IRON AND STEEL BILL

HC Deb 26 January 1967 vol 739 cc1798-918

Order for Third Reading read.

4.20 p.m.

The Minister of Power (Mr. Richard Marsh)

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

I think that at this moment I probably know how Sisyphus would have felt if he had ever managed to get his boulder to the top of the hill. The Bill comes before us today after one of the most prolonged and thorough examinations ever given to a Bill in the House of Commons. To give a few statistics, the Committee Stage filled 2,590 columns of HANSARD, 400 columns more than the previous record set on the Gas Act, 1948, and way ahead of the space occupied by any other major nationalisation Act. The Report Stage lasted for 29 hours and 15 minutes. I am sure that all that must prove something or other, but I am not quite sure what.

I suppose that it could have been described as a vast desert of infinite boredom with the odd oasis of interest, but it is certainly true that the Bill which will leave the House tonight represents the full and carefully considered views of the House of Commons, adopted after taking into account the views of those interested, and, in the light of this very thorough scrutiny, with no Guillotine, it would be quite impossible to justify any delay over the remaining stages of the Bill.

When we started on this very long road nearly six months ago, I posed three questions. I think it reasonable to look again at those questions in the light of what has been done in the past six months to see how far, if at all, developments have taken place affecting the answers to them.

The first question was whether the steel industry should be left to continue as in the past and whether, above all, it was operating as efficiently as all of us would wish. I said then, and I say again now, that there is really no major dispute about the need for big changes within the industry. If anything, acceptance of the need for chance is more real now than it was then. The British Iron and Steel Federation, which has never been among the leading proponents of nationalisation, itself said in the January 1967 issue of Steel Review that it was necessary to press on fast with the creation of larger company groupings which are both commercially advantageous in a shorter run sense and provide the base for movement towards that concentration of production into a very few big well located works which the Benson I Report set out as the longer term aim. My second question was whether or not the industry itself should be relied upon to accomplish these changes or whether it was essential for the State to intervene as the only way of obtaining the changes which every one agreed to be necessary. I claimed then that the industry had had 14 years in which it could have set about making these changes but that, by the time I took office in March 1966, it had not actually started on them. As one example of the value of the Bill which the House has had before it for the last six months there has been more movement and more progress towards rationalisation in this industry than in the previous 12 years. There has been the Benson Committee, the Organising Committee, the Dorman Long—South Durham—Stewarts and Lloyds merger—all examples of changes which are now beginning to develop, in recognition of the fact that changes must take place. People of good will—this has been the feature of the industry—have chipped in to do their part in this direction.

But these changes do not go fast enough or far enough to meet the needs of the situation. The position in the British steel industry today is both serious and extremely urgent. There is not a single company in the United Kingdom with an annual capacity of over 4 million ingot tons. There are four such companies in Europe, eight in the United States and five in Japan. In that sort of relationship, clearly, the position has to be changed rapidly.

I did not believe, and I still do not believe, that the industry would have taken even the measures it has towards rationalisation without the stimulus of nationalisation.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Nonsense.

Mr. Marsh

I am merely pointing to the fact that these things did not happen over a long time and they are happening now. I am sorry; I was not trying to be controversial.

Mr. Ridley

The right hon. Gentleman will be aware that the economics of the 4 million-ton plant only emerged since the discovery that one could make a 350-ton or larger L.D. converter. This came about two years ago. No wonder nothing had happened before then. The need was not there.

Mr. Marsh

The hon. Gentleman will probably make a speech later on if he catches your eye, Mr. Speaker. In the meantime, perhaps he will ponder over this. It is true that new processes were developed two or three years ago, but one is talking here about the Benson Committee which was set up last year. This is a long time afterwards.

My third question was whether, if it be agreed that the State should intervene, this Bill was the best method of achieving the objectives. This has been the nub of the controversy. One point is now clear. There is growing recognition that, even if there are other approaches to the problems of the steel industry, this Bill represents a practical and realistic method of achieving the aims on which there is such wide agreement. The proof of this is to be seen in the attitude of those leaders of the industry who, while opposed in principle to nationalisation, have nevertheless been willing to work wholeheartedly in one capacity or another to make a success of the new arrangements. I would like to say here that the House does right to pay a tribute to people who have come to the conclusion, Parliament having taken the decision, that it was then up to them to work as hard as they could in the interests of the industry and the nation as a whole.

Our debates in the Standing Committee over the last three months ranged over many matters, sometimes over semicolons, sometimes about whether we should meet on one morning or another, sometimes on the powerful point raised by the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) as regards Recorded Delivery as opposed to registered letter. But, on the whole, in this long operation our attention has centred upon four main issues, and I shall now say a word about them.

The first was, in many ways, the most important—how to secure the full involvement of the workers in the efficiency of the nationalised steel industry. The industry will face very difficult decisions. It will depend to a very large extent on the degree to which it can convince the people employed in it that their interests lie with the Corporation and persuade them to provide the full advantage and benefit of what knowledge, help and assistance they can give.

It was against this background that we had in Committee one of our best discussions, and, as a result, I decided to re-examine the standard nationalisation provisions relating to worker-management relationships to see whether—this was in response to my hon. Friend the Member for Poplar (Mr. Mikardo)—we had managed to learn anything in the past 20 years. Provision was made, appropriately enough, in Clause 4 for consultation with the trade unions before the Corporation reached conclusions on organisation. I think that this is right because the organisation of the industry is a matter affecting the 300,000 people employed within it. Section 39 of the 1949 Act has been substantially revised to make clear that joint consultation in this industry will be concerned with all aspects of efficiency in the Corporation and the publicly-owned companies, and that those taking part in both negotiating and joint consultative machinery will have all the information which they reasonably need made available to them in advance of the relevant discussions. We talked about this in the early hours of the morning last week, and I said then that this was a new element.

Labour relations within the steel industry are very good. The practices in some of the best companies are probably as good as anywhere else in the world. But there are areas where labour relations leave a lot to be desired.

What is new here is the recognition that relationships between workers and management are not merely the relationship of workers raising complaints and managements finding the answers to them. It could be a relationship—this is my hope—wherein the workers themselves take part in the formulation and production of ideas and become involved in the decisions which have to be made—and some of the decisions will be uncomfortable decisions in which to be involved.

Mr. Stanley Orme (Salford, West)

Some hon. Members met maintenance engineers engaged in an official dispute in the Corby plant in the House yesterday, and were very encouraged by the unsolicited welcome they gave to my right hon. Friend's proposals in the Bill. They felt that if they were already working under those proposals the dispute would not have taken place.

Mr. Marsh

Any comment on that dispute would be embarrassing for a number of reasons, but I think that it is accepted that this would be one way of avoiding disputes.

I hope that we can do more and have people who take part in, and feel themselves identified with, the success of their industry and its long-term prospects. If we can get that degree of identification between workers and their management it will be a very real advantage. But it means that people must stand up and be counted in the light of the unpleasant decisions as well as the happier ones. In an effort to bring shop floor experience into the top decisions, I have appointed Mr. Sid Harris to the Organising Committee for the National Steel Corporation. I think this is the first time a man has been appointed directly from the shop floor to a national post of this type. The experiment is proving very worthwhile.

The second main issue in our discussions was the relationship between the nationalised and private sectors of the industry. There is naturally some uneasiness among companies who will remain in the private sector, and I would like to make it clear where the Government stands. The private sector, although small in relation to the nationalised sector, will consist of about 250 iron and steel companies and about 1,200 iron and steel foundries, with an annual turnover of £400 million to £500 million, and will employ about 200,000 people.

In some of our discussions there has been a tendency to talk of the relationship between the two as if there were a possibility of the poor, virginal, private enterprise sector being raped by the massive monster of State enterprise. We need to ensure that somebody holds the ring between the two, but the private sector will still be a not inconsiderable body even after public ownership.

On any count, those sort of figures amount to a substantial sector of the national economy, and it would be absurd for the Government having decided that it should not be nationalised, to drive it into the ground. We have therefore made a number of Amendments to the Bill in response to points put forward for the private sector companies, including an important new Clause requiring the Corporation to publish lists of normal selling prices and provisions which make an acquisition of interests by the public sector in the private sector subject to the Minister's consent.

Probably more important than what the Bill says, because I accept the views of hon. Members that it is imposible to meet every point in an Act of Parliament, is the way in which the new relationship is developed in practice. The Minister of Power has production responsibilities for the iron and steel industry as a whole, and it must be his aim, and that of his Department, to conduct those responsibilities in a way which promotes a strong and effective nationalised sector and a strong and effective private sector.

But let us also be clear that that does not mean that the Minister of Power has a responsibility to protect and maintain the sloppy and inefficient. As long as they are efficient, companies in the private sector, like the public sector, have a right to expect encouragement and protection from the Minister, but they are not entitled to a divine right to exist if they cannot be equally commercially competitive.

Mr. John H. Osborn (Sheffield, Hallam)

Can the Minister say what his reaction would be if he finds the public sector either sloppy or inefficient five years after taking it over? What conclusions has he now reached after our discussion in Committee and on Report?

Mr. Marsh

If one finds that any sector of industry is sloppy and inefficient it is up to those with authority to do what they can to change that situation. I am just drawing a distinction which I would not have thought controversial. Hon. Members opposite pressed a great deal, quite rightly, for the protection of the private sector, but that does not mean that it is entitled to protection against the chilly winds of normal commercial competition. I would not have thought that there would be a great deal of dispute about that.

I want to see in the private sector a strong trade association which will represent its views forcefully to the Government and the Corporation, and I want to develop close and friendly relations between the Ministry and private sector companies, so that we get real understanding of their aspirations and problems. The Organising Committee also envisages that sort of relationship. I therefore hope that the Amendments to the Bill, and this explanation of the Government's attitude, may go some way towards removing some of the private sector companies' misgivings, and that they will join with us in developing co-operative relationships which will help them make their maximum contribution to the economy.

The third big issue was diversification, which came up over and over again in our discussions, because there is a major issue of principle between the Government and the Opposition. We believe that where a diversification will bring substantial economic or commercial advantages to a nationalised industry it should be allowed, provided it does not conflict with wider considerations of the national interest.

Mr. John Peyton (Yeovil)

rose —

Mr. Marsh

I know that "national interest" is a phrase which normally brings the hon. Member for Yeovil (Mr. Peyton) leaping to his feet. I thought that it would.

Mr. Peyton

As I do not intend to speak later in the debate, I rise now, because what I dispute with the right hon. Gentleman, as he knows perfectly well, is that he is necessarily the supreme arbiter of the national interest, although I have come to think that he is a better arbiter than almost anybody else on the Front Bench opposite. I am sorry that I cannot pay him a better compliment than that.

Mr. Marsh

That is the nearest I have got to a compliment from the hon. Gentleman it would be churlish of me to argue about it.

There is a big issue of principle here. We believe that diversification should be allowed, provided it does not conflict with wader considerations. For that reason the Bill gives the National Steel Corporation the same power to diversify as the privately-owned steel companies, and no more. Indeed, the privately-owned steel companies and steel companies overseas have long enjoyed those powers and often used them, for sound economic reasons. But the use of the powers will be subject to the Minister's consent, thus ensuring that they will be used only in a manner which accords with the national interest. The hon. Member for Yeovil says that that involves a definition being left to the Minister of the day, but that is one of the attractions of being one of the "ins" as opposed to one of the "outs".

The Opposition believe in a rather different view from ours, as was made clear by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) in a memorable interruption in Standing Committee on 17th November. That was probably one of the shortest speeches the hon. Member ever made, certainly in the Committee, and it was one of the most telling, because it was always difficult to identify exactly the point of difference between the two sides on the issue of diversification.

We had been discussing what is now known in Parliamentary circles as the "Bray letter", about which I shall go no further now. I finished my contribution by saying of diversification: If it is in the interests of the Corporation and in the interests of the nation, is it right that it should be stopped? Mr. RIDLEY: Yes. Mr. MARSH: The hon. Gentleman says 'Yes'. I am grateful to the hon. Gentleman. This is what the argument is about"—[OFFICIAL REPORT, Standing Committee D, 17th November, 1966, c. 649.] That was a significant exchange.

That is exactly what the argument is all about. If it is in what any Minister of the day, who must take responsibility for so deciding, decides is the national interest, the hon. Member for Cirencester and Tewkesbury could still envisage circumstances where he might well believe differently.

On this basic point there can be no compromise of view between us about diversification. But there is genuine concern, which has been expressed reason- ably by such bodies as the Confederation of British Industry, that in their diversified activities the nationalised industries, because they are not subject to the disciplines of the market, will be able to act in a way which is not only unfair to their private sector competitors but which may lead to a misallocation of the national resources. I can understand that apprehension, but I think that it is totally misplaced. There are two effective safeguards against the dangers which the C.B.I. fears.

First, as I have made clear, the Government intend to apply to the National Steel Corporation the principles and procedures of the White Paper on Financial Objectives and in fixing those objectives we shall, of course, take into account the desirability of earning returns on the diversified activities comparable to those earned by the private sector. [Interruption.] We will talk later on about the rates of returns we are getting in some sectors of the steel industry on capital investment.

Secondly, we intend, to the maximum possible extent, that separate information about the performance of the diversified activities should be published so that Parliament and the public can judge whether they are being conducted efficiently and in the national interest. We have introduced an important new Clause to require this. In issues like this, while the Government in power have to take the decisions, it is equally right in a democracy that the people should be able to see what is going on. No one is entitled to ask more than that of the Corporation.

Sir Tatton Brinton (Kidderminster)

The right hon. Gentleman has been putting forward the argument of national interest. Supposing that a nationalised enterprise sees that a chain of hotels is making a good profit. Would the right hon. Gentleman consider it in the national interest that the national enterprise should take over a private business of that kind because of its profitability? Surely the excuse for nationalising the steel industry is that it must be more efficient. The reason was not that it should be able to get into other industries.

Mr. Marsh

One cannot define the national interest because the definition changes with those making it at the time. It is impossible to reply to the hon. Gentleman's specific point but I would say that any Minister of Power or the Steel Corporation would say that it was not the business of the Corporation to go into the hotel business. A nationalised industry has to judge its diversification by the degree of alignment between the diversified activities. We should feel entitled, just as much as the hon. Gentleman would feel entitled, to challenge the Corporation if it went wandering off into the hotel business.

But I remind the hon. Gentleman that there is a wide range of diversification that we have considered justified by commercial reasons and it would be as reasonable for the Corporation to embark upon such activities as these as it was for the private sector. Indeed, this exchange between us shows the difference of principle between the two sides on this issue. I can see the force of what the hon. Gentleman thinks might happen with nationalised industries.

The Opposition are a little schizophrenic about this matter. On the one hand, they talk about the Corporation having to operate—and there is a lot in this view—on commercial grounds. They say that it must be treated as a commercial organisation. On the other hand, they openly challenge its right to embark on any of the practices which would be deemed as normal form in industry generally. Certainly, they would regard them as justified in the very companies which are being taken over. Yet they do not accept it when there is to be a change of ownership. It is clear that there is little point of agreement between the two sides about this, and I find that factor reassuring.

The fourth issue is the question of our relations with Europe. It really must be obvious now, even to the Opposition, that the Government are sincere in their present efforts to see whether or not there is a basis from which it would be possible to open negotiations for British entry into the European Economic Community. But we cannot be sure yet that our discussions with the Six will lead to a successful conclusion and until we are, the idea that this House should draw up its legislation on a set of rules over which it has no control and in which it played no part in formulating is stupid. We cannot commit ourselves in our legislation to follow the practices of the Community until such time as we are in direct negotiation with them, and one of the difficulties that the Opposition faced last time in the negotiations with the Six was that they never really understood the difference between unconditional surrender and negotiation.

I repeat that there is no inconsistency between nationalisation as such and the Treaty of Paris, although, whatever arrangements exist for the steel industry —and this is also true of the present arrangements—there would clearly be a problem of adaptation if we joined the European Coal and Steel Community. I have given a good deal of time to this problem and I say that, given the necessary political will, the Bill as drafted is quite reconcilable with membership of the E.E.C.

I recently met members of the High Authority of the E.C.S.C., and we had very valuable discussions about the steps, which are being taken in response to common problems, to reorganise and regroup the steel industries of the Six and in this country, and we are arranging to keep in touch as our thinking and plans develop. But to draft legislation as though we were in already is not sensible.

There has been a lot of humbug about the Opposition's anxiety on this issue and indeed our chances of securing a satisfactory outcome in the forthcoming discussions would, if anyone in Europe still took the British Opposition seriously, be significantly reduced by some of the speeches of right hon. and hon. Members, who have done all they could to convince those with whom we are at this moment talking that this major new Bill and the steps we are taking to bring about the reorganisation of the steel industry constitute a substantial new obstacle to United Kingdom membership of the European Community.

The Opposition claim to be keen on entering the Common Market, but they express the difficulties they claim to see more forcefully than opponents.

For the last four months of our work in Parliament, the Organising Committee, under Lord Melchett, has already been at work. The Committee has proved a superb team, and I would like to pay tribute especially to the very great help that is being given by those of its members drawn from both the steel industry and outside—both from the boardroom and the shop floor—and also to the help which is being given by the Iron and Steel Board and its staff.

I do not think that the House would wish to underestimate the enormous amount of work which has been done by this group of men, most of whom are not being paid and some of whom were not wildly enthusiastic about the idea in the beginning.

The Committee decided at the start of its work that one of the first priorities should be for as many of its members as possible to visit all the 14 companies scheduled for nationalisation. Lord Melchett has also wished to see as much as he could of the industry's operations on the ground, and he has now toured the great bulk of the steel works that will form the public sector.

These visits to steel works have gone on side by side with a full programme of Committee meetings, including one just before Christmas which I attended. It was a three-day session which, like Standing Committee D, extended deep into the night, beginning on a Friday.

Mr. Michael Alison (Barkston Ash)

Did the right hon. Gentleman stand the members whisky?

Mr. Marsh

I think that perhaps there are some things about Standing Committee D that we should keep to ourselves.

Lord Melchett has kept me closely in touch with the development of the Organising Committee's thinking and, while it would be premature to indicate its conclusions—indeed, no formal report will be available until after the Corporation has taken over from the Committee —I can assure the House that the Committee is well at grips with the central issues of organisation, with the practical arrangements for the establishment of the Corporation and for vesting, and with the other issues which I have referred to it.

Now I turn to the outlook for the steel industry generally. The need for the structural reorganisation of the British steel industry is made all the more urgent by the difficulties now facing it. The Opposition have asked, "Why the rush?". It is because the position is urgent. It is made the more urgent by the difficulties facing the industry.

These difficulties are worldwide, and it would be unfair to lay them at the door of the steel industry, although the managements tend to vary a great deal. Over the last ten years, world steel-making capacity has increased by 85 per cent. while production has increased by only 66 per cent. As a result, the world surplus of capacity has increased sixfold from 12½ million tons in 1955 to 74 million tons in 1965. This growth in surplus capacity has led to increased competition for international trade at prices sufficient to cover prime costs, but well below those needed to cover total costs.

In the United Kingdom, output in 1966 was 24.3 million tons and capacity utilisation fell to 79 per cent. on average. Imports are likely to total 1.2 million ingot tons compared with 750,000 ingot tons in 1965. Exports last year dropped by over 250,000 million tons as compared with 1965.

The results of all this are reflected in the preliminary figures for the year 1965–66 of 8 major steel companies—Colvilles, Dorman Long, John Summers, Lancashire Steel, South Durham, The Steel Company of Wales, Stewart and Lloyds and the United Steel Companies. The total profits after depreciation but before tax and interest of these eight companies fell from £67 million in 1964–65 to £40 million in 1965–66. Expressed as a percentage of capital employed—and we have heard a great deal about return on capital employed in the public sector—profits on this basis amounted to about 7.5 per cent. in 1964–65 and can be assumed to have fallen heavily during 1965–66. The return is expected in that year to be not more than 4 per cent. as a return on capital employed. This makes some of the arguments about the injustice of reducing the compensation terms look a little thin in the light of some returns being produced at present.

Unfortunately, the outlook for the immediate future is equally gloomy. The world surplus of capacity in the next year or two is likely to be considerably higher than the 14½ per cent. shown in 1965, and even in 1970 it is not expected to be much, if anything, below the 1965 proportion. The British Iron and Steel Federation thinks that United Kingdom production in 1967 may drop by a further 2 million tons with a capacity utilisation of 70 per cent.

Some relief from these difficulties can be expected as it becomes possible to re-expand the economy. More direct steps are also being taken to deal with the problems of the steel industry. I am discussing with the industry the prospects for steel producton in the light of world surplus capacity and it was agreed at the meeting of the Council of Association on 13th January that there should be urgent discussions on this subject between representatives of the High Authority and of the United Kingdom.

The Corporation will, after vesting, be in a position to initiate a co-ordinated pricing policy and measures to improve efficiency by concentrating output on works with the lowest escapable costs and to study in depth such problems as the effects of fluctuations in steel stockholding in exaggerating the fluctuations in the basic demands for steel. These are things we can do and have the opportunity to do under public ownership.

Mr. Nigel Birch (Flint, West)

The right hon. Gentleman talked earlier about the need to have much larger plants. He is now talking about costs. Before he leaves the financial aspect, can he give any idea of what plans he has in mind for starting such major plants and what sort of order of annual expenditure might be required upon them?

Mr. Marsh

If the right hon. Gentleman had been present in some of the earlier discussions, when this matter was gone into at great length, he would be aware that the actual grouping of plants —not necessarily the construction of new ones—is a matter that will be presented in the Report of the Corporation to the Minister. It is under an obligation to produce that Report within nine months after vesting.

Mr. J. H. Osborn

The right hon. Gentleman has referred to discussions with the High Authority for a co-ordinated pricing policy. Is not this a remarkable change of view? While I think that hon. Members associated with the industry will approve, would not the right hon. Gentleman have opposed this two years ago?

Mr. Marsh

I did not say this. The discussions we are having with the E.C.S.C. are ad hoc discussions to see what can be done. There is no quick answer. The problem of surplus capacity in the world has been with us a long time and it would be stupid to suggest that we shall get a quick, bright answer. We have started discussions to identify the various possibilities to deal with surplus capacity and then to decide how we can do it, possibly by extending the range. The hon. Gentleman has a fixation about the pricing system, as have his right hon. and hon. Friends. They are fast becoming the only people who are as completely attracted by this system as they appear. We have not discussed this aspect with the E.C.S.C. Indeed, the Community includes many members with strong views about the pricing system. The hon. Gentleman has misunderstood the point, however. It was not pricing that I was discussing, but world surplus capacity and ways to deal with it.

But all these measures can be begun but will take time to be effective. The next year or so will be a difficult time for the industry and the Corporation's initial results may well be rather depressing. I had better get that on the record now. [Laughter.] I remind the Opposition that the results from the private sector are nothing to be joyful about at the present time.

Mr. Anthony Barber (Altrincham and Sale)

What about Richard Thomas and Baldwins?

Mr. Marsh

The right hon. Gentleman does not solve the problem by saying that. This is a serious point. It seems that people in the industry accept the situation with more reality than the Opposition. They accept that there are major problems facing all sections of the industry. It would be a great pity if, when the industry is under public ownership, we do not take a realistic look at the doubtful results being produced at first. The results will be depressing for the first couple of years because the Corporation is taking over a very difficult industry faced with very tough problems. No one sees the industry at the moment as a good, healthy profit making organisation.

Mr. Michael Foot (Ebbw Vale)

If right hon. and hon. Members opposite wish to see how public enterprise can deal with this situation I suggest that my right hon. Friend invites them to come to Ebbw Vale where the publicly-owned steel works is standing up to the difficulties of the industry better than any other steel firm.

Mr. Marsh

It would be a very useful experience, and if they would only be less doctrinaire about these things and be prepared to judge on merit I would be happy to arrange for any group of right hon. and hon. Members opposite to pay a visit.

Mr. Barber

Does the right hon. Gentleman agree with his hon. Friend?

Mr. Marsh

That is a sweeping question, but certainly I agree with him that Richard Thomas and Baldwins has done a superb job in very difficult circumstances.

Mr. Brian O'Malley (Rotherham)

Will my right hon. Friend point out to the Opposition that the financial results of the European Federation of Steel Companies are extremely depressing and it is considered that they will continue to be had for the foreseeable future?

Mr. Marsh

There is a tendency among right hon. and hon. Members opposite—they do it as instinctively as a Pavlovian dog—to slang nationalised industries on every possible occasion. I am now putting it on record that the Corporation is taking over an industry which is not in a healthy state in terms of profitability, for reasons which are not its own fault but which are world wide. To overcome these difficulties, the Corporation will need to be tough, hard-headed and efficient and it and the Government and all in the industry will have to be prepared for some hard and unpleasant decisions.

I thought it right to raise this note of warning about the immediate future but the basic objective of the Bill is not just to cope with short term problems but to create a strong, competitive steel industry able to hold its own with the competing steel industries in Europe, the United States and Japan. It is essential in the national interest to push on as quickly as possible with the creation of this strong competitive steel industry.

My aim now is to establish the Corporation to take over from the Organising Committee very quickly after Royal Assent and to shorten as far as practicable the period between Royal Assent and vesting. The year 1967 will see an end to the apparently interminable argument about ownership and will see the industry working hard and successfully under the new Act to tackle the real practical and economic problems which face it.

We on this side of the House have argued for years the advantages of public ownership for the steel industry. I am more convinced than ever that we were right. It is important to realise, however, that the Bill gives us a chance to solve the problem but does not of itself solve anything. If things continue as they have in the past the effects throughout industry will be very serious indeed. If the Government, the Corporation and all those working in the steel industry take the opportunities which public ownership presents to them, we can build up an industry which will prove that nationalisation of the steel industry, far from being a genuflection to out-dated dogma, was, indeed, the only sensible way of dealing with the industry's problems—and it is a great tragedy that it did not happen years ago.

5.0 p.m.

Mr. Anthony Barber (Altrincham and Sale)

For reasons which I shall give in a few minutes, I do not intend to speak for very long. It is six months, almost to the day, since this Bill was read a Second time. I readily grant to the right hon. Gentleman whatever satisfaction he may derive from my admission that since then the Bill has been the subject of fairly full discussion. It is about that aspect that I would first like to make a few brief remarks. In its amended form the Bill is the outcome, as the right hon. Gentleman has reminded us, of the longest Committee stage in the history of Parliament and of three and a half days of debate on Report.

Such proceedings imposed a very considerable burden on the Opposition, and it is right that at this final stage in the House I should express my gratitude to my hon. Friends for all their help. I also want to pay tribute to the right hon. Gentleman in respect of one matter, which I believe is of great importance for the working of Parliament. A Government with a majority of 100 wields immense power and authority, and yet the right hon. Gentleman, when the moment of truth came, was prepared to abandon his programme for the Bill and to grant the Opposition the additional time which we were seeking. Equally, the rules of order of the House and of Standing Committees are such as to place in the hands of the Opposition an opportunity so to frustrate the Government's legislation as to make the work of Parliament impossible. I hope that the right hon. Gentleman and his colleagues in their turn will grant to my hon. Friends and myself the credit for knowing just how far to go in opposing the Bill without abusing the opportunities which are rightly available to a Parliamentary Opposition.

It was never our intention merely to thwart the passage of the Bill into law. At the beginning of a Parliament where there is a Government with a majority of 100, such an exercise would have been politically naive and futile. We sought only two things—adequate Parliamentary time in which to expose to the country what we believe to be a bad Bill, and, secondly, a number of Amendments to the Bill, particularly those providing equity for the 200 smaller iron and steel companies which are to remain under private enterprise. We finally obtained all of the Parliamentary time that we sought, even though in order to achieve this it was necessary in one week to sit on three consecutive days and nights with only five hours' sleep.

As for the Amendments which are now incorporated in the Bill after the Committee stage, and our deliberations on Report, they are by no means all that we wanted, but we are genuinely grateful to the Government for the very considerable concessions which they have made. When the right hon. Gentleman talks about a sloppy and inefficient industry, we are not in the least worried about the private sector. He used those words solely in relation to the private sector, solely in relation to the 200 companies which are not to be nationalised. Our concern is that this new monolithic organisation may become, over the years, sloppy and inefficient.

Mr. Marsh

I would not want there to be any misunderstanding on the point. All that I was arguing was that while it was reasonable to expect protection for the private sector for fair trading, and general commercial understanding, it was not reasonable and would not be reasonable for it to expect that this gave a divine right to many sloppy and inefficient firms. I believe that sloppy and inefficient firms in British industry should be weeded out, whether in the nationalised or private sector.

Mr. Barber

This is very interesting, because I have never heard any leader of the steel industry nor anyone in all of our debates asking that the right hon. Gentleman should incorporate in the Bill provisions which would safeguard sloppy and inefficient private industry. What we have been arguing is that there should be equity and fair treatment as between the public and private sectors. One of the fascinating things which has just emerged is that while the right hon. Gentleman has said that he will not protect sloppy and inefficient private concerns, he has not told us what he proposes to do if sectors of this public monopoly become sloppy and inefficient and unproductive. What will he do then? We know what will happen, as has happened with all the other nationalised industries, it will continue year after year being protected by the Government and being serviced by the Treasury.

I said that my speech would not be long, and there are two reasons for this—

Mr. Peyton

Before my right hon. Friend leaves that point, does he not think that we ought to be grateful to the Minister for having acknowledged—and he is the first Socialist Minister to do so—the possibility that nationalised industry might become sloppy or inefficient?

Mr. Barber

This is certainly a change, and one can couple that with the apologia of the Minister for the likely way in which the new nationalised industry will develop over the next two or three years. It is pretty clear that the Government are preparing the ground for the sort of difficulties, inefficiencies and all the rest which we have come to associate with so many of our nationalised industries.

Mr. Marsh

One simple question: would the right hon. Gentleman be prepared to say that he would have thought that under private ownership the steel industry's prospects for the next couple of years were ripe?

Mr. Barber

I would have responded to the right hon. Gentleman if he and his predecessors over the past year or 18 months had pointed out when the industry was in private hands the sort of difficulties which were likely to face it in future. We heard not a bleep about this from them until the Bill came forward.

I was saying that there are two reasons why I do not wish to be unduly long. First of all, I know that there are other hon. Members on both sides of the House waiting to take part in the debate, and secondly, although I would have liked to have put forward a number of alternative proposals for dealing with the industry, on the Third Reading of a Bill I am precluded by the rules of order from doing so.

I have six objections to the Bill. The first is that whatever may be the case for nationalising a public utility or a service industry, as the President of the Board of Trade said, nationalisation is quite unsuitable for a manufacturing industry. One can search the entire industrial free world, but nowhere will one find a country in the 'sixties setting out, as this Bill does, to nationalise 90 per cent. of its iron and steel industry. Indeed, it is the case that 90 per cent. of all the steel produced in the non-Communist world is produced by private enterprise. It is left to a British Socialist Government, for internal party political reasons, to revert in 1967 to the doctrines of half a century ago.

We have been told by the Government that this Bill is based on the assumption that; "greater competition is not the answer." Yet both France and Italy have chosen to organise their steel industries on a competitive basis. The German steel industry is now being rationalised on the basis of four quite separate sales syndicates. The Benson Report, to which the right hon. Gentleman continues to pay tribute, recommended the creation of multi-production groups subject to United Kingdom competition over the whole range of their output. But the Government, in passing this Bill, are oblivious of the recent experience of our European friends, and blind to the advice of any but the Left Wing of the Labour Party. It was the Prime Minister who used to pretend during the last election campaign that a Labour Government would listen to the voice of industry. I therefore conclude my remarks on this first objection to the Bill by quoting the considered view of the Confederation of British Industry on the proposals in the Bill: A national steel organisation would stifle enterprise, create inefficiency and eliminate diversity". So much for all the election poppycock about consultation with industry.

The second objection to the Bill is that it will inevitably make British industry as a whole less competitive in the markets of the world. It is a fact that about 40 per cent. of all Britain's steel output is exported, 20 per cent. directly and another 20 per cent. indirectly, in the form of goods such as motor cars, machinery and so on. Indeed, it is no exaggeration to say that exports of steel and of goods made from steel have spearheaded Britain's post-war export drive.

At a time when, as the Minister has told us again today, there is excess steel capacity throughout the world, the nationalisation proposals in the Bill will inevitably make Britain less competitive. Whatever may be the political and social arguments for and against nationalisation, our whole experience of State enterprises is either that prices increase excessively, or that profitability is depressed. I believe that it is a tragedy that, at a time when by their economic measures they have deliberately put 600,000 men and women on the dole and we are suffering the greatest package of deflationary gloom in our post-war history, the Government should embark on a proposal which will have the inevitable consequence of making Britain less competitive.

This leads me to my third objection to the Bill—the lunacy of proceeding with the nationalisation of steel at a time when Britain is in the midst of a dire economic crisis and living on borrowed money. It was the Chancellor of the Exchequer who sad: What people abroad believe about us is as important as the truth, especially in relation to the strength of sterling. He was right. It was a leading New York newspaper which wrote: If Wilson announces that he's dropping re-nationalisation of the steel industry, that will be a tougher blow to the Labour Party than the wage freeze, but will do more than anything else to restore confidence abroad. There are many other quotations from The Times and elsewhere which I could bring to the notice of the House.

Mr. Michael Foot

On a point of order. Will it be possible for all of us to discuss on the Third Reading of the Bill international reactions to a nationalisation Measure?

Mr. Deputy Speaker (Sir Eric Fletcher)

I think that it would be undesirable, but I hope that the right hon. Gentleman is bringing that part of his remarks to a conclusion.

Mr. Barber

Exactly. I shall. But it is a strange thing if the hon. Member for Ebbw Vale (Mr. Michael Foot) does not believe that the timing of a Bill of this kind is at all relevant to our economic situation and the strength of sterling. If so, he is about the only one in the House of Commons who does not realise that.

Mr. Foot

The right hon. Gentleman misunderstands me. All I was trying to ensure was that if the timing of the Bill and its international implications are proper issues for the right hon. Gentleman to raise it should be equally possible for all of us to debate them. I was not trying to inhibit the right hon. Gentleman in any way. I was trying to make sure how much was admissible on a Third Reading debate.

Mr. Barber

I do not want to pursue the matter, but if the hon. Gentleman will bear in mind, for example, the view of The Times—that the announcement that the Bill was to be brought forward, coming on top of the continuation of the seamen's strike, was likely to do damage to the £—is not relevant, then all I can say is that he has no idea about how things in the world outside actually work. I am deploying arguments against the passage of the Bill now, and I think that this is strictly relevant.

It is a strange paradox that the Labour Government, just because they are pressing ahead with the Bill at this time, have had to intensify their deflationary measures with all the hardship and unemployment which is now spreading across the country. The sadness of it all is that it need never have happened and the Bill need never have been before the House for Third Reading today. If the right hon. Member for Huyton (Mr. Harold Wilson) were to drop the Bill today, he would still remain Prime Minister. We all know that. If there is one lesson to be learned from the past 12 months, it is that the Left Wing of the Labour Party, in relation to Vietnam and unemployment and the nationalisation of steel, will always sacrifice its principles rather than risk its seats in the House of Commons.

As for compensation; it is an interesting reflection on the integrity of the Government that before the publication of the Bill the best advice which was given to the holders of steel shares was that the Government would cheat them, which is precisely what has happened. But what is of far greater consequence for the nation as a whole is the effect of the Bill's financial provisions on the economy. In 1967 there is in all stock with a nominal value of £1,644 million to be redeemed or converted. Under the Bill £500 million of compensation stock is to be issued to the public. Inevitably—and nobody can deny this—part of the compensation will be spent on consumption rather than be retained in Government stock or transferred into other securities.

In short, the financial consequences of the Bill are inflationary at a time when the Government have decreed that deflation is to be the order of the day. And all this is to happen in a year when Government expenditure is expected to rise by the alarming figure of 6 per cent. and when industrial production is plummeting. It is little wonder that the Chancellor of the Exchequer has told the Prime Minister that he has had enough of his job at the Treasury.

The fourth objection to the Bill is that at the very time when the Prime Minister is making overtures to General de Gaulle and other Europeans to join the European Community the Government are pursuing proposals for the steel industry which—and I weigh my words carefully and I challenge the right hon. Gentleman to deny that this is the case, because I have made very careful inquiries about it—are inconsistent with the practice of the European Coal and Steel Community.

We have been over this ground on a number of occasions, but always, and again today, the right hon. Gentleman has skated round the issue. Always he has said, and again today, what we all know to be the case—that nationalisation as such is not contrary to the E.C.S.C. But Mr. Deputy Speaker, ask anyone you like from the headquarters of the European Coal and Steel Community and all will tell you that the creation of a single monolithic steel industry representing 22 per cent of the combined E.C.S.C. and United Kingdom market runs completely counter to the existing permitted practice of the Community, and yet that is precisely what the Bill is intended to do.

Mr. Marsh

I have never sought to hide from the House the obvious fact that this produces another matter to be negotiated, but would not the right hon. Gentleman agree that the Bill raises no bigger difficulties than existed with the National Coal Board last time, no bigger difficulties than those presented by the Iron and Steel Board and no bigger difficulties than those which were raised by the proposals put before the British Iron and Steel Federation? Any of those proposals would produce difficulties which we would have to negotiate if we entered the Community.

Mr. Barber

Yes, but it seems a strange thing that, recognising that there were many difficulties with the Steel Board and with the coal industry, now in the midst of these negotiations the right hon. Gentleman should delberately set out to create an industry which he knows will not in fact be acceptable to the Europeans. It is no good the right hon. Gentleman shaking his head. I did not propose to pursue this matter. If he wants to pursue it, then I shall pursue it with him. It was the Minister's predecessor, the Chancellor of the Duchy of Lancaster, who said: Our proposals would create a single unit of direction with a capacity of about 30 million tons of crude steel a year". If the Minister wishes to learn more about this, he had better look at the Financial Times of 23rd November last year in which he will see a headline across four columns: Steel nationalisation could be an obstacle to entry". The reasoning is there given by Geoffrey Owen, the industrial editor, who, I should have thought, was a fairly respectable individual. If the right hon. Gentleman is still not satisfied, let me quote what Mr. Owen says, which I believe has the ring of truth: Some stiffening in the powers of the High Authority of the ECSC (which was set up, like the Steel Board in Britain, in conditions of steel scarcity) is probable, and this would be greatly complicated by the presence of the huge National Steel Corporation. Unless the NSC takes the form of three or four competing and largely autonomous groups, it could become an important stumbling block to Britain's entry into the Community. But we have been told by the Government, by the previous Minister of Power and by the Foreign Secretary that it is not the intention to have three or four largely autonomous and competing groups. We have been told that that is not the purpose of the Bill. This is why we are absolutely entitled, and, what is more, why we are right to point out to the House, that what the Minister is doing is incompatible with what is accepted by the E.C.S.C.

I for one will not stand from the Minister criticism of the Opposition because we point out something which, apparently, he thinks is not generally known in the Labour Party but which is known to every European of any consequence in the European Coal and Steel Community at Luxembourg. The right hon. Gentleman was there the other day. Did he raise this question? Did they tell him that what he was proposing to do was not contrary to the existing practice of the Community. Of course not, because we all know that it is contrary. There is nothing unpatriotic in pointing out what people on the Continent know, namely, that what the Minister is proposing is contrary to the practice in Europe.

The fifth objection to the Bill is that it gives the National Steel Corporation powers to diversify without limit. These powers can be concisely stated. The Corporation is to have unlimited power to diversify its activities, and to engage in any business of any kind—manufacturing, commercial and financial, whether in the United Kingdom or elsewhere in the world, even though that business has nothing whatever to do with iron and steel.

The Minister—I say this with respect, because I know that he would never wish to mislead the House—made a slip in his speech when he said that the Corporation can do all the things which the several operating companies are permitted to do according to the powers given in their memoranda of association. The powers in Clause 2 go much further than that. The Corporation has power to take over any company in the country and to set up any new company. There is no limit whatsoever on its powers of diversification. I cannot refer to what is not in the Bill, but the consequence of the Bill is that there will be no Parliamentary control or scrutiny of any kind.

The Minister said that the powers of diversification in the Bill are subject to ministerial control and that he would not approve any measure of diversification which was not in the national interest. I agree with my hon. Friend the Member for Yeovil (Mr. Peyton), who has deep suspicions about the phrase "in the national interest". After all, there are hon. Members opposite who do not take the same view as the Prime Minister, who thinks that it is in the national interest deliberately to put people on the dole. Yet this is what the Government are doing. There are differences of opinion about this.

While I trust the Minister's judgment more than that of most, I am not at all sure that he and I would see eye to eye about what was in the national interest in diversifying into fields outside the iron and steel industry. The only explanation we have had from the right hon. Gentleman is that private enterprise does not have to come to Parliament for permission to diversify and therefore why should the Corporation have to do so?

I understand that the Chief Secretary to the Treasury is to reply to this debate. Therefore, let me put to him a question which has gone unanswered throughout our debates. It is a very appropriate question for him to answer. It is in relation to the Minister's idea that the Corporation should be treated no differently from private enterprise in having to come to Parliament for permission to diversify. The question is: does he not agree that there is all the difference in the world between a company in the private sector embarking on an entirely new venture with a limited amount of risk capital subscribed by shareholders and a nationalised industry spreading into new manufacturing fields with the bottomless purse of the Exchequer available to underwrite every faulty commercial judgment?

We are told that we can rely on the good sense of Minister. That is what the right hon. Gentleman said this afternoon. Let the nation recall the words of the man who is now in charge of our economic policy, the Secretary of State for Economic Affairs: We "— he was referring to Socialists, among whom he includes himself— take the view that public ownership must be the rule and private ownership in certain specialised circumstances the exception. That is a philosophy which we utterly reject. But that is what right hon. Gentlemen opposite believe, and that is the purpose of Clause 2.

Sixthly, and lastly, it is a fact that the overwhelming majority of the electorate does not want this Bill to be passed. First, the combined vote of the Conservative and Liberal Parties at the last election was greater than that cast for the Labour Party. Furthermore, the most recent Gallup Poll—and hon. Members opposite frequently seek to rely on such polls—shows that only 14 per cent. of voters want the Bill to go through and that the figure even for Labour voters is only 27 per cent.

The Bill is the Prime Minister's pay-off to those who supported him against the Foreign Secretary for the leadership of the Labour Party. It is a Bill to appease the Left Wing. It is a Bill which will make Britain less competitive. It is a Bill which will sap overseas confidence. It is a Bill which will make more difficult our entry into Europe. It is against the national interest, and we reject it.

5.28 p.m.

Mr. Michael Foot (Ebbw Vale)

The right hon. Gentleman for Altrincham and Sale (Mr. Barber) has surveyed a very wide area. I hope to comment on several of his remarks. I thank him for stating the matter in its broader context.

I was not a member of the Standing Committee. The rumour was spread that I was invited to be a member of the Committee and that I rejected the offer. No such offer was ever made. Had I been invited to be a member, I should have been happy to accept. If I had been a member, I might not be wearying the House now.

Mr. Alison

The rumour which we heard was that the hon. Gentleman had offered to join the Committee and that his offer was rejected—precisely the opposite of what he says.

Mr. Foot

I agree with the hon. Gentleman that that sounds much more probable, but even that is not true; it did not happen that way, either.

I was not a member of the Standing Committee, but as one who has had an interest in this subject for many years I should like to begin by congratulating my right hon. Friend on this Measure which he has brought to the House and on the way he has carried it through the House, and on the speech he has delivered today. In my opinion he has fulfilled the pledge which was given by our party at the last election, that this would be carried through, and I think he deserves congratulations on that score.

The right hon. Gentleman the Member for Altrincham and Sale sought to cast aspersions on the integrity of myself, possibly, and some of my hon. Friends, in that he suggested that we were always prepared to sustain the Government in office rather than to pursue the advocacy of our principles. Well, if we had upset the Government during the period between October, 1964, and March, 1966, or even subsequently, as we were invited to do by many hon. Gentlemen on the opposite side of the House, purely in the national interest, of course, if we had taken that course which they advised us upon, we might not be discussing this Measure which we are discussing so agreeably now. There are many things which the Government have done or not done to which we take strong objection, and we shall continue to state our reasons for that, but we have always made it clear that we wished to sustain the Government so that they should carry through their election pledges, and this is one of the principal election pledges which is being carried through, and therefore, for many of us, this is a sweet moment of triumph, and we are very glad to cele- brate, with all prepared to join with us in doing so.

I should have thought from the complaints from many hon. Gentlemen opposite over recent years they might join us. One of the things they have said is that we must end this terrible uncertainty in the steel industry. Tonight that uncertainty in the steel industry is ended. The future of the steel industry as a great publicly-owned concern is assured. No one need have any more disputes about this at all. This is what hon. Members opposite have said was the position, that the steel industry suffered great difficulties because of the uncertainty. They may now put all their fears at rest, and join in the celebration on that account.

The right hon. Gentleman said that one of the reasons why he objected so strongly to this Measure was because of its international financial repercussions, and many people abroad objected to it. I have read this before. I remember at the time of the run on sterling in July last year the right hon. Member for Enfield, West (Mr. Iain Macleod) also put forward this proposition. He was seeking to examine why the run on sterling had originally occurred, and he advanced the proposition in an article in the Daily Mail that the origin, perhaps, of the run on sterling was the presentation of the Iron and Steel Bill to the House of Commons. I must say that summons up a very strange picture of the mental processes of the gnomes. We can imagine a gnome in Zurich, or wherever it is, coming down to breakfast one morning and saying to his wife, "Do you see, dear, that they have introduced the Steel Bill after all? You will have to take a very different view of that Government in Britain."

That was the proposition clearly advanced by the right hon. Member for Enfield, West, and apparently supported by the right hon. Gentleman the Member for Altrincham and Sale—in a more moderate manner, as we would expect from him—today, that in the opinion of many of those people abroad the financial strength of this country is determined by this Bill. There are no great signs of it; there have been no great disturbances in the last day or two because they learned that the Third Reading of this Bill was going through; there has been no financial crisis, despite all the efforts of hon. Gentlemen opposite to try to stir it up. No one would under-estimate their efforts to make sure that the financial position of this country should be regarded as unsound.

Mr. Barber

The hon. Gentleman is absolutely right in what he has just said—that the reason why this Government have taken the measures—for deflation, which would not have been necessary, deflationary measures, creation of unemployment, falling production, their approaches to Europe to join the Common Market —are all the consequences, which the Government have taken, to counter the lack of confidence resulting from this sort of Measure. If the hon. Gentleman doubts the words I quoted today I would tell him that I did not use those words. The words I quoted today were from a leading American newspaper. I could have made quotations from The Times, the Financial Times, newspapers in Zurich which the gnomes read, and others, and he will find that I am supported in my view. It may be illogical; the gnomes in Zurich may be stupid. Nevertheless, this is what they believe.

Mr. Foot

If the gnomes of Zurich do believe that, then I agree with the right hon. Gentleman in this at least, that they are very stupid people. This has been one of my complaints against successive Governments, that often to impress very stupid people we have to take stupid action. It has been my complaint against the Government on many occasions. But that does not arise on this Bill. My complaints against the deflationary measures can be stated on other occasions. What I am now arguing I should have thought almost all hon. Gentlemen, however much they may equip themselves with these quotations from these various journals, would agree, that it is absurd to suggest that the introduction of this Measure, which has been known for years to have been a principal measure in the programme of the Government, would have had any material effect on the immediate financial position of the country or the economy of this country, despite, as I say, the efforts of hon. Gentlemen opposite to stir up as much misgiving about the Measure as possible.

They are perfectly entitled, of course, to attack the Measure. I am not com- plaining on that score. They are perfectly entitled to advance their arguments about the Common Market, that this makes it much more difficult for Britain to go into the Common Market. I think my right hon. Friend has answered that argument. My own answer would be a different one. If it is in fact the case that the conditions for entry into the Common Market are such that it is not possible for the people of this country to bring into public ownership their great industries that would be a further reason, in my opinion, for not seeking to enter such an organisation. That part of the right hon. Gentleman's argument was, I am sure, not aimed at me; if it was, it hit the wrong target, if, indeed, it hit any target at all, and I do not believe it did.

The right hon. Gentleman based his argument also on saying—I think I got his words correctly—that nationalisation is unsuitable for a manufacturing industry as we had no experience of nationalisation in the steel industry. We have, of course. That is why I interrupted my right hon. Friend in his speech. We have had it.

Mr. Barber

I do not wish to join issue with the hon. Gentleman on this but, just to get the record straight, those were not my words. I was quoting from the President of the Board of Trade.

Mr. Foot

Which one?

Mr. Barber

The present one.

Mr. Foot

I was trying to identify which particular quotation and which President of the Board of Trade the right hon. Gentleman was referring to. I am afraid I have not quite followed him. If in fact the present President of the Board of Trade said that we had not experience of nationalisation in manufacturing industry and that was why we could not judge on these matters, then, not for the first time, I must educate members of the Government as well as educating hon. Gentlemen on the other side.

Mr. Barber

What he said was that public management was suitable for public transport, gas, electricity, not manufacturing industries. Therefore, the job of nationalisation proper was more or less finished by 1951. This was in an article by the present President of the Board of Trade in a magazine called the Queen.

Mr. Foot

I remember the article very well. The President of the Board of Trade should be a bit more careful both where he writes and what he writes, I must say, but the right hon. Gentleman may remember that the article started the controversy we had in the Labour Party some years ago, when the proposition of the President of the Board of Trade on this matter was widely debated. Some of us in the Labour Party put a contrary view to his. Our view was accepted by the Labour Party, and the President of the Board of Trade has had to revise these views in response to the pressures from my hon. Friends and myself, exercised perfectly democratically. That is a process which we are continuing today.

I come back to the statement quoted from some previous President of the Board of Trade, or perhaps the present one, which the right hon. Gentleman adopted, so I hope that he will not disown it in another intervention.

We have had experience in the steel industry itself of public ownership. I know that some right hon. and hon. Gentlemen quote the balance sheets of Richard Thomas and Baldwins to prove, as they think, that they are right to criticise or condemn nationalisation on that account. The figures, facts and experience of Richard Thomas and Bald-wins prove the exact opposite. Anyone who looks at the accounts must divide them between the great new works at Newport and olders works such as those at Ebbw Vale, because there is a sharp distinction between the two.

In the case of Newport, it is the fact that there have been serious losses. No one can deny that. It is those losses which figure in the balance sheets and give such gratification to the arguments of right hon. and hon. Gentlemen opposite, supposedly. The fact is that Richard Thomas and Baldwins was the only steel company in the country prepare to go ahead on a big scale with the expansion of the steel industry in 1959 and 1960 when private enterprise would not undertake the job. That is the primary reason for the losses which have been sustained by that part of Richard Thomas and Baldwins.

Mr. J. H. Osborn

Would the hon. Gentleman not agree now that it is rather unfortunate that we had such a rapid rate of expansion from 1959 onwards as a result of political pressures from the then Opposition, since that has led to the creation of so much surplus capacity at the moment?

Mr. Foot

There is a great deal in that, and if the advice of Richard Thomas and Baldwins had been accepted, the expansion would have been carried out in a different way. There would not have been expansion of both Colvilles and Newport at the same time. That was a decision taken, as a result of political pressure, by a Conservative Government who were presumably trying to exercise their views about the national interest, but were not very good at doing it.

No one can say that that is a charge against nationalisation. I hope that the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) will understand that that does not alter my argument that the serious losses at Newport shown in the balance sheets of Richard Thomas and Baldwins are due to the fact that the publicly-owned sector of the industry was prepared to undertake a vast expansion of the steel industry and create extra steel capacity when private enterprise was not prepared to embark upon the job.

Even though it is the case that there have been losses, the contribution of the great new steel works at Newport to the nation has been very considerable. The biggest exports of steel within the whole industry have come from Richard Thomas and Baldwins, from Llanwern. I appreciate that the steel sells at a lower price abroad, but that does not alter the fact that, had it not been for the expansion of the steel industry undertaken in those difficult days of 1959 and 1960 which the publicly-owned sector was prepared to undertake when private enterprise did not dare, the capacity would not have been in existence to enable such quantities to be sent abroad today, contributing greatly to the economy of the country and our general balance of payments position.

If anyone wants a further test to disprove the argument which has been advanced that we have no experience of nationalisation in the steel industry, I invite him to consider the other branch of Richard Thomas and Baldwins at Ebbw Vale. Ebbw Vale has been making a profit ever since it was started by Sir William Firth in face of the pressures from most of the rest of the steel industry. If anyone goes to Ebbw Vale today, he will see a thriving industry making big profits and contributing greatly to exports at the same time. Indeed, Ebbw Vale is standing up to the difficulties in the industry probably better than any other steel works in the country today. If hon. Gentlemen doubt what I say and the claim which I make, I invite them to look at the verdict which was passed on Ebbw Vale by representatives of the Organising Committee who went there a few weeks ago.

Lord Melchett, a representative from Summers and other representatives of the Organising Committee went to Ebbw Vale to study the facts on the spot. When they had seen it with their own eyes and looked through the books, their verdict was that Ebbw Vale was doing extremely well, and it is not easy to say that about every steel firm in the country at the moment.

Therefore, I invite the right hon. Member for Altrincham and Sale to complete his education, once he has escaped from the rigours of the discussion of the Bill, to come to Ebbw Vale and see for himself how we are showing that steel can be produced with great efficiency and considerable profit, at the same time making a major contribution to our exports.

Those are the facts. I am not discussing some vague aspirations for the future but something which is happening today. It is partly because we know those facts that many of us have been so confident in urging that we should extend these principles to the rest of the country.

There are advantages over and above many of those which have been cited. It will be a very good thing for the industry if we can now not merely put an end to the uncertainty but to the feuds inside the industry. Anyone who studies its history will know that at the time that Sir William Firth started the great steel works at Ebbw Vale, it was recognised to be the most advanced works in the country. It was the pioneer in the pre-war process of rationalisation which other private enterprise firms were not prepared to embark upon on the scale which they should have done. Sir William Firth was the pioneer in that campaign. What did he meet with from the rest of the industry? He was nearly squeezed out of existence, with the backing of the City.

The feuds have continued, and they have continued in this House. All these false allegations against Richard Thomas and Baldwins and the studied attempts of some right hon. and hon. Gentlemen to mislead the House and the country about this publicly-owned industry derive from campaigns which have been conducted by the private steel masters against the publicly-owned sector of the industry. Stewarts and Lloyds and the rest of them have conducted a constant vendetta to try and squeeze Richard Thomas and Baldwins out of existence and to squeeze Ebbw Vale out of existence. But they will not succeed. It is partly to end the feuds and secure an industry which serves the true national interest that this Measure is one not only that the Labour Party has favoured but which I believe the whole country will come to see as a great forward-looking Measure.

I welcome specially the Amendment which my right hon. Friend proposed dealing with workers' participation in the industry. In Ebbw Vale, we have had a very good record of workers' participation already. We have never had a strike at Ebbw Vale, though we have been near it on occasions. Strikes have been avoided by intelligent management such as we have there today. It is that intelligent, energetic management which helped to achieve the record steel figures which we have produced in Ebbw Vale all through these months of difficulty when some people in the industry were talking almost in terms of despair.

I do not think that anyone need talk in those terms. The steel industry is bound to face great difficulties, but they can be overcome. They are more likely to be overcome with the help of a coordinated plan and if the managements of all these concerns will explain and discuss with the people working in the industry what are the profoud changes which will have to take place. We all know that formidable difficulties have arisen in the Steel Company of Wales, and in other steel industries. For example, we know of the strike which is now going on at Stewarts and Lloyds. There is a conflict of rights in these disputes, and there are powerful arguments on both sides. We know that the unions are engaged in these disputes, but anyone who tries to dismiss them as frivolous demarcation disputes is wrong.

We want to help them solve the difficulties, but we can do so only by the most spectacular increase in the methods of participation and discussion. This Measure looks forward to that, and I hope, therefore, now that it is being passed, we will have substantial support from all sections of the industry to make it succeed.

When I read the appointments to the Organising Committee made by my right hon. Friend, I was very critical of many of them, and I remain so, but I am very glad that he has placed representatives of the publicly-owned section of the industry on the Board. They are well represented there, and I am sure that my right hon. Friend will pursue that policy in the future.

I have many criticisms to make of the past records of those who have been prepared to serve on the Organising Committee. I would prefer to see on the boards of nationalised industries many more people who have a passionate determination, judged both by their past statements and by their present ones, to make public ownership succeed, because I think that in the end it is only by this method that we will make it succeed.

However, from all that I have seen, I think we have a chance now for a new beginning for the steel industry. I think that every section of it should assist in making this plan work. I think that the speech of the right hon. Member for Altrincham and Sale itself was an abandonment of the Opposition's argument. They had been reduced to a very small measure in what they have to say against this Bill. The whole argument about the future of the industry has reached a new point. The uncertainties have gone, and we can go forward to make this great industry one that serves the whole nation and provides a good livelihood for all the people who work in it.

5.52 p.m.

Mr. Nigel Birch (Flint, West)

It would be churlish to grudge the hon. Member for Ebbw Vale (Mr. Michael Foot) the celebration of his Roman triumph over the President of the Board of Trade, who no doubt will have to walk in chains for his sins. This is a great day for the hon. Gentleman, and I congratulate him on it, but I shall return to the figures which he gave for Richard Thomas and Baldwins. When is a loss a profit? It is a most interesting point.

I have only two points to make against the Bill. The first is the danger that is contingent, the other the danger that is certain.

I want to say a word supplementary to what my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) said about the bearing of all this on the Common Market. I should have thought that this was a subject in which the Liberals might have been interested. We have only to look across the Gangway to see the Liberal benches crowded with their clean eager faces!

Hon. Members

Where are they?

Mr. Birch

The danger about our getting into the Common Market is this: as we know, there is surplus steel capacity in the world, and in the Common Market, and none of the industry in the Common Market is nationalised. I do not know how powerful the influence of the steel lobby may be in the Common Market. It may be fairly powerful, but they can hardly welcome a nationalised company coming in which has secured its assets at a fraction of their cost. They have seen that our nationalised industries have been run for years at a loss, and they may also worry lest we cheat.

Let us consider what happens with coal. It is protected by a heavy charge on oil, and it is also protected by the prevention of imports. The prevention of imports would be against the Common Market creed and whole arrangement. Whether they will trust us not to do such a thing, I do not know.

I think that it is very unwise to underestimate the damage that was done by the surcharge. When hon. Gentlemen opposite use the word "illegal", they use it as though it were the most horrible thing in the world, but we broke nine treaties when we put on the surcharge. It was absolutely illegal, and that has not been forgotten, and I do not doubt that it will be a handicap to us in getting into the Common Market. This is an added reason for celebration by the hon. Member for Ebbw Vale.

The nationalisation of steel will make the management of our economy far more difficult than it is now. When hon. Gentlemen took office, they believed, or at any rate hoped, that the management of our economy was rather easier than it has turned out to be. It is not a very easy business.

Why should the nationalisation of steel make the management of our economy more difficult? It is mainly because of the enormous increase in Government debt which results, and compensation here is relatively a flea bite. The electricity industry, the toughest monopoly of the lot, is asked by the Government to charge prices which enable it to finance quite a lot of its capital expenditure. The compensation paid in respect of this industry was £342 million, but the total funded debt to the United Kingdom is now £3,700 million. Compensation for the coal industry was £388 million. We know that £415 million has now been written off, so the Coal Board got the whole industry for less than nothing, but the funded debt is £575 million. If we add that to the amount written off, it means a debt of nearly £1,000 million outstanding. I think that the humanity of the House will permit me to draw a veil over what has happened about railway finance. Thousands of millions of £s have been written off, and the debt there is stupendous.

It is not so much a question of the nationalised industries losing money, though of course they often do so. It is a question of now we are going to finance them. I think everyone admits that if a nationalised industry loses money the unfortunate taxpayers have the privilege of paying for it. A lot of people say that that is all right, but surely if we are using money for capital investment in the nationalised industries it is appropriate to borrow the whole of that money so that it need therefore not really be a burden on the taxpayer at all?

But I do not think that it works out that way. This year capital expenditure on the nationalised industries amounts to, I think, £765 million, and in nearly every mini Budget which we have had from the Chancellor of the Exchequer he has tried to cut down capital expenditure by the nationalised industries. The reason is simply that one cannot borrow that kind of money. It would not be inflationary if we can get genuine savers to buy that amount of gilt-edged securities.

That was the great trouble in France. They had eight devaluations in France before de Gaulle got properly in the saddle, and as M. Rueff pointed out, one of the difficulties was the impasse, that is to say, they were borrowing for the nationalised industries, but could not borrow from genuine lenders. The money therefore had to be raised in taxation, and they did not raise enough.

In this country we nearly always have had to try to raise money by taxation for the capital expenditure of the nationalised industries. We have generally not raised enough, because the burden has been so heavy, so we have had the extra taxation, and we have had inflation, and I think that this Measure will add very largely to that difficulty.

Let us now consider the steel industry. Even the Minister is not particularly hopeful about what will happen. We had a remarkable discourse from the hon. Member for Ebbw Vale about Richard Thomas and Baldwins, but there were remarkable omissions in the Minister's speech. He gave us the earnings of many steel companies, but he did not mention Richard Thomas and Baldwins. I wonder why? I think I can give the reason. In the last four years, losses before taxation by Richard Thomas and Baldwins, amounted to £30 million, which by any standards is quite a lot. Those were the lush years, but the company lost 30 million, and would have lost more last year if £39 million of its debt had not been turned into equity, which was held by I.S.H.R.A. That is a genteel way of writing off capital losses.

Very prudently the Minister did not answer when I asked him if he had any idea when he would build his great plants, or at what annual cost.

Mr. Michael Foot

Will the right hon. Gentleman tell us whether he agrees with what I said, namely, that the reason for the losses was that the steel works at Newport went ahead whereas the rest of the industry refused to have anything to do with them, and that throughout the whole of this period a steady profit has been made at the other parts of the works? That seems to disprove the right hon. Gentleman's general charge against the company.

Mr. Birch

He is not correct about nobody else being willing to do it. I believe that I was at the Treasury when the original argument arose about the fourth strip mill. Many people were willing to do it. It was put in South Wales for social reasons—to please the hon. Gentleman's constituents. I hope they are grateful.

The Minister did not answer my question. I do not think that he has the faintest idea what the answer is, but if we are going to enter into a large scheme for scrapping the old mills—which we will have to do—and concentrate on a few enormous plants, the capital expenditure will be astronomical, and will all go on the Budget. This year the Chancellor of the Exchequer is in desperate straits, and will be next year and the year after that, because expenditure is rising rapidly and his revenue is not, and because production and growth are not going ahead. The business of the public sector sucking all the money out will make his task far more difficult.

It is often said that people are bored by the controversy about steel, and that is probably correct. We cannot go on for 21 years arguing about it without people getting bored. But they will not be bored by the results. They will be agonised. It will make the position of the Treasury even more difficult than it is now; indeed, it will make it almost impossible. Why have they done it—to please the Playboys' Bunny Club below the Gangway.

6.04 p.m.

Mr. R. E. Winterbottom (Sheffield, Brightside)

The right hon. Gentleman was dealing largely with the finance of the steel companies. I suggest that that problem would have been there whether or not we had had a nationalisation Bill. The British steel industry has already been the subject of a review under the very able chairmanship of Sir Henry Benson. It has published its First Report. It has made suggestions about the reorganisation of the industry, and the Report shows that the problem of finance for the reorganisation of the industry would be there whether or not there was nationalisation.

Some of us who have close links with the industry looked forward to the Second Report from Sir Henry Benson, which we hoped would deal with the financial aspects of the proposal to reorganise the industry, as outlined in the First Report, for we would then have had some idea of the point of view of those at present in the industry as to what it would cost to finance its reorganisation. I have been surprised at the tone of the discussion up to now. I thought that the tumult and the shouting would have died, but seemingly we are still debating whether or not to nationalise the industry. The speech made by the right hon. Member for Altrincham and Sale (Mr. Barber) could have been better made when the Bill was orginally introduced rather than now, when we are almost at the end of a very controversial discussion.

Mr. Marsh

The right hon. Gentleman made that speech on both occasions.

Mr. Winterbottom

The right hon. Gentleman is still living in the past. He has not seen the wind of change and has not had given to him the advice which was given to me when I was sailing before the mast, namely, "Never throw your slops to windward". It is coming back to him at this stage because he has to face the problem of what to do from now on rather than what has been done up to now.

I think that I should deal with the problem of what to do from now on, because I believe that I was the oldest Member on our side of the Committee, with possibly the longest service in the House. I should be failing in my duty and should not be satisfying my inward self if I did not pay tribute to the Minister who has succeeded in piloting the Bill through. He deserves great praise, and I consider that he has considerably enhanced his reputation. Sometimes he may have seemed a little hesitant, but he is a young man, with his first major Bill. Sometimes he may have seemed to the Opposition somewhat unyielding, but it has been proved that he was right in what he said. Sometimes he may have seemed rather sphinxlike, but nobody who had been in our debates in Committee could deny that he has brought to his job great skill, capacity and sincerity. I compliment him.

I want to deal with the problem of where we shall go from here. After the Bill becomes law the British steel industry will be divided into two sectors—the private and the public. In every argument today I detected a desire to keep the two sectors separate and distinct. There was much talk in Committee about competition between the two sectors, and I have no doubt that before this debate is over there will be more talk about such competition. But I am not concerned too much about that problem; I am concerned, from now on, with the possibility of co-operation between the two sectors.

I want to refer to what my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said, namely, that it is time the feuding in the steel industry ceased. The public and private sectors of the British steel industry must face the future and work to improve the economy. That will call for co-operation between the two and mean that if there are difficulties in one sector, the other must come to its assistance. If the industry as a whole—both sectors of it—is to face the task that lies ahead, there must be co-operation, perhaps in terms of consortia.

When one considers the state of the economy and what needs to be done to develop our export trade, one must wonder how that is to be done and which industries can make the biggest contribution. The latest export figures are encouraging, but more must be done. A tremendous proportion of our expels comes from the engineering industry. This leads me to the conclusion that if steel is to play its proper part in the export drive and is to compete with the industries of other countries, we must think in terms of steel as a whole— not just steel as steel but steel as the raw material of the plant, equipment and machinery that we can export.

It does not matter whether Richard Thomas and Baldwins increases its sales of steel by 100 per cent. Such an increase would, of course, be helpful to our export drive. More important would be for those additional sales to be made up of manufactured goods, with the "know-how" of British engineering behind them.

When thinking of what the British steel industry must do in future—and throughout my remarks I am referring not to one sector of it but to the private and public sectors alike—we should not confine our thoughts to a number of small steps that might be taken to improve the industry. We may need to take one enormous step forward, and I suggest that one of the biggest strides would be to convert more of the steel into the plant, equipment and machinery that is urgently needed throughout the world. The capacity of steel may exceed demand, but the convertibility of steel—into plant and machinery—will not exceed demand for decades to come.

When I advocate the public and private sectors of the steel industry cooperating, I do so in the knowledge that such co-operation is possible. I recall that without that co-operation Britain might never have achieved one of the greatest export orders executed by our steel industry. Some years ago 13 British steel firms won a contract to build a steel factory at Durgapur in India. Worth £120 million, the order could be executed only by those 13 firms co-operating in a consortium.

That illustrates that co-operation is not only possible but vital. Some of those 13 firms will be nationalised while others will remain in private hands. They cooperated once and co-operation will be needed in the future. The old antagonisms, which arise as a result of people having a false conception of competition, must disappear. As we finalise this act of nationalisation, I hope that it will be possible—indeed, it is vital that this should happen—that the private and public sectors will co-operate to overcome the difficulties that lie ahead and will concentrate on exporting plant, equipment and machinery to satisfy the needs of the world and make our export drive succeed.

The facts must be faced. Unless the steel industry is subject to at least the degree of nationalisation envisaged by the Bill, no progress is possible. I therefore question whether the industry could be reorganised in the terms of the Benson Report. I do not believe that sufficient private capital could be found to enable that reorganisation to take place, even though it must be a reorganisation spread over many years. Without a degree of nationalisation, the industry could not possibly face the challenges that come from overseas steel producers and face not only the competition that exists today but the competition that will grow through the 'seventies.

The British steel industry is not the only steel industry in an unhappy position. The German and French industries are no better off. The French industry has been going though a process of reorganisation such as that envisaged in the Benson Report for the British industry. A certain amount of reorganisation has gone on in that country, but the French industry has arrived at a point when it can proceed no further because of the lack of capital. Because of this, it has had to go cap in hand to the French Government for assistance.

Many people have said that the degree of nationalisation which is taking place in Britain will act as a barrier to our entering the Common Market. I urge them to study what has been, and is, happening in some of the countries of the Six. The French Government, for example, is heavily subsidising that country's steel industry—subsidising it under the sort of conditions that gives one the impression that the subsidy is almost a direct contribution to the industry's reorganisation.

Under private enterprise the British steel industry could not possibly find the necessary money to finance the sort of reorganisation envisaged in the Benson Report. Although I have no justification for saying this, I believe that the second report of the Benson Committee has been deliberately delayed so that these debates could be concluded before it was issued. I regret that—if I am right in believing that it has been held up—because I would have liked to have seen the final conclusions of the Benson Committee, which would have given us an idea of the amount of capital that will be needed to reorganise the industry.

We must accept that the industry must be nationalised if it is to be efficient. I hope that there will be no more talk of inefficiency in the days to come. The private and public sectors must co-operate, there must be harmony in the industry and the industry must be reorganised in such a way that it is enabled to make a bigger contribution to our export drive.

Considering the other industries on which many people pin their hopes for greater exports—plastics, electronics, chemicals and so on—I still believe that, somehow or other, the British steel industry, if reorganised correctly, could make an immediate impact on our export drive. So large an industry is it that it could, if given a chance, colossally boost our exports and satisfy a great deal of the steel needs of the world.

6.22 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

It is always a pleasure to speak following the hon. Member for Sheffield, Brightside (Mr. Winterbottom) to whom we were endeared during the passage of the Bill in Committee. I congratulate him on being the first hon. Member to claim to have actually seen the wind of change. It must have been a unique experience.

I pay tribute to my right hon. Friend the Member for Altrincham and Sale (Mr. Barber). Never has an opposition to a Bill so well and truly led and never has so much energy, intelligent comment and leadership been put into the Parliamentary work of exposing the weaknesses and, at the same time, trying to improve a Measure of this importance.

I also pay tribute to the Minister. He showed throughout these proceedings—which, at times, were remarkably trying and difficult for him—very good temper and patience and a readiness to listen, consider and ponder the points of views of hon. Members, although he did not always agree with them. We sincerely thank him for his efforts. At the same time, I must criticise him in one respect. I hope that when he is out-argued and finds the discussion running against him, he will cease to try to defend himself by saying that his opponents are knocking sterling, being unfair to those who work in the nationalised industries, knocking our chances of getting into Europe or knocking the national interest. These have not been the Minister's strongest arguments. His comments must be based on logic and fact.

In Committee and on Report the justification for the Bill was not substantiated. The nepotistic argument was never developed because it was clearly untrue. The technical inefficiency argument has never been developed because it was clearly more suitable for the hustings than for the Committee Room. The shortage of investment argument, which the hon. Member for Brightside has just used, did not prove on examination to he true because, apart from a few strip mills, the steel industry has been able to find the bulk of its requirements and, I believe, but for nationalisation would have been able to do the same in the future.

The rationalisation argument did not stand up to examination because rationalisation is taking place in Germany, Japan, France and America, where, of course, the steel industry is under private control. It is only because the need for rationalisation is very recent due to technical change that it has become an issue at all. Hon. Members opposite could not have been more fortunate in having the argument of the need for rationalisation landed in their laps just when it happened that for doctrinaire political reasons they wished to nationalise the industry.

We were told that there was no competition in the steel industry and that this was another justification for nationalisation. The Government, however, are abolishing any vestige of competition which will be left by making this monolithic bloc. They told us that there was too great a profit for private interests in the profits of the steel industry. Now, we hear the Minister complaining throughout his speech that the steel companies are not making enough profit. Which of these does the Minister want? Does he want the private companies to make big profits or small profits? He must make up his mind about this.

Some new fears have emerged about the Bill. My right hon. Friend the Member for Flint, West (Mr. Birch) certainly advanced one of the most powerful arguments why it is a dangerous Bill to pass at this time. I will not go over his remarks on Europe because I am sure that he is right; but his remarks about the effect of this large amount of compensation stock and of new capital for the industry upon the finances of the country in future years were indeed relevant.

Perhaps I might briefly remind the House that during the period since the war we have paid revenue subsidies to nationalised industries of £800 million and we have written off £1,717 worth of capital, making a total loss to the taxpayer of £2,517 million. Those figures are taken from Parliamentary Written Answers. And yet the direct tax paid by the nationalised industries hitherto has been only £192 million. Therefore, about £2,300 million has been taken out of the taxpayers from the private sector and put into the public sector. This illustrates the degree of burden which nationalisation puts upon the backs of those who pay tax.

I think it is generally accepted that the nationalised steel industry will pay little or no tax and yet its investment needs will run over the years into many thousands of millions of £s. There will be £500-odd million to start with for compensation stock this summer. I believe that the further burden which this will place on taxpayers will cause the rest of private industry to have to pay more and more tax to support the ever greater State animal which the Minister is producing.

The Minister reminds me of Jack and the Beanstalk. He has planted today a seed which will grow and grow to a proportion which we do not quite know.

What have we created in the Bill? What is the organisation which will be set up after the Bill leaves this House? The justification has so often been that we must bring the steel industry into public control. When we consider it, however, we are loosing an enormous economic elephant over which nobody will have any control. It is extraordinary how little control we shall have over rationalisation. These are decisions for the Organising Committee. Works can be closed and new works can be built, and neither Government nor Parliament can affect them.

What about prices? It has not been demonstrated that the Government have any influence over the prices which nationalised industries have charged in the past. Quite the reverse. What about wages. There has been no indication that the wages of nationalised industries are more effectively controlled than wages in the private sector. With their open-ended financial ability, nationalised industries have been able to pay wages which nave gone beyond norms and incomes policies of Governments of both colours. The nationalised industries do not respond to deflation, to high Bank Rate, or to all the traditional instruments for controlling the economy. Steel will be no exception.

This enormous capital investment which will be necessary will not be influenced by the forces of the market. In bad times or good, the Steel Corporation will draw up its budget and the Chief Secretary will have precious little influence. He will not know what is going on. There will be no means by which this enormous investment in steel can be matched in relation to investment in other branches of the economy. There will be no real control. When one thinks that the nationalised industries are responsible for one-tenth of the productive resources of the country and that they consume one-quarter of the industrial investment, one realises how privileged they have been in obtaining the savings of the nation.

I believe that in efficiency we are creating something over which we will have less control and not more. The steel industry varies from being 10 or 20 per cent. overmanned to being, per haps, in some sectors as much as 50 or 80 per cent. overmanned when it is compared with similar plants in Europe and America. It is a devilishly difficult job to find a way of making acceptable efficient working practices and to get a far higher degree of manning efficiency in the industry. And yet by nationalising steel we will make it harder—not easier—to eliminate these practices because the pressure on margins and the financial pressure upon the managers will be less keen.

We have also lost control over much of the industry's public performance—such matters, for example, as compulsory purchase of land. The Building Control Act is not to apply to it. We have in the Bill all sorts of safeguards which make life more easy and more favourable for the Coporation. All this adds up to providing less control, and not more control, over this enormous slice of economic power.

This House must devise disciplines and structures to redress the balance between the private and public sectors. The control mechanisms in the Bill are inadequate. Demands for capital from the nationalised industries should be made to compete with and sometimes to suffer at the hands of the demands for capital of other industries. We cannot ignore the fact that one-tenth of the productive capacity in public hands is already consuming one-quarter of the capital. When this great Leviathan is launched, it will probably make that disparity increase.

We must somehow bring real competition from outside to bear on the steel industry. If we fail—and I hope that we do not—to enter the Coal and Steel Community, it will be necessary somehow to succeed in cutting the tariff so that this great steel industry comes under direct competition from abroad to keep it in tiptop form.

We must think up a provision to stop and to penalise the Corporation or the companies if they drift into peristent financial loss over the years. There is no easy way to force efficiency, but somehow we must find ways of putting management on its mettle so that the performance of the industry will be better even than private enterprise has been.

It is on these issues that so many of our debates have centred in Committee and on Report. The Chief Secretary would, I think, agree that neither this side of the House nor the Socialist Party has been able to put forward remedies that will make a nationalised industry able to stand on its own feet and to compete on equal terms with privately-owned industry. It may be impossible to devise such disciplines, but now that the Government are extending the public sector we must turn our attention much more seriously to this whole problem. It may not be possible, but we can take no pride or pleasure in the degree of success which we have had in the Bill which is now before us.

I would like to make one point on labour relations. The hon. Member for Ebbw Vale (Mr. Michael Foot) and others seem to be under the impression that the Bill contains a decisive move towards worker control or worker participation in running the industry. I do not believe that that is true, nor do I imagine that that is what the Minister thinks.

The Minister has several times said that managers must manage, and this is the way in which the industrial relations in the Bill are laid out: that the managers should have responsibility for managing at all levels. On the other hand, there is to be the maximum amount of consultation between both sides and this is absolutely desirable. Consultation, however, is not the same thing as participation. It would not be right to let the impression go out from this House that the Iron and Steel Rill contains a move towards worker participation or worker control. What I pay tribute to is that there is a definite attempt on the part of the Government to set up consultative procedures and negotiating machinery for the steel industry which will be an improvement on previous practice.

The future administrative and technical shape of this vast economic animal which the Government are today creating is to be dropped gently but firmly into the lap of the noble Lord, Lord Melchett, that lapsed Tory peer whom the Government have selected to put right all the problems of this industry. He has no direct experience of steel, nor really any experience of industry directly, and very little experience of politics. There was, I suppose, a pious hope in the minds of the Government that as his grandfather reorganised I.C.I., on the hereditary principle he will have the same ability to reorganise a great industry himself. That the hereditary principle should be called in aid is extraordinary.

It is incredible the way the Government have defended Lord Melchett's unfettered right to take all major decisions about how the steel industry is to be run. Whenever the House has pressed for details of the pricing policy, the grouping policy, the structure of management, details of rationalisation or even an indication of how the Minister's mind was working, we have been told that this was a matter for the Organising Committee and for Lord Melchett.

Nothing at all has been worked out by the party opposite while they were in Opposition. The civil servants produced for them the standard Bill for nationalising steel, the skeleton upon which they were unable to put any new clothes or any new flesh. This afternoon, therefore, the steel industry passes out of the con- trol of the forces of the market and the disciplines of competition. In my opinion, it passes out of the control of the House of Commons. It passes even out of the control of the Government, a large rogue elephant on the loose in our economy and trampling down the productive industries in the private sector which remain.

There is a strong desire among many people in the steel industry, and elsewhere, to take steel out of politics. But who brought it in? The party opposite. There was an uneasy compromise—I admit that it was uneasy, but at least it was a compromise—in the 1953 Act. We returned steel to private enterprise, but we kept some degree of public supervision so that the party opposite could possibly persuade their doctrinaire wing to accept that despite this dispute between us, we had left some degree of public control.

By this Bill the Labour Party guarantees that steel will remain in politics. I believe they are bringing many other industries into politics by their desire to control, to fix prices and wages, and to have participation by the Government. As they bring more and more into the maw of politics, people will get more fed up with political interference in industry. The steel industry has been made a guinea pig, the political football kicked about between the two parties. This is not for any reason than that both parties honestly believe that their own system of running industry, by free enterprise or nationalisation, is the only way in which we can cure the economic ills of the country and our known sloppiness and inefficiency as an industrial nation.

Because I believe that what the Government are doing for the steel industry will permanently wreck our chances of achieving first-rate technical and managerial efficiency in future, I believe no sacrifice is too great to make sure that this industry is eventually returned to private ownership.

6.42 p.m.

Mr. Brian O'Malley (Rotherham)

I begin by congratulating the Government on getting this Measure through to its Third Reading. Many of us in the Labour movement have waited a long time for this Bill. It has been in the party programme throughout the postwar period, in the years of Opposition, in 1955, 1959, 1964 and 1966. The workers in the steel industry have looked forward to the introduction and the final completion of this Bill for a very long time, indeed.

There were times during the 1964 Parliament, when we had a very small majority and when there were all kinds of interesting twists and turns in the arguments about nationalising the industry, when I began to wonder whether we would ever reach this happy stage. I was a Whip in those days, but even Whips have opinions on these matters; although they cannot offer them publicly they can still think them privately. I am very pleased that the end of this part of the story of the history of the industry has been reached and that we have reached the Third Reading tonight.

I congratulate the Minister very sincerely on piloting this Bill through its various long stages in the House of Commons. Whatever hon. Members opposite might say about the interest in the subject of steel nationalisation in the country as a whole, one thing is certain. It is that the workers in the steel industry, the men who are dependent on that industry for their livelihood and who know something about it, believe that steel nationalisation is in their interests. It is no good the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) shaking his head. As we all know, he has long and intimate connections with the steel industry which we all respect, but if he went into a working class steel constituency, in Sheffield or Rotherham, he knows that he would not be returned to this House in a thousand years.

He has to go to the outskirts of Sheffield which I know very well. I am not being derogatory about his constituency, but he would not get in for a South Yorkshire steel constituency where the men who work on the shop floor live. These men believe that nationalisation is for their benefit because they do not trust the present owners of the steel industry. They have goon reasons for not trusting them. That is not to say that there are not very often good labour relations within various parts of the industry, but that they do not trust the motives behind the actions which the industry has taken in the past. I do not blame them; I agree with them.

The right hon. Member for Altrincham and Sale (Mr. Barber) used to be at least within some distance of a steel constituency, my constituency, when he was the hon. Member for Doncaster. He put forward a very weak argument this afternoon. Steel workers from my constituency went in busloads to Doncaster to get him out at the 1964 General Election because of his views about the industry. He said today that this was not the right time to nationalise the steel industry. He said that it was affecting overseas confidence. I should not have thought that the one factor above all which had affected overseas confidence in this country was that so much of the industrial infrastructure of the industry was suitable for the 1930s, but not for the 1960s and into the 1970s.

We are told that this Bill will make it more difficult to get into Europe. I echo what my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) said. If it meant that by going into Europe the British people, through this House of Commons, could not decide the future pattern of organisation within British industry, I should have very serious reservations about our going into Europe. There is another curious side to this argument. What the right hon. Member opposite who blithely put forward arguments about entering the E.E.C. seemed to suggest was that only by keeping the British steel industry in its weak fragmented form could we get into Europe and that if we had a strong steel industry the Europeans would not want us.

I would not want to think that this country was to go into any organisation on the basis of industrial weakness. I should have thought that we should want to operate from a position of industrial strength. I thought that hon. Members opposite, particularly the right hon. Member who opened for the Opposition, put a weak case. It is notable that their case has changed in the last 18 months—at least I thought it had until I heard the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) this afternoon. He suggested that one argument for nationalisation of the steel industry was that we want to rationalise the industry and that this was no longer an important argument, but there was no indication that the steel industry was showing any intention of carrying out the necessary rationalisation, such as has been going on in Europe, until the industry knew that a nationalisation Bill was to be introduced.

The Minister dealt with that adequately. The hon. Member said that investment had been adequate under private ownership. It had not. Why did his Government put money into Richard Thomas and Baldwins and Colvilles? It was precisely because the private sector was unable or unwilling—or both—to carry out the kind of investment programme needed to increase the capacity of the industry. I suppose that hon. Members opposite could get away with talk about competition on Second Reading but the hon. Member has been through the long days and nights of the Standing Committee sittings and he knows the story about the state of competition in the British industry in the post-war period.

Before leaving the hon. Member for Cirencester and Tewkesbury, I must say two things to him. He made an attack on Lord Melchett, which I thought was a personal one. The hon. Member was sneering about lapsed Tory peers and about the hereditary principle and what Lord Melchett's grandfather did. I regret that, and I think the hon. Member will regret it when he thinks about it. Some of us on this side of the House have attacked other individuals on the Organising Committee. It is well known that I made an attack on Mr. Niall Macdiarmid, but never personally as an individual. I attacked the kind of views he had expressed for many years in opposition to nationalisation.

The hon. Gentleman said that it was the Labour Party which had brought the industry into politics. Of course we did. It is entirely within the scope of politics to be discussing the great industrial and economic issues of the day. What crossed my mind when I listened to the hon. Gentleman was the story of the great landed aristocrat and coal owner at the time of the legislation for coal inspectors in the 19th century who threatened to whip any inspectors off his land who went to look at his coal mines. I sometimes think that the hon. Gentleman is way back in the 19th century in what he thinks should be the scope and range of political activity. Times have changed since then. The scope and range of successive Governments has widened considerably.

Mr. Paul Hawkins (Norfolk, South-West)

The hon. Gentleman is adducing the argument that it has always been proper for the industry to be brought within the range of politics. Does he suggest also, as many of his hon. Friends have, that now is the time when it should no longer be legitimate political interest?

Mr. O'Malley

I do not suggest anything of the kind. Indeed, there are provisions in the Bill giving a degree of supervision to the Minister and to Parliament. Knowing hon. Members opposite and their attitudes, I have no doubt that it will not be taken out of politics in the next few years or, indeed, in the foreseeable future.

The Tory Party's opposition to the Bill has considerably changed over the last 18 months or two years. When they were in government and during the 1964 General Election campaign, both the British Iron and Steel Federation and the Conservative Party defended the present set up in the privately-owned sector and spoke with glowing approval of its policies and records. It was only when a Labour Government were returned—when the crunch came—that the Tory Party's whole attitude changed. The right hon. Member for Enfield, West (Mr. Iain Macleod), in the first debate on steel after the 1964 Parliament met, admitted, as no Conservative spokesman had admitted before, that everything was not well within the British steel industry. The argument now is that there is considerable need for a radical reorganisation of the industry and rationalisation, that the 1953 Act was wildly and grossly defective. The Opposition admit it now, but they did not admit it until recently.

This changed attitude would have been more impressive if the timing of the conversion had been different. It was noticeable that the British Iron and Steel Federation's proposals for the reorganisation of the industry came only in May and June of 1966, and the Benson Report did not reach many hon. Members in time for the Second Reading debate. The Report was published on the very eve of the Second Reading debate. The Opposition's case would have been more impressive if some of the necessary amalgamations and rationalisation had taken place long before 1964, when the writing was on the wall and when the Europeans were already beginning to do something about this.

The truth is that the Opposition have lost even the confidence of the Federation. There is a wide gulf of opinion on a number of issues between the Federation and the industry and what hon. Members opposite have been saying. I can understand why. It is known in some quarters what some senior members of the Federation thought about the standard of the Opposition Front Bench speeches on Second Reading, particularly the winding-up speech.

The right hon. Member for Altrincham and Sale let the cat out of the bag in Standing Committee. I asked him: Is it not true that all hon. Members opposite on this Committee had at least one initial briefing over at Steel House a few days before this Bill. I meant a few days before the Committee stage began, because that is when the meeting took place. The right hon. Member for Altricham and Sale said: Before we came on to the Committee we wanted to know what it was all about"— [OFFICIAL REPORT, Standing Committee D, 13th December. 1966; c. 2277.] It is a pity that they did not try to find what it was all about when they were in government so that they could deal with the problems that existed in the industry over those years when the Labour Party was complaining.

We had an argument on the question of vesting day only this week in the House. Hon. Members opposite, the Front Bench included, said that, because of the negotiations with Europe, we should postpone vesting day. Hon. Members opposite are not even representing the views of the Federation or of its senior members. In the annual statement of the South Durham Steel and Iron Company, the Chairman, the Hon. E. E Ward, said: Any last-minute delay in the date of vesting would not help us. This was on Wednesday, 25th January. Only two days previously hon. Members opposite had said they thought vesting day should be put off.

Another example of this has been the way in which hon. Members opposite, including the Opposition Front Bench, have been insisting that we should adopt an E.C.S.C.-type pricing system. When I and some of my hon. Friends suggested to the right hon. Gentleman the Member for Altrincham and Sale that there were some objections to that—first, that it did not work, and, secondly, that our steel industry, whatever it thought 18 months ago, did not want it—heads were shaken. In the annual statement of United Steel Companies Ltd., published in The Times on Monday, 23rd January —only this week—the Chairman, Mr. A. J. Peech, said this: In Europe the steelmakers have been unwise enough to match the prices of cheap imported steel with the result that the pricing system on the Continent is at the moment in a state of collapse, although discussions are proceeding in an attempt to restore the position. We told hon. Members opposite this in Committee, but they would not accept it.

One very unfortunate aspect of the attack made by hon. Members opposite on the Bill is this. Over the years we have always had attacks on Richard Thomas and Baldwins. I thought we had got over that, but like a political pterodactyl, the right hon. Member for Flint, West (Mr. Birch) came back with those kind of sneers at Richard Thomas and Baldwins. My hon. Friend the Member for Ebbw Vale answered him fully and effectively. At least Richard Thomas and Baldwins has paid in full the interest on the £70 million of the taxpayers' money it received.

But the same situation does not apply to Colvilles. Last time I examined the accounts, I found that on the loan to Colvilles there was £5 million in unpaid interest. The right hon. Gentleman knows the situation very well with regard to the strip plant at Richard Thomas and Baldwins. He knows the difficulty of running in a plant like that, particularly in the economic circumstances of the last few years. Although he knows something about the steel industry, he did not mention Colvilles which, with a strip mill that is half the size of that at Richard Thomas and Baldwins, made a loss of £4.7 million in 1963. I am not attacking Colvilles but merely noticing the situation. One appreciates the difficulties that Colvilles have had.

But it is not only Colvilles which has the peculiar difficulties which the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) and I spoke about the other night. Last year, John Summers' new plant lost £1.37 million. The new plant at Park Gate, near my constituency, has lost a considerable amount of money. I noted that the right hon. Member for Flint, West did not refer to the fact that Richard Thomas and Baldwin has an export record second to none. It has exported about 40 per cent. of its production in recent years.

We are giving its Third Reading to the Bill against a background of world surplus and when the other European nations are drastically reorganising the shape and pattern of their steel industries. With this background in mind, the Minister and the Corporation should make the right decisions. In this context I want to refer to the composition of the Corporation. I shall not go over old ground but present some new points.

We have said before that we must get the right men for the job and the right balance on the Corporation because these are the people who will take crucial decisions affecting the whole future and prosperity of the industry and employment within it. I take this first opportunity that I have had publicly to say to the Minister that I am very pleased that an experienced trade unionist from my constitutency, Mr. Sidney Harris, whom I know very well, has been appointed to the Organising Committee. With his experience and point of view he can play a very useful and important part on the Committee.

But, having said that, I want to raise one further matter about the composition of the Corporation. It seems to me that the Organising Committee, from which, one assumes, the Corporation will at least in part be chosen, is not yet sufficiently broadly based. The present members represent—and I do not use that word in its narrow sense—tube and sheet interests in the main. The other steel maker on the board is not greatly involved as a major part of his company's interests are outside the scope of the Bill.

I hope that my right hon. Friend will be appointing people with experience in bulk steel production from large plants but, more than that, since we are talking about reorganisation, which is more likely, perhaps, to affect some at least of the smaller units, there should be on the Corporation, in the early years at any rate, a member or members with experience of the operation and administration of smaller companies. The financial, operational and commercial problems of the smaller companies are different from those of the larger. There are obviously wide differences between these various sections and if the Minister were to appoint members of the Corporation with experience of the smaller companies he would be getting a wealth of experience on the Committee which it would otherwise lack.

I want to refer to the pricing system for which the Corporation will be responsible. The Opposition have said that we should have a system like the E.C.S.C. pricing system. I believe that the danger in that system, and its loophole, is the alignment one can take as a result of the intervention of a third party. I am not antagonistic to this system, but although it worked well until 1961, when we got into a buyers' market, it is obvious that, since we are in such a market, the system has not worked well. The Corporation would be ill-advised to adopt that system which, I believe, will probably be radically overhauled within the Community itself because what is necessary, as the Iron and Steel Board has stressed, is that the industry should be able to have internal prices which will secure sufficient capital for a proportion of its capital investment.

My last point concerns the question of the reorganisation of the industry on which the Corporation has powers in Clause 4. It has been suggested that the Corporation is likely to recommend the reorganisation of the steel industry in either regional or product groups. I believe that regional groupings are the most satisfactory way. Perhaps the Minister will comment on the amalgamation to which he has agreed between Dorman Long, South Durham and Stewarts and Lloyds. If one looks at this in terms of regional groupings, one finds that Consett, a firm on the North-East Coast, is excluded. The amalgamation does not conform to either a regional or a product basis and if it is carried through it must affect all future groupings.

I believe that the purpose of the amalgamation—and one understands that it was urgent and important—could have been achieved by a straightforward commercial arrangement without prejudice to the final outcome. As a result of the amalgamation, the group now has plants in the North-East, Scotland, Birmingham and Corby. Surely this is administratively difficult to control and will make the situation more difficult in future. It seems to me that a consortium or amalgamation of Dorman Long, Consett, South Durham and Skinningrove would have been a better arrangement.

I echo what my right hon. Friend said —that nationalisation of itself does not solve any of the major problems of the steel industry. But it makes a solution of them possible to a degree not possible under private ownership. We can speedily get the rationalisation and reorganisation that is necessary. We can get a more sophisticated stocking policy which, as my hon. Friend the Member for Penistone (Mr. Mendelson) said in Committee, has been one of the greatest difficulties confronting the industry. I believe that we shall get co-ordinated rolling programmes, just as they are getting them on the Continent. I believe that, with new technologies, such as the spray steel making process, which has immense significance under public ownership we can develop a steel industry which is the envy of Europe.

I believe that the kind of organisation we are creating under the Corporation means a prosperous steel industry which can give the people working in it a secure future, even though difficulties not only loom on the horizon but are with us at present. This Bill and the organisation created by it will produce a steel industry which will be able to compete with any industry in the world.

7.10 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

This debate and those we have had over the last few years on the steel industry have been of considerable personal significance to me because I have been connected with the industry indirectly for many years and directly for 20 years, and during that time the industry has been in the cockpit of politics. Many times I have regretted that state of affairs. This debate has confirmed my view that the steel industry is now locked in the cockpit. The only difference is that it is locked in with its hands off the steering wheel and unable to reach the brake or the accelerator while someone else will be taking over control—the State.

The hon. Member for Rotherham (Mr. O'Malley) referred to the attitude of the workers. He said they would welcome this Bill. I am certain that he speaks for many of the leaders on the shop floor, but I doubt whether he can say that he speaks for the rank and file, although they are strong Labour Party supporters. Many people will weigh up what has happened in the House since March and reach their own conclusions.

Managements, and certainly the President of the Iron and Steel Federation, have repeated recently that the industry must accept the decisions of an elected Parliament and operate the industry under the new legislation which will control it. This reflects my own attitude of last July namely that, the Second Reading having been agreed to, those who had been responsible for the destiny of the industry should now be prepared to operate it under the new system irrespective of whether they thought it the best system or not.

I believe that the electorate has not fully realised even now the significance of what will happen tonight. Many have read our debates and have still asked me, "Will steel really be nationalised?" I have had to reply, "Yes". According to a Gallup Poll, 71 per cent. of the public were against nationalisation of steel. But now there is to be a sophisticated takeover by the State and central direction will be in the hands of the Government. We have debated today the meaning of the penalty of accountability to Parliament.

I will touch on the extent to which the discretionary powers that the Minister is taking on will be accountable to Parliament. The nation will discover to what extent accountability to Parliament will make up for the flexible measures and controls under which the steel industry has been operating up to the past few months. We have had many debates on Clause 2 and have referred to the Bill as a general nationalisation enabling Bill. In spite of Amendments there is no doubt that a Minister would have power to nationalise anything as the Bill stands. This is something which the country must not run away from.

The Minister and the Parliamentary Secretaries have assured us that the powers would be used in the national interest, but who decides what that is? Is it the Minister, who may not be accountable to Parliament for any of the discretionary decisions that he takes until it is far too late? The accountability to Parliament comes when the annual reports are reviewed, well after the events. The day-to-day decisions of the Minister are not under review. This is why we have brought in the Amendments for affirmative Resolutions where the Minister has been able to exercise his discretion. Clause 2 says that the Corporation shall have power: to hold such interests in companies as vest in them … with the terms of any general authority given by, the Minister, to acquire by agreement, and to hold, interests in other companies. If that is not a general power to hold interest in any activity I do not know what is. The Clause goes on: With the consent of, or in accordance with the terms of any general authority given by, the Minister, to form, or take part in forming, companies; and to exercise all rights conferred by the holding of interests in companies. In spite of our endeavours this still gives the Minister powers not only on certain occasions to give a "yea" or "nay" but to cover it up by the term "any general authority" which was the subject of Amendments moved by us but not accepted on Report. This points the real dangers in this Measure. I welcome the power to provide for: … any group of companies (whether consisting of all or any of the publicly-owned companies, other companies or both) any services which, in the opinion of the Corporation, can conveniently be provided as common services …". This is the second reference I make to the Bill and it raises some of the points raised by the hon. Member for Sheffield, Brightside (Mr. Winterbottom) about collaboration, as against competition between the public and private sectors. There has always been co-operation, sometimes administrative, sometimes technical and sometimes in the sphere of advertising, between large companies, or subsidiaries of large companies, and small companies with similar interests.

There are trade associations where those with similar interests meet and dis- cuss important commercial and technical issues and prospects with their customers. I presume that those will go on and that there will be trade associations involving both the private and public sectors. In Sheffield and elsewhere some firms have the cogging mills and others the finishing mills. Naturally the public sector will be more likely to provide the heavy facilities and the private sector the finishing, heat treatment, grinding, reeling and other processes.

I imagine that this will take place as a result of commercial arrangements. But when the big company happens to be a monopoly the situation is slightly different, because a small company cannot turn to an alternative company to provide a service if it can only be provided by the public company. I have in mind the large melting furnaces, cogging mills and presses and forges which might be used for these processes. This is why under Amendment No. 32, to which I spoke, and new Clause No. 9, were moved in connection with Clause 3, in the hope that the Minister would: … secure that neither the Corporation nor a publicly-owned company shall show undue preference "—

Mr. Speaker

Order. We cannot at this stage go into Amendments.

Mr. Osborn

I am just pointing to the issues and I am not discussing the Amendment now. We raised the Amendments, and the importance of these issues. This leads me to the point made by the Minister who said that I and others were concerned with the protection of the private sector. Time and time again we have said that we are not concerned with the protection of the private or public sector. Our concern was that there should be fair competition in every respect and if, preadventure, there was not com petition then we wanted some way of ensuring arbitration, other than through the discretion of the Minister.

During the Report stage I brought in the case of Millom Hematite and Iron Company Limited. A notice sent out under Section 6 of the Iron and Steel Act, 1953, required: Any person proposing to provide or procure the provision of any additional production facilities in Great Britain the cost of the provision of which is estimated to exceed £100,000 shall give particulars in writing of the proposal to the Board … Later in the 1960 Act the particulars were better defined and additional information about existing facilities, quality of product etc. were required.

In the first Report of the Iron and Steel Board in July, 1953, a reference is made to the Act. It says: The Act also provides, in Section 6, that the Board may require any person proposing to provide production facilities in Great Britain (including the replacement or adaptation of existing facilities but excluding any facilities concerned only with the casting of iron and steel) to submit all necessary particulars to the Board … Spray melting is a process which we had discussed in Committee and on Report. In the case I cited the Board gave its reasons for refusing consent. I have this report which says: The Board acknowledge the great skill and enthusiasm which has been put into the work, and many of the technical problems have been overcome. The next stage is to find out whether saleable steel products can be produced mere economically by the process than by conventional processes. They then went on to say: The Millom Company is not a steel works but a merchant iron plant … out on economic grounds they"— the Board— are reluctant to encourage the creation of new small-scale steel capacity when the whole trend in steel production is towards the economic advantages of large scale operation. Naturally, Millom which had created Millspray spray steel melting, which we discussed on Second Reading and in Committee, put up a very good defence. It pointed out that at present: … further development of the spray-refining process referred to in Paragraph 149"— of the Iron and Steel Board Report— seems the most promising approach to a continuous steel making process … I do not want to go on, but this raises issues and principles which will confront the country from time to time in the new legislation. Who will decide in future whether a new project is viable?

No doubt many people have read "The Organisation Man", a book by White about the United States. This book gives the reasons why some in big organisations consider that the Millspray process has not been well planned or developed by the Millcm Company. The hard fact is that when the big steel companies were occupied with the L.D. and KALDO pro- cesses they quite naturally did not want to dissipate their energies with a new process. Millom was a company prepared to take this on.

In previous debates in this House I have cited my own experience, where a small company can take on a new process or development that a large organisation does not want, and invariably make it work successfully and profitably. This is the type of case which could arise under the new system of discretionary authority when the Minister might say No "and stultify and frustrate vital flexible technological developments. Normally I agree that, where large-scale development is to be brought in operation, this must be done with carefully-planned research, development, and design programmes, such as could only be conducted by a large company.

We have discussed the international situation and not so long ago, in the January issue of the Iron and Steel Review, there was an article entitled "Heading Down" in which it was pointed out that the latest figure available at the time of writing for the production of crude steel was 445,000 tons, that is 13 per cent. down. The article went on: In the light both of these general considerations and of a review of the prospects of the major steel-using industries, the home consumption of steel in 1967 can tentatively be put at about 21 million ingot tons as against 22½ million tons in 1966. That is it was well down on previous years.

We have international competition, and this is why I interrupted the Minister when he used the phrase "co-ordinated pricing policy". What is rather interesting is that he now realises that a free-for-all, where one has excess capacity, justifies the British steel industry getting together with its competitors overseas. This is logical, if there is to be price stability. This amounts to a complete reversal of the policies which the present Government have started and put forward originally as one justification for the nationalisation of steel.

There must be this co-operation and that is one of the reasons why the old pricing policy was supported by the industry. It is satisfactory to know that the Minister, now that he has responsibility, is realising that there must be a balance between competition and price stability. This is something which faces those who have charge of the destiny of the steel industry.

The Minister admitted that the steel industry would go through a difficult time. This is the result of two years of mismanagement of our economy. There will be, and have been, redundancies and short-time. More than two years of political threat has been hanging over the industry's head and has led to a certain amount of confusion. The hon. Member for Ebbw Vale (Mr. Michael Foot) pointed out that the mistake of the steel industry was that there was not enough capacity in 1959 yet there is excess capacity now.

Why did that excess capacity come about? There was a lot of outside and political pressure on the Government of the day to increase that capacity. The assessment of the amount of capacity required is a very difficult thing. If there is excess capacity, it is under-utilised and one of the reasons why the industry has been faced with a poor return of capital has been because not enough of the capacity is being used to the full.

I also dealt with the argument about whether the Government of the day did the right thing in having two strip mills, one at Colville's and the other in Wales. That was a political decision on sociological grounds, and I am certain that my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) can say that as a result of the Colville development there has grown up in Scotland a motor industry, which has certainly changed things there. At the time I was doubtful if this was a right decision, but during the course of this Bill and just before it I had the chance of reviewing some of the pros and cons, and I believe that the Government reached the correct decision.

I turn now to the subject of rationalisation. The Minister has praised the merger of Stewarts and Lloyds, Dorman Long, and South Durham Steel. On Second Reading and in the debates on the Industrial Reorganisation Corporation I reminded hon. Members that there had been a complete change in the national attitude towards amalgamations, mergers and takeovers. The Socialist Party, too, has changed its mind. I am sorry that he is no longer present, but I have to say that the hon. Member for Nelson and Colne (Mr. Sydney Silverman) was one of the first to oppose a possible amalgamation of I.C.I. and Courtaulds, and did so very forcefully at the time. But we all now appreciate that a coming together is desirable and something to which we look forward.

However, rationalisation in the steel industry has not been confined to Britain. The Steel Review gives four factors for it. They are first, changes in technology —the emergence of the LD process; secondly, the rapid change in fuel and material transportation—the use of American coal on the Continent, coal which is denied to this country, the importation of iron ore instead of using our own; thirdly, the imbalance between world steel capacity and demand; fourthly, the whole issue turns on cash—steel works are expensive to build and the future managers of the industry will have to decide where they are to raise the money. This is a problem which will face everyone.

There is no doubt that the Corporation will inherit a vast diversity of interests—chemicals, building materials, civil engineering, agriculture, the production of fertilisers, general engineering, ranging from steel plant manufacture to almost every other kind of engineering activity. I have said before that the Corporation will have to decide what it is in business to do and whether a monolithic concern can efficiently run all these activities, even though separate steel companies have been doing so.

One or two interesting features have arisen. For instance, about 25 per cent. of the British constructional steel companies will be in the public sector. About 40 per cent. of all construction is for the public sector or nationalised industries. About one-quarter of the total employed in steel construction will be in the public sector and about one-quarter of the work will be undertaken by subsidiaries of nine companies in the public sector—Colvilles, Dorman Long, John Summers, Lancashire Steel Corporation, South Durham Steel, Stewarts and Lloyds, and United Steel. As a result of the nationalisation of steel about 25 per cent. of the steel construction industry will be in the public sector and that will be a factor which those producing buildings will have to bear in mind in future.

As I have said, rationalisation and concentration are desirable, but there are ways of bringing them about, provided that the political and economic climate is right, other than by nationalisation. With an ever-growing public sector, we are faced with the problem of finding Treasury finance for it. There will undoubtedly be a need for new steel works. Will the Treasury have the resources for them, bearing in mind our present difficulties? The European Coal and Steel Community has been able to obtain capital from countries outside Europe and much of it has been raised in this country. Will capital for steel making be available from outside these islands when steel is nationalised? I very much doubt it.

What will be the future of the new organisation? Will it in fact be a monolithic organisation, or will it follow the recomendations in the Benson Report, so that there are four or five competing groups? Will there be a degree of price flexibility if not exactly competition between these competing groups? If there is, how will there be an effective compromise between that and the international price stability which is necessary if the Corporation is to survive? Will the Minister find that he is in conflict with the Restrictive Trade Practices Act and the activities of the Restrictive Trade Practices Registrar, Mr. Sich? Will we have a unified price structure, the existence of which was given as a reason for attacking the industry, but which will probably now continue as a result of the nationalisation of the industry?

What will be the effectiveness of Parliamentary control? Will wastage be stopped by Parliament? I fear that it will not. Will discriminatory powers exercised by the Minister, however benevolent he may be—and I have no doubt that the present Minister has the industry's interests at heart—be fair and how will it be possible to question them?

Most of those who have been associated with the industry all their lives accept that the industry will have to operate in changed conditions; this can certainly be said of the Corporation and the 14 companies. The House can ask the Minister to ensure that there is fair competition. The difficulty is that it will be hard to bring about that fair competition.

The fear of many of my hon. Friends and of many people in the country is that the Organising Committee will find that it is faced with an impossible task. The worst thing which could happen would be for the Minister to fail. It will become apparent that this ill-conceived, ill-thought-out Bill will be difficult to operate, but the measures, however bad, outlined in this Bill still have the best wishes of the country as a whole, because failure would be a disaster to the nation.

7.37 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I must compliment my Parliamentary neighbour the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) on having tried to address his mind to some of the serious problems at issue in the Bill and in the industry. Too many of the speeches of his colleagues sounded rather like weary tirades of defeated captains now wondering whether they were fighting a good battle.

Steel has been described by a very great Parliamentarian as a commanding height of the economy, and that is beyond dispute. It is an industry of absolutely fundamental importance to our whole economy. If any proof of this be needed, it can be seen in the twenty-year battle for effective control of it by the Government in the name of the whole community.

The Bill can be said to introduce a slightly new principle into public ownership. I may be wrong, but I think that hitherto nationalisation Measures have been across the board. We have tried to take entire industries or virtually entire industries into public ownership all in one piece. The Bill adopts a more selective approach and deliberately sets out to take certain steel companies, admittedly the major part of the industry, about 90 per cent. of the capacity. Nevertheless, the Bill's approach is selective and it has endeavoured not to achieve a tangle of interests such as was a disadvantage in earlier nationalisation Measures. I know that hon. Members opposite have criticised the fact that extraneous interests are involved even under the present provisions, but I fear that that is inevitable. The Bill is the pattern for selective public ownership in the form which we want and which we shall apply more in future. Public ownership of this industry is an absolutely essential basis for the sound planning of the industry and of the economy. This is substantially the case for bringing it under public control.

In looking at the industry's future and planning it, the fundamental criteria which we must consider are not crude yardsticks of profit or profitability but much more important considerations of efficiency—for example, in the use of manpower. It is established and well known, and it is not even excused by hon. Members opposite, that the industry is overmanned. The Iron and Steel Board has documented this, reported on it, and researched into it. Even if it had not done so, comparisons between Continental steel industries and our industry demonstrate it. It is of the greatest importance that this overmanning should be done away with and that the fullest and most effecient use should be made of manpower in the industry.

Another criterion of efficiency which has nothing to do with profit but which can be scientifically measured and calculated is the ratio of output of steel to the volume of materials used. Again, this is something which is nothing to do necessarily with crude monetary profit, but it has a great bearing on the efficiency of production and it can be objectively and scientifically measured to give us the index of the efficiency of the industry.

Sir Harmar Nicholls (Peterborough)

Nobody would disagree with the hon. Member's wish for greater efficiency in this very important industry. Certainly if we can prevent wasted use of manpower and if we can use materials to better effect, that is a good thing. But in making that point there is no need to denigrate profit as a measuring rod. If there is greater efficiency in manpower and materials, that will reflect itself in greater profit. There is no point in denigrating profit as a measuring rod in considering whether the things which the hon. Gentleman wants to happen will happen.

Mr. Hooley

In certain market conditions it is possible to achieve considerable profitability without having efficiency. But if there is a monopoly grip on the market, or if a tariff barrier is erected, or if one distorts market forces or has undue power over the buyers, one can have a high degree of profitability and, therefore, superficially a very good industry. However, when one considers the fundamentals, such as the use of manpower and materials—the more basic scientific criteria—one finds the industry is not nearly as efficient as the balance sheet would presuppose.

Apart from manpower and the use of materials, there is also expenditure on research. Year in, year out, the Iron and Steel Board has criticised publicly the level of research effort in the industry. It has said over and over again that not enough effort has been made and not enough money has been put into research and development. This is not propaganda from these benches. It is the considered, published view of the body set up by a Conservative Administration to supervise the operation of the iron and steel industry. If hon. Members opposite are not prepared to accept that, they must produce their own objective assessment to refute it. But, on the published evidence, it is irrefutable.

Another important criterion in modern days in measuring the efficiency of an industry is what is sometimes referred to as the O.S.E. ratio—the number of qualified scientists and engineers employed as a percentage of the total work force. It is an interesting ratio. I should not care to say how valid it is as a criterion of efficiency, but I am sure that, in an age in which scientific and technological advance is becoming more important every day, it is a ratio which cannot be ignored. On the published evidence of the Iron and Steel Board, the steel industry is defective in this respect compared with other industries. Even excluding the aircraft industry, which has special claims on qualified scientific manpower, iron and steel does not come out well compared with other industries in the use of highly-qualified scientists and engineers.

An hon. Member opposite said that private investment had been adequate for the needs of the industry. This is open to challenge. It is true that very large sums of money have gone into the industry from both public and private sources over the past ten or twelve years. But it is also true that in the last 15 years, at successive times, this country has been seriously short of structural steel and sheet steel. There was a time when the University of Sheffield had work on its buildings halted for the lack of structural steel—a most ironic occurrence. The latest scandal is the shortage of pipe-making capacity.

These shortages have occurred because in past years there has been inadequate investment in capacity for producing these kinds of steel. As the economy has expanded and as the demand for these products has grown the industry has been unable to fulfil the requirements of the home market. It is on record that this country has had to spend thousands of millions of dollars on importing sheet steel and it is now unable adequately to meet demand for steel pipes.

Mr. Barber

Does not the hon. Gentleman think that the iron and steel industry could have anticipated the discovery of North Sea gas?

Mr. Hooley

Other steel industries seem to have been able to maintain a capacity adequate to meet demand. These pipes are being produced from somewhere. If we are not producing them, somebody else is. The gas is being piped, but the pipes are not being produced by our industry.

On the question of technological advance, the failure of the steel industry for many years to exploit adequately the new oxygen processes for steel making has been amply documented in the Iron and Steel Board's reports. It is true that we are catching up in this respect, but it also true that the initial investigations and development of these processes had to be borrowed from other countries. Obviously, one cannot criticise the steel industry for not inventing every new process. It would be absurd to suppose that new processes will not often be discovered in other advanced industrial countries. But it is an indictment of the steel industry, which is made by the Iron and Steel Board, the body set up by the Conservative Party, that the industry did not develop adequately the production of steel by the various oxygen processes.

I understand that Britain now has devised a very important and probably revolutionary steel-making process to which reference has been made in this debate—the spray iron process. It will be extremely important that the development of this shall be carried out at a place, in a manner, consonant with the best technological requirements rather than in accordance with the needs of a particular company which may or may not be best suited by location, by capacity, by manpower to develop and use this process. I am not technologically qualified to comment on this, but I do believe that it is important that the development of this process, which I genuinely hope is a very great discovery, will be carried forward in the nationalised iron and steel industry in accordance with the best economic and technological considerations and not to suit the needs of some individual firm which may or may not coincide with those criteria.

I emphasise these things because I believe we must get British industry working to the criteria of efficiency in the use of manpower, in the use of materials, in the employment of research and the employment of scientists, in a way which will produce the maximum output of the particular commodity which the country requires, whether for electricity, gas, steel or something else, and not simply so arranged as to produce the maximum profit in market conditions which may possibly be wholly artificial and in any case can be manipulated.

Sir Harmar Nicholls

They must go together.

Mr. Hooley

It is perfectly possible to manipulate market conditions by excise, taxation, and monopoly.

Sir Harmar Nicholls

But if maximum efficiency is reached, and the efficient use of materials, whether we like it or not, there is bound to be a profit.

Mr. Hooley

It is perfectly true that if we do these things we are very likely to be able to compete effectively, but my point is equally true that if we start from the criterion of profitability, if we set this first, and if we manipulate conditions, as we can and have done for 40 years or more, so as to get profit, then the other considerations must tend to drift back into second place and this must seriously damage this country.

It has been said by one of my colleagues that the mere process of nationalisation could of itself solve the problems of the industry. I believe the whole House will agree that there are serious problems facing this industry in the next few years. There is the question of capacity. It would appear at the moment, in present circumstances, that we have enough capacity, but I do not think sufficient allowance is made for the need to scrap obsolescent plant, which, I think, would run as high as three or four million tons of capacity.

I would hope a nationalised industry would take a long rather than a short term point of view, would look at the world, would hope the economies of the countries of Africa and Asia will expand, perhaps not as fast as we would hope, but will expand and will generate consumer demand which will have to be satisfied ultimately by machines and objects made of steel. I hope that, in planning our forward capacity, we shall take account of the possibility of the emergence of new demands and new requirements and rising standards of living, not merely in Britain, not merely in Europe, but throughout the world, so that this country can play a part in meeting the new demands as they arise.

Apart from the question of total capacity, there are clearly going to be difficult decisions to make about the location of whatever capacity we decide to have, and these decisions may prove difficult in social as well as in physical terms. In this regard, I am bound to say that the record of the National Coal Board in adjusting its manpower, both in total size and in location, has been far and away in humanity and in skill beyond anything ever achieved by a private industry. Apart from location there is the question of the type of location we are going to have. Industry, I gather, is pressing for multi-product concentration of production for groups of companies, in different areas which will produce different products. This does not seem, on the face of it, as satisfactory as concentration of capacity for particular products in particular areas, although I concede that this would cause very serious local problems in certain parts of the country. One thing is quite clear, and that is that forward planning is extremely urgent—and here I echo the words of the hon. Member for Hallam—for the good of the industry and for the good of the country.

It is important that this Bill goes quickly through the remaining constitutional processes so that this great and vital industry can play its proper part in our national economy.

7.57 p.m.

Mr. Michael Shaw (Scarborough and Whitby)

I do not wish to follow in detail the arguments of the hon. Member for Sheffield, Heeley (Mr. Hooley), but I think it is right that I should refer to one point which he made. I believe that he has done a great disservice to the steel industry of this country in his allegation that it has completely fallen down in the supply of pipes for the new gas strikes in the North Sea. He is, of course, as is so often done, picking up the first headline without pursuing the follow-up headline the next day. It is perfectly true that in The Times of 25th May last year a headline was, Britain must buy steel gas-pipes abroad. Minister shocked by dilemma arising from North Sea finds". But then, in the next day's issue, we found headlines which said, Steel industry rejects gas-pipes charge. Political kite flying. Some firms say that they can meet demand". In reporting a B.B.C. interview it went on to say: Yesterday Mr. Marsh, the Minister, thought there was no doubt at all that the British steel industry would be able to provide a very large proportion of the steel piping which is necessary, but he added, 'We may in the early stages have to import a limited amount of it from overseas.'". The fact is that, due to the efficiency of the pipe-making industry, it has gone out abroad because it had got extra capacity, and it has found some very profitable contracts to fill up its order books. When the sudden demand came it could not immediately switch over to supplying all the new, immediate demand, but in the long term it had the capacity, and made arrangements for it. I believe the hon. Member's charge is unjustified.

Mr. Hooley

Is it not correct that an important factor was that pipe-making capacity was not carried through several years ago, before the question of North Sea gas arose, and is it not also correct that this ability now to meet the demands of the North Sea gas strikes has only come about because of cancellation of an extremely important export order?

Mr. Shaw

Yes, but that is the whole point. Surely that is the one thing that the steel industry, in my view quite rightly, has learnt. With a market which fluctuates so violently, it is economic madness to set up an organisation to cope with the maximum possible demand which might be needed every two or three years. Clearly, the proper way to run a business is to run it so that the order book is filled up at a medium level of demand which, year in and year out can be completed. If there is a boom in any year, that can be coped with by importing from abroad, if necessary. That is the way to run a profitable business and to keep the people of the country most profitably employed.

However, I will not pursue that subject, because I want to turn to an aspect of the Bill which has received very little attention so far, and that is the question of compensation. I am only sorry that the right hon. Gentleman the Chief Secretary is not here to hear what I have to say, but I hope that it will be passed on to him. In particular, I should like to address my remarks to the subject of the redeemable fixed interest securities and the compensation therefor.

According to the Government's Explanatory Memorandum to the Bill, which came before us on Second Reading, the main purpose of the Bill is to bring into public ownership the principal companies concerned with the production of steel in Great Britain. To achieve that public ownership, it is obvious that the Government have to acquire the share capitals of all the companies named in the First Schedule, because the ownership of those companies goes with the share capital. Having acquired those shares and, with them, as a consequence, the ownership of the companies, the objective set out in the Bill has been achieved. Having done that, with the minimum of disturbance, in my view, there is no moral or equitable right wantonly to interfere with the financial obligations which have been undertaken previously by those companies when they were in private enterprise hands.

Like any companies requiring cash, these companies have borrowed. Some cash they borrowed long-term, some short-term, depending upon the needs for which they were borrowing. In so far as they borrowed long-term, obviously it was in their interest to create certain conditions both to protect themselves as regards repayment and so on, and also to protect and attract those people who were lending them money. Therefore, the longer-term loans were arranged by means of moneys lent under solemn and binding agreements which were drawn up between the companies, on the one hand, and the representatives of the lenders, on the other.

These are debts, be they secured or otherwise. It is true that, in the majority of cases, they are secured under debentures. On the strength of the binding agreements which were entered into at the time of issue, the money was lent by the public. We find today that these companies which are to be nationalised have a total indebtedness by way of debenture notes and the like of some £120 million which has to be repaid over a period, at the latest dates, between 1974 and 1990 in accordance with the terms on which the money was originally lent.

I should add that I am not including one particular stock. The John Summers issue of 4 per cent. debenture stock is not being taken over under the Bill, again showing an inconsistency, because the lenders are required to be repaid on three months' notice if required, and there is a Section in the 1949 Act which excludes stocks redeemable within 12 months at par.

I believe that we on this side who served on Standing Committee D have done our best to bring alterations to the Bill, although we have not made nearly as many as we should have liked. Under the Bill, the Government will break those contracts which have been negotiated freely between the companies and the public. In particular, they will break them with regard to the rates of interest, the amounts of the capital repayments and the time of repayment, which is possibly one of the most important factors of all.

It is no use the Government arguing that they propose to give stock of an equivalent value. The conditions on which the money was lent are not being honoured and, in our opinion, they should be.

Not only are the stockholders entitled to have the conditions of their loans honoured. They should not be subjected, as they are under the terms of the Bill, to a loss in repayment rights of some £30 million. Do not let the Government run away with the idea that that is a matter which just concerns themselves only. It is a matter about which the Stock Exchange itself has shown a great deal of concern and dissatisfaction.

In that connection, I want to quote a letter which was published in the Monthly Bulletin of the Stock Exchange from the Chairman of the Council of the Stock Exchange to the Chancellor of the Exchequer. It was sent off on 15th November, 1966. It says: My Council has been considering the compensation terms proposed for holders of those redeemable fixed interest securities of Iron and Steel Companies which were offered for sale by the Iron and Steel Holding and Realisation Agency. The Iron and Steel Holding and Realisation Agency is a Government Agency which was established under the Iron and Steel Act, 1953, and in the prospectus or document of offer the securities to which we refer were clearly stated to be redeemable on certain conditions. The importance is that not all, but a very large number—about £100 million worth —of those securities were issued through the agency of I.S.H.R.A., and therefore the Chairman, in my view rightly, feels that, as it is a Government agency, the Government have a responsibility in the matter.

The letter goes on: In view of the terms on which those stocks were sold to the public, my Council consider that it is only equitable that the holders should be given the option of retaining their securities and thereby obtaining the redemption price at the appropriate time. The absence of such options would lay the Government open to the allegation that there had been a breach of good faith. It is my Council's wish that our Members should, in due course, be informed of the contents of this letter "— which, of course, they have been.

To that letter, the Chancellor sent a reply in which he made three points as to why he denied the charge. The first is: The question of the compensation of the holders of these securities was dealt with by the Chief Secretary to the Treasury during a debate on the Committee Stage of the Iron and Steel Bill on 23rd November. To allow the debentures and similar securities to remain in private hands after the nationalisation of steel would be impossible since the rights of the holders could frustrate the purposes of the National Steel Corporation, the Minister, and Parliament in any rationalisation or re-organisation of the industry. His second point was: I do not think that your suggestion that an option to holders of these stocks would have any advantage over the suggestion that these stocks should not be transferred to the Corporation at all but should all remain in private hands. Indeed, it would bring its own special difficulties, for instance over the period for the exercise of the option. Thirdly, he said: I cannot accept that there is any breach of faith involved in the compensation terms for these fixed interest securities. Several of the securities were indeed sold by the Iron and Steel Holding and Realisation Agency, but neither the Agency nor the Government was a party to the terms or conditions in the Prospectuses or Documents on Offer for the securities. The existing holders of the securities will receive fair compensation for them, calculated objectively from stock exchange prices. Let us look at some of the excuses which the Government have put forward, some of which were aired in Committee, to justify the conditions laid down in the Bill, and to justify taking over these redeemable securities and issuing Government stock in their place.

First, the Government deny breaking any contract. The Chief Secretary—I am sorry that he is not here—said: I thought that the hon. Gentleman"— he was referring to my hon. Friend the Member for Yeovil (Mr. Peyton)— made the point that the company which has borrowed the money on certain terms has its obligations and those obligations should continue. I am saying that this is quite right and that those obligations exist and continue. They exist in favour of the Corporation after vesting day, instead of existing in favour of individuals."—[OFFICIAL REPORT, Standing Committee D, 23rd November, 1966; c. 896.] I am amazed that the Chief Secretary should have put up such a defence, because what is to happen is that the Government are to acquire a business with £120 million contracted debts, and at the same time compulsorily force certain of the creditors to part with their debts for less than £90 million. According to my reckoning this is making a quick killing of about £30 million. As we rightly said, if a private individual tried to carry out such a transaction he would very likely find himself in gaol.

The matter is accentuated by the fact that so many of the debts were issued through I.S.H.R.A., a point which, incidentally, was first raised by my hon. Friend the Member for Horsham (Mr. Hordern) in a Question to the Chancellor of the Exchequer. This really means that in so far as they have been issued through I.S.H.R.A., the Government, through I.S.H.R.A., having offered those loans on stated published and binding terms to the public, are now, through this Bill, and having invited the public to lend money on those stated terms, proposing to break those terms and compulsorily to acquire loan stock from them. This is really the case, no matter how much window dressing may be put on it.

The second excuse for taking over this debenture stock is that it would hamper reorganisation. I accept that it would, but I do not accept that if the Government had the will to do so, it would be difficult to make arrangements whereby the stocks could continue in all material particulars as they have done before. The stock could have been taken over by the Corporation on the same terms, or it could have been taken over by the Government on exactly the same terms, thus preserving all the rights for the stockholders. This is what should have happened. The right hon. Gentleman, however, says, "No. We must take the action proposed in the Bill, because what we are seeking to do is not to continue the rights which existed before, but to give fair and just compensation", but no compensation can be fair and just if it involves the breaking of the original contract and the terms of it.

Another argument which has been used is that if the same terms were continued there would be fragmentation, in other words, there would be a number of small parcels of stock with lots of differing dates. I rang up a leading stockbroker in the City to ask whether there had ever been any difficulty in the marketability of these stocks, and when I told him the Government's argument, his reply was almost unprintable.

I detest the Bill, but it is clear that we will have to suffer its terms for a few years at any rate. There is a very important principle involved here, namely, that for the first time we are nationalising an important sector of this country's manufacturing industry, and this sector will be competing at all levels with the private sector. I believe that the Government have missed a wonderful opportunity, from their point of view. They have missed the opportunity of keeping to the original terms on which these stocks were issued and of saying that in going into the iron and steel business—as the right hon. Gentleman at an earlier stage said they were—they were prepared to accept the disciplines and obligations which are normally applied in the private sector with whom they are now to compete.

The Government have failed to take that opportunity, and I believe that the fear will continue to mount and to fester that there is, and will continue to be, one law for the private sector and another for the public one. But, quite apart from whether that remark is justified, one thing is certain, namely, that these stockholders have been unjustifiably treated, and that contracts into which they freely entered have been wantonly broken by the Government.

8.18 p.m.

Mr. J. J. Mendelson (Penistone)

The hon. Member for Scarborough and Whitby (Mr. Michael Shaw), like myself, was a Member of the Standing Committee which went through the Bill with great care and improved it in some respects. Towards the end of his speech he said that he detested the Bill, and this, with variations, has been the theme song of the Opposition throughout the Committee stage and during the debate today.

Hon. Gentlemen opposite have not done themselves very much good by repeating this theme song, because it means that they are completely out of touch with people in the industry, who, at all levels, have accepted the decision of Parliament. As I told the Standing Committee, people at all levels in the steel industry have said to me, "Get on with the job. The main decision has been taken. We want you to do the job properly, but we want you to get on with it."

There is no sympathy at any level in the steel industry today, be they senior managers, or junior executives, or technicians, or senior craftsmen, or senior steel producers, for anybody who merely strikes an attitude and says that he detests the Bill, but this theme song is linked with some of the statements made by the right hon. Member for Altrincham and Sale (Mr. Barber), who leads for the Opposition in this matter.

The right hon. Gentleman used to be the Member for a constituency not far from mine, in Doncaster, and in an area where there are many steel workers and engineering workers. In spite of what he said this afternoon about the attitude of the electorate to this legislation his own experience is conclusive proof of the view that the electorate is taking. In several General Elections he carried on propaganda against the public ownership of the steel industry, in his constituency, next door to mine, while I was putting forward my own programme and that of the Labour Party.

The result was that we increased our majority substantially, while the right hon. Gentleman, on an anti-steel nationalisation platform, was defeated in Doncaster and had to find a seat elsewhere. I have had a good deal of experience in this matter because I fought my first by-election in June, 1949, in a constituency where, in Stocksbridge, I have one of the main steel works, belonging to United Steel Company. One morning a correspondent of The Times came to the constituency during the election campaign and wrote that because the Labour candidate, from the first day, had put the public ownership of the steel industry in the centre of his programme and had argued that it was essential, for the good of the British economy as a whole, that this vital industry should be under public ownership, that Labour candidate would lose several thousand votes from his majority. This theme was taken up by other newspapers which had not sent special correspondents to the constituency.

What happened? A few other special correspondents came down the next day, including Mr. Travers, the special correspondent of the Daily Telegraph. He interviewed me and said, "Can I come with you to the works?" I said, "Certainly, you can come to the works." We took another five correspondents along with us. I mounted my little platform in front of the steel works and made my speech as people were streaming out for lunch. Soon a youngish man came along and said, "May I have a word with you?" I said, "Certainly."

He was going to take me aside, but I said, "Do not take me aside, we have Mr Travers here, of the Daily Telegraph, and these other correspondents. The fate of the steel industry is a matter of great public importance, not to whisper about. Tell me what you have to say in front of these gentlemen—unless it is personal". He said, "No, it is not personal". The correspondents crowded round. He said, "We know you. You spent some time in the works four or five years ago. About 400 or 500 people in the works know you personally. I have a message from the people who work there." I said, "What is it?" He said, "We are all behind you but the next time you nationalise the industry we want you to do the job right. We do not want you to be half-hearted about it. We want you to organise the industry in such a way that there is full understanding and full participation in the industry after nationalisation between the people running it and the people working in it." I turned to Mr. Travers and deliberately mentioned his name, because it is much better to give the name of a correspondent by one's side. Mr. Travers nodded, and a few different stories appeared the next day.

We had the majority of 11,000 in the preceding General Election and we had a majority of about 11,000 in that by-election, in spite of the prediction of The Times special correspondent. In the following General Election I put my programme forward in the same way and we slightly increased our majority, and in the next General Election I again urged as essential, among other policies, the public ownership of the steel industry, and we added another 2,000 to our majority. At the last General Election I did the same thing and we added another 3,500 to our majority. At all my meetings, steel workers and representatives of steel trade unions were on my platform, either providing the chairman or surrounding me and making supporting speeches. Other representatives of steel constituencies can tell similar tales.

The experience of my right hon. Friend the Member for Flint, East (Mrs. White)—who is now a member of the Government—is more remarkable. In the three years preceding the General Election of 1964 the directors of a major steel works spent many thousands of pounds in propaganda directed against her. I laughed when the hon. Member for Holland with Boston (Mr. Body) and the hon. Member for Scarborough and Whitby referred to taking politics into the steel industry. This theme ran throughout our Committee proceedings. I had to laugh. Here were the directors of a company using thousands of pounds of shareholders' money in a vicious political campaign against my right hon. Friend in order to defeat her, without any accounting to their shareholders or to the electorate of the way in which they were using their money. In spite of spending these thousands of pounds they saw my right hon. Friend increase her majority by 3,500 votes in the subsequent election.

I am sorry that the hon. Member for Aylesbury (Sir S. Summers) is not here. He has intervened in our debates—not as a member of the Committee—and he normally prefaces his remarks, quite properly, by saying that he is in steel and has great experience of the industry. But he does not stand as a candidate in his steel area, or anywhere near it, so that the people in the industry can decide whether or not to send him to Parliament. He stands for Aylesbury. There are not many steel works in Aylesbury. It is famous for ducks, fowl and other things, but not steel.

There was another point, which was characteristic of the speeches made by the right hon. Member for Altrincham and Sale. He said the same thing many times in Committee, as did the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin). Having been defeated several times by the British electorate when the issue of public ownership of the industry had been clearly put to it, and knowing full well that they would be defeated if they ever dared to put the issue again to the electorate, they seek to escape by threatening the Government, and saying, "If you believe that this is going to be the kind of policy that is acceptable in New York, Rome or Paris you make a very great mistake".

The right hon. Gentleman quoted a snippet from the new evening journal published in New York. I recognised it because I was in New York when it appeared. He quoted the snippet—it is the only one he seems to have, because he quoted it in Committee, and we are familiar with it—as if it were the Holy Writ. Even if in a New York evening newspaper in one of its first issues, as a new paper that saw the light of day on 12th July last year, a report appeared saying that we should not proceed with the nationalisation of the steel industry, what is the relevance of such an opinion?

Are we to be governed by articles in the New York boulevard Press? Is this a new tradition developing in the Conservative Party? Hon. Gentlemen opposite are, of course, the inheritors of the Disraeli tradition. Now they are saying that, having received a mandate from the British electorate, we must throw it away because somebody has written in a New York evening paper that we should do so. I urge my hon. Friends to remember this event for the next General Election.

This is no trivial point, remembering who originated it. The right hon. Member for Altrincham and Sale is not an insignificant back bencher whose views might be considered irresponsible and whose remarks can be hidden away. He is a former senior Member of a previous Conservative Government, and if the day dawns, of which there is little likelihood, of the Conservative Party coming to power again, the right hon. Gentleman will probably be a senior member of that Cabinet. With all his responsibility, he is prepared to use the strange argument that we must throw aside the views of the British electorate because someone has stated in a New York evening newspaper that we should do so.

There is a slightly more sophisticated version of this happening. Hon. Gentlemen opposite are threatening the Government that what they describe as the "dire consequences" of this Government's policies may affect our relations with Europe and may eventually make it impossible for us to negotiate entering the Common Market. Time and again hon. Gentlemen opposite have said, "You will not be allowed to have a nationally-owned and organised steel industry if you want to join Europe".

I invite the House to examine this argument and its basis. It has nothing to do with the attitude which any hon. Member might hold about our policy to enter the Community, although from time to time hon. Gentlemen opposite have tried to smuggle in a slight attack either on the basic attitude of my right hon. Friend the Minister of Power or on some back benchers on this side of the House. What some of my hon. Friends and I may think about our approach to the Community is wholly irrelevant to this argument.

It has been decided by the British public that Britain's steel industry should, in the national interest, be taken into public ownership. That is a fact of life which hon. Gentlemen opposite must accept. The Government have a clear mandate to proceed and for hon. Gentlemen opposite to tell us to ignore our mandate and duty simply because it might be contradicting some of the provisions of the Iron and Steel Community is sheer nonsense.

Having said that, we must consider the argument because it is a novel doctrine. It is, of course, the abandonment of one's national sovereignty well ahead of even becoming a member of a supranational authority. It is turning the whole thing upside down. Arguments are going on about our approach to the Six, but the Government's policy is clear. The Prime Minister and Foreign Secretary are engaged in discussions, at the end of which they will make their decision on whether serious negotiations can be officially started. Despite this, the Opposition are arguing that at this stage we must say, "We cannot proceed with our domestic legislation we must ignore the views of the British electorate and surrender all our policies because if we continue with them we might be prejudicing our chances of joining the Community".

From the narrowest point of view—even from the simple diplomatic point of view—this is an irresponsible attitude to adopt. It means throwing away all our policies in advance, so that, in the end, we will not have anything about which to negotiate. It is a doctrine of nonsense and it reveals the quality of thinking which hon. Gentlemen opposite have been adopting on a matter as serious as this. It is not surprising that my right hon. Friend the Minister and other Government spokesmen in Committee found little difficulty in answering the policy points made by hon. Gentlemen opposite.

I turn to two aspects of the future of the steel industry which are more serious than the shadow boxing in which the Opposition have indulged throughout the debates on this Measure. At a recent function in my constituency the matter I wish to raise was forcefully brought home to me. Practically all the speeches made by the various people representing the industry at that function emphasised the importance of this issue. As I go about my constituency, I find that it is a matter of major concern. I lead into the subject with such emphasis because no speech made at this stage of the Bill would be significant unless this matter is tackled.

We are facing a shortfall in production and we are aware that the steel industry is not isolated but is, in many ways, a function of other industries and is greatly affected by the general economic situation. It is the general deflationary aspects of the present situation which have contributed greatly to the steel industry's difficulties.

My first plea must be to the Government as a whole and to my right hon. Friend in particular, because he is a member of the Cabinet. There is urgent need to hasten an end to the deflationary policy now being adopted and to begin the reflationary process by various means, of which a cut in Bank Rate should be the first. Neither initial allowances nor other incentives can do the trick. The problem which industrialists are facing is that they must be reasonably certain that, at the end of a productive process, they will be able to sell their goods at a reasonable profit, so giving them the incentive to make greater strides forward. Initial allowances provide an incentive only once the decision is taken to invest or reinvest. A tax allowance is merely an additional incentive, but it does not, by itself, lead to new investment.

While many people are urging the Government to start the process of reflation, I wish to draw attention, from the point of view of the steel industry, to a particularly important matter which I raised in Standing Committee. My hon. Friend the Member for Rotherham (Mr. O'Malley) referred to it earlier. In Committee I moved an Amendment which urged the Government to have a new and more positive policy towards the stocking of steel. The argument is linked with one of the points made by an hon. Member on the benches opposite earlier this afternoon when he referred to the fluctuations in the demand for steel. The fluctuations in the demand for steel are something that we must look at carefully at all times and not only at a time of economic difficulty.

The suggestion, however, that was made by the hon. Member was wholly futile. He suggested that all that had to he done was to ensure that we have a steady demand, that we keep fulfilling the orders as part of that steady demand and that we should not have any additional capacity but that if suddenly a good deal more is needed, steel should be imported from abroad. That seems to me to be a policy of despair and a wholly unnecessary policy.

What we have to do is to have a policy which allows us to deal with fluctuations in demand by having a certain amount of capacity and steel in stock. While we are still in the middle of an international balance of payments crisis, from which we hope to emerge this year or next year, we certainly could not advocate deliberately in such a situation a policy of paying in foreign currency for imports of steel. To do so would be the height of folly. That folly was shown up many years ago when the Spectator conducted an inquiry into the steel industry and showed conclusively that it was both inefficient from the viewpoint of the industry and, at the same time, very bad from the point of view of the country to spend foreign currency on importing steel.

Therefore, we must not be pessimistic about the capacity that we have. What we need is a policy of forward planning. I refer my right hon. Friend the Minister to what he said in Standing Committee when he said that he could not quite accept my Amendment but, on the other hand, he did not accept the case that was made in other quarters that a policy of stocking was impossible and impracticable.

I therefore invite my right hon. Friend at this point, when capacity working in the steel industry is not as high as it should be, actively to reconsider a policy of limited stocking at the present time and in the near future and to encourage the Corporation and the companies to stock a limited amount of steel—this need not be too expensive—so that there should be no further short-time working, until there is an upturn in trade and the demand for steel again increases. I do not believe that if my right hon. Friend were to pursue such a policy he would see much opposition in the industry. Although many people are in favour of such a policy, there are a number who are gravely doubtful about it and their case has to be met.

I turn to the financial position of the industry. My right hon. Friend the Chief Secretary, who has just returned to the Chamber, missed one of the speeches in which a good deal was said about this. I will safely leave it to him to answer that whole complex of questions and I would not presume or attempt to try to do it for him, for reasons which are well known to all hon. Members. I want, however, to comment on the speeches which have been made today on compensation and on the innumerable speeches on this subject that were made in Committee.

For some hon. Members opposite, the whole debate came to life and was aflame when we were talking about money, the terms of compensation and the like. During those lively occasions and again today, a case has been made for more money to be paid in compensation or in many different ways to those who own shares in steel. For my part, I have repeated again and again in my constituency the words of my right hon. Friend the Chief Secretary, which cover the situation admirably, when he said in Committee and on other occasions that the Government had decided to offer fair-to-generous compensation. That is, he said, what a responsible Government should do, and that is the policy that the Government are pursuing.

What matters here, however, is that the view taken by those who have to deal in the stocks and shares of the steel industry has been consistently optimistic. They have not regarded the compensation terms as disastrous or bad. They regard them as good. All the articles which have appeared by people who have assessed these matters, in the Financial Times and elsewhere, since the end of the Standing Committee proceedings have been in that direction. They have said that the compensation terms are encouraging and they have encouraged people to buy the shares. There could not be a better test than this.

All those who make these big demands are asking for more money contributed by taxpayers, rich and poor, in many positions in life, where tax is a difficult matter for those who have to pay it. What those who are advancing these demands are asking for, however, is that more of the taxpayer's money should be handed to one section of the community.

This is not money that the Government privately possess. It is not a matter for my right hon. Friend the Chief Secretary to go to his safe deposit and take out a few million £s and hand it over. He does not have the money. Even if he did, I still would not advise him to do it. But this is not the Government's money. It is the taxpayer's money.

The whole logic is that if more money in compensation is to be given to certain individuals, more must be taken from all sorts of people who have to contribute as taxpayers. Those taxpayers include many people in my constituency—elderly people, for example, who do a little part-time work or some overtime hours and who have to pay Income Tax if they fall within the relevant category. It would be a transfer of some of that money to those who have been represented so volubly and, in some cases, so violently by certain hon. Members on the benches opposite.

Those debates and discusions have been all to the good. I commend the Government on having allowed the debate to flow freely. Their decision was right. The future of this industry and of those who work in it and the economy of the country as a whole is a very grave, serious and important matter. It is right for the Government to have allowed the freest possible debate. I have always supported them in that view during the long and sometimes dreary hours in Committee. I hope that, at the end of the day, those in the industry will have their attitude accepted by all hon. Members of this House. The decision has been made; let us get on with the job.

8.46 p.m.

Mr. Edward M. Taylor (Glasgow, Cathcart)

I shall be as brief as possible because other hon. Members opposite wish to speak in this debate. The debate has been a little disappointing because the attendance has not been very large. There has not been a great deal of excitement, apart from the usual brilliant speech of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber). One of the few bits of real joy was when the hon. Member for Ebbw Vale (Mr. Michael Foot) came in to show his joy and excitement at this triumph of stone-age Socialism. He assured us that if the Bill did not please the gnomes of Zurich it would please the dwarfs of Tonypandy. Then he left the Chamber. Another piece of joy was when the hon. Member for Penistone (Mr. Mendelson) came in after an absence—

Mr. Mendelson

The hon. Member is gravely misrepresenting me. I was present here throughout the opening speeches of my right hon. Friend the Minister and the right hon. Member who opened for the Opposition, and I have heard four back bench speeches delivered from the two sides of the House.

Mr. Taylor

The hon. Member could not have been making himself as noticeable as usual. I apologise for not noticing that he was present all the time. He made two significant points. The first point he also made in Committee, about the substantial and increasing majority which he has. He said this showed that the people of the country wants steel nationalisation. He is perhaps unduly modest. I think the reason is his personal abilities. The results of Gallup Polls show quite clearly that, far from a majority of the people wanting steel nationalisation, not even a majority of the supporters of his party want it. For the country as a whole, the percentage in support of steel nationalisation was 14 per cent.

Mr. Marsh

Since the hon. Member is placing so much weight on Gallup Polls and the lack of enthusiasm of the electorate for steel nationalisation, will he take his comments on the poll one step forward and comment upon how it applies to the Leader of the Opposition

Mr. Taylor

We are not afraid of changing opinions being reflected in ideology. They will turn our way. We are a modern party of change. One thing about hon. Members of the party opposite and their ideas is that they never change.

The main argument of the hon. Member for Penistone was that this was an election pledge by the Government and election pledges have to be kept. I wonder how ridiculous he can become. If he looks at the grand list of pledges which have been made, he will find that there are many which my constituents in Cathcart would much prefer the Government to honour than this one ridiculous, reactionary pledge. What about keeping prices stable, reducing taxes, 3 per cent. mortgages, and a great increase in house-building? All these are pledges which my constituents would prefer to see honoured.

My great objection to this Bill concerns the expenditure of money. The Government are getting this industry at an unreasonably low price and the amount fixed for compensation is almost a swindle for the holders of shares, but in times of crisis such as these when there is a desperate shortage of capital, for the Government to spend around £600 million on this irrelevant exercise is the height of economic madness. With such a sum I ask the House to think how many of the real problems in our society could be dealt with—the problems of housing, hospitals, roads, university cuts, school-building. On all these things we could and should be spending much more money.

Instead of this, the Government are spending £600 million on the irrelevant exercise of nationalising steel, but, more significant, spending it at a time when, to get the money to do so—because the Government have not got the money; they will have to borrow it—the interest rates are such that they will have to pay a substantial rate of interest. Our children and grandchildren will still be paying after the year 2000 for this irrelevant folly on the part of the Government.

Throughout the Committee stage I endeavoured as best I could to draw the Minister's attention to the way in which the Bill would apply to Scotland. At the beginning I asked questions. To those questions I got no answers. I then did some minor probing to see if the Minister would accept certain points of view. He made it clear not only that they were not accepted but that they were points of view which had never occurred to him.

For the last time, and very briefly, may I put three significant points to the Minister about the Bill and its application to Scotland. First, do the Gov- ernment accept or not accept that the Bill, if it is applied in the way in which we see it set out, will have an effect on Scottish steel? Will the effect be such that the steel industry will be expanded or contracted?

This afternoon the Minister gave a clear indication that one of the first things to be done would be a ruthless pruning of uneconomic and flabby sections of the industry. How will he assess a section of the industry is flabby and uneconomic? The tragedy of Scottish steel is not that it is flabby, which it certainly is not, not that it is uneconomic, not that it is inefficient, not that it is unprogressive or not modern enough, but that, simply because of the differential policies of the other nationalised industries, an unreasonable burden is placed on Scottish steel.

If the Government or the Corporation are to have regard only to the results of the various companies, unquestionably Scottish steel will be in danger of real collapse. This will not be because of inefficiency or lack of effort, but simply because the differential in coal price compared, say, with United Coke, costs Colvilles an extra £3 million a year. The differential to local rates between Scotland and England is that Colvilles pay an extra £ million a year. I cannot give an exact figure for the differential in the cost of gas and electricity, but it is estimated to be about £200,000 a year. There is one section of the new Corporation which will start off with a net deficit of £3¾ million per year which it must overcome before it makes a penny profit.

If this policy of ruthless pruning is applied, I fear for Scottish steel. If the Government will insist, as seems likely from the debates we had on Report, on having a differential pricing policy in which the prices applied in the various areas will represent costs, inevitably, as in every other nationalised industry, the price of the commodity will be higher in Scotland. If the cost of steel is higher in Scotland, this will affect our engineering, lighter industries, shipbuilding, etc. Inevitably this will have a devastating effect on Scotland.

Today I asked the Minister of Labour a Question about unemployment in Scotland. I asked him this straight question: what rate of increase had there been over last month in unemployment in Scotland and in England and Wales? He told me that in the month between 12th December, 1966 and 9th January, 1967, unemployment in Scotland had jumped by 10.8 per cent. and that in England by 5.4 per cent. —exactly double. There are now 88,000 people unemployed in Scotland. The number increased last month by over 10 per cent., double the rate for England.

This is surely a serious situation. We are not asking for any question of subsidy. Give us equality and nothing else and the Scottish steel industry will be prepared to compete with the rest of the country and I believe it will compete successfully.

The one thing that has been undermining the Scottish economy year after year is that we do not have fair competition. We start with an unreasonable disadvantage solely because of our natural problems and the differential policies applied by the nationalised industries. I am not blaming the Minister for what has happened in the past—indeed, not even for what has happened in the past two years. I simply ask him to look to the future and see that the tragedy of coal, gas and electricity in Scotland is not repeated in the steel industry.

If the Government apply to steel the policy pursued in other nationalised industries, the outlook for Scottish steel and Scottish heavy industry generally will be very serious and I hope that he will consider this very seriously. I ask him to spend a few minutes discussing the matter with Scottish industrialists at all levels. I hope that he can indicate that his mind is not closed to the interests of Scotland.

8.55 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

I have just five minutes to answer the repeated arguments of the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor). He spent ten minutes attacking and criticising, except in one small respect, all the industrial policies followed for coal, gas and electricity by the last Government. He attacked everything that that Government did, except the benefit that it brought to Scotland by establishing the Colvilles strip mill.

The hon. Gentleman mentioned three items as constituting a serious factor for Scottish steel in making it uneconomic. But there are others. For example, there are the managerial costs which in the south and south-east of England and the Midlands are much higher than in Scotland. Site costs and administrative costs are also higher. That is why industry in many cases has been voluntarily moving to the perimeters of these areas where the costs are lower.

But in grumbling about these costs, the hon. Gentleman says that he does not want a subsidy for Scottish steel nor for Scottish coal. He does not want the miners of Yorkshire to subsidise the miners of Scotland. Yet he wants coal in Scotland to be the same price as it is from the more economic pits south of the Border. He wants to standardise prices on the one hand and then, on the other, says that this must not mean one part of an industry subsidising another. He must know that the two are incompatible, for standard prices would mean the more profitable pits subsidising the less profitable. He is quite illogical in the diatribe that he runs on these three items of costs.

Before the election, the Conservatives said in their manifesto that if returned to office they would undertake an examination for the purpose of reorganising the steel industry. They knew that the set-up was unsatisfactory. Every consumer of steel was complaining about trading associations and the cartel in steel prices. The shipbuilding industry of Scotland was complaining and asking the Government to take action that would enable it to buy steel at competitive prices. The hon. Gentleman's criticism of the present Government is quite unjustified.

The plea to leave the industry in private hands and to establish it on a laissez faire basis has been denied as a practical proposition by no less a person than the Chairman of the National Steel Co. of Wales. He has said that if the industry attempted to go on to a price competitive basis it would be catastrophic to the industry. In fact, he said that we would have to integrate and co-ordinate this high capital cost industry to enable it not to compete within itself but to compete with the large units of Europe and the United States.

In Britain we have to think not of a competitive industry to supply Britain but of a British competitive industry to supply the world. I believe that this reorganisation of the industry will put it in a position to compete in the world markets, which is what British industry must do if the country is to survive.

The country will not survive by wasteful, internal competition. It will survive and succeed by high quality organisation and production so that we can put our goods into markets abroad at competitive prices. We shall not do this if our industry is based on small units competing with each other. Such a system means that firms have not the resources and are unable to build them up. Colvilles could not raise the money for its new strip mill and the State had to provide it. This Bill is probably the best solution for the steel industry that has come before the House in the last 20 years.

9.1 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

We are now on the last lap of what has been a very long race. In an hour from now the issue will be in process of decision. Third Reading debates always seem to have something of an air of a stale ham sandwich in a railway buffet. One is inevitably chewing over a well and truly digested subject.

But I do not think that that is an adequate excuse for the fact that throughout this debate, with the exception of about five minutes in the middle, when the hon. Member for Ross and Cromarty (Mr. Alasdair Mackenzie) was present, the Liberal benches have remained entirely empty. We had a Liberal Member on the Standing Committee, and one of the very few things which the Minister said in those 2,500-odd columns of Hansard with which I agreed was that, having listened to a few interventions by that Liberal Member for the Committee, no one was any the wiser as to why anyone should ever vote Liberal.

The Chief Secretary to the Treasury has in his time committed himself to some very startling propositions and I have in a number of debates had to take issue with him. But few of his propositions even with the benefit of hindsight read so startingly as that which he made during his Second Reading speech. On 25th July, complaining that the debate had been calm, he went on to say: There is really no major opposition to the Bill."—[OFFICIAL REPORT, 25th July, 1966; Vol 732, c. 1343.]

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

Hear, hear.

Mr. Jenkin

Having sat through the Standing Committee debates, having sat through three and a half days of Report and having studied the columns of the Press, how anyone could commit himself to that proposition passes my understanding. Standing Committee D is now a byword for tough, well-argued and above all sustained opposition, under, if I may say so, the superb leadership of my right hon. Friend the Member for Altrincham and Sale (Mr. Barber). No doubt in the end the Government will get their miserable Bill, but they have had to fight every inch of the way for it, and so they should.

The hon. Gentleman the Member for Penistone (Mr. Mendelson), who made a brief intervention a few moments ago, seemed to imply that because a decision had been taken in favour of giving the Bill a Second Reading six months ago at that stage all opposition should somehow have folded up.

Mr. Mendelson indicated dissent.

Mr. Jenkin

He seemed to suggest that the Opposition should not have pursued the Amendments they had tabled. The fact is that the Opposition were exercising not only their constitutional right but their duty in challenging the Bill every inch of the way and enforcing their Amendments to a Division as often as they could. Nevertheless, it would be wrong to ignore the very many cases—the right hon. Gentleman has had tributes paid to him in this respect and I gladly add mine—when the Government wisely yielded to superior argument.

This Bill contains no fewer than 50 Amendments and 4 new Clauses which have been inserted as a result of the Opposition. In counting that figure I have not taken into account any Amendment which the Government brought forward apart from Opposition pressure, nor have I counted a single Amendment in the Fourth Schedule, because those are merely consequential to other Amendments. This figure of 50 Amendments and 4 new Clauses represents a very significant number of battle honours for Standing Committee D. They were inserted solely as a result of Opposition pressure, reinforced by the vigorous protests and angry deputations from the industry which the right hon. Gentleman has seen.

This tribute was paid in an article in The Times on 21st December under the heading "Safeguard for Private Steel Firms". It said: It would be wrong to regard the Committee Stage on the Iron and Steel Bill which ended yesterday as a sterile affair from the point of view of the steel industry. The Government's will to nationalise steel was not shaken. But that was not the object of opposition in the Committee. Looking back at the work done since October 25 it is clear that several important concessions have been over run from the Government for the private sector of steel which will remain after nationalisation". I would add for more than the private sector of steel. A total of 50 Amendments and 4 new Clauses give the lie to the foolish jibe that the Opposition was merely engaging in sterile obstruction, or banging its head against the stone wall of the principle of nationalisation. The debates were long and the arguments were fierce, but then, God knows, we have had enough to argue about. The longest arguments and debates took place upon the vexed subject of diversification.

Here I will break off for a moment to welcome the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond), who is, with one minor exception, the first representative of his Party that we have had the good fortune to see today. I would hasten to add that we are delighted to have him, even at this late stage.

The hon. Member for Poplar (Mr. Mikardo) complained in Committee that after 20 years' experience of nationalisation the same old stuff had been dished up in the Bill—that 20 years had taught the Government nothing. As my hon. Friend the Member for Yeovil (Mr. Peyton) said, we had a lot of musty old bones into which the kiss of life had been breathed again. As so often is the case, the hon. Member for Poplar was wrong in one important respect. When Parliament passed the Coal Nationalisation Act, and the Gas and Electricity Acts, they were tightly-drawn and concentrated the functions and powers of the Board set up. In the words of the hon. Gentleman the Member for Poplar in another debate, these Corporations were … hamstrung by idiotic inhibitions".[OFFICIAL REPORT, Standing Committee D, 17th November, 1966; c. 657.] This Bill has swung to the other extreme. It confers on the Steel Corporation powers to engage in virtually any activity, to take over any company it wishes, to take over any British company operating in any country of the world and to form new companies for any purpose it wishes. The scope is absolutely unlimited and the only check on this power is that the Minister's consent is needed. That is the only barrier standing in the way of what The Times call "wildfire diversification".

The only check is a Socialist Minister's veto. What is that worth? What is that worth from a Minister who has promoted legislation to give the National Coal Board power to go fiddling about in the North Sea prospecting for natural gas? What is it worth from a Ministry whose Parliamentary Secretary, who I regret to say is not present this evening, had in his election address: We reject the selfish, greedy doctrine of capitalism That is what stands between private industry and diversification by the Corporation. What is this veto worth from a Government which is encouraging the existing nationalised industries to gobble up their competitors as hard as they can. The Parliamentary Secretary to the Ministry of Transport knows that the Transport Holding Company is gobbling up all its companies as hard as it can go, and this is the Government whose Minister's veto is the only limit on diversification. The fears of industry were fully and entirely justified and the only check, that contained in Clause 2, and Clause 37, is absolutely worthless.

To do him justice, the Minister set out deliberately to try to allay those fears. In Committee he said: There is no cause for private enterprise to be worried that this is a great State takeover". He had earlier scoffed at fears that, the Government have embarked upon some diabolical plot to undertake the complete nationalisation of British industry by the backdoor"—[OFFICIAL REPORT, Standing Committee D, 10th November. 1966; c. 447-–6.] On Report, the right hon. Gentleman was at pains to point out that although the National Steel Corporation would have power to manufacture aircraft—it might be, he said, that one company would like to manufacture just one or two teensy weensy little aircraft—he asked why should they not. The Corporation has power to go into the contracting industry. How would it like to put up one or two little prefabricated steel houses? [An HON. MEMBER" Or build an airship."] It would be part and parcel of the Labour Party's old-fashioned doctrine if that was what it wanted to do.

We now know that all that verbiage was dust in our eyes, a mere smokescreen for the Government's real intentions, because all the world now knows that the Government's real intentions were embarrassingly revealed in all their stark nakedness by the hon. Member for Sheffield, Brightside (Mr. Winterbottom), for whom we on Standing Committee D conceived a real and warm affection. At one point he expressed his anxiety in writing to the Minister that he felt that the powers in Clause 2 were unduly restrictive. The then Parliamentary Secretary, now the Parliamentary Secretary to the Ministry of Technology, hastened to reassure him and wrote him a letter which, I am bound to say, ought to be learned by heart by every student of Ministerial indiscretions. Bless his little heart, the hon. Member for Bright-side published it in the Sheffield Telegraph!

After a passage in which the Parliamentary Secretary explained that there was this power to withhold consent when diversification was wanted, the crucial paragraph of this letter, which the Parliamentary Secretary wrote in rather chummy terms, was: But Dick Marsh has asked me to assure you that he would be favourably inclined towards any request from the Corporation to extend their diversified activities when this would be to their advantage and that he would only withhold consent for significant reasons of national economic policy. It would be any request when the Corporation thought it to its advantage and the only reason would be national economic considerations.

Were, then, all the earlier assurances given to industry so much empty verbiage? It is difficult to disagree with the verdict of the Daily Telegraph, which said that it was hard to acquit the Government of deceit. The hon. Member for Brightside has performed a notable public service in alerting industry to the dangers of Clause 2.

By that time, industry was thoroughly alarmed by these powers and in due course a deputation from the C.B.I. waited on the Minister. In The Times of 15th December, The Times correspondent wrote—and it is somewhat surprising— The C.B.I. is still, of course, totally opposed to the renationalisation of steel but at least it seems to have won some important concessions. The threat of wildfire diversifications has receded…". What assurances did the Minister give to the C.B.I. in this cosy private meeting in his office? How far has he derogated from the assurances which he gave to his hon. Friend the Member for BriAtside? In short, whom is the Minister selling down the river, his hon. Friends, or industry and the public? The Chief Secretary should give an answer. Which one is it? Has the threat of wildfire diversification receded, or does the position remain as in the letter to the hon. Member for Brightside?

Another matter on which we engaged in long and heated argument was compensation. If "deceit" is the right word to use for what the Government have done concerning diversification of the industry, the only word to apply to the compensation is "robbery". Nowhere have the Government's arguments, ably deployed by the Chief Secretary, been less convincing or more devious. He may have convinced himself and some of his hon. Friends, but he has not convinced the stock market, the financial Press, or the tens of thousands of private investors in the steel industry who bought steel shares and loan stock and who now stand by and see the Government grab these companies for compensation literally hundreds of millions of pounds less than their true worth. I will justify that statement and quote a few figures.

The truth of the matter is that the whole basis of valuation in Clauses 10, 11 and 12 is wrong. If one buys shares in small parcels, of course the market value is the true test of the value of the shares; that is appropriate because one is purchasing the dividends which the shares will yield. But when one buys a whole company, one buys not merely the dividends which the company declares but all the profits which the company makes. In any take-over bid there is a substantial increase in the value of the shares because the take-over bidder knows that he will get the whole of the profits; and the whole of the profits of the company are almost always worth more than the aggregate value of the shares on the market.

The Bill—I do not think this point has been made before, but I believe it to be true—is an expression of the pernicious Socialist philosophy that the undistributed profits of a company do not belong to the shareholders. Their only right is to recieve dividends. The rest can be confiscated without compensation and with no hardship, loss or injustice. This was the philosophy which underlay the Corporation Tax which taxed dividends over and above the tax on profits. If the undistributed profits of a company do not belong to the shareholders, to whom do they belong? The argument is that they might as well belong to the State as to anyone else. The Bill stands as a stark testimony to that philosophy.

This under-valuation can be expressed in a number of ways. Over the last ten years, the steel industry has invested no less than £1,070 million in new capacity. The total compensation to be paid for the companies to be taken over is about £600 million—perhaps rather less. The cost of a new integrated plant on a green field site is approximately £120 per ingot ton of capacity. The State is taking over the steel capacity of these companies at a price of less than £30 per ingot ton of capacity—less than a quarter of the replacement value.

Take the nine companies whose shares are quoted. The compensation is about £470 million. The net assets, after deducting Government loans, are about £850 million—a difference of nearly £370 million. Take the question of profits. In 1965, which was perhaps the last reasonably typical year for the steel companies, the profits of the nine companies were approximately £60 million. Assuming a 7 per cent. coupon—even that may be too high in view of the cut in Bank Rate—the interest on the compensation stock will be £33 million. The balance—£27 million—is what the Government are "pinching" for nothing; they are paying no compensation at all for that. That is why we contend that the basis of compensation is demonstrably wrong, demonstrably unjust, and, I may add, a deplorable example to the under-developed countries which are facing this problem.

But that is not the end. There is a crucial important consequences. When the accounts of the nine companies come to be consolidated, there will be a massive surplus representing the difference between the book value of the assets and the compensation paid. It will be more than the £370 million to which I referred because the unquoted companies will be in this as well. What I want to ask the Chief Secretary is, how is that surplus going to be dealt with in the consolidated accounts of the Corporation?

Because this is highly relevant to the European issue about which so much has been said. We have tended to concentrate on other matters—the 13 million ton unit under single direction, and so on—but this subsidy argument, because that is what it amounts to, is equally important. The Paris Treaty expressly forbids Government subsidy in any way. Under Clause 18 the commencing capital debt of the Corporation will consist of the compensation issue, the Government loan transfer and the transfer from I.S.H.R.A. shares and stocks of Richard Thomas and Baldwins. What will happen to the surplus?

Mr. O'Malley

The hon. Gentleman referred to the Paris Treaty forbidding Government subsidies. Is not this precisely what happens in the French steel industry, where the French Government allow the steel industry to use Government money on subsidised rates of interest?

Mr. Jenkin

I really cannot get involved in an argument between the European Steel Community and the French Government.

This, subject to anything the Chief Secretary may say, would amount to a subsidy here. We unfortunately came to what is now Clause 18 at 5 o'clock in the morning, when, naturally enough, the Chief Secretary was attending a conference somewhere else; he was not in his place to answer the question which arose. This is now his opportunity. It is of crucial importance to this issue. How will the surplus be used? Will it be used to write off assets, or what?

The right hon. Gentleman referred again this afternoon to Amendments which he tabled in the early hours of Tuesday morning, especially the new machinery for joint consultation. Indeed, it was a somewhat remarkable scene in the small hours of Tuesday morning, with a number of his hon. Friends who tend to share certain views and who sit below the Gangway cheering him on, saying what a splendid thing this was—we were already in the dawn of a new era of industrial joint consultation, and so on. Well, they may be right. We shall wait and see. We wish this experiment well. There is no doubt that when other industries were nationalised nationalisation was followed by great disappointment among those in those industries who felt they would have much more say; indeed, some of them felt they would be running the industries, after nationalisation. There has been in fact little change since then.

There may be hon. Members here now who were here on 17th January and will remember how the right hon. Gentleman the Member for Easington (Mr. Shinwell), the Chairman of the Parliamentary Labour Party, complained to the Minister Does my right hon. Friend realise that many miners, certainly in my area, though I do not know if he is aware of it, begin to have very grave doubts about nationalisation." —[OFFICIAL REPORT, 17th January, 1967; Vol.739, c. 18.] Twenty years after the Coal Industry Nationalisation Act was passed they are beginning to have grave doubts about nationalisation. I believe more people are going to have grave doubts about the nationalisation of the steel industry. Certainly, there was a gentleman who was parading outside Corby steel works the other day and carrying, in relation to a strike, a banner which said, "Labour relations out: nationalisation in." I do not know what he thought he was going to get instead. But how many more people, how many other industries, are going to have to learn the hard way that nationalisation does not have any advantages?

I referred to 50 Amendments and 4 new Clauses, and those represent significant improvements to what is irredeemably and fundamentally a bad Bill. I now come to a matter of great importance, and I want to refer to the new Clause which deals with the provision of information on figures and statistics. It has for many years been a source of criticism of the nationalised industries that their annual reports do not provide that wealth of detail of really vital figures which would show What sort of return had been made on the various activities and various parts of the businesses to enable the performances of the different units to be evaluated. In the case of the Steel Corporation this is to be put right by a very important provision in the Bill, and we shall look forward with interest to see what emerges in the reports of the Corporation.

We have also achieved important amendments for the private sector of the industry as The Times rightly mentioned, but the private sector will face some very formidable problems. For instance, will the forward investment programme rest on the whim of the Minister?

My hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) mentioned the Millom Hematite Company, in whose case eventually an appeal may reach the Minister from a decision of the Iron and Steel Board. When the Bill becomes an Act, the only arbiter will be the Minister, and there will be no appeal from him at all. The private sector of the steel industry regard that as a possible strangulation of their lifeline, depriving them of the very right to exist.

Although we have improved the Bill in many respects, it remains a catastrophically bad Bill. Where the need is for greater enterprise and more competition, the Bill creates centralised control and massive monopoly. At a time when private industry is desperately in need of more confidence for the future and of encouragement to invest, the Bill faces it with the threat of subsidised State competition from a body with unlimited powers and finance, and responsible to a Socialist Minister—

Mr. Mendelson

rose —

Mr. Speaker

Order. We cannot have an intervention in a peroration.

Mr. Jenkin

I say this in no unkind sense—responsible to a Socialist Minister with unlimited ambition. At a time when faith in the Government's financial competence and integrity of purpose is still at issue, we are faced with as nasty a piece of confiscatory legislation as this House has seen for many years. At a time when the Government are deliberately forced to engineer rising unemployment, falling production, and a slump in investment, we are faced with a Bill which can only intensify those difficulties.

The 35 hon. Members opposite who have tabled a Resolution critical of the Government's policy on unemployment cannot support the Bill when they realise that, if they vote for this Measure, there will be men and women on the dole in 1967, because the Government are determined to force through the Bill this year. What an irony it is that the loudest clamour should come from those hon. Members opposite who shrieked loudest for this legislation.

Above all, the Prime Minister and the Foreign Secretary are staking their reputations on what purports to be an all-out bid to secure Britain's entry into the Common Market. Yet here we are faced with a Bill which, for many reasons, must make that task infinitely more difficult.

The right hon. Gentleman the Minister admitted that the Bill creates new obstacles, or, to use his own words, "poses problems of adaptation". The hon. Member for Ebbw Vale (Mr. Michael Foot) is not prepared to put up with that, but he does not want to get into the Common Market, as we all know.

This is an irredeemably bad Bill. On 10th March, The Times, in an article headed "Why the £ is Weak", said: The £ is weak because the Labour Government is showing it has learnt nothing; it has committed itself … to proceed with the irrelevance of nationalising steel. Right hon. and hon. Members who tramp through the Division Lobbies tonight in support if the Bill will do so knowing that it is irrelevant to Britain's economic recovery, knowing that it is making the Chancellor's task of winning economic solvency harder, knowing that it is blatantly confiscatory, knowing that it threatens wide sectors of private industry with takeover and subsidised competition, and, above all, knowing that it contradicts completely the Government's stated aim of entry into Europe.

On 8th November, the Minister committed himself to a revealing statement when he said that this was an "umbrella" Bill. He was referring to the absence of any clues as to the organisation of the steel companies. The true fact is that this is an umbrella Bill. It is the Government's umbrella with which they parry the rain of Left-Wing brickbats hurled at the rest of Government policy. If anyone doubts that, let him read tomorrow the speech of the hon. Member for Ebbw Vale, when he said that this was "a sweet moment of triumph".

This is a shabby political sell-out of British interests and of British people. I urge my right hon. and hon. Friends to cut the Bill's miserable throat.

9.30 p.m.

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

The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) started his speech in a most courteous fashion by paying his regards to my right hon. Friend the Minister of Power and to his own right hon. Friend the Member for Altrincham and Sale (Mr. Barber), and I hope that I do not embarrass him by saying that he made an extremely good speech, as he did on many occasions in Committee. Any Member of the Opposition who has to fight for this length of time with such slender material deserves everybody's congratulations, and I hope, therefore, that the House will forgive me if I, too, start by saying in all seriousness to my right hon. Friend how delighted those who work with him are that he should at this early age have had the great responsibility of carrying an enormously important Measure against a very difficult Committee through the House, and above all of having achieved the complete co-operation of those in the industry which this Bill proposes to take over. To have done that is worthy of the commendation which I am sure everyone in the House would wish to give him.

It has been said that this debate has been rather like a stale ham sandwich, and that is true. We have a large House at the moment, but, as is well known, the House varied between a membership of two and eight on the Opposition side, and at one time as many as 14, but the Liberal bench never succeeded at any time to equal the two. The reason is exactly that stated by the hon. Gentleman in quoting my reference on an earlier occasion. There are wide sections of the community who were opposed to this Bill, but who are no longer opposed to it. This includes the directors, the shareholders and, in fact, a large number of the Opposition who, in spite of the fight that they have had to put up in Committee to make a show of it, and to pay their obeisance to their one-time friends, have realised full well that there is no fight left in this because there is no real issue involved at all.

Let me explain why, and in the course of my reply I shall deal with as many of the questions as I can which have been put to me.

I said that the directors of the companies themselves were now reconciled to the situation. They recognise the need for reconstruction of the industry. They recognise that this can only be based on amalgamations which provide economies of scale, both as regards the size of firms, and as regards the size of plants. In case there is any doubt about that, I should like, and it is a tribute to them that I should do so, to give some of the quotations, some of the references, some of the speeches, and some of the comments in the papers with regard to that.

First, according to the Benson Report, the technical optimum size of works in the mid-seventies will be an annual capacity of 5 million tons for an integrated works including a strip mill, and one of 3½ million tons for a multi-project integrated works. These may even become bigger as time goes on. This is the optimum size. The figures published by the British Iron and Steel Federation in its October issue of Steel Review show that there is only one works in the United Kingdom with a capacity of more than 3 million tons. This compares with 14 in the United States, 5 in Japan, and 2 in the E.C.S.C., and according to the same figures we have fallen even further behind as regards company sizes.

Mr. J. H. Osborn

rose—

Mr. Diamond

I shall give way in a moment, when I have concluded what I have to say on this aspect of the matter.

In the United Kingdom there are no companies at all with a total annual capacity of more than 4 million tons, whereas in the Community there are 4, in the United States 8, and in Japan 5. I ask hon. Gentlemen opposite who have been so critical of all this, how can a company whose total annual capacity is less than 4 million tons support a works of at least 3½ million tons, or as the case may be 5 million tons, as recommended by the Benson Report?

It is not surprising that this month's issue of Steel Review said that we must press on fast with the creation of larger company groupings which are both commercially advantageous in the shorter run, and provide the base for movement towards that concentration of production into a few very big, well-located works which the Benson Report set out as the longer-term aim". It is clear that there has been a complete recognition of the need for a reconstruction of the industry.

Mr. J. H. Osborn

It is easy to distort the truth in quoting figures from the review. In fact, 23 per cent. of the steel companies in the E.C.S.C. have a production below half a million tons, whereas only 21 per cent. are below that figure in this country. So there are more small firms in the E.C.S.C. As for the range—

Mr. Diamond

I must continue if that is all the hon. Member wants to say by way of an intervention. This is not the time for making a speech. I did not say a word about small firms. We are not concerned with them. Of course there may be small firms.

Mr. Osborn

rose—

Mr. Speaker

Order. The hon. Member has already intervened. We must go on with the debate.

Mr. Diamond

I cannot give way again. If the hon. Member is trying to maintain that there is no need for an amalgamation, or for increasing the size of firms and plants, he is the only person in the whole country who is attempting to say so. I am drawing a fair comparison, and I thought it was agreed by the Opposition—certainly it is a point of view held by my right hon. Friend and by the steel industry—that there is no question about the need for amalgamation; the only question is whether it could have arisen before, or whether it is necessary to step in to provide for the possibility of this expansion. It is clear form the timing and everything that has gone on that the barriers share ownership have prevented the necessary amalgamations and the kind of concentration which alone can achieve an efficient industry.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said that this was not the fault of the steel industry; the fact was that the new oxygen process which alone permitted large steel plants had been discovered only recently. The process to which he was referring was the L.D. process. The letters "L.D." stand for Linz-Donawitz. Linz is the town in Austria. That is a reminder that this process, which has been widely adopted and was installed in the 1950s, was the invention of the nationalised Austrian steel industry. We are grateful to the hon. Member for so reminding us.

His argument is completely wrong, because it is at least six years since our competitors installed this process, and they are way ahead of us. Furthermore, this process is compatible with a small as well as a large plant. It has nothing to do with the size of plant.

Mr. Ridley

rose—

Mr. Diamond

The hon. Member must not think that he has a right to be controversial the whole time. He made his speech and I listened to him. I am giving him his reply. If I am to give way to everybody who wants to intervene I shall not be able to reply to those Members who have asked me important questions.

It has nothing to do with the L.D. process. It is simply that although other countries have found themselves capable of amalgamation and reconstruction, notwithstanding that they have a privately-owned industry, the British industry has not found itself capable of so doing without help from outside, and we are giving that help.

Mr. Ridley

rose—

Mr. Diamond

The hon. Member knows that I am only too glad to give way, but if, every time an hon. Member wishes to raise an argument, I am told, "You must give way", we shall have a double speech on every question to which I reply. I will then be able to reply to only half as many. However, I give way on this occasion; but it will be the last.

Mr. Ridley

May I help the right hon. Gentleman? [Interruption.] He is be- traying a woeful technological ignorance. The point is that by inventing converters of 300 to 400 tons capacity it has been possible to make the cheapest steel at levels of 3½ million to 5 million tons. It is not the invention of the process but the British development of the large-scale converters which has brought about the need for amalgamation.

Mr. Diamond

I am grateful for what the hon. Gentleman said, but it does not affect the argument in the slightest. [Interruption.] It is not open to this country alone to build large plants and to have amalgamations resulting in large firms. The curious thing is that it has been open to our competitors to do so, and they have done it. We have been left miles behind and the only conclusion to draw—the conclusion which was drawn by the Benson Committee—is that there is need for this to be done. It should be remembered that the Benson Committee did not say in its Report that it should be done by nationalisation. That is because the instructions to that Committee were to exclude the question of nationalisation; and it had to proceed as best it could.

I repeat that it is because of this that there is a realisation that there had to be reconstruction. Private ownership did not permit it. Indeed, privately-held shares created barriers to it. We are now providing the means whereby it can be done. We have the support of the industry and I hope that we shall have the support of the Opposition in the years ahead, joining with us in saying that we hope it will be successful because we want it to be a fruitful and efficient industry.

As everybody knows, my right hon. Friend has appointed an Organising Committee. The three leading members of the industry have joined it. Their action was welcomed by the British Iron and Steel Federation in these words: The Federation appreciates the contribution to the future wellbeing of the industry being made by those steel makers who have decided to assist the work of the Organising Committee. Another Chairman, Sir Julian Pode, also welcomed it. [Interruption.] This may not be welcome to some hon. Gentlemen opposite. We are trying to look on this as the people who are responsible to the country. This must be trying to some hon. Gentlemen opposite, particularly to some of those now seated below the Gangway opposite who have not listened to a word of the debate but have just come into the Chamber. [Interruption.]

Mr. Speaker

Order. We have had a debate today without a running commentary. I do not want one to start now.

Mr. Diamond

I was saying that Sir Julian Pode, Chairman of the Steel Company of Wales, according to a report in The Times on 18th January, said: It now becomes the duty of your Board, staff and workpeople to support to the full the Organising Committee for the National Steel Corporation, and, later, the National Steel Corporation itself when set up. I was right in suggesting in the first place that there is no issue left here. There is no passion left in this at all. It is an issue which was put to the country and which WAS accepted a long time ago, and at the last General Election the country accepted it for good It is only the Tories who are carrying out a rearguard action.

Mr. Barber

The right hon. Gentleman just said, "It is only the Tories who are carrying out a rearguard action." Every person to whom the right hon. Gentleman has referred is vehemently opposed to nationalisation. Will he now answer the question I put earlier? The considered view of the Confederation of British Industry is as follows: The National Steel Corporation would stifle enterprise, create inefficiency and eliminate diversity. Let us have the right hon. Gentleman's comments on that?

Mr. Diamond

I have been asked at least 15 important questions and I would like to answer them.

Mr. Barber

Answer my question.

Mr. Diamond

I will be only too glad to come to the right hon. Gentleman's question and answer it in its turn. I am grateful to him because his intervention proves how foolish it is of me to give way so often. I have shown that, from the point of view of the directors, we have their full co-operation. This is a tribute to my right hon. Friend for the functioning of the Organising Committee.

I come to the question of the shareholders because a lot has been said about the way in which they have been treated, and one hon. Gentleman opposite referred to the way in which they were being "robbed". What is the true position? They are offered compensation which results in their being paid, on the basis of market figures, a figure of £45 million over and above the figure at which they could have sold their shares. [HON. MEMBERS: "Too much."] I hear some of my hon. Friends saying "too much". I have explained before that it was more than they could have voluntarily sold their shares for. As I have frequently said, it represents a generous interpretation of "full and fair compensation." It is right that when a Government are denying to a shareholder the possibility of voluntarily disposing of his shares or of voluntarily keening them, something over the odds should be paid to take that into account.

Mr. Robert Cooke (Bristol, West)

rose—

Mr. Diamond

I will not give way.

Hon. Members

Give way.

Mr. Speaker

Order.

Mr. Diamond

If I give way I will not have time to deal with all the points I want to answer.

Mr. Robert Cooke

You dare not give way.

Mr. Diamond

I will bring the position a little more up to date. After that had taken place, the shares were quoted at varying prices, although they did not vary very much. Towards the end of November, however, the shares which were subject to takeover by compensation at a figure of £45 million more than their White Paper price—the time of the White Paper issue—fell to a figure of something like £55 million below it. Although the Bill was out the shares were quoted towards the end of November when we were in Committee at something like £55 million less than the compensation payable if the Bill went through. It is not surprising that in those circumstances the anxiety expressed by the right hon. Gentleman and his hon. Friends in Committee was not lest we should carry out our threat to nationalise. The anxiety was lest we should not carry out our undertaking.

I was asked to give a firm assurance and I gave it. What do hon. Members think happened to the prices of the shares when I gave that firm assurance? They went up by £16 million as a result of the assurance, on the responsibility of a Treasury Minister, that as soon as the House gave us the powers we would proceed with the Bill and the compensation therein provided. There is, therefore, no question but that the shareholders' anxiety, despite what is pretended to be said on the benches opposite, is one alone lest we do not carry out our undertaking to nationalise and pay these compensation figures.

The Opposition have asked me a number of questions, trying to pretend that there is still some passion on this issue and that they feel greatly interested in it. I will try to deal with as many of the questions as I can. The first is that we imperilled confidence in the economy, and in particular in sterling, by deciding to nationalise the steel industry. That has been said by the right hon. Member for Flint, West (Mr. Birch) and it has been repeated by the hon. Member for Wanstead and Woodford.

The curious thing is that this, our final step in the House of Commons to nationalise the steel industry by giving the Bill its Third reading, coincides, curiously enough, with the best day for sterling that one can remember for a long time. The right hon. Member for Altrincham and Sale and his right hon. Friend the Member for Flint, West, who have made many speeches on this topic, will be delighted to know that, measured in the usual way, confidence in sterling, which is very important, is higher now than it has been for very many months and we have reduced the Bank Rate by one-half of 1 per cent. If the right hon. Gentleman wants to talk about timing, I could not find a more appropriate piece of timing than to reduce the Bank Rate and to have this reassurance of confidence in sterling at the very moment when we are passing the Third Reading of the Iron and Steel Bill.

The right hon. Gentleman said that the timing was wrong and that we were doing this at a time of crisis. He would have been delighted for us, no doubt, to nationalise the steel industry at some other time—

Mr. Barber

rose—

Mr. Diamond

—would he not?

Mr. Barber

Since I have been asked a question, I will answer. This afternoon, in relation to the strength of sterling, I quoted merely the Chancellor of the Exchequer and a New York newspaper. I ask the right hon. Gentleman this in relation to what he is saying—

Mr. Diamond

rose—

Mr. Speaker

Order. If the Minister allowed the right hon. Gentleman to intervene, he must take the consequences.

Mr. Barber

I put this point to the right hon. Gentleman. As a Treasury Minister he must answer. The Times said—

Mr. Speaker

Order. Interventions on interventions must be brief.

Mr. Barber

I will be very brief. The Times made it clear that this would do sterling harm. What has the right hon. Gentleman to say about that?

Mr. Diamond

I asked the right hon. Gentleman, when he was complaining that we were nationalising steel at a time of crisis, at which time he would have liked us to nationalise it. If he would not like us to nationalise steel at any time, it was an unfortunate kind of argument to use.

The next thing about which the Opposition make a great song and dance is the problem of diversification. There is common ground between the two sides on one thing and there is not common ground on another. What there is common ground about is that we do not believe that nationalised industry should compete on unfair terms with private industry. What there is not common ground about is that we do not believe that nationalised industry should not have an opportunity of competing. That is what the right hon. Gentleman and his hon. Friends are afraid of.

If the right hon. Gentleman will be good enough to refresh his memory on what was said by the industry itself, the Federation said in a booklet published in 1964: The industry has no one simple, tidy pattern: companies sprawl across all demarcation lines, following trading opportunities whenever they arise. Would Labour take over only the steel elements in companies, thus dismembering closely-linked units? Why should they have the opportunity to follow trading opportunities wherever they arise and not the nationalised Steel Corporation? If the party opposite wants to destroy the enterprise, if it wants to take the heart out of good management, it should just stop the industry from proceeding where business naturally leads and where it is in the interest of the industry either in earlier processes or later processes.

Let us be clear, there is no proposal to deny the privately-owned industry the winds of competition which the nationalised industry will provide. What we shall achieve by having a proper financial target—this answers the right hon. Gentleman's question about what has happened, to the alleged surplus, as he described it, it is all wrapped up in providing the appropriate target—what we shall achieve by providing that target—[Interruption.] This is a short way of answering the question which the right hon. Gentleman thinks there is great complication about. It is quite straightforward: there is no such surplus in practice. All that arises is the need to fix the rate of profit earned on the capital invested and to have regard to the circumstances, including those he mentioned. If that is fixed realistically the steel industry in all its respects will have to provide a proper return and therefore will be forced to compete in a realistic way with privately-owned industry.

That is the situation in regard to diversification. Then it is alleged that, of course, we are responsible for putting steel into politics. That is an extraordinary statement to make. Steel has been in politics since 1933, when the party opposite gave it certain protection

and, because of that protection, insisted on a measure of supervision under the Import Duties Advisory Council. That has been going on since 1933 in one form or another. It has been in politics all that time and it is far from true to say that we put it there.

The curious thing about the Tories' complaint is that during their period of office they maintained a partly privately-owned and partly publicly-owned steel industry and deliberately turned the publicly-owned steel company into the largest company of the lot by infusing new capital into it. To try to pretend that there is any real antagonism to steel nationalisation is quite beyond the point.

The summary of the situation is clear. Rationalisation is recognised by all of us to be needed by those in the steel industry and by those outside. Some believe in one method of achieving it, some in another, but all agree that the worst thing that could possibly happen would be that there should be continuing uncertainty. The steel directors themselves recognise this fully. I shall quote for the last time what Mr. Judge, the President, said in his address to the Iron and Steel Federation in March last year, just before the election: The British steel industry stands plagued with the political atmosphere of nationalisation and denationalisation ad infinitum. I would like to feel confident that the Government we have after the Election will see that there must be an end to this. Britain needs a real and lasting solution for steel. Here it is.

Question put, That the Bill be now read the Third time: —

The House divided:Ayes 306, Noes 220.

Division No. 259.]	AYES	[9.59 p.m.
Abse, Leo	Bidwell, Sydney	Butter, Mrs. Joyce (Wood Green)
Albu, Austen	Binns, John	Callaghan, Rt. Hn. James
Allaun, Frank (Salford, E.)	Bishop, E. S.	Cant, R. B.
Alldritt, Walter	Blackburn, F.	Carmichael, Neil
Allen, Scholefield	Boardman, H.	Carter-Jones, Lewis
Anderson, Donald	Booth, Albert	Chapman, Donald
Archer, Peter	Boston, Terence	Coe, Denis
Armstrong, Ernest	Bottomley, Rt. Hn. Arthur	Coleman, Donald
Atkins, Ronald (Preston, N.)	Boyden, James	Concannon, J. D.
Atkinson, Norman (Tottenham)	Bradley, Tom	Conlan, Bernard
Bacon, Rt. Hn. Alice	Bray, Dr. Jeremy	Corbet, Mrs. Freda
Bagier, Gordon A. T.	Brooks, Edwin	Craddock, George (Bradford, S.)
Barnes, Michael	Broughton, Dr. A. D. D.	Crawshaw, Richard
Barnett, Joel	Brown, Hugh D. (G'gow, Provan)	Cronin, John
Baxter, William	Brown, Bob (N 'c'tle-upon-Tyne, W.)	Crosland, Rt. Hn. Anthony
Bellenger, Rt. Hn. F. J.	Buchan, Norman	Crossman, Rt. Hn. Richard
Bence, Cyril	Buchanan, Richard (G'gow, Sp'burn)	Culten, Mrs. Alice
Bennett, James (G'gow, Bridgeton)	Butler, Herbert (Hackney, C.)	Dalyell, Tam
Darling, Rt. Hn. George	Janner, Sir Barnett	Pavitt, Laurence
Davidson, Arthur (Accrington)	Jay, Rt. Hn. Douglas	Pearson, Arthur (Pontypridd)
Davies, Dr. Ernest (Stretford)	Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)	Pentland, Norman
Davies, G. Elfed (Rhondda, E.)	Jenkins, Hugh (Putney)	Perry, Ernest G. (Battersea, S.)
Davies, Harold (Leek)	Jenkins, Rt. Hn. Roy (Stechford)	Perry, George H. (Nottingham, S.)
Davies, Ifor (Gower)	Jones, Dan (Burnley)	Prentice, Rt. Hn. R. E.
Davies, Robert (Cambridge)	Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)	Price, Christopher (Perry Barr)
Davies, S. O. (Merthyr)	Jones, J. Idwal (Wrexham)	Price, William (Rugby)
Delargy, Hugh	Judd, Frank	Probert, Arthur
Dell, Edmund	Kelley, Richard	Randall, Harry
Diamond, Rt. Hn. John	Kenyon, Clifford	Rankin, John
Dickens, James	Kerr, Dr. David (W'worth, Central)	Redhead, Edward
Dobson, Ray	Leadbitter, Ted	Rees, Merlyn
Doig, Peter	Ledger, Ron	Reynolds, G. W.
Driberg, Tom	Lee, Rt. Hn. Frederick (Newton)	Rhodes, Geoffrey
Dunn, James A.	Lee, Rt. Hn. Jennie (Cannock)	Roberts, Albert (Normanton)
Dunnett, Jack	Lee, John (Reading)	Roberts, Goronwy (Caernarvon)
Dunwoody, Mrs. Gwyneth (Exeter)	Lestor, Miss Joan	Roberts, Gwilym (Bedfordshire, S.)
Dunwoody, Dr. John (F'th & C'b'e)	Lever, Harold (Cheetham)	Robertson, John (Paisley)
Eadie, Alex	Lever, L. M. (Ardwick)	Robinson, Rt. Hn. Kenneth (St. P'c'as)
Edwards, Rt. Hn. Ness (Caerphilly)	Lewis, Arthur (W. Ham, N.)	Robinson, W. O. J. (Walth'stow, E.)
Edwards, William (Merioneth)	Lewis, Ron (Carlisle)	Rodgers, William (Stockton)
Ellis, John	Lipton, Marcus	Roebuck, Roy
English, Michael	Lomas, Kenneth	Rogers, George (Kensington, N.)
Ennals, David	Loughlin, Charles	Rose, Paul
Ensor, David	Luard, Evan	Ross, Rt. Hn. William
Evans, Albert (Islington, S.W.)	Lyon, Alexander W. (York)	Rowland, Christopher (Meriden)
Evans, Gwynfor (C'marthen)	Lyons, Edward (Bradford, E.)	Rowlands, E. (Cardiff, N.)
Evans, Ioan L. (Birm'h'm, Yardley)	Mabon, Dr. J. Dickson	Ryan, John
Fernyhough, E.	McBride, Neil	Shaw, Arnold (Ilford, S.)
Finch, Harold	McCann, John	Sheldon, Robert
Fitt, Gerard (Belfast, W.)	MacColl, James	Shinwell, Rt. Hn. E.
Fletcher, Raymond (Ilkeston)	MacDermot, Niall	Shore, Peter (Stepney)
Fletcher, Ted (Darlington)	Macdonald, A. H.	Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Floud, Bernard	McGuire, Michael	Short, Mrs. Renée (W'hampton, N.E.)
Foley, Maurice	McKay, Mrs. Margaret	Silkin, Rt. Hn. John (Deptford)
Foot, Sir Dingle (Ipswich)	Mackenzie, Gregor (Rutherglen)	Silverman, Julius (Aston)
Foot, Michael (Ebbw Vale)	Mackie, John	Silverman, Sydney (Nelson)
Ford, Ben	Mackintosh, John P.	Skeffington, Arthur
Forrester, John	Maclennan, Robert	Slater, Joseph
Fowler, Gerry	McMillan, Tom (Glasgow, C.)	Small, William
Fraser, John (Norwood)	McNamara, J. Kevin	Snow, Julian
Fraser, Rt. Hn. Tom (Hamilton)	MacPherson, Malcolm	Steele, Thomas (Dunbartonshire, W.)
Freeson, Reginald	Mahon, Peter (Preston, S.)	Stewart, Rt. Hn. Michael
Gardner, Tony	Mallalieu, E. L. (Brigg)	Strauss, Rt. Hn. G. R.
Garrett, W. E.	Mallalieu, J.P.W. (Huddersfield, E.)	Swain, Thomas
Ginsburg, David	Mapp, Charles	Swingler, Stephen
Gordon Walker, Rt. Hn. P. C.	Marquand, David	Taverne, Dick
Gourlay, Harry	Marsh, Rt. Hn. Richard	Thomson, Rt. Hn. George
Gray, Dr. Hugh (Yarmouth)	Mason, Roy	Thornton, Ernest
Greenwood, Rt. Hn. Anthony	Mayhew, Christopher	Tinn, James
Gregory, Arnold	Mellish, Robert	Tomney, Frank
Griffiths, David (Rother Valley)	Mendelson, J. J.	Tuck, Raphael
Griffiths, Rt. Hn. James (Llanelly)	Mikardo, Ian	Urwin, T. W.
Griffiths, Will (Exchange)	Millan, Bruce	Varley, Eric G
Cunter, Rt. Hn. R. J.	Milne, Edward (Blyth)	Wainwright, Edwin (Dearne Valley)
Hale, Leslie (Oldham, W.)	Molloy, William	Walker, Harold (Doncaster)
Hamilton, James (Bothwell)	Moonman, Eric	Wallace, George
Hannan, William	Morgan, Elystan (Cardiganshire)	Watkins, David (Consett)
Harper, Joseph	Morris, Alfred (Wythenshawe)	Watkins, Tudor (Brecon & Radnor)
Harrison, Walter (Wakefield)	Morris, Charles R. (Openshaw)	Weitzman, David
Hart, Mrs. Judith	Morris, John (Aberavon)	Wellbeloved, James
Haseldine, Norman	Moyle, Roland	Wells, William (Walsall, N.)
Hattersley, Roy	Mulley, Rt. Hn. Frederick	Whitaker, Ben
Hazell, Bert	Murray, Albert	White, Mrs. Eirene
Healey, Rt. Hn. Denis	Neal, Harold	Whitlock, William
Henig, Stanley	Newens, Stan	Wilkins, W. A.
Herbison, Rt. Hn. Margaret	Noel-Baker, Francis (Swindon)	Willey, Rt. Hn. Frederick
Hilton, W. S.	Norwood, Christopher	Williams, Alan (Swansea, W.)
Hobden, Dennis (Brighton, K'town)	Oakes, Gordon	Williams, Alan Lee (Hornchurch)
Hooley, Frank	Ogden, Eric	Williams, Clifford (Abertillery)
Horner, John	O'Malley, Brian	Williams, Mrs. Shirley (Hitchin)
Houghton, Rt. Hn. Douglas	Oram, Albert E.	Williams, W. T. (Warrington)
Howarth, Harry (Wellingborough)	Orbach, Maurice	Willis, George (Edinburgh, E.)
Howarth, Robert (Bolton, E.)	Orme, Stanley	Wilson, Rt. Hn. Harold (Huyton)
Howell, Denis (Small Heath)	Oswald, Thomas	Wilson, William (Coventry, S.)
Howie, W.	Owen, Dr. David (Plymouth, S'tn)	Winnick, David
Hughes, Rt. Hn. Cledwyn (Anglesey)	Owen, Will (Morpeth)	Winterbottom, R. E.
Hughes, Hector (Aberdeen, N.)	Paget, R. T.	Woodburn, Rt. Hn. A.
Hughes, Roy (Newport)	Palmer, Arthur	Woof, Robert
Hunter, Adam	Pannell, Rt. Hn. Charles	Yates, Victor
Hynd, John	Park, Trevor	Zilliacus, K.
Irvine, A. J. (Edge Hill)	Parker, John (Dagenham)
Jackson, Colin (B'h'se & Spenb'gh)	Parkin, Ben (Paddington, N.)	TELLERS FOR THE AYES:
Jackson, Peter M. (High Peak)	Parkyn, Brian (Bedford)	Mr. Lawson and Mr. Grey.

NOES
Alison, Michael (Barkston Ash)	Goodhart, Philip	More, Jasper
Allason, James (Hemel Hempstead)	Goodhew, Victor	Morgan, Geraint (Denbigh)
Astor, John	Gower, Raymond	Morrison, Charles (Devizes)
Atkins, Humphrey (M't'n & M'd'n)	Grant, Anthony	Munro-Lucas-Tooth, Sir Hugh
Awdry, Daniel	Grant-Ferris, R.	Murton, Oscar
Baker, W. H. K.	Gresham Cooke, R.	Neave, Airey
Barber, Rt. Hn. Anthony	Grieve, Percy	Nicholls, Sir Harmar
Batsford, Brian	Griffiths, Eldon (Bury St. Edmunds)	Noble, Rt. Hn. Michael
Beamish, Col. Sir Tufton	Grimond, Rt. Hn. J.	Nott, John
Bell, Ronald	Gurden, Harold	Onslow, Cranley
Bennett, Dr. Reginald (Gos. & Fhm)	Hall, John (Wycombe)	Orr, Capt. L. P. S.
Berry, Hn. Anthony	Hall-Davis, A. G. F.	Orr-Ewing, Sir Ian
Bessell, Peter	Hamilton, Marquess of (Fermanagh)	Osborn, John (Hallam)
Biffen, John	Hamilton, Michael (Salisbury)	Osborne, Sir Cyril (Louth)
Biggs-Davison, John	Harris, Frederic (Croydon, N.W.)	Page, Graham (Crosby)
Birch, Rt. Hn. Nigel	Harris, Reader (Heston)	Page, John (Harrow, W.)
Black, Sir Cyril	Harrison, Col. Sir Harwood (Eye)	Pardoe, John
Blaker, Peter	Harvey, Sir Arthur Vere	Pearson, Sir Frank (Clitheroe)
Body, Richard	Harvie Anderson, Miss	Percival Ian
Bossom, Sir Clive	Hastings, Stephen	Peyton, John
Boyd-Carpenter, Rt. Hn. John	Hawkins, Paul	Pike, Miss Mervyn
Braine, Bernard	Heald, Rt. Hn. Sir Lionel	Pink, R. Bonner
Brinton, Sir Tatton	Heath, Rt. Hn. Edward	Powell, Rt. Hn. J. Enoch
Bromley-Davenport, Lt. -Col. Sir Walter	Heseltine, Michael	Prior, J. M. L.
Brown, Sir Edward (Bath)	Higgins, Terence L.	Quennell, Miss J. M.
Bruce-Gardyne, J.	Hill, J. E. B.	Ramsden, Rt. Hn. James
Bryan, Paul	Hirst, Geoffrey	Rawlinson, Rt. Hn. Sir Peter
Buchanan- Smith, Alick (Angus, N&M)	Hobson, Rt. Hn. Sir John	Rees-Davies, W. R.
Buck, Antony (Colchester)	Holland, Philip	Renton, Rt. Hn. Sir David
Bullus, Sir Eric	Hordern, Peter	Ridley, Hn. Nicholas
Burden, F. A.	Hornby, Richard	Ridsdale, Julian
Campbell, Gordon	Howell, David (Guildford)	Rodgers, Sir John (Sevenoaks)
Carlisle, Mark	Hunt, John	Roots, William
Carr, Rt. Hn. Robert	Hutchison, Michael Clark	Rossi, Hugh (Hornsey)
Cary, Sir Robert	Iremonger, T. L.	Royle, Anthony
Channon, H. P. G.	Irvine, Bryant Godman (Rye)	Russell, Sir Ronald
Chichester-Clark, R.	Jenkin, Patrick (Woodford)	St. John-Stevas, Norman
Clark, Henry	Jennings, J. C. (Burton)	Scott, Nicholas
Clegg, Walter	Johnson Smith, G. (E. Grinstead)	Sharples, Richard
Cooke, Robert	Jones, Arthur (Northants, S.)	Shaw, Michael (Sc'b'gh & Whitby)
Cooper-Key, Sir Neill	Jopling, Michael	Sinclair, Sir George
Cordle, John	Joseph, Rt. Hn. Sir Keith	Smith, John
Costain, A. P.	Kerby, Cant. Henry	Stainton, Keith
Craddock, Sir Beresford (Spelthorne)	Kimball, Marcus	Stodart, Anthony
Crawley, Aidan	King, Evelyn (Dorset, S.)	Summers, Sir Spencer
Crosthwaite-Eyre, Sir Oliver	Kitson, Timothy	Taylor, Sir Charles (Eastbourne)
Crouch, David	Knight, Mrs. Jill	Taylor, Edward M.(G'gow, Cathcart)
Crowder, F. P.	Lambton, Viscount	Taylor, Frank (Moss Side)
Cunningham, Sir Knox	Lancaster, Col. C. G.	Teeling, Sir William
Currie, G. B H.	Langford-Holt, Sir John	Thatcher, Mrs. Margaret
Dalkeith, Earl of	Legge-Bourke, Sir Harry	Tilney, John
Dance, James	Lewis, Kenneth (Rutland)	Turton, Rt. Hn. R. H.
Davidson, James (Aberdeenshire, W.)	Lloyd, Ian (P'tsm'th, Langstone)	van Straubenzee, W. R.
d'Avigdor-Goldsmid, Sir Henry	Lloyd, Rt. Hon. Selwyn (Wirral)	Vaughan-Morgan, Rt. Hn. Sir John
Dean, Paul (Somerset, N.)	Longden, Gilbert	Vickers, Dame Joan
Deedes, Rt. Hn. W. F. (Ashford)	Loveys, W. H.	Walker, Peter (Worcester)
Digby, Simon Wingfield	Lubbock, Eric	Walker-Smith, Rt. Hn. Sir Derek
Doughty, Charles	McAdden, Sir Stephen	Wall, Patrick
Drayson, G. B.	MacArthur, Ian	Walters, Dennis
du Cann, Rt. Hn. Edward	Maclean, Sir Fitzroy	Ward, Dame Irene
Eden, Sir John	Macmillan, Maurice (Farnham)	Weatherill, Bernard
Elliot, Capt. Walter (Carshalton)	Maddan, Martin	Wells, John (Maidstone)
Eyre, Reginald	Maginnis, John E.	Whitelaw, Rt. Hn. William
Farr, John	Marples, Rt. Hn. Ernest	Wills, Sir Gerald (Bridgwater)
Fisher, Nigel	Marten, Neil	Wilson, Geoffrey (Truro)
Fletcher-Cooke, Charles	Maude, Angus	Winstanley, Dr. M. P.
Foster, Sir John	Maudling, Rt. Hn. Reginald	Wolrige-Gordon, Patrick
Fraser, Rt. Hn. Hugh (St'fford & Stone)	Mawby, Ray	Wood, Rt. Hn. Richard
Galbraith, Hn. T. G.	Maxwell-Hyslop, R. J.	Woodnutt, Mark
Giles, Rear-Adm. Morgan	Mills, Peter (Torrington)	Worsley, Marcus
Gilmour, Ian (Norfolk, C.)	Mills, Stratton (Belfast, N.)	Wylie, N. R.
Gilmour, Sir John (Fife, E.)	Miscampbell, Norman
Glover, Sir Douglas	Mitchell, David (Basingstoke)	TELLERS FOR THE NOES:
Glyn, Sir Richard	Monro, Hector	Mr. Pym and Mr. R. W. Elliott.

Bill accordingly read the Third time and passed.