]

Mr. Speaker

Order. Mr. Speaker wants to hear the winding-up speech.

Mr. Diamond

The right hon. Member for Leeds, North-East asked what the Government are proposing to do about over-manning in the steel industry. I assume from that question that the right hon. Gentleman alleges that overmanning exists in the steel industry.

Sir K. Joseph

indicated assent.

Mr. Diamond

The right hon. Gentleman no doubt has in mind the S.C.O.W. Report, and so on. In answering his question, I must first ask how it comes about that this wonderful privately-run steel industry, run under a system which the right hon. Member for Streatham says is the ideal system for running the industry, this private enterprise industry which is the acme of efficiency, has this over-manning.

An Hon. Member

Like the railways.

Mr. Diamond

The hon. Gentleman says, "Like the railways". I am grateful for the hon. Gentleman's comment. If there is over-manning in that industry I invite the House to consider what has happened on both the railways and in the coal mines, where there has been a rundown of labour—a complete rundown in the mining industry—without a major difficulty of any kind, as a result of the improved labour relations which are possible only with a nationalised industry. [Interruption.] Is it not odd that the hon. Gentleman can never accept an answer to one point—[Interruption.]

Mr. Speaker

Order. We cannot argue by running commentary.

Mr. Michael Foot

Hon. Members opposite are the Argentinians of debate.

Mr. Diamond

I hope that the House will realise that if there is over-manning in the steel industry, as the right hon. Gentleman alleges, it is in the interests of the nation that we should have a means whereby, through consultation between the two sides, over-manning can be reduced in a humane and efficient way, which has come about both in the nationalised railways and in nationalised coal.

Steel is one of the commanding heights —[Interruption.]—and as the present situation results in an inefficient supply of steel and in inadequate competition; as

there is need for larger firms and larger units, a development which is incompatible with the retention of private ownership; as anything less than 100 per cent. State ownership is unfair to the private shareholder and inadequate to achieve the public interest; as the change is overdue, and as we have the support of the workers in the steel industry and of the electorate; and as steel is basic to the expansion of our economy; we propose that Britain should occupy that height, and do it now.

Mr. Gilbert Longden (Hertfordshire, South-West)

rose—

Mr. Alan Fitch (Lord Commissioner of the Treasury)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the Bill be now read a Second time:—

The House divided: Ayes 328, Noes 247.

Division No. 145.]	AYES	[10.0 p.m
Abse, Leo	Buchan, Norman	Dunnett, Jack
Albu, Austen	Buchanan, Richard (G'gow, Sp'burn)	Dunwoody, Mrs. Gwyneth (Exeter)
Allaun, Frank (Salford, E.)	Butler, Herbert (Hackney, C.)	Eadie, Alex
Alldritt, Walter	Butler, Mrs. Joyce (Wood Green)	Edwards, Robert (Bilaton)
Allen, Scnolefield	Cant, R. B.	Edwards, William (Merioneth)
Anderson, Donald	Carmichael, Neil	Ellis, John
Archer, Peter	Carter-Jones, Lewis	English, Michael
Armstrong, Ernest	Castle, Rt. Hn. Barbara	Ennals, David
Ashley, Jack	Chapman, Donald	Evans, Albert (Islington, S.W.)
Atkins, Ronald (Preston, N.)	Coe, Denis	Evans, loan L. (Birm'h'm, Yardley)
Atkinson, Norman (Tottenham)	Coleman, Donald	Femyhough, E.
Bacon, Rt. Hn. Alice	Concannon, J. D.	Finch, Harold
Bagier, Cordon A. T.	Conran, Bernard	Fitch, Alan (Wigan)
Barnes, Michael	Corbel, Mrs. Freda	Fletcher, Raymond (Ilkeston)
Barnett, Joel	Cousins, Rt. Hn. Frank	Fletcher, Tod (Darlington)
Baxter, William	Craddock, George (Bradford, S.)	Floud, Bernard
Beaney, Alan	Crawshaw, Richard	Foley, Maurice
Bellenger, Rt. Hn. F. J.	Cronin, John	Foot, Sir Dingle (Ipswich)
Bence, Cyril	Crosland, Rt. Hn. Anthony	Foot, Michael (Ebbw Vale)
Benn, Rt. Hn. Anthony Wedgwood	Crossman, Rt. Hn. Richard	Ford, Ben
Bennett, James (G'gow, Bridgeton)	Cullen, Mrs. Alice	Forrester, John
Bidwell, Sydney	Dalyell, Tam	Fowler, Gerry
Binns, John	Davidson, Arthur (Accrington)	Fraser, John (Norwood)
Bishop, E. S.	Davies, Dr. Ernest (Stretford)	Freeson, Reginald
Blackburn, F.	Davies, G. Elfed (Rhondda, E.)	Galpern, Sir Myer
Blenkinsop, Arthur	Davies, Ednyfed Hudson (Conway)	Gardner, A. J.
Boardman, H.	Davies, Harold (Leek)	Garrett, W. E.
Booth, Albert	Davies, Ifor (Gower)	Garrow, Alex
Boston, Terence	Davies, Robert (Cambridge)	Ginsburg, David
Bottomley, Rt. Hn. Arthur	Davies, S. O. (Merthyr)	Gordon Walker, Rt. Hn. P. C.
Bowden, Rt. Hn. Herbert	de Freitas, Sir Geoffrey	Gourlay, Harry
Boyden, dames	Delargy, Hugh	Gray, Dr. Hugh (Yarmouth)
Braddock, Mrs. E. M.	Dell, Edmund	Greenwood, Rt. Hn. Anthony
Bradley, Tom	Dempsey, James	Gregory, Arnold
Bray, Dr. Jeremy	Dewar, Donald	Griffiths, David (Rather Valley)
Brooks, Edwin	Diamond, Rt. Hn. John	Griffiths, Rt. Hn. James (LlanellY)
Broughton, Dr. A. D. D.	Dickens, James	Griffiths, Will (Exchange)
Brown, Rt. Hn. George (Belper)	Dobson, Ray	Gunter, Rt. Hn. R. J.
Brown, Hugh D. (G'gow, Proven)	Doig, Peter	Hamilton, James (Bothwell)
Brown,Bob(N'c'tle-upon-Tyne,W)	Driberg, Tom	Hamilton, William (Fife, W.)
Brown, R. W. (Shoreditch & F'bury)	Dunn, James A.	Hamling, William
Hannan, William	McMillan, Tom (Glasgow, O.)	Rogers, George
Harper, Joseph	McNamara, J. Kevin	Rose, Paul
Harrison, Walter (Wakefield)	MacPherson, Malcolm	Ross, Rt. Hn. William
Hart, Mrs. Judith	Mallalieu, E. L. (Brigg)	Rowland, Christopher (Meriden)
Heseldine, Norman	Mallalieu,J.P. W.(Huddersfield,E.)	Rowlands, E. (Cardiff, N.)
Hattersley, Roy	Manuel, Archie	Ryan, John
Hazell, Bert	Mapp, Charles	Shaw, Arnold (Ilford, S.)
Henig, Stanley	Marquand, David	Sheldon, Robert
Herbison Rt. Hn. Margaret	Marsh, Rt. Hn. Richard	Shinwell, Rt. Hn. E.
Hilton, W. S.	Maxwell, Robert	Shore, Peter (Stepney)
Hooley, Frank	Mayhew, Christopher	Short,Rt.Hn.Edward(N'c'tleou-Tyne)
Homer, John	Mellish, Robert	Short,Mrs.Renee(W 'hampton,N.E.)
Houghton, Rt. Hn. Douglas	Mendelson, J. J.	Silkin, S. C. (Dulwich)
Howarth, Harry (Wellingborough)	Mikardo, Ian	Silverman, Julius (Aston)
Howarth, Robert (Bolton, E.)	Milian, Bruce	Silverman, Sydney (Nelson)
Howie, W.	Miller, Dr. M. S.	Skeffington, Arthur
Hoy, James	Mitchell, R. C. (S'th'pton, Test)	Slater, Joseph
Hughes, Rt. Hn. Cledwyn(Anglesey)	Molloy, William	Small, William
Hughes, Emrys (Ayrshire, 8.)	Morgan, Elystan (Cardiganshire)	Snow, Julian
Hughes, Hector (Aberdeen, N.)	Morris, Alfred (Wythenshawe)	Spriggs, Leslie
Hughes, Roy (Newport)	Morris, Charles R. (Openshaw)	Steele, Thomas (Dunbartonshire, W.)
Hunter, Adam	Morris, John (Aberavon)	Stewart, Rt. Hn. Michael
Hynd, John	Moyle, Roland	Stonehouse, John
Irvine, A. J. (Edge Hill)	Mulley, Rt Hn. Frederick	Strauss, Rt. Hn. G. R.
Jackson, Colin (B'h'se & Spenb'gh)	Murray, Albert	Summerskill, Hn. Dr. Shirley
Jackson, Peter M. (High Peak)	Neal, Harold	Swain, Thomas
Janner, Sir Barnett	Newens, Stan	Swingler, Stephen
Jay, Rt. Hn. Douglas	Noel-Baker, Francis (Swindon)	Symonds, J. B.
Jeger, George (Goole)	Norwood, Christopher	Taverne, Dick
Jeger,Mrs.Lena(H'b'n&St.P'cras.S.)	Oakes, Gordon	Thomas, George (Cardiff, W.)
Jenkins, Hugh (Putney)	Ogden, Eric	Thomas, lorwerth (Rhondda, W.)
Jenkins, Rt. Hn. Roy (Stechford)	O'Malley, Brian	Thomson, Rt. Hn. George
Johnson, Carol (Lewisham, S.)	Oram, Albert E.	Thornton, Ernest
Johnson, James(K'ston-on-Hull, W.)	Orbach, Maurice	Tinn, James
Jones, Dan (Burnley)	Orme, Stanley	Tomney, Frank
Jones,Rt.Hn.SirElwyn(W.Ham,S.)	Oswald. Thomas	Tuck, Raphael
Jones, J. Idwal (Wrexham)	Owen, Dr. David (Plymouth, S'tn)	Urwin, T. W.
Judd, Frank	Owen, Will (Morpeth)	Valley, Eric G.
Kelley, Richard	Padley, Walter	Wainwright, Edwin (Dearne Valley)
Kenyon, Clifford	Page, Derek, (King's Lynn)	Walden, Brian (All Saints)
Kerr, Mrs. Anne (R'ter & Chatham)	Paget, R. T.	Walker, Harold (Doncaster)
Kerr, Russell (Feltham)	Palmer, Arthur	Wallace, George
Leadbitter, Ted	Pannell, Rt. Hn. Charles	Watkins, David (Consett)
Ledger, Ron	Park, Trevor	Weitzman, David
Lee, Rt. Hn. Frederick (Newton)	Parker, John (Dagenham)	Wellbeloved, James
Lee, Rt. Hn. Jennie (Cannock)	Parkyn, Brian (Bedford)	Wells, William (Walsall, N.)
Lee, John (Reading)	Pearson, Arthur (Pontypridd)	Whitaker, Ben
Lester, Miss Joan	Peart, Rt. Hn. Fred	White, Mrs. Eirene
Lever, Harold (Cheetham)	Pentland, Norman	Whitlock, William
Lever, L. M. (Ardwick)	Perry, Ernest G. (Battersea, S.)	Wigg, Rt. Hn. George
Lewis, Arthur (W. Ham, N.)	Prentice, Rt. Hn. R. E.	Willey, Rt. Hn. Frederick
Lewis, Ron (Carlisle)	Price, Christopher (Perry Bar)	Williams, Alan (Swansea, W.)
Lipton, Marcus	Price, Thomas (Westhoughton)	Williams, Alan Lee (Hornchurch)
Lomas, Kenneth	Price, William (Rugby)	Williams, Clifford (Abertillery)
Loughlin, Charles	Probert, Arthur	Williams, Mrs. Shirley (Hitchin)
Luard, Evan	Pursey, Cmdr. Harry	Williams, W. T. (Warrington)
Lyon, Alexander W. (York)	Rankin, John	Willis, George (Edinburgh, E.)
Lyons, Edward (Bradford, E.)	Redhead, Edward	Wilson, Rt. Hn. Harold (Huyton)
McBride, Neil	Rees, Merlyn	Wilson, William (Coventry, S.)
McCann, John	Reynolds, G. W.	Winnick, David
MacColl, James	Rhodes, Geoffrey	Winterbottom, R. E.
MacDermot, Niall	Richard, Ivor	Woodburn, Rt. Hn. A.
Macdonald, A. H.	Roberts, Coronwy (Caernarvon)	Woof, Robert
McGuire, Michael	Roberts, Gwilym (Bedfordshire, S.)	Yates, Victor
McKay, Mrs. Margaret	Robertson, John (Paisley)	Zilliacus, K.
Mackenzie, Gregor (Rutherglen)	Robinson,Rt.Hn.Kenneth(St.P'C'aS)
Mackie John	Robinson, W. O. J. (Walth'stow E.)	TELLERS FOR THE AYES:
Mackintosh, John P.	Rodgers, William (Stockton)	Mr. Charles Grey and
Maclennan, Robert	Roebuck, Roy	Mr. George Lawson.
NOES
Alison, Michael (Barketon Ash)	Biffen, John	Brown, Sir Edward (Bath)
Allason, James (Hemel Hempstead)	Birch, Rt. Hn. Nigel	Bruce-Gardyne, J.
Astor, John	Black, Sir Cyril	Bryan, Paul
Atkins, Humphrey (M't'n & M'd'n)	Blaker, Peter	Buchanan-Smith,Alick(Angus,N&M)
Awdry, Daniel	Body, Richard	Buck, Antony (Colchester)
Baker, W. H. K.	Bossom, Sir Clive	Bultus, Sir Eric
Barber, Rt. Hn. Anthony	Boyd-Carpenter, Rt. Hn. John	Campbell, Gordon
Batsford, Brian	Boyle, Rt. Hn. Sir Edward	Carlisle, Mark
Beamish, Col. Sir Tufton	Braine, Bernard	Carr, Rt. Hn. Robert
Bell, Ronald	Brewis, John	Cary, Sir Robert
Bennett, Sir Frederic (Torquay)	Brinton, Sir Tatton	Channon, H. P. G.
Berry, Hn. Anthony	Bromley-Davenport,Lt.Col.Sir Walter	Chichester-Clark, R.

Clark, Henry	Hogg, Rt. Hn. Quintin	Pearson, Sir Frank (Clitheroe)
Clegg, Walter	Holland, Philip	Peel, John
Cooke, Robert	Hooson, Emlyn	Percival, Ian
Cooper-Key, Sir Neill	Hordern, Peter	Peyton, John
Cordle, John	Hornby, Richard	Pike, Miss Mervyn
Corfield, F. V.	Howell, David (Guildford)	Pink, R. Bonner
Costain, A. P.	Hutchison, Michael Clark	Pounder, Rafton
Craddocli, Sir Beresford (Spelthorne)	Iremonger, T. L.	Powell, Rt. Hn. J. Enoch
Crawley, Aidan	Irvine, Bryant Godman (Rye)	Price, David (Eastleigh)
Crouch, David	Jenkin, Patrick (Woodford)	Prior, J. M. L.
Crowder, F. P.	Jennings, J. C. (Burton)	Quennell, Miss J. M.
Cunningham, Sir Knox	Johnson Smith, G. (E. Grinstead)	Rawlinson, Rt. Hn. Sir Peter
Currie, G. B. H.	Johnston, Russell (Inverness)	Rees-Davies, W. R.
Dalkeith, Earl of	Jones, Arthur (Northants, S.)	Renton, Rt. Hn. Sir David
Dance, James	Jopling, Michael	Ridley, Hn. Nicholas
Davidson,James(Aberdeenshire,W.)	Joseph, Rt. Hn. Sir Keith	Ridsdale, Julian
d'Avigdor-Goldsmid, Sir Henry	Kaberry, Sir Donald	Rippon, Rt. Hn. Geoffrey
Dean, Paul (Somerset, N.)	Kerby, Capt. Henry	Robson Brown, Sir William
Deedes, Rt. Hn. W. F. (Ashford)	Kershaw, Anthony	Rodgers, Sir John (Sevenoaks)
Digby Simon Wingfield	Kimball, Marcus	Roots, William
Dodds-Parker, Douglas	King, Evelyn (Dorset, S.)	Rossi, Hugh (Hornsey)
Doughty, Charles	Kitson, Timothy	Royle, Anthony
Douglas-Home, Rt. Hn. Sir Alec	Knight, Mrs. Jill	Russell, Sir Ronald
Drayson, G. B.	Lambton, Viscount	St. John-Stevas, Norman
du Cann, Rt. Hn. Edward	Lancaster, Col. C. G.	Sandys, Rt. Hn. D.
Eden, Sir John	Langford-Hoit, Sir John	Scott, Nicholas
Elliot, Capt. Walter (Carshalton)	Legge-Bourke, Sir Harry	Sharples, Richard
Errington, Sir Eric	Lewis, Kenneth (Rutland)	Shaw, Michael (Sc'b'gh & Whitby)
Eyre, Reginald	Lloyd,Rt.Hn.Geoffrey(Sut'nC'dfield)	Sinclair, Sir George
Farr, John	Lloyd, Ian (P'tsm'th, Langstone)	Smith, John
Fisher, Nigel	Lloyd, Rt. Hn. Selwyn (Wirral)	Stainton, Keith
Fletcher-Cooke, Charles	Longden, Gilbert	Steel, David (Roxburgh)
Forrest, George	Loveys, W. H.	Stodart, Anthony
Fortescue, Tim	Lubbock, Eric	Summers, Sir Spencer
Foster, Sir John	MacArthur, Ian	Talbot, John E.
Fraser,Rt.Hn.Hugh(St'fford & Stone)	Maclean, Sir Fitzroy	Tapsell, Peter
Galbraith, Hn. T. G.	Macleod, Rt. Hn. lain	Taylor, Sir Charles (Eastbourne)
Gibson-Watt, David	McMaster, Stanley	Taylor,Edward M.(G'gow,Cathcart)
Giles, Rear-Adm. Morgan	Macmillan, Maurice(Farnham)	Taylor, Frank (Moss Side)
Gilmour, Ian (Norfolk, C.)	Maddan, Martin	Teeling, Sir William
Gilmour, Sir John (Fife, E.)	Maginnis, John E.	Temple, John M.
Glover, Sir Douglas	Marples, Rt. Hn. Ernest	Thatcher, Mrs. Margaret
Glyn, Sir Richard	Marten, Neil	Thorpe, Jeremy
Codber, Rt. Hn. J. B.	Mathew, Robert	Tilney, John
Goodhart, Philip	Maude, Angus	Turton, Rt. Hn. R. H.
Goodhew, Victor	Maudling, Rt. Hn. Reginald	van Straubenzee, W. R.
Gower, Raymond	Mawby, Ray	Vaughan-Morgan, Rt. Hn. Sir John
Grant, Anthony	Maxwell-Hyslop, R. J.	Vickers, Dame Joan
Grant-Ferries, R.	Maydon, Lt.-Cmdr. S. L. C.	Wainwright, Richard (Colne Valley)
Gresham Cooke, R	Mills, Peter (Torrington)	Walker, Peter (Worcester)
Griffiths, Eldon (Bury St. Edmunde)	Mills, Stratton (Belfast, N.)	Walker-Smith, Rt. Hn. Sir Derek
Grimond, Rt. Hn. J.	Miscampbell, Norman	Wall, Patrick
Gurden, Harold	Mitchell, David (Basingstoke)	W alters, Dennis
Hall, John (Wycombe)	Monro, Hector	Ward, Dame Irene
Hall-Davis, A. G. F.	More, Jasper	W eatherill, Bernard
Hamilton, Michael (Salisbury)	Morgan, W. G. (Denbigh)	Webster, David
Harris, Frederic (Croydon, N.W.)	Morrison, Charles (Devizes)	Wells, John (Maidstone)
Harris, Reader (Heston)	Mott-Radclyffe, Sir Charles	W hiteiaw, William
Harrison, Brian (Maldon)	Munro-Lucas-Tooth, Sir Hugh	Wills, Sir Gerald (Bridgwater)
Harrison, Col. Sir Harwood (Eye)	Murton, Oscar	Wilson, Geoffrey (Truro)
Harvey, Sir Arthur Vere	Nabarro, Sir Gerald	Winstanley, Dr. M. P.
Hastings, Stephen	Heave, Airey	Wolrige-Gordon, Patrick
Hawkins, Paul	Nicholls, Sir Harmar	Wood, Rt. Hn. Richard
Hay, John.	Noble, Rt. Hn. Michael	W oodnutt, Mark
Heald, Rt. Hn. Sir Lionel	Nott, John	Worsley, Marcus Wylie, N. R.
Heath, Hn. Edward	Onslow, Granley	Younger, Hn. George
Heseltine, Michael	Orr, Capt. L. P. S.
Higgins, Terence L.	Orr-Ewing, Sir Ian
Hiley, Joseph	OsbOrn, John (Hallam)	TELLERS FOR THE NOES:
Hill, J. E. B.	Osborne, Slr Cyril (Louth)	Mr. Francis Pym and
Hirst, Geoffrey	Page, Graham (Crosby)	Mr. R. W. Elliott.
Hobson, Rt. Hn. Sir John	Page, John (Harrow, W.)

Bill accordingly read a Second time.

Motion made, and Question put, That the Bill be committed to a Committee of the whole House—[Mr. Whitelaw.]

The House divided: Ayes 247, Noes 325.

Division No. 146.]	AYES	[10.13 p.m.
Alison, Michael (Barkston Ash)	Atkins, Humphrey (M't'n & M'd'ri)	Barber, Rt. Hn. Anthony
Allason, James (Hemel Hempstead)	Awdry, Daniel	Batsford, Brian
Astor, John	Baker, W. H. K.	Beamish, Col. Sir Tufton
Bell, Ronald	Hall, John (Wycombe)	Nicholls, Sir Harmar
Bennett, Sir Frederic (Torquay)	Hail-Davis, A. G. F.	Noble, Rt. Hn. Michael
Berry, Hn. Anthony	Hamilton, Michael (Salisbury)	Nott, John
Biffen, John	Harris, Frederic (Croydon, N.W.)	Onslow, Cranley
Birch, Rt. Hn. Nigel	Harris, Reader (Heston)	Orr, Capt. L. P. S.
Black, Sir Cyril	Harrison, Brian (Maydon)	Orr-Ewing, Sir Ian
Blaker, Peter	Harrison, Col. Sir Harwood (Eye)	Osborn, John (Hallam)
Body, Richard	Harvey, Sir Arthur Vere	Osborne, Sir Cyril (Louth)
Bossom, Sir Clive	Hastings, Stephen	Page, Graham (Crosby)
BoydoCarpenter, Rt. Hn. John	Hawkins, Paul	Page, John (Harrow, W.)
Boyle, Rt. Hn. Sir Edward	Hay, John	Pearson, Sir Frank (Clitheroe)
Braine, Bernard	Heald, Rt. Hn. Sir Lionel	Peel, John
Brewis, John	Heath, Rt. Hn. Edward	Percival, Ian
Brinton, Sir Tatton	Heseltine, Michael	Peyton, John
Bromley-Davenport,Lt.Col.sir Walter	Higgins, Terence L.	Pike, Miss Mervyn
Brown, Sir Edward (Bath)	Riley, Joseph	Pink, R. Bonner
Bruce-Gardyne, J.	Hill, J. E. B.	Pounder, Rafton
Bryan, Paul	Hirst, Geoffrey	Powell, Rt. Hn. J. Enoch
Buchanan-Smith,Alick(Angus,N&M)	Hobson, Rt. Hn. Sir John	Price, David (Eastleigh)
Buck, Antony (Colchester)	Hogg, Rt. Hn. Quintin	Prior, J. M. L.
Bultus, Sir Eric	Holland, Philip	Quennell, Miss J. M.
Campbell, Gordon	Hooson, Emlyn	Rawlinson, Rt. Hn. Sir Peter
Carlisle, Mark	Hordern, Peter	Rees-Davies, W. R.
Carr, Rt. Hn. Robert	Hornby, Richard	Renton, Rt. Hn. Sir David
Cary, Sir Robert	Howell, David (Guildford)	Ridley, Hn. Nicholas
Channon, H. P. G.	Hutchison, Michael Clark	Ridsdale, Julian
Chichester-Clark, R.	Irvine, Bryant Godman (Rye)	Rippon, Rt. Hn. Geoffrey
Clark, Henry	Jenkin, Patrick (Woodford)	Robson Brown, Sir William
Clegg, Walter	Jennings, J. C. (Burton)	Rodgers, Sir John (Sevenoaks)
Cooke, Robert	Johnson Smith, G. (E. Grinstead)	Roots, William
Cooper-Key, Sir Neill	Johnston, Russell (Inverness)	Rossi, Hugh (HOrnsey)
Cordle, John	Jones, Arthur (Northants, S.)	Royle, Anthony
Corfieid, F. Y.	Joplin, Michael	Russell, Sir Ronald
Costain, A. P.	Joseph, Rt. Hn. Sir Keith	St. John-Stevas, Norman
Craddock, Sir Beresford (Spelthorne)	Kaberry, Sir Donald	Sandys, Rt. Hn. D.
Crawley, Aidan	Kerby, Capt. Henry	Scott, Nicholas
Crouch, David	Kershaw, Anthony	Sharpies, Richard
Crowder, F. P.	Kimball, Marcus	Shaw, Michael (Sc'b'gh & Whitby)
Cunningham, Sir Knox	King, Evelyn (Dorset, S.)	Sinclair, Sir George
Currie, G. B. H.	Kitson, Timothy	Smith, John
Dalkeith, Earl of	Knight, Mrs. Jill	Stainton, Keith
Dance, James	Lamhton, viscount	Steel, David (Roxburgh)
Davidson,James(Aberdeenshire,W.)	Lancaster, Col. C. G.	Stodart, Anthony
d'Avigdor-Goldsmid, Sir Henry	Langford-Holt, Sir John	Summers, Sir Spencer
Dean, Paul (Somerset, N.)	Legge-Bourke, Sir Harry	Talbot, John E.
Deedes, Rt. Hn. W. F. (Ashford)	Lewis, Kenneth (Rutland)	Tapsell, Peter
Digby, Simon Wingfield	Lloyd, Rt.Hn.Geoffrey(Sur'nC'dfield)	Taylor, Sir Charles (Eastbourne)
Dodds-Parker, Douglas	Lloyd, Ian (P'tsm'th, Langstone)	Taylor,Edward M.(G'gow,Cathcart)
Doughty, Charles	Lloyd, Rt. Hn. Selwyn (Wirral)	Taylor, Frank (Moss Side)
Douglas-Home, Rt. Hn. Sir Alec	Longden, Gilbert	Teeling, Sir William
Drayson, G. B.	Loveys, W. H.	Temple, John M.
du Cann, Rt. Hn. Edward	Lubbock, Eric	Thatcher, Mrs. Margaret
Eden, Sir John	MacArthur, Ian	Thorpe, Jeremy
Elliot, Capt. Walter (Carshalton)	Maclean, Sir Fitzroy	Tilney, John
Errington, Sir Eric	Macleod, Rt. Hn. lain	Turton, Rt. Hn. R. H.
Evans, Gwynfor (Carmarthen)	McMaster, Stanley	van Strauhenzee, W. R.
Eyre, Reginald	Macmillan, Maurice (Farnham)	Vaughan-Morgan, Rt. Hn. Sir John
Farr, John	Maddan, Martin	Vickers, Dame Joan
Fisher, Nigel	Maginnis, John E.	Wainwright, Richard (Colne Valley)
Fletcher-Cooke, Charles	Marples, Rt. Hn. Ernest	Walker, Peter (Worcester)
Forrest, George	Marten, Neil	Walker-Smith, Rt. Hn. Sir Derek
Fortescue, Tim	Mathew, Robert	Wall, Patrick
Foster, Sir John	Maude, Angus	Walters, Dennis
Fraser,Rt.Hn.Hugh(St'fford & Stone)	Maudling, Rt. Hn. Reginald	Ward, Dame Irene
Galbraith, Hn. T. G.	Mawby, Ray	Weatherill, Bernard
Gibson-Watt, David	Maxwell-Hyslop, R. J.	Webster, David
Giles, Rear-Adm. Morgan	Maydon, Lt.-Cmdr. S. L. C.	Wells, John (Maidstone)
Gilmour, Ian (Norfolk, C.)	Mills, Peter (Torrington)	Whitelaw, William
Gilmour, Sir John (Fife, E.)	Mills, Stratton (Belfast, N.)	Wills, Sir Gerald (Bridgwater)
Glover, Sir Douglas	Miscampbell, Norman	Wilson, Geoffrey (Truro)
Glyn, Sir Richard	Mitchell, David (Basingstoke)	Winstanley, Dr. M. P.
Godber, Rt. Hn. J. B.	Monro, Hector	W olrigeoCortIon, Patrick
Goodhart, Philip	More, Jasper	Wood, Rt. Hn. Richard
Goodhew, Victor	Morgan, W. G. (Denbigh)	Woodnutt, Mark
Gower, Raymond	Morrison, Charles (Devizes)	Worsley, Marcus
Grant, Anthony	Mott-Radolyffe, Sir Charles	Wylie, N. R.
Grant-Ferris, R.	Munro-Lucas-Tooth, Sir Hugh	Younger, Hn. George
Gresham Cooke, R.	Murton, Oscar
Griffiths, Eldon (Bury St. Edmunds)	Nabarro, Sir Gerald	TELLERS FOR THE AYES:
Grimond, Rt. Hn. J.	Neave, Airey	Mr. Francis Pym and
Gurden, Harold		Mr. R. W. Elliott.

NOES
Abse, LEO	Dunnett, Jack	Leadbitter, Ted
Albu, Austen	Dunwoody, Mrs. Cwyneth (Exeter)	Ledger, Ron
Allaun, Frank (Salford, E.)	Eadie, Alex	Lee, Rt. Hn. Frederick (Newton)
Altdritt, Walter	Edwards, Robert (EliIston)	Lee, Rt. Hn. Jennie (Cannock)
Allen, Scholefield	Edwards, William (Merioneth)	Lee, John (Reading)
Anderson, Donald	English, Michael	Lester, Miss Joan
Archer, Peter	Ennals, David	Lever, Harold (Cheetham)
Armstrong, Ernest	Evans, Albert (Islington, S.W.)	Lever, L. M. (Ardwick)
Ashley, Jack	Evans, loan L. (Birm'h'm, Yardley)	Lewis, Arthur (W. Ham N.)
Atkins, Ronald (Preston, N.)	Faulds, Andrew	Lewis, Ron (Carlisle)
Atkinson, Norman (Tottenham)	Fernyhough, E.	Lipton, Marcus
Bacon, Pt. Hn. Alice	Finch, Harold	Lomas, Kenneth
Bagier, Gordon A. T.	Fitch, Alan (Wigan)	Loughlin, Charles
Barnes, Michael	Fletcher, Raymond (Ilkeston)	Luard, Evan
Barnett, Joel	Fletcher, Ted (Darlington)	Lyon, Alexander W. (York)
Baxter, William	Floud, Bernard	Lyons, Edward (Bradford, E.)
Beaney, Alan	Foley, Maurice	McBride, Neil
Be'lenge., Rt. Hn. F. J.	Foot, Sir Dingle (Ipswich)	McCann, John
Bence, Cyril	Foot, Michael (Ebbw Vale)	MacColl, James
Benn, Rt. Hn. Anthony Wedgwood	Ford, Ben	MacDermot, Niall
Bennett, James (G'gow, Bridgeton)	Forrester, John	Macdonald, A. H.
Bidwell, Sydney	Fowler, Gerry	McGuire, Michael
Binns, John	Fraser, John (Norwood)	McKay, Mrs. Margaret
Bishop, E. S.	Freeson, Reginald	Mackenzie, Gregor (Ruthergien)
Blackburn, F.	Galpern, Sir Myer	Mackie, John
Blenkinsop, Arthur	Cardner, A. J.	Mackintosh, John P.
Boardman, H.	Garrett, W. E.	Maclennan, Robert
Booth, Albert	Garrow, Alex	McMillan, Tom (Glasgow, C.)
Boston, Terence	Ginsburg, David	McNamara, J. Kevin
Bottomley, Rt. Hn. Arthur	Gordon Walker, Rt. Hn, P. C.	MacPherson, Malcolm
Bowden, Rt. Hn. Herbert	Gourley, Harry	Mallalieu, E. L. (Brigg)
Boyden, James	Gray, Dr. Hugh (Yarmouth)	Mallalieu,J.P.W.(Huddersfield,E.)
Braddock, Mrs. E. M.	Greenwood, At. Hn. Anthony	Manuel, Archie
Bradley, Tom	Gregory, Arnold	Mapp, Charles
Bray, Dr. Jeremy	Griffiths, David (Bother Valley)	Marquand, David
Brooks, Edwin	Griffiths, Rt. Hn. James (Llanelly)	Marsh, Rt. Hn. Richard
Broughton, Dr. A. D. D.	Griffiths, Will (Exchange)	Maxwell, Robert
Brown, Rt. Hn. George (Belper)	Gunter, Rt. Hn. R. J.	Mayhew, Christopher
Brown, Hugh D. (G'gow, Proven)	Hamilton, James (Bothwell)	Mellish, Robert
Brown,Bob(N'c'tle-upon-Tyne,W)	Hamilton, William (Fife, W.)	Mendelson, J. J.
Brown, A. W. (Shoreditch & F'bury)	Hamling, William	Mikardo, lan
Buchan, Norman	Hannan, William	Milian, Bruce
Buchanan, Richard (G'gow, Sp'burn)	Harper, Joseph	Miller, Dr. M. S.
Butler, Herbert (Hackney, C.)	Harrison, Walter (Wakefield)	Mitchell, R. C. (S'th'pton, Test)
Butler, Mrs. Joyce (Wood Green)	Hart, Mrs. Judith	Molloy, William
Cant, R. B.	Heseldine, Norman	Morgan, Elystan (Cardiganshire)
Carmichael, Neil	Hattersiey, Roy	Morris, Allred (Wythenshawe)
Carter-Jones, Lewis	Hazen, Bert	Morris, Charles R. (Openshaw)
Castle, Rt. Hn. Barbara	Honig, Stanley	Morris, John (Aberavon)
Chapman, Donald	Herbison, Rt. Hn. Margaret	Mulvey, Rt. Hn. Frederick
Coe, Denis	Hilton, W. S.	Murray, Albert
Coleman, Donald	Hooley, Frank	Neal, Harold
Concannon, J. D.	Horner, John	Newens, Stan
Conlan, Bernard	Houghton, Rt. Hn. Douglas	Noel-Baker, Francis (Swindon)
Corbet, Mrs. Freda	Howarth, Harry (Wellingborough)	Norwood, Christopher
Cousins, Rt. Hn. Frank	Howarth, Robert (Bolton, E.)	Oakes, Gordon
Craddock, George (Bradford, S.)	Howie, W.	Ogden, Eric
Crawshaw, Richard	Hoy, James	O'Malley, Brian
Cronin, John	Hughes, Rt. Fin. Cledwyn (Anglesey)	Oram, Albert E.
Crosland, Rt. Hn. Anthony	Hughes, Emrys (Ayrshire, S.)	Orbach, Maurice
Grossman, Rt. Hn, Richard	Hughes, Hector (Aberdeen, N.)	Orme, Stanley
Cullen, Mrs. Alice	Hughes, Roy (Newport)	Oswald, Thomas
Dalyell, Tam	Hunter, Adam	Owen, Dr. Davis (Plymouth, S'tn)
Davidson, Arthur (Accrington)	Hynd, John	Owen, Will (Morpeth)
Davies, Dr. Ernest (Stretford)	Irvine, A. J. (Edge Hill)	Padley, Walter
Davies, G. Elfed (Rhondda, E.)	Jackson, Colin (B'h'se & Spenb'gh)	Page, Derek (King's Lynn)
Davies, Ednyfed Hudson (Conway)	Jackson, Peter M. (High Peak)	Paget, R. T.
Davies, Harold (Leek)	Janner, Sir Bartlett	Palmer, Arthur
Davies, Ifor (Gower)	Jay, Rt. Hn. Douglas	Pannell, Rt. Hn. Charles
Davies, Robert (Cambridge)	Jeger, George (Goole)	Park, Trevor
Davies, S. O. (Merthyr)	Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Parker, John (Dagenham)
de Freitag, Sir Geoffrey	Jenkins, Hugh (Putney)	Parkyn, Brian (Bedford)
Delargy, Hugh	Jenkins, Rt. Hn. Roy (Stechford)	Pearson, Arthur (Pontypridd)
Dell, Edmund	Johnson, Carol (Lewisham, S.)	Pearl, Rt. Hn. Fred
Dempsey, James	Johnson, James (K'ston-onoHull, W.)	Pentland, Norman
Dewar, Donald	Jones, Dan (Burnley)	Perry, Ernest G. (Battersea, S.)
Diamond Rt. Hn. John	Jones,Rt.Hn.SirErwyn(W.Ham,S.)	Prentce, Rt. Hn. R. E.
Dickens, James	Jones, J. Idwal (Wrexham)	Price, Christopher (Perry Barr)
Dobson, Ray	Judd, Frank	Price, Thomas (Westhoughton)
Doig, Peter	Kelley, Richard	Price, William (Rugby)
Donnelly, Desmond	Kenyon, Clifford	Probert, Arthur
Driherg, Tom	Kerr, Mrs. Anne Oiler & Chatham)	Purvey, Cmdr. Harry
Dunn, James A.	Kerr, Russell (Feltham)

Redhead, Edward	Silverman, Sydney (Nelson)	Watkins, David (Consett)
Rees, Merlyn	Skeffington, Arthur	Weitzman, David
Reynolds, G. W.	Slater, Joseph	Wellbeloveel, James
Rhodes, Geoffrey	Small, William	Wells, William (Walsall, N.)
Richard, Ivor	Snow, Julian	Whitaker, Ben
Roberts, Goronwy (Caernarvon)	Spriggs, Leslie	White, Mrs. Eirene
Roberts, Gwilym (Bedfordshire, S.)	Stewart, Rt. Hn. Michael	Whitlock, William
Robertson, John (Paisley)	Stonehouse, John	Wigg, Rt. Hn. George
Robinson,Rt.Hn.Kenneth(St.P'c'as)	Strauss, Rt. Hn. G. R.	Willey, Rt. Hn. Frederick
Robinson, W. O. J. (Walth'stow, E.)	Summerskill, Hn. Dr. Shirley	Williams, Alan (Swansea, W.)
Rodgers, William (Stockton)	Swain, Thomas	Williams, Alan Lee (Hornchurch)
Roebuck, Roy	Swingler, Stephen	Williams, Clifford (Abertillery)
Rogers, George	Symonds, J. B.	Williams, Mrs. Shirley (Hitchin)
Rose, Paul	Taverne, Dick	Williams, W. T. (Warrington)
Ross, Rt. Hn. William	Thomas, George (Cardiff, W.)	Willis, George (Edinburgh, E.)
Rowland, Christopher (Meriden)	Thomas, lorwerth (Rhondda, W.)	Wilson, Rt. Hn. Harold (Huyton)
Rowland, E. (Cardiff, N.)	Thomson, Rt. Hn. George	Wilson, William (Coventry, S.)
Ryan, John	Thornton, Ernest	Winnick, David
Shaw, Arnold (Ilford, S.)	Tinn, James	Winterbottom, R. E.
Sheldon, Robert	Tomney, Frank	Woodburn, Rt. Hn. A.
Shinwell, Rt. Hn. E.	Tuck, Raphael	Woof, Robert
Shore, Peter (Stepney)	Urwin, T. W.	Yates, Victor
Short,Rt.Hn.Edward(N'c'tle-u-Tyne)	Varley, Eric G.	Zilliacus, K.
Short, Mrs. Renee (W'hampton,N.E.)	Wainwright, Edwin (Dearne Valley)
Silkin, John (Deptford)	Walden, Brian (All Saints)	TELLERS FOR THE NOES:
Silkin, S. C. (Dulwich)	Walker, Harold (Doncaster)	Mr. Charles Grey and
Silverman, Julius (Aston)	Wallace, George	Mr. George Lawson.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Corninittal of Bills).