HC Deb 18 January 1967 vol 739 cc563-601

It shall be the duty of the Corporation, in formulating any recommendations to the Minister relating to the organisation of the activities that have fallen to be carried on under their ultimate control (whether by way of conclusions reported to the Minister under section 4 of this Act or otherwise) and of the Minister, in giving any general authority or direction to the Corporation or settling any general programme under section 4 of the 1949 Act as revived by this Act to have regard to—

  1. (a) the need to secure the largest degree of decentralisation consistent with the proper discharge by the Corporation of their duties under the provisions of this Act and the 1949 Act as revived by this Act; and
  2. (b) the need to secure competition between the publicly-owned companies by causing each such company, or group of publicly-owned companies if they are so organised, to operate as a separate trading unit, responsible for its own commercial performance and profitability.—[Mr. Barber.]

Brought up, and read the First time.

Mr. Barber

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

Of all the new Clauses on the Order Paper, this is one of the most important, because it raises two issues which are basic to the operation of the new Corporation. I will first explain what the new Clause proposes and then outline the advantages that would flow from it. It imposes a duty on the Minister and the Corporation to have regard to (a) the need to secure the largest degree of decentralisation consistent with the proper discharge by the Corporation of their duties under the provisions of this Act and the 1949 Act as revived by this Act; and (b) the need to secure competition between the publicly-owned companies by causing each such company, or group of publicly-owned companies if they are so organised, to operate as a separate trading unit, responsible for its own commercial performance and profitability. It is apparent that the wording of the new Clause is not in every sense watertight and that in other respects it may be too tightly drawn. However, the general purpose of what we have in mind is apparent.

The House will note that the wording of the new Clause is unusually modest, bearing in mind that it is put forward by a party which has very strong views on the question of decentralisation and competition. When I say that the new Clause is couched in modest terms, I am referring to the phrase "to have regard to" because this means that Parliament is not seeking to lay down either the degree of decentralisation or competition which may be appropriate in this case.

I would draw the attention of the House to Clause 33, which was added as a result of a discussion in Committee when the right hon. Gentleman realised that if he were to continue to resist he would be defeated by the combined votes of the Opposition and of a number of hon. Members who normally support the Government. In Clause 33 there appear the words—

It being Ten o'clock, further consideration of the Bill, as amended, stood adjourned.

Ordered, That the Proceedings on the Iron and Steel Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Gourlay.]

Bill, as amended (in the Standing Committee), further considered.

Mr. Barber

In Clause 33 we read: In determining the location of its commercial and administrative offices, the Corporation shall have regard … to certain factors there set out.

The Minister then took the view about the Clause, firstly, that the ultimate decision rested with the Corporation and, secondly, that it was an advantage to indicate in the Bill the wishes of Parliament. We have therefore carefully chosen the same operative words "to have regard to" in this Clause which, on the Minister's own interpretation, means that the Corporation will not be bound by these two criteria but that, again on the Minister's interpretation, it would be useful to have in the Bill some indication of Parliament's wishes.

Perhaps I could also say, with all due respect to the Organising Committee, that it is for Parliament to lay down the guide lines of the operation of the new nationalised industry. Indeed, the Minister has already recognised this by the general duties that he has imposed on the Corporation and which are set out in Clause 3.

What we want to see is some decentralisation in the operation of the National Steel Corporation. It is not simply because we have before our very eyes examples of other centralised nationalised industries that have already clearly failed the nation, but because a number of important positive advantages would flow from decentralisation and a measure of competition. This, I repeat, is the first occasion on which the State is taking over a great manufacturing industry.

What are these advantages? First of all, the National Steel Corporation will be a mammoth organisation, with capital employed amounting to £1,300 million and with 278,000 employees. Whatever may be the wishes of right hon. Gentlemen opposite, it is really inconceivable that it could be organised in any way other than through a number of operating groups. That must be accepted.

That being the case, if there were to be a centralised monolithic organisation with all major decisions taken at the centre, the inevitable consequence would be to stultify enterprise and stifle initiative, yet it is just these two attributes, initiative and enterprise, that are crucial to an international manufacturing enterprise. This, I believe, is in itself sufficient for advocating the maximum amount of decentralisation, but there is another factor, and I hope that the whole House will think it a very significant factor, that should be taken into account.

In Section 3(1) of the Iron and Steel Act, 1949, which nationalised the steel industry before, the general duties of the Corporation are laid down. In paragraph 3 of the list of general duties there appear these words: …to secure the largest degree of decentralisation consistent with the proper discharge by the Corporation of their duties under the preceding provisions of this section and under any other provision of this Act. Mr. Speaker, you will see that these words, with one minor amendment necessary because of the passage of time—these words in the 1949 Act presented to Parliament by a previous Labour Government—are identical with the words in this new Clause. These significant words, indicating a decentralised industry, have for some reason not apparent to me been omitted from the Bill before us.

The second advantage of the new Clause would be to make possible a measure of genuine competition between the constituent companies or groups of companies which together comprise the nationalised sector. One recognises that the overall planning would remain with the National Steel Corporation itself. No one suggests otherwise, but the establishment of competing units is the only possible way of ensuring that most decisions are taken on a strictly commercial basis. If the companies or groups of companies were treated as commercially viable entities responsible for their own commercial performance and their own profitability, this surely would create a spirit quite different from that which exists under the existing nationalisation set-up.

Thirdly, the breakdown of the National Steel Corporation into a number of competing units would provide a very real safeguard for the 200 smaller companies in the steel industry which are still to operate under the system of private enterprise. Many of these companies—for example, the rerollers—will be dependent on the National Steel Corporation for their raw material. Obviously it will be in their interest, and I believe in the national interest, for them to have the opportunity of buying from more than one supplier. An hon. Friend explained earlier that, unlike all the existing nationalised industries, the steel industry is a manufacturing industry where those who buy its products ought to be able, as it were, to shop around from one company to another to get the best bargain they can, be it a question of price—and we have advocated that there should be price competition in the industry—or quality, delivery or so on.

The fourth advantage of the new Clause would be to provide a large degree of decentralisation which would be advantageous for exports of steel. Anyone concerned with the export trade knows perfectly well the overwhelming importance of satisfying the overseas customer that he is in touch with a group or company with a known name where there are personal links and where problems and difficulties which inevitably arise in trade can be dealt with easily without having to go through some enormous head office. This will be impossible if all the export business is done nominally through the headquarters of the National Steel Corporation.

Fifthly, there is the vitally important task of retaining the best men in the operating groups. I am sorry to have to say it, but it is a fact that many people in senior positions in the steel industry are already very dispirited by what the Government are proposing. For these people there are abundant opportunities in steel industries overseas, not to mention other private enterprises in this country. If this nationalised industry is to be in any way a success, it is absolutely vital that these men should be retained. The top men in this industry, or any industry, are attracted in the main by two incentives. The first is the opportunity to earn a high salary—there is nothing wrong with that—and the second is the opportunity to decide the future of the enterprise which they serve. If all really important decision-making is taken away from the operating companies or from the operating groups of companies and centralised in the headquarters of the Corporation, many of the top men in the industry will leave.

Sixthly and lastly, the one factor which has been largely lacking in the existing nationalised industries is the personal responsibility for financial results. However big the loss, the Treasury always stands ready to bail them out. By decentralising the organisation and by establishing competing groups it would be possible to instil a measure of financial discipline into a new nationalised industry which would be of immense value to the nation.

None of these advantages would detract from the obvious desirability of greater rationalisation in the industry. Indeed, hon. Gentlemen will recall that throughout I have referred, not merely to the operating companies, but to operating groups. We have seen one example of a group being formed in recent weeks even while the Bill has been going through the House of Commons.

Whatever the previous shortcomings of the industry may have been, they now all accept the need for rationalisation on the lines of the first Benson Report. The present Foreign Secretary has said on behalf of the Government that competition is not the answer, but happily, he is no longer responsible for our economic affairs. If the Minister is not prepared to give his blessing to a considerable degree of decentralisation within the nationalised sector, I predict that, as the years pass, the steel industry of Britain, in the words of Aneurin Bevan, will indeed fail the nation.

Sir J. Eden

The whole House will have listened with a great deal of interest to what my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) has said and will recognise as a result of his speech, if they had not already realised it, how very important the new Clause is. We believe that this goes to the very root of the whole issue now before the country as a result of the Government's decision to re-nationalise the industry.

We know, as most hon. Members opposite do, that many people had hoped that, since the Government had apparently decided, after very considerable hesitation and doubt on their part, to go ahead with renationalisation, they would use this as an opportunity for departing from the old formula of nationalisation. which has been tried and which has manifestly failed the nation. It was hoped that this would not simply be a rehash of all the old techniques and methods of nationalisation which have been shown to be very unsuited to the industries which have been taken into public ownership, which have denied to them a degree of flexibility which subsequent development has proved to be necessary, and which have brought to the people an intolerable burden.

It was hoped by all, by hon. Members on these benches as much as by those who are ardent supporters of nationalisation, that we should have some evidence of dynamic rethinking from the Government benches. Instead, so far we have had all the old stuff. We have had the rehash or the reincarnation of a former nationalisation Act.

All of us who were fortunate enough to serve on Standing Committee D will recollect the references made by my hon. Friend the Member for Yeovil (Mr. Peyton) to the horrible skeleton or bundle of bones he found in the cupboard.

10.15 p.m.

Mr. Peyton

My hon. Friend is doing me a great injustice. I never looked into any such dirty cupboard. I did not find these bones. What I think I did comment on was the obscenity of the Minister in attempting to give the kiss of life to dirty, dank, old statutory bones which he had found.

Sir J. Eden

I am much relieved, and I readily accept the correction of my hon. Friend if he was not guilty of any sleuthing or snooping after this unpleasant and horrible collection of bones. The fact remains that I am quite certain that everyone thought that this would not simply be a repetition of the old formula, that the Government genuinely intended to try to advance the interests of the community and especially help strengthen the economy of the country. But they have not done this. There is still a chance for them to have second thoughts. I believe that they may well be inclined to accept this new Clause, because, after all, it does go a very long way towards what is clearly now already moving within the industry, namely, a desire to form larger groups among those already engaged in it.

If one were to ask what is needed in the steel industry, many people would straight away hit on this point, that there should be fewer of the larger manufacturing units. Clearly, this is the view of the industry itself. This is certainly the view of the Benson Committee, so far as it has already gone in its investigation of the industry. This has already been assisted by the industry itself in the associations which it is currently engaged in effecting.

My right hon. Friend referred to one of them, the South Durham-Dorman Long-Stewart and Lloyds group. There is everything to be gained from this. It would strengthen the structure of the industry whilst, at the same time, preserving that element of competition which I believe to be absolutely essential.

Acceptance of this new Clause would give heart to all the main people concerned with the future of this industry: to those employed in it, to those who buy from it at home, and to those who buy from it abroad. I have no doubt at all that acceptance by the Government of this new Clause would give a tremendous boost to the personnel engaged in the industry.

In company with some of my hon. Friends I had the opportunity, during the latter part of the Summer Recess, of visiting a number of steel works in this country. One of them, for example, was the Steel Company of Wales. Another one was Colvilles in Scotland. Wherever we went—I know that I am speaking also for my hon. Friends—we were struck by the immensely high calibre of the people employed in the industry, and also by their sense of devotion to the companies and to the industry for which they were working.

I am quite certain that the Government would not wish to destroy this spirit. I am quite certain they would not wish to take any action which would result in men of this calibre, of this stature, of this sense of devotion, leaving the industry. However, I greatly fear that if they persist in creating a single, monolithic structure and destroying the identification which these people may have with an individual company or group of companies, then the sort of movement out of the industry which my right hon. Friend envisaged will, all too regrettably, take place.

I hope that this will not be so. I am certain that for these people to wish to remain in the industry they must feel a sense of identification with the company or the group with which they are associating and must therefore have some kind of direct responsibility for the policies of that group. This is why I believe that some element of competition or freedom to determine the pricing and marketing arrangements of their own group of companies is so important.

Second, there is the question of customers at home. I wish only to add to what my right hon. Friend said that I agree that it is extremely important for those who purchase from these companies that they should not be dependent upon one supplier. They must have an alternative source. This has been preached by hon. Gentlemen opposite in their anti-monopolistic speeches time after time and I absolutely agree with them. What they have applied against monopolistic power in private industry applies just as much and with almost greater emphasis when State money and public investment is involved, as it is here.

Third, there is the question of customers abroad. Those who have been buying from these companies overseas have come to value the service and the quality of the products of the companies with which they have been dealing. They have valued them not simply as British steel, but as British steel made and supplied by a particular company with a particular label. These companies have had their own overseas selling forces and they have established close personal links with their customers in overseas markets. It is most important that we do not destroy this, particularly at this juncture.

I think that they can be added to and strengthened. I agree very much that there is room for substantial amalgamation and regrouping. I am sure that this is important and that the National Steel Corporation can help to achieve it, with the assistance and advice of the Benson Committee and the organising committee. However, I beg the Government to ensure that, in future, there is not one single monolithic structure, but a number of groups free to compete among themselves. Only in that way will we get the really effective discipline out of which true benefit will come to the industry and to the country.

Mr. John H. Osborn (Sheffield, Hallam)

The debate on Second Reading and in Committee was preceded by the Benson Report, part of the theme of which, as well as rationalisation, was competition between various groups. On page 77, the Report says: … discussion of rationalisation must above all proceed in terms of works. This is the basis of the Amendment. Throughout Committee—I claim to be one of those who belong to "Club D"—we tried to find the object and policy of the Government in implementing the Second Reading decision to nationalise steel.

I have felt that the whole process of nationalisation has careered along madly in a vacuum. The objective has been clear—to nationalise steel—but the policy and what the industry should do when nationalised has been far from clear to the Opposition, to the steel industry and to the country. The justification for these comments is that the Organising Committee set up under Lord Melchett is working overtime to advise the Minister about what should be done.

There is a trend in this modern age for administrators and professional economists to attempt to determine from theory rather than practice what should happen in our industrial society. From time to time over the last 20 or 30 years there has been a trend in the private sector, let alone the public sector, to concentrate and centralise on the so-called need for rationalisation and efficiency. But ultimately there comes a time when centralisation results in over-centralisation and eliminates healthy competition and when conformity leads to mediocrity. Perhaps hon. Members opposite cannot accept this, but it has been the experience of many large private concerns. When they have reached mediocrity in a competitive age, they have had to do something about it or go out of business. We are discussing a Corporation which will be subsidised, if necessary, by the State. We are discussing a nationalised Corporation, which is something different.

Many management consultants would concede that centralisation may look tidy to the planner. It has its advantages. But the result for people, factories and plant is that authority is ultimately taken from the manager and the manager feels frustrated, decision-making is taken from the shop floor and given to somebody in a head office and too frequently, not only the shop floor, but those in charge of it become so remote from the decision-making that they do not know what is going on. This has happened, and it could happen again.

Paragraph (b) of the new Clause refers to the need to secure competition between the publicly-owned companies by causing each such company, or group of publicly-owned companies if they are so organised, to operate as a separate trading unit.… There is a certain amount of uncertainty on many issues. We do not know whether, after nationalisation and the Report of the Organising Committee, there will be 14 separate units. But according to conclusion No. (xxxviii) in the Benson Report, Six or seven integrated works and two or three large non-integrated steel-works could provide 28.8 million ingot tons.… This is the prototype which certainly must be looked at by Lord Melchett.

It is reasonable to ask what the nation wants in terms of the future and the nationalised Steel Corporation. The tragedy is that far too many people in the country find the process of steel nationalisation something which they cannot understand or comprehend. I do not blame the large section of the population who feel that this is the affair of politicians and administrators and is nothing to do with them. The nation and Parliament want an efficient steel industry which is a commercial success. But what will promote that efficiency? If managers on the spot are not given a free hand and a certain amount of independence, far from promoting efficiency, exactly the reverse could result.

We have been discussing commercial accountability on other Amendments, ensuring that the activities of one works are not hidden in a large mass of accounts. Points were raised in Committee with particular reference to the National Coal Board and the gas industry. We want to measure sales, profits, and return on capital.

On the question of sales, at all times in the steel industry it is vital that there should be personal contact between the person or persons making steel and those buying it. Some coustomers have idiosyncrasies, and those idiosyncrasies are learned by certain suppliers. If the contacts between those supplying the steel and those buying it are broken, the suppliers will lose customers to others, perhaps overseas companies. This will have to be borne in mind in the steel industry. There is value, therefore, in these personal contacts, not only by the sales director but by the managing director of the company concerned. There is need to ensure that the customer can identify not only the product he is getting, but the person supplying it.

10.30 p.m.

To summarise, of course there must be good people in the steel industry, and they must not be driven away at factory level, and the one factor which will prevent this from happening is, giving them authority in their own works, and not to concentrate authority at the centre. To turn again to the need for rationalisation, rationalisation by no means conflicts with this new Clause. We are virtually careering down the corridor of nationalisation without a clear idea in Parliament as yet of what should be the correct balance between accountability to Parliament and commercial freedom. We have not decided—we did not on a previous new Clause—whether we should abandon the price structure under the 1953 Act or retain it. The Minister was remarkably elusive when we were on the previous Clause. We are not certain whether the Minister intends to have a monolithic structure, and whether the large Corporation is to be maintained. That is certainly indicated by the fact that the Minister is increasing the members of the Corporation by a subsequent Amendment, destroying, perhaps, the whole character of individual firms.

But to conclude, the buyer must know his source of supply and the people supplying him, and be able to identify his material with the manufacturing works supplying it. This is required by the customer whether at home or overseas, and by the industry itself. The new President of the Federation, Mr. Peech, is reported in the Steel Times of 6th January as referring to the need for diversified industry, industry where units are competing against one another not only in terms of price but delivery, costs of production, methods of production, quality and service.

Therefore, I believe that it is in the national interest that the emphasis in the new Clause should be accepted, and I very much hope that the Joint Parliamentary Secretary to the Ministry of Technology, who, I think, will be replying, will bear this in mind and will, on behalf of the Government, accept it.

Mr. Hall-Davis

Without question, this new Clause, as my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) has said, goes to the heart of the future organisation of this vital industry. The discussion of the new Clause will, I hope, enable the Government, through the Joint Parliamentary Secretary, to remove some of the uncertainties, fears and hazards which must confront the industry at the present time. If I could make a general observation, before turning particularly to the arguments in favour of the new Clause, I would say to him, he is well qualified to appreciate the importance of what I am going to say and I hope that when we discuss the affairs of this industry—in the abstract, as it were—in this House, we shall not lose sight of the sheer scale of the changes which may be involved, and the immense importance of the industry, and that we shall not look upon this as a paper operation, or as a theoretical operation, but translate all our thinking in terms of its effect upon individuals, upon communities, and of what is practicable in changing the organisational structure within any given period.

That is one reason why both parts of the Clause are of vital importance to the steel industry and to the national economy. In what I am about to say, I accept the decision of the Second Reading of this House. The Clause presents an opportunity for the Minister to show, without any sacrifice of his political principle, that he is capable both of heeding the lessons of the past derived from our experience of nationalised industries, and of noting the current trend of organisation within industry, to which my hon. Friend the Member for Hallam has just referred.

If the right hon. Gentleman accepted the Clause or introduced one closely allied to it in another place, he would make a gesture which would not only encourage those engaged in the steel industry but put much needed new heart into the whole of British industry generally.

To those engaged in industry, it seems so often that Governments are immune against infection by new thinking which is producing changes in evolution in industry in the private sector. If Governments are not immune to new thinking, they give the impression, by inertia, that they are incapable of adjusting Government-controlled organisations in a way that translates the new thinking into policy and action.

At present, the trend of industrial thinking is simultaneously both towards larger units and towards decentralised decision taking and operational control. It has been found that once the benefits in terms of production of an optimum sized unit have been obtained—and they are often obtained in terms of production and marketing before they are obtained in fundamental research and development, though fortunately that is not a problem which faces this industry and its organization—a further aggregation in size is adverse and harmful and produces retrogressive effects rather than increased efficiency.

There is no doubt that, at present, people are becoming increasingly perturbed by the size of Government-established units of administration and operation. It is not something which relates only to the steel industry, and it is not something which has any particular political significance. It is a deep-seated feeling that we are beginning to lose the degree of control over our affairs that we ought to possess because we have allowed them to be grouped into units of activity which are too large for them to be controlled effectively by any collection of individuals.

The first part of the Clause, dealing with decentralisation, gives the Minister the opportunity to recognise and acknowledge the validity of that widespread national feeling. However, if he acknowledges the substance of the argument in favour of the first part of the Clause without also accepting the second part, which recognises the advantage of the industry operating on a basis of formal competition, he will only seize half his opportunity. I want to stress this point, because I suspect that this may be the form of reply that we shall receive from the right hon. Gentleman or the Joint Parliamentary Secretary this evening. It will be easy to pay as it were lip-service or acknowledgement to decentralisation, but they will not be prepared to accept the more binding and formal commitment of agreeing that internal competition within the industry would be the best way of conducting its affairs.

It is, of course, possible to establish substitute criteria for measuring efficiency to replace the criteria of the profit and loss account and the flow of customer support, but I believe that it is neither easy nor entirely satisfactory. I appreciate that hon. Gentlemen opposite often express concern about certain aspects of a competitive economy. Some of them, I think, express concern about every aspect of a competitive economy, but on the whole there are few Members of the House who would deny that competition has its part to play in energising and stimulating the whole economy of the country.

There are few of us who would deny that there is, to a greater or lesser extent, a competitive instinct in all of us. This instinct is most satisfied when we can compete on a basis which is fairly and readily understood, and the basis which is generally recognised to be fair, and generally readily understood in industry, is when the competition exists commercially and industrially, and is measured by what is known as, I think, the traditional form, that is, not the completion of statistical tables, but of the profit and loss account, and the measurement of customer satisfaction through expanded sales.

I believe that the Clause would enable the Minister to have the best of both worlds, because there is nothing in the Clause which is taking away from the Minister control of what is sometimes described as the commanding heights of the economy, while at the same time enabling the individual units to compete against each other and to measure their relative progress and achievement with each other.

There are two other arguments strongly favouring the adoption of the Clause. The first one was referred to specifically by my right hon. Friend the Member for Altrincham and Sale (Mr. Barber), relating to exports, and I should like for a moment to touch on the more personal aspects of the export problem.

As a result of the Bill we shall have a State-owned steel industry competing overseas with undertakings which themselves are in the private sector. I believe that this will create difficulties—and we may as well acknowledge it in this House; we would be failing in our duty if we did not—which the industry will have to surmount in its relations with its overseas customers, because customers, many of them politically opposed to steel nationalisation, will be quick to blame any failure of service on bureaucratic over-centralisation and control, and minor failures of the kind which may be inevitable from time to time in all organisations, may be exaggerated and undue significance attached to them, with consequential damage to the Corporation's trading prospects.

Acceptance of the Clause and its implementation would, I believe, do much to protect the industry against this handicap on its export effort, and, similarly, the operation of the industry on the basis of separate groups in competition with each other, and presenting individual profit and loss accounts, would go a long way to set at rest resentment which may arise among the industry's overseas competitors and lead to difficulties, and prevent them having a suspicion that particular products are in some way enjoying an internal subsidy within the Corporation. Competitors would feel that the affairs of the industry were fully and frankly exposed if the basis of the Clause were adopted. This would be to the benefit of the industry in its export efforts.

I am sorry if I apear to have been following my brief somewhat carefully—it is my own—but I can assure hon. Members opposite that this subject is one in which every word should be carefully weighed, and I make no apology for doing so. [HON. MEMBERS: "Big business."] It is big business for the country that we should maintain steel exports.

10.45 p.m.

Lastly, and perhaps most important, I want to put a point to the Minister that I do not think will receive any more support from hon. Members opposite than that to which I have just been referring, but it should be said in the House—and it is the proper time to say it on Report—that the industry must be heartily sick of being fought over as a political battlefield, and that we, as politicians, should be not a little disturbed at our actions in subjecting the industry to this type of uncertainty over such a prolonged period.

It so happened that when I became a Parliamentary candidate—an unsuccessful one—20 years ago, the main political parties were debating the future of the steel industry, and it has been subjected to uncertainty ever since. It is the responsibility of those who have political control of the affairs of the industry, so far as possible, so to order its affairs and organisational structure that the largest possible segment of its operations and its direction should be cast in a pattern which removes them from the field of political controversy. I believe that a realistic appraisal of the Clause would show that it would have exactly this most desirable effect. It would cast the organisational structure of the industry into a pattern broadly acceptable to many whose political views differ from those of the Government.

I accept this. I am stating what I believe to be important, absolutely frankly. It would reduce the future pressure for change in the structure of the industry. It would also mean that changes of a political-economic nature which the nation may at some future time decide are in the best interests of the country could be effected with a minimum of disturbance. These are considerations which the Minister has a duty to the industry to take into account when determining the Government's attitude to the Clause.

To accept the Clause would in no way compromise the Government's principles, but it would hold out to the industry a hope of greater stability and of a less hazardous path ahead. For that reason it deserves the most careful consideration.

Mr. Edward M. Taylor

I want to say a few words in support of the Clause. I was rather disappointed that the Minister has not yet intervened, because the implication is that he will not accept it. This will be very regrettable. I am afraid that throughout Committee attempts made by those on this side to improve the Bill were not treated with the respect they deserved. We appreciated throughout the proceedings then that the Bill was going to go through. There was little we could do about it, except to try to improve it, but when constructive attempts were made to remove the difficulties which we have seen in regard to other nationalised industries, they were rejected.

Here again we are trying to improve the structure of a nationalised industry in a way which does not lay any specific obligation upon the Minister, but merely lays an obligation on the Corporation in formulating its recommendations to the Minister, and if the passing of the Clause resulted in the Corporation presenting a pattern which the Minister did not like, at the end of the day the responsibility would still be his.

Apart from that, we are not proposing any rigid pattern. The Clause allows for great scope. From that point of view, too, the Government would be foolish to reject it. The Clause seeks to find a new way of overcoming some of the difficulties which have been experienced in other nationalised industries. One argument which has been advanced, and dealt with in detail by my hon. Friends, concerns the dispersal of decision making. The arguments for this are obvious and I need not repeat them, but obvious implications stem from them. If decision making is centralised, the implication clearly is that the top jobs will be centralised, and, unfortunately, from previous actions of the Government, we know where that centralisation will take place. It will almost certainly be in the Greater London area, and that is the kind of thing which is knocking the heart out of regional development. We have seen several examples from the Government and no doubt we shall see more.

The question of good will is neglected by many of the nationalised industries. What is not appreciated is that the moment the Corporation is set up, many customers, individuals and organisations will want to make representations of one sort and another about the activities of the steel-manufacturing companies, and they will want to make those representations in the right places. How much better it will be for the good will of the steel organisations and the companies if these representations can be made locally, and if the decisions can be taken locally, and if the idea is generated that the people in the local works are those who take the decisions. This kind of good will is very important—and many of the nationalised industries lack good will.

It is also important for the morale of the staff for them to feel that the decisions are taken locally. I am afraid that if we have this form of centralisation, which is inevitable if the new Clause is not accepted, the morale could be as low as it is, unfortunately, in some of the other nationalised industries. The reputations of the individual companies are of real value. They have taken a long time to establish their reputations and we should be destroying much of value if we destroyed the companies and the existing groupings. Quite apart from the lower prices which we believe could come from fair competition between the groups, we must also have regard to the question of efficiency.

I have not put my name to the Clause because I have one slight reservation about it. While it is true that we want to encourage the maximum degree of competition, and while we know that this means lower prices and good service, the plain fact is that because of the activities of other nationalised industries, for Scotland fair competition is a nonstarter. That is true of certain of the steel-producing areas, of which Scotland is one. The reason is not inefficiency on the part of the Scottish steel industry. In some ways it is most efficient, particularly Colvilles. It is simply because of the price differentials which are imposed upon them by other nationalised industries.

Through your generosity, Mr. Deputy-Speaker, I shall have an opportunity later to deal with that in detail, but I hope that my right hon. and hon. Friends will bear in mind that while fair and free competition is splendid and can do nothing but bring benefits to all the people of this country and our customers abroad, it is impossible to have fair and free competition when one section of that industry starts with a ball and chain round its feet. While I favour fair and free competition, therefore, I ask that this point be borne in mind.

I emphasise that this difficulty stems from other nationalised industries, from the policies which they adopt and their organisations, and we do not want to see that kind of mistake repeated in the new steel organisation. To that extent the Government would be well advised to accept the Clause and all that it implies. There is clearly a need for change and experimentation in a nationalised industry. Unfortunately, the Government have adopted a rigid and inflexible attitude which will be bad for the future of the industry. With the slight reservation that I have made, I urge the Government to accept the Clause.

Mr. Peyton

It is a pleasure to follow my hon. Friend the Member for Cathcart (Mr. Edward M. Taylor). I had noted with some disappointment that he had not put his name to this new Clause. I have had the privilege of his support for many Amendments I put down in Committee, and now on Report, I know the careful consideration he gives to these matters before deciding. I am always very grateful for the support I get from him.

I wish I could feel the confidence that one ought to feel following the almost unanswerable arguments deployed by my right hon. and hon. Friends, but I am afraid that the presence of the Parliamentary Secretary to the Ministry of Technology somewhat dislodges, if it does not destroy, my confidence. I do not believe for one moment that he is there to bring gaiety into our lives, or that a Government wholly given over to doctrine and musty dogma will depart from it and change their views—

Mr. Ridley

Does not my right hon. Friend agree that the position is even worse? We have two ex-Parliamentary Secretaries to the Ministry of Power, which is all that that Ministry appears to be able to muster.

Mr. Peyton

No, three. I am not quite sure what my hon. Friend meant by that suggestion. Assuming that it was not directed at me, I will revert to the observation I was about to make, that one of the ex-Parliamentary Secretaries to the Ministry of Power was at least respectable. I speak entirely for myself. It would be kind to allow the hon. Gentleman the Parliamentary Secretary to the Ministry of Technology to escape into the recesses of that Ministry and have a veil drawn over his performance in Standing Committee D. Of course, here is an opportunity for him to cut loose and say that he will accept this very reasonable new Clause.

My hon. Friend the Member for Bournemouth, West (Sir J. Eden), in his very penetrating speech, reminded the House that during the Committee stage I had protested on more than one occasion against this kind of revivalist legislation which has been put before us—and a nasty sort of dog's dinner it is, too. The idea that Ministers can search the graves of old Statutes, disinterring them, reviving them and putting them before Parliament in the hope of cutting short discussion is something that I find wholly unacceptable, but it is a pity that, when given a chance of reviving one reasonably healthy piece of this otherwise revolting corpse, they should with contumely reject it.

I am sorry that I do not feel any great confidence that the Parliamentary Secretary to the Ministry of Technology will be minded on behalf of his ex-Ministry to accept this very reasonable new Clause, but I do believe that the virtues of competition and decentralisation which are enshrined in it should commend themselves even to the Parliamentary Secretary. I do not believe that when the Government came to wrestle with the problems of how to reorganise, run, manage a great industry such as iron and steel, they felt anything beyond a real shock at being lost by the problem with which they were confronted. It was so evident throughout the passage of the Bill that they did not have a vestige of an idea.

11.0 p.m.

Sometimes the Parliamentary Secretary got quite cross with the arguments put to him from the Opposition. He failed entirely to appreciate that what was worrying us throughout was that here was a Government hell-bent on a course which we believed to be a bad one, without having available, or even in an early stage of preparation, anything that could remotely be called a plan. This state of affairs came ill from a collection of people who had been singing the virtues of planning for many years. I except honourably the hon. Member for Ebbw Vale (Mr. Michael Foot). I am quite certain that he has never thought of making a plan in his life.

I hope that the Government will make progress along the road to developing the iron and steel industry in a healthy manner and see fit to acknowledge the virtues of competition and decentralisation rather than adhering rigidly to some awful clap-trap about "the commanding heights of the economy". I hope that the Minister will have in mind some of the considerations mentioned by my hon. and right hon. Friends, that it is important to provide safeguards for the customers, important to give the publicly-owned industry the stimulus and discipline of competition, and also important that the remaining private sector should be comforted by the sight of continuing competition taking place within the publicly-owned industry.

I have been relieved from the duty of making a long speech on this new Clause because of the eloquence, the conciseness and quality of the arguments presented by my hon. and right hon. Friends. I do not see any need to go into it in detail, but I hope that if the Ministers are deaf to arguments presented in this House they will give ear to some of those who work in existing nationalised industries and many of those who work in the existing steel industry, upon whose good will they will be increasingly dependent. I hope that they will give weight to the requests of such people for decentralisation and their belief in competition, and also pay some respect to the wish, particularly of those in the steel industry to keep alive names and organisations which mean a great deal to many people.

I accept that this may be difficult for the Government because it will involve the swallowing of some rather indigestible words. They have abused this industry with every type of smear, charges of nepotism, being old-fashioned and the rest. They have castigated it continuously, but when they came to reorganise it, what were they driven to do? To get a chairman they had to go to the City and to get a No. 2 they had to go straight back to the industry which they had been so busy chastising with very stupid words.

We are too hard-bitten by painful experience to believe that the Parliamentary Secretary is there for any purpose other than to reject valid argument with no good reason. That is an almost inevitable depressing experience to which my hon. and right hon. Friends have been too often exposed to be tender now.

Mr. Ridley

The Parliamentary Secretary to the Ministry of Technology is someone with whom we should sympathise. A week ago he thought that he had escaped from any further proceedings on the Bill. He must be very depressed to find himself again having to answer with his known hesitation these important debates upon the nationalisation of steel.

Dr. Bray

On the contrary, they could not keep me away.

Mr. Ridley

We now have three Parliamentary Secretaries to the Ministry of Power on the Treasury Bench. All in due course will join "the Bray drain". I have no doubt that the hon. Gentleman will be extremely pleased to have escaped into the safe confines of the Ministry of Technology.

It is extraordinary that there is no decision in the minds of the Government about the organisation of the industry following nationalisation. For 13 years hon. Members opposite have been crying for the nationalisation of this great industry. They have had all this time in the wilderness to think out how they were to achieve it. Yet time and time again they say, "This is a point for the Organising Committee. This is a point for Lord Melchett to settle. We cannot say what the answer will be. We have not made up our minds about pricing policy, about the grouping of the companies, about anything at all".

The hon. Member for Ebbw Vale (Mr. Michael Foot) and others will know the noble Lord, Lord Melchett, to be no great disciple of Keir Hardie, no great descendant of the fathers of Socialism. Yet it is he, aided by Mr. Macdairmid, that very able steelmaster, who will take these decisions. It is absolutely preposterous that the Labour Party, having for so long prayed nationalisation in aid as the solution to all our industrial problems, should lamely come before the House and spend £580 million of the taxpayers' money in order to nationalise this great industry but yet say, "We have no idea whatsoever of the form we would like it to take upon nationalisation". What a pathetic admission of failure. What a pathetic admission of lack of homework, of lack of forethought, of the lack of any attempt during those 13 years to solve this problem.

Mr. Deputy Speaker (Sir Eric Fletcher)

Order. The hon. Gentleman seems to be wandering a little from the terms of the Clause.

Mr. Ridley

The main choice in accepting the Clause or rejecting it is whether we are to create a monolithic industry controlled from the centre with each of its dependent works or establishments simply appendages, or whether we are to create a series of competing groups controlled no doubt as to the ground rules by the Corporation. The Clause seeks to set up competing groups. This is a structure of nationalised industry which has been tried before in the previous steel nationalisation Act. I believe it to be about the only worthwhile comparison, because all the other nationalised industries are service industries, with the exception of the coal industry, which is an extractive industry. This is the first manufacturing industry. So there are few precedents as to whether the monolithic solution or the competing solution is the right one.

It is marvellous and wonderful that the Labour Government have not made up their minds on this. It is impossible in a nationalised industry to match the ultimate degree of competitive efficiency which forces of competition, the fear of bankruptcy, and the market, can induce in the managers of the industry. But in setting up this great productive monolith, we must try to get as much competition, as much discipline, as much pressure upon managers as we can.

If there are troubles in industry, if there is inefficiency and slackness, it is the fault of the managers, of the bosses. The only way to get better performance from them is to put them in a position in which they have to do better or go under. The main task is to eliminate the sloppiness of management caused by the cosy conditions which slack financial discipline brings about.

There is considerable inefficiency in many sectors of private industry, but the examples in nationalised industry are probably worse still, and the need ultimately is for the managers to be able to get tough. I was a boss, an industrial manager, for ten years, and the hardest thing I ever had to do was to sack people. It is the most unpleasant and most difficult part of being a boss. But it is the essential part of running a business efficiently. We must induce in the managers of the future nationalised steel industry the need and the ability to dispense with the services, perhaps, of their friends and of people who work for them when they are failing to do as they should.

The nearest we can come to this ideal is by making the various elements in the steel industry compete one against the other, making the financial disciplines which we put upon the industry strong enough to embolden managers to chance their arm, to risk their reputation, to fail or to succeed, because they are forced to by the conditions which we create.

The main defect of British industry is the lack of competition. A few months ago, I asked a Swede what he thought was wrong with British industry, and he replied: "Whether it be private or nationalised industry, the trouble with you in Britain is that you have not been made to compete, you have not had the full weight of the competitive pressures which we in this Socialist State of Sweden have fought against for years. If you made yourselves compete, you would force yourselves to be more efficient". As we slide gradually down the slope into the industrial backwardness of inefficiency, it is not the time to start making national steel corporations which, if anything, will tend to lessen the pressure for competitive efficiency, but, rather, it is the time to devise ways by which we can make the nationalised industries compete and, therefore, perhaps become more efficient.

In the Coal and Steel Community we should have to adopt the grouping solution. For our own benefit, from the point of view of industrial efficiency and managerial responsibility, we need it, too. From the point of view of trade marks and the reputation of the companies acquired over the years, we need it, too. But there is a further reason why we should adopt the competing group solution, a reason which, perhaps, will not appeal to hon. Members opposite. In a year or two, when they leave office, we shall have to put the country's economy right again, and one of the first things to do will be to denationalise the steel industry. The more that the party opposite integrates it into one, the more difficult will that legislation be. That, therefore, is an added reason why the industry should be left in groups, so that it can more easily be disentangled when the disastrous flirtation with Socialism has come to an abrupt and unhappy end.

11.15 p.m.

Mr. John Nott (St. Ives)

Financial control of the public sector is one of the greatest problems facing all Governments, and this new Clause does a great deal of good in drawing attention to this problem. The steel industry, as has been mentioned, is different in many respects from the other nationalised undertakings and I want to draw attention to only one aspect of this matter.

Wherever there are trading activities in the other nationalised industries—one might take the brickwork division of the National Coal Board, British Railways hotels and the showrooms of the electricity and gas industries—they are competing with a large number of firms in the private sector. But when the steel industry is nationalised, only about 10 per cent. of the steel industry will be left in the private sector and therefore the situation will be very different. For this reason—and it is only one of the reasons—it will be essential to maintain some form of competition within the industry itself.

Groupings within the industry have been mentioned. It is important that these groupings should not be one-product groupings, say, of strip or sheet. The obvious grouping which the layman might think of is the grouping which is neat and tidy and is a one-product grouping. What my hon. Friends and I are envisaging is a grouping which would contain a whole range of products so that one integrated steel grouping would compete with another integrated steel grouping. That is the form of competition which we seek.

In the excellent White Paper on the Financial and Economic Obligations of the Nationalised Industries the criteria suggested of a selected return on capital employed, is possibly the only means in the case of a monopolistic activity that can be used in order to decide whether a nationalised industry is efficient or not. But here where we have an opportunity of competition within a nationalised industry and this seems to me to be a far better method of ensuring efficiency.

May I make one suggestion which was not made in Committee and has not been made in the House tonight? It is a bit off-beat, but I hope the Minister and the Parliamentary Secretary will forgive me for that because occasionally a bit of radicalism from this side of the House should not offend the party opposite. One of the things which a nationalised undertaking lacks is the capital disciplines which are available within the private sector—not the same capital disciplines anyway. At the same time it would be easy in the case of a nationalised undertaking to create a form of capital discipline and encourage competition without in any way letting control fall out of the hands of the Government. The way in which this could be done is through a variant of the method which Professor Morgan suggested as far back as the Radcliffe Committee's Report in 1959 and which Professor Edwards, Chairman of the Electricity Council, has touched upon. Professor Edwards is in favour of the area electricity boards borrowing part of their capital on the open market to maintain the form of capital discipline which we on this side of the House would wish.

If, assuming this Measure goes through and the Bill becomes law, the Minister could consider the issue of a form of participating preference stock in the nationalised undertaking. This would mean that control of the nationalised undertakings remained wholly in the hands of the Government. There would, however, be a preference security with a coupon, say, of 4 per cent. yielding far less than gilt-edged stock and, therefore, cheaper for the Government and the Treasury to service; but it would have a participating element which would be geared to the profits of the underlying steel grouping. Therefore, while maintaining nationalisation there could be a cheap form of security for the Treasury to service and in it there would be an element of participation which would provide an incentive for companies to compete with one another for capital in the market.

Moreover it would be a way of attracting savings out of the private sector into the public sector, and one of the fundamental difficulties we have now in creating competition for capital within the public sector is lack of a suitable security where the investor has a hedge against inflation. In the private sector the small saver can invest in an equity but there is no hedge against inflation available to investors in the public sector.

I believe that the public sector badly needs some way of attracting savings. The method I have suggested would provide a capital discipline, competition for capital within the public sector, and at the same time it would provide an equity hedge for the small investor who wanted to invest in the public sector.

I only take this as an off-beat suggestion, but it has been made in a different way by the Chairman of the Electricity Council, an ex-economist, and by Professor Morgan in the Radcliffe Committee. If we are seeking competition this might be one way in which competition could be maintained for capital in the public sector.

Finally, may I say that what we really seek here is competing groupings and a wide range of products for these competing groupings which is essential under the Treaty of Paris and the High Authority's Regulations. That I am sure will only be maintained if the Minister is prepared to see different prices between one grouping and another, but that returns to pricing policy which we have already debated once tonight.

Mr. Geoffrey Wilson (Truro)

I want to intervene merely to reinforce a remark made by my hon. Friend the Member for Yeovil (Mr. J. Peyton). He suggested that we could learn something about the difficulties of over-centralisation from the nationalised industries. I think I am the only hon. Member of the House—certainly the only hon. Member on this side —who served in a nationalised industry both before and after it was nationalised.

I am not going to enlarge on the difficulties of over-centralisation which arose in the early days of railway nationalisation. They are pretty well known, but what is not so well known is that there were over-centralisation problems before rail nationalisation. For a short time I was the representative of the Great Western Railway on the Solicitors Committee of the Railway Clearing House Committee. That Committee had a representative from each of the four main line companies, plus a member from London Transport, and the five of us met together and had to consider certain legal matters of common interest to the railways. From time to time we had to refer matters back to our respective Boards.

I vividly recollect that when anything had to be referred back, the London, Midland and Scottish representative used to push back his chair and tell the rest of us to get on with it because he could not be certain of getting any decision from his Board within a reasonable time. The reason was that while the other railways and particularly the Great Western Railway were highly decentralised so that not so much responsibility was thrown upon the centre, the London, Midland and Scottish was very highly centralised, which caused delay in decision-making at the top.

On a comparatively minor matter of a legal decision of common interest to the railways, the London, Midland and Scottish used to take an unnecessarily long time in coming to a decision, and the other railways, which were more decentralised, could do it much more quickly.

I think lessons like that could be learned from examination not only of the nationalised industries but from some of the big corporations and that it would be found that there are very considerable advantages in a high degree of decentralisation.

Mr. Kenneth Lewis

I want to make just two points which I do not think have been made so far in the debate. I am not absolutely certain that in asking for decentralisation, as we are, we are not baying for the moon. I am not sure that, under this monolithic organisation which is going to be set up, this will be possible. But if the Minister really does want decentralisation of this industry, he might seriously consider that it is in his own interests that there should not be over-centralisation at the centre in London. I suggest that the headquarters of the Corporation should be outside London. This would get it away from the Ministry. Particularly with this Government, the danger is that the Ministry would smother the activities of the Corporation, however much it wants to encourage it to act in a businesslike way and be profitable.

I am not sure that competition will be possible, especially if, as the Minister indicated earlier, he intends to encourage the Corporation to play a large part in fixing prices. If there is to be competition between separate companies, it must be on the basis of their being encouraged to be profitable, and this means their competing with each other in administrative efficiency and, particularly, in productivity.

The labour in this industry is paid by results and under a different formula in different companies. It is important that this should be preserved and that the companies should be encouraged by the Corporation to make their own deals with their own labour. If the Minister is prepared to consider competition as a whole, I hope that he will take into account the effect upon labour and the productivity which the industry has always had from the special wage rates which it has negotiated.

In discussing the Benson Report and grouping, I hope that the result will not be what happened in the industry in the inter-war years. Grouping is now being generally accepted as necessary, but its danger is that it leads to rationalisation. There was rationalisation of the industry before the war and it ran into trouble. The result was the closing of certain plants and a failure to develop. The industry was totally unequipped to deal with the heavy demands which came with the war.

Whatever reductions there may be in the demand for steel, neither the Minister nor the Corporation should precipitately close down or reduce production. In the long run, the industry will have demands from free enterprise in- dustry, and from other nationalised industries. One hopes that it will also be able to create a demand in overseas markets.

Dr. Bray

Those of us who enjoyed the experience of Standing Committee were used to the alternation of positively embarrassing embraces and chill whiffs of grape which was such a feature of it. The hon. Member for Yeovil (Mr. Peyton) was less than his usual generous self when he said that we on this side were not intensely interested in many of the points of hon. Gentlemen opposite. When we discuss these general problems of the industry and can forget some of the dogma of public or private enterprise, we achieve some of our best debates on industrial problems.

There is a difficulty with the Clause, as the right hon. Member for Altrincham and Sale (Mr. Barber) appreciated when he referred to Clause 33, now standing in the Bill. I would particularly remind the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), who was so gratified with this, that his last remark on that Clause was: … one has to admit that the Amendment"— that is, Clause 33, as it stands— does not really say a great deal at all."—[OFFICIAL REPORT, Standing Committee D, 14th December, 1966; c. 2414.] Many of the valuable things which have been said in the debate are not, perhaps, adequately expressed in the new Clause.

11.30 p.m.

A number of points was made by the hon. Member for Altrincham and Sale and other hon. Members, first, on decentralisation. Clearly, any organisation as big as the Corporation would have to work through operating groups. The right hon. Gentleman urged the maximum degree of decentralisation, possibly even down within the management of the groups. However, he did not question, and I do not think that anyone would, that there are major functions which must be exercised centrally in such an organisation, such as the control of investment and the assessment of major investment projects.

No one in the steel industry feels that it should be without a pricing policy, and this must be the concern of the Corporation. The hon. Member for Rutland and Stamford (Mr. Kenneth Lewis) correctly dwelt on the importance of labour relations and methods of trade union bargaining. While it is true that there must be scope for great improvement at the works level, there are many parts of the industry which come nowhere near the standard of others. We hope that there will be a central responsibility for raising the standard of labour negotiations all round.

The question of competition in pricing was raised. The steel industry is unique in that it is very highly capital-intensive and suffers great fluctuations of demand. In this situation, as the industry learnt through bitter experience in the twenties and thirties, unregulated price competition forces it into operating prices well below the level of total costs, down to somewhere near marginal costs at all times, and it is unable to service its capital, unable to modernise and unable to keep techniques of production up to date.

That is accepted as being true by steel companies not only in this country but overseas, and there are various attempts at managed price systems. I do not think that the right hon. Member for Altrincham and Sale suggested that we should have totally unregulated price competition between the operating groups, and he would agree that it is a matter of balance as to what can be achieved. It may be that competition on quality, services to customers, and the type of technical service provided to the customers' processes will be more effective than uninhibited price competition.

The next point was the question of advantage to exports. If there is unregulated price competition and a natural wish of each operating group to maximise its own profits, it is not clear that exports would benefit. If we want to export efficiently we must export from the most efficient works, and they must meet export demand when possibly it would be more profitable for them to compete in the home market with another company which is already fully taken up in that market. The position in the lighter end of the industry is well known to hon. Members opposite in that connection.

The industry is not now over-sentimental about the advantages of retaining company names. It appreciates the advantage in the Dorman Long—South Durham—Stewarts and Lloyds merger of naming the holding company of the group "Dorman Long and Company". But the names of South Durham and Stewarts and Lloyds as independent operating companies have been cheerfully abandoned in favour of greater operating efficiency in that group.

Sir S. Summers

Is the hon. Gentleman saying that a decision has already been taken that the three companies he has named will not sell products under the names under which they have traditionally sold them?

Dr. Bray

Certainly not. I was distinguishing the question of naming groups from the degree of independence of those groups. The question of decentralisation is entirely separate from the question of naming in which clearly there is great advantage in meeting the wishes of people at all levels in the industry. There has been no decision made on such a question as that.

From the point of view of the attraction of independence in operating groups, particularly for the top men, there are great differences of remuneration of directors, for example, between the 14 companies in the industry. There are very great differences of morale on different boards. There is perhaps not a complete evenness of quality on the boards. Is this a matter in which the Corporation should take no interest? I do not think there are many people on the boards of steel companies who would expect this to be the case.

In Committee we had a valuable debate on the question of personal responsibility for financial results. Certainly it is the Government's intention to ensure that the financial management—the system of budgetary responsibility of individual groups—gives as great a degree of responsibility as possible to the operating management on the spot. But the objectives which have been put forward by the Opposition, in which we have a great deal of sympathy, would not be served by pressing this Amendment. There are other organisational objectives just as desirable—for example, the avoidance of multitudinous layers of management.

Hon. Members on both sides agree that the rationalisation of the management structure of the Coal Board, reducing the number of control levels from five to three, is a highly desirable organisational improvement. It may be that the dogma to over-centralise or decentralise would proliferate the management levels in the steel industry.

When we start considering the organisation of these groups, the theoretical questions about whether they should be multi-product groups, regional groupings, or whatever they may be, tend to disappear. When we see the organisation of the Corporation, hon. Members opposite will appreciate that many of their points have been listened to with interest and have been taken into consideration.

Mr. Barber

I am grateful to the Joint Parliamentary Secretary for what he said, although I found it singularly unconvincing. He referred to Clause 33 and prayed it in aid of his argument. I cannot understand this. He agreed with us that the Clause did not achieve very much. The purpose of my reference to that Clause and of adopting the operative words of it and importing them into this new Clause was so that we would not tie the Corporation dogmatically to any particular mode of operation. I said that I wished to do no more than was done in Clause 33, namely, to provide guidelines for the new nationalised industry. This is a perfectly reasonable thing for Parliament to do, and yet the hon. Gentleman never dealt with that point.

The Parliamentary Secretary said that he did not think that it was right that we should have "totally unregulated price competition between the operating companies". But nobody has suggested

that. We all realize—it is in conformity with the new Clause—that the Corporation, acting as a form of holding company, would have the last say. But what we suggest in the Clause is that there should be some element of competition between the various operating companies or the groups which we hope will be formed. No more than that. This new Clause, indeed, does not impose even that upon the Corporation. All it says is that the Corporation and the Minister shall have regard to these important desiderata. Then finally the hon. Gentleman talked about decentralisation; but of course, he did not deal with the point which I raised, that the very words which are included in this paragraph of this new Clause are words taken from the nationalising Statute of 1949.

Well, we have had, I think, a useful debate on this important matter. The last thing I want to do at this stage is to be offensive to the Joint Parliamentary Secretary to the Ministry of Technology, but I am bound to tell him that I can hardly conceive of a less convincing reply than that we have had this evening. However, it is all we can expect from him. If we pursued this debate any further we should not, I suppose, get any more out of him. In all these circumstances I must advise my right hon. and hon. Friends to divide in favour of this new Clause.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 221, Noes 273.

Division No. 235.] AYES [11.42 p.m.
Alison, Michael (Barkston Ash) Brewis, John Cunningham, Sir Knox
A Mason, James (Hemel Hempstead) Brinton, Sir Tatton Currie, G. B. H.
Astor, John Brown, Sir Edward (Bath) Dalkeith, Earl of
Atkins, Humphrey (M't'n & M'd'n) Bruce-Gardyne, J. Dance, James
Awdry, Daniel Bryan, Paul Dean, Paul (Somerset, N.)
Baker, W. H. K. Buchanan-Smith, Alick(Angus,N&M) Deedes, Rt. Hn. w. F. (Ashford)
Balniel, Lord Buck, Antony (Colchester) Digby, Simon Wingfield
Barber, Rt. Hn. Anthony Bullus, Sir Eric Dodds-Parker, Douglas
Batsford, Brian Burden, F. A. Doughty, Charles
Beamish, Col. Sir Tufton Campbell, Gordon Douglas-Home, Rt. Hn. Sir Alec
Bell, Ronald Carlisle, Mark Drayson, G. B.
Bennett, Dr. Reginald (Gos. & Fhm) Carr, Rt. Hn. Robert du Cann, Rt. Hn. Edward
Berry, Hn. Anthony Cary, Sir Robert Eden, Sir John
Biffen, John Channon, H. P. G. Elliot, Capt. Walter (Carshalton)
Biggs-Davison, John Chichester-Clark, R. Elliott, R.W.(N'c'tle-upon-Tyne,N.)
Birch, Rt. Hn. Nigel Clark, Henry Eyre, Reginald
Black, Sir Cyril Clegg, Walter Farr, John
Blaker, Peter Cooke, Robert Fisher, Nigel
Body, Richard Costain, A. P. Fletcher-Cooke, Charles
Bossom, Sir Olive Crawley, Aldan Fortescue, Tim
Boyd-Carpenter, Rt. Hn. John Crosthwaite-Eyre, Sir Oliver Foster, Sir John
Boyle, Rt. Hn. Sir Edward Crouch, David Fraser,Rt.Hn.Hugh(St'fford & Stone)
Braine, Bernard Crowder, F. P. Galbraith, Hn. T. G.
Gibson-Watt, David Kitson, Timothy Quennell, Miss J. M.
Giles, Rear-Adm. Morgan Knight, Mrs. Jill Ramsden, Rt. Hn. James
Gilmour, Ian (Norfolk, C.) Lambton, Viscount Rawlinson, Rt. Hn. Sir Peter
Gilmour, Sir John (Fife, E.) Lancaster, Col. C. G. Rees-Davies, W. R.
Glover, Sir Douglas Langford-Holt, Sir John Renton, Rt. Hn. Sir David
Goyn, Sir Richard Legge-Bourke, Sir Harry Ridley, Hn. Nicholas
Godber, Rt. Hn. J. B. Lewis, Kenneth (Rutland) Ridsdale, Julian
Goodhart, Philip Lloyd, Ian (P'tsm'th, Langstone) Roots, William
Goodhew, Victor Lloyd, Rt. Hn. Selwyn (Wirral) Rossi, Hugh (Hornsey)
Gower, Raymond Longden, Gilbert Royle, Anthony
Grant-Ferris, R. Loveys, W. H. Russell, Sir Ronald
Gresham Cooke, R. Lubbock, Eric St. John-Stevas, Norman
Grieve, Percy MacArthur, Ian Sandys, Rt. Hn. D.
Griffiths, Eldon (Bury St. Edmunds) Maclean, Sir Fitzroy Scott, Nicholas
Hall, John (Wycombe) Macleod, Rt. Hn. Iain Sharples, Richard
Hall-Davis, A. G. F. Macmillan, Maurice (Farnham) Shaw, Michael (Sc'b'gh & Whitby)
Hamilton, Marquess of (Fermanagh) Maddan, Martin Sinclair, Sir George
Hamilton, Michael (Salisbury) Maginnis, John E. Smith, John
Harris, Reader (Heston) Marples, Rt. Hn. Ernest Stainton, Keith
Harrison, Brian (Maldon) Marten, Neil Stodart, Anthony
Harrison, Col. Sir Harwood (Eye) Maude, Angus Summers, Sir Spencer
Harvey, Sir Arthur Vere Mawby, Ray Taylor, Sir Charles (Eastbourne)
Harvie Anderson, Miss Maxwell-Hyslop, R. J. Taylor,Edward M.(G'gow,Cathcart)
Hastings, Stephen Mills, Peter (Torrington) Taylor, Frank (Moss Side)
Hawkins, Paul Mills, Stratton (Belfast, N.) Teeling, Sir William
Heald, Rt. Hn. Sir Lionel Miscampbell, Norman Temple, John M.
Heath, Rt. Hn. Edward Mitchell, David (Basingstoke) Thatcher, Mrs. Margaret
Heseltine, Michael Monro, Hector Tilney, John
Higgins, Terence L. More, Jasper Turton, Rt. Hn. R. H.
Hill, J. E. B. Morgan, Geraint (Denbigh) van Straubenzee, W. R.
Hirst, Geoffrey Morrison, Charles (Devizes) Vaughan-Morgan, Rt. Hn. Sir John
Hobson, Rt. Hn. Sir John Mott-Radclyffe, Sir Charles Vickers, Dame Joan
Hogg, Rt. Hn. Quintin Munro-Lucas-Tooth, Sir Hugh Wainwright, Richard (Coine Valley)
Holland, Philip Murton, Oscar Walker, Peter (Worcester)
Hordern, Peter Nabarro, Sir Gerald Walker-Smith, Rt. Hn. Sir Derek
Hornby, Richard Neave, Airey Wall, Patrick
Howell, David (Guildford) Nicholls, Sir Harmar Walters. Dennis
Hunt, John Nott, John Weatherill, Bernard
Hutchison, Michael Clark Onslow, Cranley Webster, David
Iremonger, T. L. Orr, Capt. L. P. S. Wells, John (Maidstone)
Irvine, Bryant Godman (Rye) Orr-Ewing, Sir Ian Whitelaw, Rt. Hn. William
Jenkin, Patrick (Woodford) Osborn, John (Hallam) Wilson, Geoffrey (Truro)
Johnson Smith, G. (E. Grinstead) Page, Graham (Crosby) Winstaniey, Dr. M. P.
Johnston, Russell (Inverness) Page, John (Harrow, W.) Wolrige-Gordon, Patrick
Jones, Arthur (Northants, S.) Pearson, Sir Frank (Clitheroe) Woodnutt, Mark
Jopling, Michael Peel, John Worsley, Marcus
Joseph, Rt. Hn. Sir Keith Peyton, John Wylie, N. R.
Kerby, Capt. Henry Pike, Miss Mervyn Younger, Hn. George
Kershaw, Anthony Pink, R. Bonner
Kimball, Marcus Pounder, Rafton TELLERS FOR THE AYES:
King, Evelyn (Dorset, S.) Powell, Rt. Hn. J. Enoch Mr Anthony Grant and Mr. Francis Pym.
Kirk, Peter Prior, J. M. L.
Abse, Leo Broughton, Dr. A. D. D. Delargy, Hugh
Albu, Austen Brown, Rt. Hn. George (Belper) Dell, Edmund
Allaun, Frank (Salford, E.) Brown, Hugh D. (G'gow, Provan) Dewar, Donald
Alldritt, Walter Brown,Bob(N'c'tle-upon-Tyne,W.) Diamond, Rt. Hn. John
Allen, Scholefield Brown, R. W. (Shoreditch & F'bury) Dickens, James
Anderson, Donald Buchan, Norman Dobson, Ray
Archer, Peter Buchanan, Richard (G'gow, Sp'burn) Doig, Peter
Armstrong, Ernest Callaghan, Rt. Hn. James Driberg, Tom
Atkins, Ronald (Preston, N.) Cant, R. B. Dunn, James A.
Atkinson, Norman (Tottenham) Carmichael, Neil Dunnett, Jack
Bacon, Rt. Hn. Alice Carter-Jones, Lewis Dunwoody, Mrs. Gwyneth (Exeter)
Bagier, Gordon A. T. Chapman, Donald Dunwoody, Dr. John (F'th & C'b'e)
Barnes, Michael Coe, Denis Eadie, Alex
Barnett, Joel Coleman, Donald Edelman, Maurice
Beaney, Alan Concannon, J. D. Edwards, Robert (Bilston)
Bence, Cyril Conlan, Bernard Edwards, William (Merioneth)
Bidwell, Sydney Corbet, Mrs. Freda Ellis, John
Binns, John Craddock, George (Bradford, S.) English, Michael
Bishop, E. S. Crawshaw, Richard Ennals, David
Blackburn, F. Cronin, John Ensor, David
Blenkinsop, Arthur Crosland, Rt. Hn. Anthony Evans, Albert (Islington, S.W.)
Booth, Albert Crossman, Rt. Hn. Richard Fernyhough, E.
Boston, Terence Cullen, Mrs. Alice Fitch, Alan (Wigan)
Bottomley, Rt. Hn. Arthur Dalyell, Tam Fitt, Gerard (Belfast, W.)
Boyden, James Davidson, Arthur (Accrington) Fletcher, Raymond (Ilkeston)
Braddock, Mrs. E. M. Davies, Dr. Ernest (Stretford) Fletcher, Ted (Darlington)
Bradley, Tom Davies, G. Elfed (Rhondda, E.) Foley, Maurice
Bray, Dr. Jeremy Davies, Harold (Leek) Foot, Sir Dingle (Ipswich)
Brooks, Edwin Davies, Robert (Cambridge) Foot, Michael (Ebbw Vale)
Ford, Ben McCann, John Roberts, Albert (Normanton)
Forrester, John MacColl, James Roberts, Goronwy (Caernarvon)
Fowler, Gerry Macdonald, A. H. Roberts, Gwilym (Bedfordshire, S.)
Fraser, John (Norwood) McGuire, Michael Robertson, John (Paisley)
Fraser, Rt. Hn. Tom (Hamilton) McKay, Mrs. Margaret Robinson, W. O. J. (Walth'stow, E.)
Freeson, Reginald Mackenzie, Gregor (Rutherglen) Rodgers, William (Stockton)
Galpern, Sir Myer Mackie, John Roebuck, Roy
Gardner, Tony Mackintosh, John P. Rogers, George (Kensington, N.)
Garrett, W. E. Maclennan, Robert Rose, Paul
Ginsburg, David MacMillan, Malcolm (Western Isles) Ross, Rt. Hn. William
Gourlay, Harry McMillan, Tom (Glasgow, C.) Rowland, Christopher (Meriden)
Gray, Dr. Hugh (Yarmouth) McNamara, J. Kevin Rowlands, E. (Cardiff, N.)
Greenwood, Rt. Hn. Anthony Mahon, Peter (Preston, S.) Ryan, John
Gregory, Arnold Mahon, Simon (Bootle) Shaw, Arnold (Ilford, S.)
Grey, Charles (Durham) Mallalieu, E. L. (Brigg) Sheldon, Robert
Griffiths, Will (Exchange) Mallalieu,J.P.W.(Huddersfield,E.) Shore, Peter (Stepney)
Hale, Leslie (Oldham, w.) Manuel, Archie Short, Rt.Hn. Edward (N'c'stle-u-Tyne)
Ham ling, William Mapp, Charles Silkin, Rt. Hn. John (Deptford)
Hannan, William Marquand, David Silkin, Hn. S. C. (Dulwich)
Harper, Joseph Marsh, Rt. Hn. Richard Silverman, Julius (Aston)
Harrison, Walter (Wakefield) Mayhew, Christopher Silverman, Sydney (Nelson)
Hart, Mrs. Judith Mellish, Robert Skeffington, Arthur
Haseldine, Norman Mendelson, J. J, Slater, Joseph
Hattersley, Roy Mikardo, Ian Small, William
Hazell, Bert Millan, Bruce Steele, Thomas (Dunbartonshire,W.)
Heffer, Eric S. Milne, Edward (Blyth) Stonehouse, John
Henig, Stanley Mitchell, R. C. (S'th'pton, Test) Strauss, Rt. Hn. G. R.
Hobden, Dennis (Brighton, K'town) Moonman, Eric Swain, Thomas
Hooley, Frank Morgan, Elystan (Cardiganshire) Taverne, Dick
Horner, John Morris, Alfred (Wythenshawe) Thomas, George (Cardiff, W.)
Houghton, Rt. Hn. Douglas Morris, Charles R. (Openshaw) Thornton, Ernest
Howarth, Robert (Bolton, E.) Morris, John (Aberavon) Tinn, James
Howie, W. Moyle, Roland Tomney, Frank
Hughes, Roy (Newport) Murray, Albert Tuck, Raphael
Hunter, Adam Neal, Harold Urwin, T. W.
Irvine, A. J. (Edge Hill) Newens, Stan Varley, Eric G.
Jackson, Peter M. (High Peak) Norwood, Christopher Wainwright, Edwin (Dearne Valley)
Jenkins, Hugh (Putney) Oakes, Gordon Walden, Brian (All Saints)
Jenkins, Rt. Hn. Roy (Stechford) Ogden, Eric Walker, Harold (Doncaster)
Johnson, Carol (Lewisham, S.) O'Malley, Brian Wallace, George
Johnson, James (K'ston-on-Hull, w.) Oram, Albert E. Watkins, David (Consett)
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.) Orme, Stanley Watkins, Tudor (Brecon & Radnor)
Jones, J. Idwal (Wrexham) Oswald, Thomas Weitzman, David
Judd, Frank Owen, Dr. David (Plymouth, S'tn) Wellbeloved, James
Kelley, Richard Owen, Will (Morpeth) Whitaker, Ben
Kenyon, Clifford Paget, R. T. White, Mrs. Eirene
Kerr, Dr. David (W'worth, Central) Palmer, Arthur Wigg, Rt. Hn. George
Lawson, George Park, Trevor Willey, Rt. Hn. Frederick
Leadbitter, Ted Parker, John (Dagenham) Williams, Alan (Swansea, W.)
Ledger, Ron Parkyn, Brian (Bedford) Williams, Alan Lee (Hornchurch)
Lee, Rt. Hn. Frederick (Newton) Pavitt, Laurence Williams, Clifford (Abertillery)
Lee, Rt. Hn. Jennie (Cannock) Peart, Rt. Hn. Fred Williams, Mrs. Shirley (Hitchin)
Lee, John (Reading) Pentland, Norman Williams, W. T. (Warrington)
Lestor, Miss Joan Perry, Ernest G. (Battersea, S.) Willis, George (Edinburgh, E.)
Lever, Harold (Cheetham) Perry, George H. (Nottingham, S.) Wilson, William (Coventry, S.)
Lewis, Ron (Carlisle) Prentice, Rt. Hn. R. E. Winnick, David
Lomas, Kenneth Price, Christopher (Perry Barr) Woodburn, Rt. Hn. A.
Loughlin, Charles Price, William (Rugby) Woof, Robert
Luard, Evan Probert, Arthur Wyatt, Woodrow
Lyon, Alexander W. (York) Randall, Harry Yates, Victor
Lyons, Edward (Bradford, E.) Redhead, Edward
Mabon, Dr. J. Dickson Reynolds, G. W. TELLERS FOR THE NOES:
McBride, Neil Rhodes, Geoffrey Mr. William Whitlock and Mr. Ioan L. Evans.