IRON AND STEEL BILL

HC Deb 11 July 1969 vol 786 cc1734-64

Order for Third Reading read.

Motion made, and Question proposed, That the Bill be now read the Third time.

11.7 a.m.

Sir John Eden (Bournemouth, West)

We have begun proceedings on the Bill a little earlier than I had anticipated. I have little doubt that the Minister, when he was making his Second Reading speech two months ago, thought that this Measure would glide swiftly and effortlessly on to the Statute Book. It has turned out differently. From the outset we on this side of the House have fully recognised the importance of the Bill and although it was certainly not our aim to prevent it becoming law, we were determined to give its main features close and careful examination.

We are sorry that the Minister did not accept any of our Amendments, it would have made it a much better Bill had he done so. That was not for want of trying on our part. My hon. Friends who served on the Committee did an excellent job; they fulfilled their responsibilities in a thoroughly capable manner and I am most grateful to them. By comparison with the skill and expertise displayed by my hon. Friends the Ministers in charge of the Bill appeared to be strangely ill-equipped. Many of our questions were left unanswered. They appeared either not to know or not to care.

Sometimes to our regret, when argument failed they turned to abuse. We got the impression that they were irritated that anyone should dare to question their Bill. So irritated were they that on the last morning of all absurdities the Minister found it expedient to move a timetable Motion. He was in a hurry and wanted to get his Bill out of the way. Both the Minister and the Parliamentary Secretary from time to time resorted to the well-worn tactic of implying that our criticisms were against the Corporation. That is not so. We are suspicious of the motives and machinations of this Government. Our criticisms have been directed not against the men and management of the British Steel Corporation, but against the powers under the Bill which the Minister seeks for himself.

Although Ministers came ill-prepared, they were accompanied by a veritable deluge of documentation, all ostensibly in support of the Bill. The only trouble was that not one document seemed to agree with the other. No set of figures seemed to tally with any other. There was enormous confusion over the conflict in the figures which were made available, so much so that the Parliamentary Secretary gallantly tried to come to our rescue by producing yet a further document. Sadly, the confusion still persists. Perhaps before we leave the Bill the Minister will be able to clear up one or two further points so that we know the direction in which the Bill is likely to take the Corporation.

The latest paper, courteousously produced by the Parliamentary Secretary, was designed to shed light and explain discrepancies. It certainly helped a little, but it did not, for example, satisfactorily explain either the mysterious £44 million of unaccounted borrowing, nor the £40 million of loans referred to by the Chief Secretary on Second Reading, nor the £60 million mentioned in paragraph 11 of Cmnd. 3995, the National Loans Fund White Paper, nor does it give a break down of the dividend figures which the Minister produced in his memorandum accompanying the Bill, Cmnd. 4022.

Further, in spite of all our efforts to get at the truth, we still do not know the full extent of the Corporation's long-term borrowing. We do not know whether it will be £157 million as given to me in a Written Answer on 10th June, or £176 million as appears in the Corporation's publication "Finance for Steel," or £200 million, the figure given by the Minister in Committee.

We still do not know what will be the ratio of internal financing—that is to say, the investments grants and depreciation generated by the Corporation. In Committee, the Parliamentary Secretary made it 50 per cent. "Finance for Steel" shows a ratio more like 75 per cent. Although we ultimately dragged from the Minister the fact that the rate of interest on fixed capital debt is 6.5 per cent., we still do not know the nature of the financial target or the criteria by which the Corporation's performance is to be judged.

You will see from that, Mr. Speaker, that inevitably we have been left in a state of exasperation that as a result of all our probing we do not yet have the true facts of the situation. These are all serious matters, and it is not to be wondered that we are still concerned that the Bill was badly presented from the outset. If the Ministers had taken more trouble, they would have saved a lot of time.

The one thing which is certain about the Bill is that it enables yet another nationalised industry to have a substantial part of its capital debt reduced. Seven hundred million pounds of the liabilities arising out of the Act of nationalisation are to be converted into variable interest capital. One of the reasons given for this exercise by the Government is that the industry operates in an internationally competitive atmosphere. I find this rather strange, particularly when we recall that during the passage of the 1967 Act one of the principal justifications for nationalisation was the Government's claim that there was no competition in the steel industry, so they created a State monopoly. Here they are, two years later, asking Parliament to pass a Bill designed to help them enable their own State industry to take on as many as possible, or as many as convenient, of the trappings of private enterprise.

As a result of our efforts in Committee and on Report, it has been clearly underlined that the concept of public dividend capital will not of itself make the Corporation competitive. There will be no change of ownership as a result of Clause 2. There will be no true equity. Nor, no matter how anxious the Corporation may be to model itself on the private sector, can it ever be regarded as a normal joint stock company.

I do not blame the Corporation for wanting it otherwise. I do not blame it or its management for wanting to model themselves as much as possible on the private sector. In fact, I strongly approve of their desire to become fully commercial. But sadly, as hon. Members opposite so often reminded us, the Act of nationalisation is passed and steel has fallen victim to Socialist dogma. Having Ministers and their civil servants constantly breathing down the back of their necks must be infuriating and time-consuming for the Corporation's managers. That is one of the penalties of nationalisation, and It underlines the senseless folly of the whole exercise.

One of the more miserable consequences of the Bill is that it marks the demise of the public companies—the grand old names of steel. With their disappearance goes the obligation to keep separate accounting procedures alive. Although the future shape of the industry is still not quite clear, the intention has been spelled out. The result of what has been described as the greatest merger in manufacturing industry is now to be taken further on the road towards a massive unified structure. It therefore seems likely—in fact, it is certain—that in some form or other monopoly product grouping will emerge and will take the place of the old public steel companies.

The Corporation will, I hope, ensure that, whatever the future pattern of the industry may be, the identification of the groups and their accountability is no less clear that would have been the case for public companies. As the Corporation recognise in its reports, many people have a justifiable interest in its affairs. In these days, when full disclosure is very properly required of private sector companies, we have a right to expect even greater openness from a nationalised industry.

The Minister claims that the Bill is necessary to set the Corporation on its way to greater competitiveness and commercial orientation. In defence of his proposals, he has often spoken of the cyclical nature of the industry. Our hope is that the trend will long continue to be upwards. We do not expect all the problems to be sorted out at once. Doubtless there will still be many difficulties to overcome and many tough battles lie ahead of the industry. But we know that, whatever may be the circumstances in which they find themselves, the men in the industry, with their traditional skill and ingrained enterprise, will spare no effort to make their product competitive in the markets of the world.

Although during the passage of the Bill we have sometimes found it necessary to say harsh things about the Government, let me make it clear beyond any doubt that we all wish nothing but success for British steel.

11.20 a.m.

Mr. Donald Anderson (Monmouth)

I rise briefly to bless this useful Bill on its way as one that will provide greater flexibility to the British Steel Corporation by means of a new financial structure and paves the way for product divisions by vesting the total assets of the existing companies in the Corporation itself.

On Second Reading, my right hon. Friend said that the justification for public dividend capital for the B.S.C., as in the case of B.O.A.C., was that it was a viable commercial undertaking and many of us on this side will be looking carefully at the decisions over the next years, hoping that they will be taken against a background of the Corporation being an increasingly viable commercial concern.

Nationalisation is not a dogma, but an opportunity for rationalisation. Hard political decisions need to be taken in the industry. There are all sorts of temptations to yield to regional pressures, as in the case of the Ravenscraig-Llanwern decision in the 1950s. This is a basic industry and we cannot afford to make it a "lame duck". I am confident that my right hon. Friend and the leaders of the industry will have both the urge for efficiency and the quality of humanity which is necessary to ensure that our national steel industry has a rosy future.

I want to refer to the emergence of product divisions and to speak particularly of the position in South Wales, an area which I know best. I have mentioned this point to my right hon. Friend on several occasions. There is some feeling that the regional grouping in South Wales is too Port Talbot-orientated, where the headquarters of the region is sited. Whatever justification there may be for this, there is some deep feeling among both management and workers involved in the South Wales companies.

Presumably, one of the headquarters of the new product divisions, the sheet division, will be sited in South Wales—there would be an eruption if it were not. I hope that, with this new opportunity, my right hon. Friend will try to ensure that the headquarters is not sited either in Port Talbot, or in Llanwern in my constituency. I suggest somewhere like Cardiff, which is equidistant from these two major centres of sheet production, so that the decisions taken are not only objective and fair but are seen to be so by everyone in the South Wales industry.

I hope that my right hon. Friend will grasp the new opportunity and give this symbolic sign of the objectivity of future investment in the sheet steel sector in South Wales.

11.23 a.m.

Mr. James Scott-Hopkins (Derbyshire, West)

The hon. Member for Monmouth (Mr. Anderson) demonstrated why we on this side feel that the nationalisation of steel was a wrong decision.

Mr. Speaker

Order. This is not the nationalisation of steel Bill. We are on the Third Reading of the Iron and Steel Bill. Debate must be on what is in the Bill.

Mr. Scott-Hopkins

The hon. Member was praising the Bill and the reconstruction of the industry, and I was suggesting, Mr. Speaker, that his argument demonstrated why we consider nationalisation of steel to have been wrong.

The hon. Member was pleading for South Wales. He asked the Minister to take a decision and to influence the British Steel Corporation in its investment plans, and this is relevant to Clause 3. His speech underlines our reason for opposing nationalisation. We do not believe that there should be political decisions here. It is not for the Minister to take decisions. They must be taken by the Corporation in the light of the economic circumstances according to the best management advice.

Mr. Donald Anderson

Will the hon. Gentleman accept that the same argument should have applied to the Ravenscraig-Llanwern decision in the 1950s?

Mr. Scott-Hopkins

Decisions on investment should always be taken on the right commercial grounds. Mistakes are made, but mistakes will happen time and again under the existing set-up. The Bill does nothing to put matters right but makes the situation worse.

My hon. Friend the Member for Bournemouth, West (Sir J. Eden) spoke of our good wishes for the Corporation in future. Throughout the passage of the Bill, suggestions have been made by hon. Members opposite that we were trying to blacken the name of the Corporation and make life difficult for it. That is not so. All through we have been trying, in circumstances we regret, to make the best for the Corporation of a very bad business.

Clause 2 contains one of the most important provisions. Public dividend capital is brought in to the extent of £700 million. The Minister has still not said in what way the decisions are to be taken by him on his directions to the Corporation to pay interest on that capital. The point has been made several times that the proportion between £700 million and the fixed-interest loan capital was something that the Minister wished to maintain, but in Clause 4 he has the power to transfer from reserves to capital under Clause 2 at his own discretion. The proportion between the two can be varied at will. I do not agree that this is the right way of creating an entity of the Corporation.

Mr. Eddie Griffiths (Sheffield, Brightside)

How can the hon. Gentleman reconcile the two statements he is making? On the one hand, he says that the Government or the Corporation are trying to write off £700 million—to lose it in the balance sheet and get rid of it—and, on the other, that the Minister will decide what rate of interest is to be paid on it? How can one pay an interest on something which does not exist? The hon. Gentleman must decide whether this £700 million is being written off or whether it is, as is stated in the Bill, public dividend capital.

Mr. Scott-Hopkins

The Minister has the right, in consultation with the Corporation, to decide whether, in any given year, the Corporation shall pay interest on public dividend capital. If he decides, in the light of what it tells him, that there is no need, the Corporation will pay no interest to the State at all. This state of affairs could arise year after year if the Minister so decided. Whether or not he is advised by the Corporation, under Clauses 2 and 5, the decision is left entirely in his hands.

Therefore, this is another form, if the Minister requires it, of writing off the capital for those years where no interest is paid because of his own decision. If the Minister has decided that this would be fixed interest capital, the Corporation would have had a duty to pay a rate of interest on that capital debt and would have had clear knowledge of how much its liability was.

My hon. Friend talked about the cyclical nature of the industry and how he hoped that the swing is now upwards. We hope that that will continue for many years. If that is so, the Corporation will have no difficulty in paying interest on fixed interest capital. Then it would have known exactly the amount.

However, the whole position was completely bedevilled halfway through our discussions in Committee by the decision of the Government to accept the Prices and Incomes Board Report and to cut back on the amount of the price increase for which the Corporation had asked so as to be able to be in a position to generate enough capital to refinance the renovation of its existing plant and expansion of plant.

It looks now, from the figures which were given to us in Committee by the Parliamentary Secretary—and we are grateful to him for having given them to us, although they came a little late, at least they came—as though the Corporation will have a great struggle to do these things. It looks as though the amount of interest which, under Clause 2, the Minister will be able to authorise on p.c.d., will be remarkably small. I would suggest that, under Clause 3, of the additional £250 million tranche which the Government are allowing to the Corporation to borrow under the borrowing powers there, the first £100 million is almost taken up at the moment, and because of the cut-back the Government have accepted, because of their commitment to the Prices and Incomes Board Report, the additional amount authorised under Clause 3 will very soon be taken up as well, because the Corporation will not be in a position to generate sufficient self-financing to do the expansion and renovation of its plant which it wants.

Indeed, if it is to follow the lines which the hon. Member for Monmouth was suggesting and is to bow always to political decisions as to investment, then, indeed, it will be in grave trouble, and it will not be very long before the right hon. Gentleman—or, perhaps, somebody else—will be back to the House asking for a further authorisation in a Clause similar to Clause 3 to increase and expand the borrowing powers.

As I said, I wish to be brief, so I shall not dwell at length on the powers to borrow overseas and I certainly do not wish to repeat the arguments we had on that matter, but I think that the Minister gave a glimmer of hope that he agreed about this, that the Corporation will be able to expand its operations in overseas countries. I entirely agree with my hon. Friends that if it is to be allowed, as indeed it is, under these Clauses, to borrow capital overseas that that capital should not be employed back here in this country—for all the reasons already given, the increase in the money supply, the inflationary tendencies, and so on.

All this I entirely accept and agree about. I agree that it should be allowed to do this borrowing overseas on condition that it uses the money in overseas countries.

Mr. Speaker

Order. That Amendment was defeated the night before last, and so is not in the Bill.

Mr. Scott-Hopkins

But as you well know, Mr. Speaker, there is power for the Corporation, with the consent of the Minister and the Treasury, to borrow in overseas markets now. All I am saying now, at this closing stage of the Bill, is that I hope that the Corporation, if it is allowed to so do, as it is allowed to so do, with the consent of the Minister, to do this borrowing, will, having borrowed money in overseas countries, invest the money in overseas countries.

The Corporation is a worldwide trading organisation and will probably build up its trade and investment near the places where its raw materials are, and I believe that there is a great future for the Corporation in this. Perhaps in days to come the ordinary public will be able to hold a share, a stake—a dominant stake—in B.S.C. In the meantime, I hope that the Minister will encourage B.S.C. to do this and I believe it will have a great future if it so does.

In conclusion, we have had our difficulties over the Bill in Committee, and the right hon. Gentleman and the Parliamentary Secretary were sometimes not fully aware of all the facts. We have always got the facts after we asked for them, but that has sometimes taken a long time to get them, and we have had muddled and long debates because we lacked the facts and figures necessary for clarity of the debate. Now we have come to the last stage of the Bill, but before we pass it and it leaves this House I will only say to the Minister and to the Government that I think they have made a mistake. I think that the Government and B.S.C. will come in future to regret the way in which the Bill has been drafted and the capital has been divided, and the percentage of public dividend capital instead of fixed-interest capital. They will regret that the names of the old companies in the industry are being abolished, but I join my hon. Friend the Member for Bournemouth, West in wishing B.S.C. the best of good fortune in future, operating, as it will be, under the gravest of political difficulties.

11.35 a.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I said on Second Reading that this was a sloppy Bill sloppily presented. I believe I was wrong. It is an extremely sloppy Bill extremely sloppily presented.

The Joint Parliamentary Secretary to the Ministry of Agriculture, who is now leaving the Chamber, has been here to see how best to obtain £700 million cheap capital, which he could well do with to put into agriculture, and I am not sure that it might not be a more profitable investment were we to put the money into that great, prosperous, hardworking industry. I say this because I think it goes to the root cause of what is wrong with this Bill. It is a question of allocating resources.

I believe the reason for the British economic crisis is the layer upon layer of sloppy, bad Bills of this sort which have been placed on the Statute Book, with endless political decisions being taken about the allocation of national resources, and it is in that context that I want to make one final criticism of what is proposed in the Bill.

The Minister seems to assume that the manufacture of steel on an ever-increasing scale is a divine right of this country and something which is as important as Westminster Abbey and will last as long. If he had thought the same thing about the manufacture of hansom cabs in the 18th century we would, presumably, still have an industry for the manufacture of hansom cabs. I do not know; I do not pretend to have the slightest idea whether in fifty years' time the steel industry will be or should be greater or smaller than it is at the present time. It might cease to exist because new products will have been invented. It may be that steel will be made in Australia or at Dunkirk or some other place where conditions will be more favourable.

The point I want to make is that we must, in the public ownership of these industries, have a system whereby decisions of this sort can be taken correctly, and that is why, like my hon. Friends, I have argued that the decisions must be left to the industry and not taken away from it, for they are commercial decisions, and contrary to what the hon. Member for Monmouth (Mr. Anderson) was suggesting, that it is a good idea for some reason that the Corporation should have its offices in Cardiff—for political purposes rather than the consideration that the correct commercial decision should be taken.

Mr. Anderson

Not political. I said psychological purposes for the good of the South Wales industry—not for political purposes.

Mr. Ridley

The hon. Member must learn to find out the rate of return on capital investment in psychological reasons. That is the point, and what we want to have is a Steel Corporation taking its decisions as commercial decisions and not just ones which we as politicians think are good ones.

Mr. Anderson

Profits?

Mr. Ridley

The use of public dividend capital is likely to be a step in the wrong direction because the reason why we should invest money and therefore be able to pay dividends on the investment in steel is not that it is a good idea to have a steel industry or because it saves imports, or anything like that, but that it is a profitable thing to do. Therefore, to give the British Steel Corporation a type of capital which enables it to shirk the profitability aspects of what it is doing is a mistake.

I know that the B.S.C. is subject to the 8 per cent. discounted cash flow test on all new investments, but what I cannot understand is why this same test should not apply to the investment of new public dividend capital rather than just to the making of investments in general. Supposing the percentage of 8 per cent. were the correct rate, which patently it is not, then we should be told in advance that the Steel Corporation should not make investments, even in the medium of p.d.c., unless they can yield the 8 per cent. It is fatuous to give the B.S.C. capital and not to say in advance what return must be made upon it and to say, "After you have had the experience of employing the capital, we will jointly decide how much you should pay."

When one adds to that the farce which we uncovered in Committee that corporation tax is to form part of the declared rate of interest, one realises how very far we have come from proper economic decisions about the allocation of scarce national resources.

There is a capital famine; capital is costing up to 11 per cent. in the markets; yet here are we solemnly going through the paraphernalia of passing this Bill through the House to provide £700 million of scrace capital to make investments for political reasons, without having the faintest idea whether we shall get any return or whether this has been a proper investment. It is not a question of dogma about whether we favour private or public investment, or of whether we knock one system or another, or of patriotism; and all those ridiculous features of the Parliamentary Secretary's about how we were trying to "do in" British steel were off the point. The point is whether this country should or should not make certain investments, either through the public or the private sector.

Where nationalisation has so far failed the nation, and failed it at tremendous cost, is in not having devised a means of deciding what is the proper allocation of capital within our national investment structure. Those of us who fought the original Steel Bill predicted that this would be so. We have little thought that, after such a desperately short time, we should be proved right, and that this sorry, miserable, wretched Bill, which will only contribute to the British financial crisis, would be necessary.

11.42 a.m.

Mr. Patrick McNair-Wilson (New Forest)

The Bill is an unsatisfactory Bill. On Second Reading I described it as damaging, dangerous and deceitful. After having followed the Bill for some weeks, my views are totally unchanged. Indeed, it is fair to say that the Bill poses more questions than it answers, and here we are, at Third Reading, none the wiser, after having been through a very long Committee stage.

One reason for this has been the total intransigence of the Minister and his Parliamentary Secretary throughout all the debates. They have been sticking to a very tightly worded brief which has been handed to them. They have both made it clear beyond doubt that they are neither of them steel men, and so through all our debates they have never been fully aware of the problems of the industry and have been unable to answer the questions put to them by hon. Members from this side.

The Bill will become law carrying with it some very dangerous proposals. First, it gives the corporation the widest possible borrowing powers. It is frightening to realise that in 1967 the corporation set off with a borrowing limit of £300 million: last year that limit increased to £400 million, and, after the passing of the Bill, there will be a possible limit of £650 million—and this in a very short period of nationalisation.

What worries me is that we are passing this borrowing power with no evidence how the money is to be spent. Those of us who follow the steel industry, and perhaps have been in it, will realise that it is just possible—I hope not—that the top of one of the many cycles which the industry goes through has been reached, and perhaps even passed, and some of us may have noticed yesterday that steel production is beginning to tail off. I hope that this is only marginal, but it must be considered, and the Minister must satisfy himself, and indeed the country, that £650 million worth of taxpayers' money will be needed at a time when the market situation for steel—

Mr. Eddie Griffiths

The hon. Gentle-month has said that steel production is tailing off, but this is misleading the House. The fact is that the boom which has been going on since September is continuing for much longer than the so-called experts of the other side anticipated.

Mr. McNair Wilson

I take the hon. Gentleman's point. We know how misleading facts and figures concerning steel production can be, but on the figures as they are known—and he no doubt read the figures yesterday with the same despondency as I did—the hon. Gentleman must have noticed that the graph is beginning to fall. In this situation, should we be advancing an opportunity to borrow enormous sums of money?

At no time during our discussions has an investment programme for the industry been produced, no targets have been produced and we have no evidence why this money is required. It would be fair to say that by giving the Bill a Third Reading we are passing a blank cheque to the Minister and the Corporation to do as they wish without identifying the areas where the money is to be used.

I am also concerned about foreign borrowing. The indebtedness of this country is no secret. The Minister was quick to brush this aside in Committee, but I am concerned that it would be possible to take up all the borrowing powers in foreign currency. I know that the Minister described this as completely hypothetical and not worth consideration, but I do not think that we should let it go at that. I should have liked to see in the Bill a check on the level of borrowing in foreign currency. After all, this country has short-term repayment obligations of about £4,117 million, which must be paid back at the latest by 1976. That is a very great deal of money, and for a nationalised industry to be able to wander round the European money market adding to the total indebtedness of Britain is an extremely dangerous exercise. To have no check on the level of these borrowings is folly in the extreme. I cannot understand why it is not possible to have an arrangement whereby when these borrowings take place the Minister has to come to the House and explain why the money is required.

Mr. Speaker

Order. The hon. Member must not stray in that direction on Third Reading.

Mr. McNair-Wilson

I take the point Mr. Speaker.

I turn now to the controversial area of the Bill which centres around Clause 8. Clause 8 seeks to break up the company structure. This has been discussed at length in Committee, and we know that this will affect good will, morale, exports and so on. I want to say something which is more important and which I hope will be helpful to the Minister. The disappearance of the company structure is part of the move from geographical areas to product groups. It may be that in the manufacture of steel the product groups will be more effective, but the mere production of steel in itself is not enough.

There are those who are very concerned that when the divisions have been split up into product groups other areas of industry may want to buy sheet from one area, structure steel from another area, and universal beams from another and they are worried that there will be no co-ordination. I hope that when the Minister has set up the product groups he will make sure that there is proper marketing co-ordination between the groups. We do not want production groups frantically producing individual products with no proper idea of marketing.

One has experience in the corporation at present of a great lack of understanding at the right levels of marketing procedures. I do not blame them for this since they are confused by the many changes which they have had to face. I warn the Minister that several industries are now looking at materials other than steel. If the marketing of these products is not right, the other industries will turn away to those other products.

Clause 8 raises even more important considerations. It contains the genesis of the whole Bill—the raw meat of political philosophy. I should like to quote what the Minister said on the Clause on 1st July, since he put it so well. When referring to myself—he has always been most courteous and generous in his remarks to me—he said The hon. Member for New Forest is right to believe that when the Bill has gone through Committee, it will be much more difficult for steel to be denationalised. It will be more difficult for steel to be unravelled. Then he went on to say: It is wrong that hon. Members opposite, for narrow, mean, doctrinaire political reasons should keep slanging the name of British steel …" Here we have typical Tory reasoning: resistance to change; hesitant to see a major national industry go forward.—[OFFICIAL REPORT, Standing Committee A, 1st July, 1969, c. 426.] Heady stuff, not a dry eye in the House! The Minister is at his best on such an occasion, and I shall return to what he said in a moment.

Mr. John Ellis (Bristol, North-West)

The hon. Gentleman is not doing too bad either.

Mr. McNair-Wilson

I am grateful to the hon. Gentleman. The Minister was wrong. It is not our intention at any time in these discussions to be hesitant or resist change. But also we do not wish to be foolhardy, and we are unconvinced, cautious and concerned. We are anxious that in this great industry, which has not long been in Government hands, the right steps should be taken to make it effective and viable.

The Minister in these debates has shown himself to be an admirable politician. It is in those political moments that he shines brightest. But he is not a steel man and he is not, I am sure he will admit, a businessman. My cricisim of the Bill is that we are passing into law legislation to give the Minister even greater control over the industry. We shall be cutting right across the very thing that the Minister and the Chairman of the B.S.C. constantly tell us they are seeking to do, and that is to make the industry commercial.

We saw from the N.B.P.I. Report on the prices of steel just how political com mitments can get in the way of commercial judgment. No Minister will starve a nationalised industry of money regardless of performance. Therefore, all the commercial parameters that one tries to set up are meaningless.

The hon. Member for Newport (Mr. Roy Hughes), who has now left, pointed out that hard political decisions would have to be taken. These are decisions that I do not want to see taken. I want to see hard, commercial decisions taken rather than political ones. The fact that we have nationalised the industry is not in itself going to make it more effective. We must produce effectively and sell competitively. I am much more anxious to see the industry running on commercial lines than on lines which are suitable to and appreciated by hon. Gentlemen opposite.

I want to see the industry once again given an opportunity to be commercial. I want to see the industry once again taken out of the maw of Socialist politicians and run once again by people who understand steel. Politicians are excellent people in the right place. The wrong place for them is masquerading as tycoons and captains of British industry.

I congratulate my hon. Friend the Member for Bournemouth, West (Sir J. Eden) on his magnificent speech, and I echo his words. I believe in British steel with a small "s". I do not believe in the British Steel Corporation.

11.57 a.m.

Mr. David Lane (Cambridge)

I take part in this debate with great good will towards the industry but with grave fears about the effects of nationalisation. I wish to comment on three provisions in the Bill.

Clause 3 makes this large increase in borrowing powers while we are still uncertain what these millions of pounds will be used for. I know that the development programme is now before the Minister and raises crucial and exceedingly difficult issues, but we have a right to demand of the Corporation and of the Government that these issues should be settled soon.

It is nearly two years since the industry was nationalised. During this time there have been too many leaks and rumours and too few hard decisions. Only this week the latest rumour is about a new port development on Teesside to serve the industry. I believe this would be a correct priority if the rumour is true, but we should like to know the situation as soon as possible so that we can all see where we stand.

I believe that the corporation and the Government will be right to develop two or three major ports of this type for use by the steel industry and other industries. They will be right to concentrate future expansion at a relatively few centres of steel-making with natural advantages. If they do this they will continue a trend which started many years ago under private enterprise. Whichever way the decisions go, let us have bold and rapid decisions to end the uncertainty and let people inside and outside the industry know where they stand.

Turning to Clause 5, I welcome the more specific financial duty which on the face of it is laid upon the corporation. It is unsatisfactory, however, that we are parting with the Bill today having been given no idea what target is to be set. I make no apology for returning to this matter today although we spent a good deal of time on it in Committee and on Report. If we are to believe in the intentions of the Government to impose a strict discipline on the corporation, it is imperative that this target should be set and published soon. If this is not possible for the Government before the House rises, surely they should do so and let us know what it is before the end of the Corporation's financial year in September.

Thirdly, Clause 8 paves the way for the disappearance of the publicly- owned companies. We have had nothing but blind prejudice and contemptuous sneers from hon. and right hon. Gentle- men opposite when they have referred to private enterprise. The record should be put straight now by paying tribute to the achievements and vision of those who have worked in these and other companies before, during and since the war. These are companies such as Richard Thomas and Baldwins, the Steel Company of Wales, Stewarts and Lloyds, John Summers, United Steels, Guest Keen, Dorman Long, South Durham, Consett and Colvilles. I pay tribute also to the men and women, who were formerly my colleagues, in the central organisations of the industry.

With the disappearance of these companies, the powers of the Corporation will be increased still further. Fears are being felt that, out of all the haze of uncertainty, the Corporation is emerging as an insensitive and over-centralised colossus. Let me give three examples of this disturbing trend. Only this week a leading executive member of the National Union of Blast Furnacemen said: We feel that the British Steel Corporation is so busy planning its own future that it has little concern for ours. Secondly, there have been disturbing reports, as the trend towards centralisation has developed, of lower morale among the men on the job, doing the work of planning, making and selling steel. There have been reports that their scope in decision-making is being restricted by the increasing power going to the centre. There are reports of experienced salesmen leaving for other industries. This point was raised in Committee, but there was no comment from the Government.

Perhaps most important is the attitude of the corporation towards steel consumers, unfortunately exemplified by a current advertisement which appeared in the newspapers only yesterday—"Steel can and others can't." It is astonishing that that advertisement was apparently prepared and produced without any consultation with the main user of tinplate and producer of cans, who protested a few days ago that the advertisement should appear at a time when the supply of tin plate is substantially below demand. My hon. Friend the Member for New Forest (Mr. Patrick McNair-Wilson) has referred to the attitude and fears of consumers.

Mr. Ridley

I have not yet seen the advertisement, but is my hon. Friend sure that it does not say "Steel can get p.d.c., and others can't."?

Mr. Lane

I am sure that that will be the new version of the advertisement, if it has to be withdrawn for good reasons. If that episode, possibly small, is typical of the attitude towards consumers, then they have every right to be disturbed.

While we welcome recent production records we cannot shut our eyes to these current examples of disturbing trends in the industry. Unless the corporation shows itself more aware of the feelings and needs of those outside itself, the future for many working in the industry and for those who depend on it will be one of disappointment and frustration. I hope that the industry will flourish. I am sure that it will flourish better under a régime which gives greater choice to consumers, in which there will be less burden on the taxpayer and more discipline upon the industry through the re-injection of private capital.

12.5 p.m.

Mr. David Crouch (Canterbury)

The right hon. Gentleman the Minister and the hon. Gentleman the Parliamentary Secretary are particularly lucky to have had so much good advice from this side of the House—I cannot recall a Friday morning when a Minister has been so privileged to have had such a wealth of advice from hon. Members representing such interesting places as Bournemouth, the New Forest, Cambridge, Cirencester and Tewkesbury, and he might even get some advice from Canterbury. I hope that the Minister will take note of the serious tenor of the advice that he has been receiving, expressed so forcibly by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley).

It has been given to him sincerely, in the hope that he will realise that, as the sponsoring Minister for an enormous new nationalised industry, he has not a political responsibility but a responsibility to safeguard a national investment of taxpayers' money. I am talking about the commercial disciplines and I hope that the Minister will remember that we cannot consider this industry without bearing such disciplines in mind.

The main purpose of the Bill is to bring about the restructuring of the Corporation's finances. The Minister is asking us to accept an increased borrowing of £250 million and the use of £700 million, possibly without the payment of interest. These facts must be said slowly so that they penetrate outside this House, so that the full meaning is realised and it is appreciated how big an operation this is and how much money is involved. I join with all those who have wished the Corporation well. Its success will influence very much other parts of British industry.

I strongly agree with the views expressed by my hon. Friends that it is essential on all sides of our industry, and particularly in the nationalised industry sector, that these same commercial disciplines should apply. The hon. Member for Monmouth (Mr. Anderson) spoke about the psychological effect on management and workers of siting headquarters in a particular part of the country. The most important psychological effect on a nationalised industry has to do with whether it will be subject to the full commercial disciplines and so make the right commercial decisions.

The psychological influences which might come from this restructuring of the Corporation's finances could make the Corporation's management feel that these commercial disciplines were no longer as strict as they should be. The Minister must remember that he is only the sponsoring Minister and it is his Chairman, beneath him, who should be required to react to these disciplines. I was among those who served for a year on the Committee which eventually produced a report on the responsibility of the nationalised industries to the Government, to their Ministers. This report said that the nationalised industries, if they are to serve the Minister, must become more commercially orientated and less politically orientated.

Only yesterday, I heard that British Railways were now running at a slight profit. How? It is because the Government have picked up the tab, the cost of the social obligations. I do not object to that. In the Steel Corporation the Government must not "pick up the tab" and allow the Corporation to operate for as long as it may like without paying interest on capital, and able to come back for more taxpayers' money.

I hope that the Minister will at least acknowledge that he has a heavy responsibility and will realise that this side of the House and the whole nation will be watching the opportunity which he can give to the industry to operate successfully in a commercial manner.

12.10 p.m.

Mr. Eddie Griffiths (Sheffield, Brightside)

It is always a privilege to make a contribution in a debate on the steel industry. Like hon. Gentlemen opposite and my hon. Friends, I welcome the Bill.

I am quite sure that the hearts of steel men in Sheffield, Scotland and on the North-East Coast will be gladdened when they read of the concern for their welfare and future which has been expressed by the hon. Members for Bournemouth, West (Sir J. Eden), New Forest (Mr. Patrick McNair-Wilson), Cirencester and Tewkesbury (Mr. Ridley) and Canterbury (Mr. Crouch).

Mr. Patrick McNair-Wilson

Reference was particularly made to the New Forest. I hope that they will be concerned, because in the New Forest we have a very large industrial steel-using area, particularly in the construction of the Fawley power station. The Minister will know of the delays that we have had in the supply of structural steel to that power station.

Mr. Griffiths

Obviously, the steel men will be gladdened to know that they have been judged and that their future has been predicted from the consumers' point of view. I do not like the word "consumer". In the steel industry it has always been "customer". I hope that my right hon. Friend will take this to heart and that the B.S.C., in its future activities, will not think of its customers as consumers, but will give them the same sort of efficient treatment that they have had in the past.

The steel industry has a very proud record. The 250,000 workpeople in the industry do not want charity. Hon. Gentlemen opposite have talked about £700 million being wiped out. I hope that my right hon. Friend will see the Steel Corporation gives an adequate return on its capital debt. As Lord Melchett has said on many occasions—and, indeed, if the Report of the National Board for Prices and Incomes had been rejected and price increases had been allowed—with the buoyancy in the industry at the moment an amount of about IS per cent. could have been put on the industry, as it has in the past in some works.

I hope that my right hon. Friend will see that the B.S.C. is made into a strong, viable, commercial enterprise. The industry does not want Government charity. We hope that the future will have as little political interference as possible either on a parochial or on a regional basis. The industry should be allowed to get on with the job of making good quality steel and of giving good delivery dates so that it can be profitable.

I turn now to the disappearance of company names and, indeed, individual companies. The hon. Member for the New Forest, in quoting my right hon. Friend, has assured himself of one thing today. If he ever has the misfortune to lose his seat, I am certain that he will have a future on the stage. I do not think that it will be on the furnace stage, but, nevertheless, on the stage.

The company names may go, but quite a number of the people associated with the industry over the last 30 or 40 years are working in the B.S.C. Hon. Gentlemen opposite have said that the industry has given good service in the past. These people, who are now under the mantel of the Steel Corporation, will surely give the same sort of service that they gave to the individual companies.

I do not believe that in commerce, in business, or in industry, there is quite the sentiment painted by hon. Gentlemen opposite. Indeed, what the customer wants is good-quality steel delivered on time at the right price. Whether it comes from Stewarts & Lloyds, the English Steel Corporation, Steel Peech and Tozers, or Port Talbot does not interest them.

There is, unfortunately, a strike of blast furnacemen at Port Talbot which is curtailing substantially the production at that plant. I am sure that its customers will be looking elsewhere within the B.S.C. and, if their requirements cannot be met, they will probably go abroad. There is no real loyalty between customer and producer. The customer wants the goods delivered. Experience in the steel industry is that when a plant has lost orders to another competing plant, often the customers realise that the product is as good, or sometimes better, and they remain with the new producer. Therefore, we should not mourn too much the disappearance of the company names.

Hon. Gentlemen opposite have spoken about the low morale in some places in the industry. That is a measure of the uncertainty that prevails in the industry. If we could remove the uncertainty I am sure that the morale of the workers at all levels in the industry would rise overnight. It is uncertainty about the future and the attitude of political parties about long-term planning which is causing the uncertainty.

Reference was made to the ore terminal and whether it should go to Teesside, to Immingham, or to the Clyde. This is the kind of uncertainty, as well as the political uncertainty, that is jeopardising the morale of the industry.

I should like to turn to the question of the regions. In the Bill and the documents that we have had mention is specifically made of Wales and Scotland. It is time that the word went out that the steel industry of this country is nationalised. We are talking about the Steel Corporation, and the interests of Scotland, the North-East Coast and Wales are secondary to the national interest and the nationalised steel industry.

It is clearly stated that there will be regional concern. How are the regional interests to be safeguarded? It is said that there might be a director on the board of the British Steel Corporation to look after the specific interests of Wales and Scotland. In my opinion, it is not necessary, but if my right hon. Friend, in his wisdom, deems that it is, I submit—and I am sure that hon. Members on both sides of the House will agree with me—that there must be a member on the Board to look after English interests. I hope that my right hon. Friend will take that point into account.

I welcome the Bill. I look forward to a bright future for the Corporation, which reaches its second birthday at the end of this month. I wish every success to the Corporation and its Chairman, Lord Melchett—who has the greatest respect not only of the House but of the 250,000 people who work in the industry. The production figures for the first six months of this year are nearly a record, so that the future augurs well for the Corporation.

I hope that in the future there will be as little industrial unheaval as there has been in the past, and that when we discuss the next Steel Bill the Minister will be able to report—contrary to the expectation and hopes of hon. Members opposite—that the Corporation is paying its way and is giving the nation the sort of return that I am more than optimistic it will be able to do.

12.22 p.m.

The Minister of Power (Mr. Roy Mason)

When my predecessor as Minister of Power—now the Minister of Transport—moved the Third Reading of the last Iron and Steel Bill in 1967 he remarked that it had received one of the most prolonged and thorough examinations ever to be given to a Bill in the House of Commons.

Discussion of the Bill has not been on anything like the same scale, but given the length of the Bill it has been full and searching. It was absolutely right to have a full and searching examination of a Bill which changed the capital structure of a major nationalised industry and increased its borrowing powers by £250 million.

I do not measure the usefulness of the debates that we had by the fact that no Amendments were made. As the hon. Member for Bournemouth, West (Sir J. Eden) said at the end of the Committee proceedings, the Bill has been given a very careful examination. It was a careful and a useful examination.

The Opposition had a good team. It was well led. They had well-chosen Members, who played a remarkedly good part throughout the Committee proceedings. There were one or two mavericks, like the hon. Member for New Forest (Mr. Patrick McNair Wilson). He is against the Bill. He is against nationalisation. He would like to denationalise steel. I take it that that is not the view of the official Opposition any longer. After the Bill is passed they have no intention once more to throw back into the political game of pitch and toss this coin that they have played with for so long—the Corporation.

Mr. Anderson

Since much mention has been made of morale in the industry being affected by uncertainty, would it not be helpful, and for the benefit of all concerned in the industry, for the Opposition to state clearly their views on the future of the industry?

Mr. Mason

One of the more serious features that has formed a theme in our discussions on the Bill is the fact that many people in the industry are concerned and anxious about their future. To some extent that anxiety hinges on the question whether the Opposition, if they were ever returned to power, would ever denationalise steel.

The hon. Member for Bournemouth, West and his hon. Friends could take this opportunity, if they so wished, to explain to all those working in the Corporation that from this day hence they need have no further anxieties because the Corporation is for ever settled and the Opposition have no intention of ever denationalising it if they come to power.

I would have hoped that the official Opposition spokesman concerned with the steel industry would now say that, and so clear the minds of all those in the industry once and for all. I take it that silence means acquiescence.

Sir J. Eden

The right hon. Gentleman has no right to take anything or to interpret anything from my silence.

Mr. Mason

That is a pity. I gave the hon. Member and his hon. Friends the opportunity. No doubt all those who work for the Corporation—from the members of the board down to those working in the plants—will now be fully aware of the fact that if the Opposition were ever returned to office denationalisation would be a possibility. That will not allay their concern.

Mr. Speaker

Order. We must now get back to the Third Reading debate.

Mr. Ridley

My hon. Friend was quite right not to respond in any way. If he were to say that we would not denationalise the industry there would be such a catastrophic fall in the morale in the industry that production would come to a total halt.

Mr. Mason

I thought the reason for the hon. Member's silence on the issue was to give heart to some of the political mavericks in the Tory Party, like the hon. Member for New Forest.

Mr. Speaker

Order. We must leave this question until we have a debate on a Motion on the future policy of the Conservative Party.

Mr. Mason

The question is best left for the Conservative Party Conference, as you suggest, Mr. Speaker.

I want, first, to make a general point. Many of the Amendments proposed were directed towards the publication of fuller information by the Corporation. We discussed this on Wednesday night. Although the Amendments in themselves were unacceptable I hope that the House will agree that my hon. Friend and I, by the undertakings that we have given, have gone a long way towards meeting the need expressed.

I am in complete sympathy with the view expressed by the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) late on Wednesday night, that public corporations, and bodies in the public sector, should set the pace in conforming not only to the letter of the Companies Act but to its spirit. I also sympathise with the hon. Member for Bournemouth, West and the hon. Member for Cambridge (Mr. Lane), who welcomed the fact that year by year our national economy is becoming more open, but stressed that most of us want still more disclosure in both the private and the public sectors.

The nationalised industries have traditionally led the rest of industry in the publication of information in their accounts. The tide in private industry is now moving strongly towards the publication of fuller information, and the 1967 Companies Act represented a major step forward. I expect the accounts of the nationalised industries, including the B.S.C., to continue to lead and set an example to private industry.

On the question of p.d.c., let me once again make it clear that it is not intended as a disguised form of capital write-off, or as an easy way out from the hard facts of life. My hon. Friend the Member for Sheffield, Brightside (Mr. Eddie Griffiths) was right to say, in other language, that p.d.c. is not intended to be a couch on which lethargic members of the board and the industry can rest. What I intend—and this must be a broad statement of intention which is not to prejudge the decision on dividends in any one year—and intend firmly, is that what the Government receive from the Corporation once it has p.d.c. shall not be less than what it would have received had there been no p.d.c.; in other words, the dividends on p.d.c. plus the corporation tax which comes to the Government as a result of this change will be no less than the interest which would have been paid on fixed interest capital.

This change will be an important improvement, and is well worth the experiment. It will enable the Corporation to face the real problem of the future wth a sound financial structure which makes it comparable with its competitors.

The hon. Member for Bournemouth, West and the hon. Member for Cambridge mentioned the financial objective. Clause 5 empowers me to set a statutory financial duty for the Corporation in more specific terms than is contained in Section 16(1) of the 1967 Act. This duty or objective will be expressed, like the one given to B.O.A.C., in terms of a rate of return on the Corporation's net assets over a given period of years. It will be determined after consultation with the Corporation and in agreement with the Treasury.

There were various suggestions for changing the form of the objective which my hon. Friend the Parliamentary Secretary dealt with fully in Committee, but I will take this opportunity of reiterating that the Corporation's financial duty will be determined in accordance with the Government's policy as stated in the 1967 White Paper reviewing the economic and financial objectives of nationalised industries, Cmnd. 3437, that the objective will be looked upon to a large extent as the minimum that the Corporation should aim to achieve and so will in no way be restrictive and, by having a life span of a number of years, will allow the Corporation's performance to be judged in proper perspective so that the lean years and the good years can be taken together.

It is my intention to fix a financial objective for the Corporation as soon as possible after enactment of the Bill and to ensure as far as possible that the Corporation has a statutory objective during the whole time it has p.d.c. The objective is intended to be a reasonably stiff incentive which the Corporation must gear itself over a period to achieving, taking one year with another.

The hon. Members for Bournemouth, West and New Forest and my hon. Friend the Member for Sheffield, Brightside raised the question of the structure of the Corporation, and particularly Clause 8. There was considerable discussion in Committee about Clause 8. There is one general comment I should like to make on the Clause. It will have no real effect on the industry's operations or policy. It will not affect its production policy, selling policy or labour relations. The companies have already ceased to play any real part in the management of the industry, so that their disappearance will not affect these matters. I see the dissolution of the companies as having two effects only. First, it will bring appearance more into line with reality, by giving the Corporation direct ownership of the industry's assets as well as the effective control of the industry's operations. Second, it will free it from the costly and time-consuming administration involved in maintaining the companies.

My hon. Friend the Member for Monmouth (Mr. Anderson) mentioned organisation. During the Committee debates, some concern was expressed about the Corporation's organisation and especially the effect on consumers of a possible change to a system of product divisions. This question of organisation is not, of course, directly related to Clause 8. The case for the abolition of the companies would be just as strong if the present groups continued as it would be if the Corporation moved over to product divisions.

But, apart from this, no decision has yet been made on these matters of organisation. A change to a system of product divisions would require my consent. I have not yet received the Corporation's final proposals, although both it and I are, of course, anxious that these questions should be resolved as quickly as possible, and the Corporation hopes to publish a third report on organisation, giving its final proposals, before the end of the year. But I have taken note of the points made in Committee and in the debate.

Some concern was also expressed about the position of consumers under any new arrangements, particularly by the hon. Member for Cambridge. I can certainly assure the House that this is one of the aspects I shall have in mind when I reach my decision. But, while I certainly share hon. Members' desire that the interests of consumers should be properly safeguarded, I do not think that there is any need for concern on that score now. I have received no representations from the Consumer's Council on these matters of organisation. In this respect and, indeed, generally, I know that the Corporation is well aware of the importance of consumers' interests. Indeed, it must be as a simple matter of commercial prudence. Although it has no statutory obligation to consult the Consumers' Council, it has said that it would always be pleased, as soon as it has decided broadly on its own lines of approach, always to take the Council into its confidence on important matters affecting consumers. These matters naturally include changes in the marketing and sales structure where these would have important effects on consumers.

When the 1967 Act was drafted, we had—and we said this at the time—to work very largely in the dark because the Corporation was not in existence, and we had little idea of what organisation it would propose, how it would plan the industry and what investment it would wish to undertake. Now nearly two years have passed since the vesting date, and the picture is becoming much clearer. Major decisions regarding the expansion of the industry are now on their way. Today, for example, as I forecast in Committee on 19th June, the Corporation is announcing its proposals to develop steel-making facilities at Scunthorpe and an ore terminal at Redcar, on Tees-side. I hope that that will satisfy the hon. Member for Cambridge and answer the questions posed by my hon. Friend the Member for Brightside.

It is not possible to allay all the anxieties and concern of those in the steel industry in Lackenby, Port Talbot, Llanwern, Ravenscraig and Scunthorpe altogether. The picture is evolving, and the first announcement is being made. I want to emphasise that the proposals being announced today require my approval, because they form part of the capital investment programme, and it has still to be examined by the Government. In addition, the ore terminal requires the consent of my right hon. Friend the Minister of Transport under the Harbours Act, 1964. All the relevant considerations will be taken into account, including regional ones, but this is only the first of a series of major development proposals which will emerge in the months ahead.

The possible development of an ore terminal on the Clyde, which was raised by my hon. Friend the Member for Brightside, is not affected by the proposals. The Corporation recognises that the deep water approaches of the Clyde make it especially suitable for large ore carriers.

The Bill will enable the Corporation to get on with the heavy tasks ahead from a sound and stable base. I hope that as soon as it has gone through its remaining stages the House will realise that so much water has flowed under the bridge that it is not now possible to turn back, that nationalisation of steel is a fact and that denationalisation again would be hideous. I hope that the House will accept the Motion.

Question put and agreed to.

Bill accordingly read the Third time and passed.